The Changing Economic World Flashcards
Consequences of uneven development - Wealth
Immense differences in wealth of nations, regions and people. Extreme inequality leads to a number of consequences
Wealth:
- 2000 - richest 1% owned 40% all planet’s assets
- Top 10% controlled 85% of the world’s economic production
- Lowest 50% owned just 1% of the world’s assets
- 2014 - richest 85 people hold the same wealth as the lowest 50% globally
- N. America holds 35% of all global wwealth, Africa just 1%
Consequences of uneven development - Health
Health:
- 2015 - Somalia’s avg. life expectancy was 52. It was 85 in Japan.
- HIC’s can more easily deal with diseases, provide medical care to the population - and access to a doctor is readily available.
- LIC’s - 4 in 10 deaths from children <15, just 2 in 10 from those >70. In HIC’s: 7 in 10 >70yrs, 1 in 100 <15yrs.
- 2013 - 500,000 died from malaria globally. >80% occured in Africa. Richer African countries eg S.Africa have a malaria death toll similar to most S.Europe countries - massively improved healthcare systems over the poorer countries.
Consequences of uneven development - Mass migration
Mass Migration
- Uneven development is one of the major causes - 2016, huge numbers left N.Africa to seek a better life in Europe, despite hazards.
- Syria - war has caused 2 million people+ to migrate. 11.5% of all Syrians killed/injured in the civil war since 2011. 4 million+ have now fled to other countried - Turkey, Jordan, Lebanon.
- 2015 - Germany accepted 1.1 million refugees. UK has pledged to accept only 20,000.
Migration - what are:
- immigrants & emigrants
- economic migrants
- refugees
- push factors
- pull factors?
- Immigrant: moves into a country, emmigrant: moves out of one
- Economic migrants: voluntarily moves for better economic status, health, education
- Refugees: forced out due to war, politics, sexuality, religion
- Push factors - factors that “push” people away from one country
- Pull factors - factors that “pull” people into another country
Give some examples of pull and push factors.
Social, economic, political
Push factors
- Social: poor services/healthcare, lack of education, lack of medicine
- Economic: unemployment, poor pay, hazardous working conditions
- Political: war, persecution based on religion/gender/sexuality/race etc.
Pull factors
- Social: good services/healthcare, education, medicine
- Economic: plenty of well-paying jobs
- Political: democracy, freedom of speech, equality, etc.
Methods of reducing the development gap List all (8) of the major methods of reducing the development gap.
-Investment (FDI, Foreign Direct Investment), Industrial Development, Tourism, Aid, Intermediate Technology, Fairtrade, Debt Relief, Microfinance
Methods of Reducing the Development Gap 1 - Investment (FDI, Foreign Direct Investment)
- Countries + TNCs invest money + expertise in many poor countries to increase profits
- Not like a loan - repayments don’t have to be made
- Examples - building infrastructure: power stations, ports & helping to establish industries
- POSITIVE MULTIPLIER EFFECT (jobs + money) - new skills for workers
- The TNC/investing nation gains: cheap labour, fewer H+S/environment rules, tax incentive, cheap raw materials, access to growing domestic market
- Positives and negatives for TNCs and the LIC in question
Examples of investment into an LIC:
- IBM - office in Dakar, Senegal
- Google - 6th new office in SSA, in Uganda
- Harley-Davidson - dealership in Botswana
More recently, China began investing in Africa - now has more investments than America
- African Union HQ - funded by China, $200 million. More than 200 chinese companies have invested $billions in Africa - mining and construction
- Chinese government - HEP station in Madagascar
- China needs agricultural goods, energy. Africa now supplies these, and is a market for Chinese goods. China needs African natural resources for energy/manufacturing
Methods of Reducing the Development Gap 2 - Industrial Development
- NEE’s (Newly Emerging) eg Brazil or NIC’s (Newly Industrialised) eg Malaysia have used industrialisation to improve development. Industries eg car manufacturing have been invested in.
- This has lead to GDP growth from exports and a quality of life rise.
- Factories create employment, high wages for workers and taxes for the government.
- This tax money can be invested in schools, roads and services (eg healthcare).
- The population becomes better educated + healthier = increased living standards
- A more educated and healthier population -> new investment opportunities, eg supply industries, shops and services
POSITIVE MULTIPLIER EFFECT
Methods of Reducing the Development Gap 3 - Tourism
- For some countries, tourism is a positive way of reducing poverty + promoting development.
- Natural resources, eg tropical beaches, exotic wildlife and cultural sites developed to attract foreign tourists - promoting a POSTIIVE MULTIPLIER EFFECT
- Examples - Myanmar, Cambodia, Carribean nations, Indonesia
Cambodia:
- Angkar Wat, Siem Reap
- Sustainable tourism - using local people, reducing poverty = positive multiplier effect.
But, tourism is vulnerable to things such as natural disasters, etc. - COVID-19 has led to a worldwide recession in tourism, which left many tourism-based economies struggling.
Methods of Reducing the Development Gap 4 - Aid
- The UK is one of the biggest donors of aid (~0.7% of our GNP)
- Only long-term sustainable aid can really address the development gap. Can enable countries to invest in development projects eg roads, power and water management - benefits for generations to come.
- On a local scale aid can improve QoL - focusing on small smaller scale healthcare + education projects.
- UK sends £338million to Pakistan, more than any other nation - 66 million impoverished living in Pakistan, population set to rise in 40 years. Most aid spent on education, hunger + poverty.
- UK gives £369million to Ethiopia: Tekeze Dam (partially funded by UK bilateral aid) - a HEP station that may attract industrial growth - infrastructure in the region has improved.
Goat Aid - Oxfam
- Project to help families in many African countries (eg Malawi, Rwanda). Goat sent to families in need - provides milk, butter, cheese, meat
- Goats produces more goats, and are an excellent source of food.
- Manure used as fertiliser, produce can be sold (money for health+education), care of it can produce community spirit.
Methods of Reducing the Development Gap 4.5 - Types of Aid (name and explain 5)
BILATERAL - Aid from one country’s government to another’s. Set aside from a government’s budget - ultimately from taxes.
- Often tied with a condition.
- Control over where money goes, no loss of money from 3rd parties. Can build close ties & good relationships.
- But, receiving government may be corrupt, money has to come from a country’s budget. Conditions - tied to trust.
MULTILATERAL - Aid from a government to a separate organisation (WHO, GAVI). Also from tax.
- No government resources used on managing sending aid. Money can be used in different places. Specialised + more efficiently designed.
- Less control of where money goes. Money may be too thinly spread.
NGO’s (voluntary) - Aid from the population to NGOs by choice - voluntary donations.
- Personal choice of where money goes, government budget not used. Specialists, not mandatory, no politics.
- Money may not be dealt with efficiently + responsibily - more likely to be corrupt. Money can run out - bad publicity.
SHORT TERM
- Food, medicines, water. Natural distaster, war. Provides immediate relief for countries that need it following a disaster - a necessity.
- Only temporary relief - doesn’t last very long. Many lead to dependancy.
LONG TERM
- Infrastructure - well in a garden to a huge dam, no set size. Provides relief for much longer
- However, takes a lot of time and appropriate technology is needed.
Methods of Reducing the Development Gap 5 - Intermediate technology
- Technology that is appropriate to the needs, skills, wealth and knowledge of the local people.
- Must not harm the environment or cause people to lose jobs.
- Small scale, quality of life, local involvement - water, food, health
eg Irrigation at Adis Nifas, Ethiopia:
- N. Ethiopian village. 15m high 300m long dam created to form a reservoir close to village fields using local stones.
- Village provide labour. Appropriate machinery + money provided.
- Hand pumps transfer water to the fields.
- Each family can now irrigate a small area of land wih crops such as fruit trees - these provide a crop to eat + sell.
- Elephant grass divides the fields and prevents soil erosion.
eg Hippo Roller
- 5x more water than buckets. Can act as a sealed water container. Easier to transport water- rolled, not carried. 20 countries in Africa, S.African designed. 90L drum.
eg Solar Cookers in Africa
- Low cost, high impact. Reduces firewood need + carbon emissions. Portable (20 mins to put up). No specialised skills, last 20 years, easy to use.
Methods of Reducing the Development Gap 6 - Fairtrade
Why is trade not fair?
- Tariffs: taxes paid on imports in a country, protecting home produced goods as they become cheaper
- Quotas: limits set on quantity of good that can be imported - usually placed on primary goods, protecting industries eg agriculture
- WTO - the World Trade Organisation aims to remove these barriers - free trade.
- Subsidies are a major hurdle to the WTO - rich nations support farmers by paying subsidies so their products can be cheaper than poorer nations despite obvious higher wages and production costs. Mostly agricultural, some to other producers.
- Trading groups - nations that have joined together to promote trade between them by cutting tariffs and discouraging trade with non-members - EU and NAFTA
Methods of Reducing the Development Gap 6 - Fairtrade (cont.)
What is the Fairtrade movement?
Why doesn’t it always work?
What is the Fairtrade movement?
- Began in 1988 in Holland, Fairtrade coffee launched around this time. Has now become popular across Europe.
- Guarantees fair, stable prices. Provides a social premium (money spent on health/education)
- No child/forced labour, Health/Safety/Environmental standards, Contracts (long-term planning)
Why doesn’t it always work?
- Doesn’t address international trade rules, often more expensive - may not be bought or stocked by supermarkets.
- Doesn’t always help the very poorest farmers. Money still lost in the expensive + long supply chain.
- Many businesses are controlled by large TNCs - make it impossible for Fairtrade to succeed.
Methods of Reducing the Development Gap 6 - Fairtrade (cont.)
Eg1
Eg2
Eg1 - Cocoa from Ghana
- Ghana, W.Africa = world’s largest cocoa bean producer, but most of the packaging/processing is done in Europe.
- EU charges 7.7% import tariff on cocoa powder and 15% on chocolate, but no tariff is charged on raw cocoa beans.
- So Ghana is forced to export the beans rather than develop it’s own chocolate-making industry, which would bring more profit.
Eg2 - Ugandan Coffee Farmers
- > 90% of small coffee farmers in E. Uganda have joined the Gumutindo Coffee Cooperative to gain economies of scale.
- Means savings by buying + selling larger amounts of coffee
- Farmers earn extra income from the Fairtrade Premium - not possible if individual farmers tried to sell their coffee
- 1st processing stage done on the farm. Semi-processed beans worth much more to the farmer.
- Then sent to a nearby warehouse for milling, then packed for export abroad where the final roasting takes place.
- Processing of the coffee beans adds value - increasing the farmer’s profit.
Methods of Reducing the Development Gap 7 - Debt Relief
Where does the debt come from?
- Every £1 sent in aid to Africa, they repay £13 in debt.
- African countries borrowed money in the 1970s/80s to industrialise
- Then world interest rates went up and commodity prices went down.
- Oil prices went up and trade became more expensive
= Debt crisis
Methods of Reducing the Development Gap 7 - Debt Relief (cont.)
Conditions, examples
- 2005 - G8 agreed to cancel the debt of 19 HIPCs
- By 2015 36 HIPCs had met the required debt relief conditions by the IMF. So far $75billion have been cancelled.
Conditions:
- Recipients manage their own finances, no corruption.
- 20% of GDP spent on healthcare, education and reducing poverty.
- Countries not eligible - Eritrea, Somalia and Sudan
Eg1 Guyana
- $21bn debt from the 1980s cancelled
- 20% GDP spent on healthcare/sanitation/water/poverty/education
- This has massively modernised the country
Eg2 - Tanzania
- Money has been spent to support drought areas and make education free.
Methods of Reducing the Development Gap 8 - Microfinance
What is microfinance?
- Microfinance = small-scale financial support from banks or charities directly to help the poor
- Loans enable individuals or families to start up small-scale businesses.
- 85% people who take out micro-loans are women
- Mobile phones bought + rented out so women can check market prices in other villages, get health advice
- eg Just Small Change - Mali, Kenya
Methods of Reducing the Development Gap 8 - Microfinance (cont.)
Examples
eg Grameen Bank, Bangladesh
- Set up in 1976
- Local people, especially women, given the chance to develop small businesses
- Borrowers have a shared ownership of the bank so repayment is high
- Loans are small (often
An Example of Reducing the Development Gap via Tourism - TOURISM IN JAMAICA
Context about Indonesia
Advantages + disadvantages of tourism there
Indonesia
- Classed as an upper-middle-income country, but has struggled economically in recent years
- HDI 0.7, GDP $16bn pre COVID, $14bn during it
- Tourism, bauxite and energy are the only real economic areas that have grown
- Debt and unemployment are high
Advantages
- Beautiful beaches + warm tropical climate + rich cultural heritage = tourists attracted. International air communications + airport, cruise ship hub.
- Economic contribution: 2014, 24% Jamaica’s GDP. Expected to hit 32% by 2024. Cruises bring 1.1 million passengers (however they only spend $70/day compared to $120/day by 2.5 million others)
- Employment: main source of employment in Jamaica - 200000 directly or indirectly employed - positive multiplier effect
- Port, airport and road infrastructure developed
- Some people have huge QoL improvements - the wealthy Jamaicans
- Environment: Conservation + landscaping projects boost employment. Eco-tourism, new water-treatment plants.
However, the full benefits do not trick down to the poor - those not wealthy do not receive the benefits.
An Example of Reducing the Development Gap via Tourism - TOURISM IN JAMAICA (cont.)
What is the positive economic multiplier effect?
What is ecotourism?
The positive economic multiplier effect:
- “The positive snowballing of economic activity.”
- Eg New jobs = employees have more money to spend = more workers needed.
- These employees pay taxes and spend the new money = jobs in more diverse industries, eg transport and education.
Ecotourism:
- Sustainable development with the aim of reducing tourism’s impact on natural environments, protecting them for future generations.
An Example of Reducing the Development Gap via Tourism - TOURISM IN JAMAICA (cont.)
Montego Bay
Has attracted tourists through:
- cruise line terminal, beaches and resorts, international airport, tropical climate, opportunities for scuba diving.
- plenty of resorts eg Hyatt Zilara Rose Hall
Drawbacks for visiting tourists:
- Dense population + large number of tourists
- Busy year-round, mostly in summer
- Pickpocketing common due to large population + number of vulnerable tourists
An Example of Reducing the Development Gap via Tourism - TOURISM IN JAMAICA
More advantages and disadvantages of tourism
- Tourism has led to high levels of investment into Jamaica’s N.Coast where most tourism is centred, eg new port/cruise terminal at Trelawney
- However, road and airport infrastructure not focused due to tourism focus - parts of island isolated
- Northern tourist areas - high QoL, wealthy Jamaicans with a high living standard.
- However, large numbers of people live nearby in poor housing with limited fiid supply, inadequate fresh water/healthcare/education, because money that could be spent to improve this is all focused on the tourism sector.
- Policing such a large number of tourists is difficult
- Tourism is very vulnerable - eg pandemic - COVID-19, GDP from $17bn to $14bn
- Local culture and traditions may be lost (although some tourist attractions focus on these). Locals may miss out on offerings for tourists due to costs.
An Example of Reducing the Development Gap via Tourism - TOURISM IN JAMAICA (cont.)
Advantages and disadvantages for the environment
Advantages:
- Conservation + landscaping projects = job opportunities, encouraging visits to the island
- Montego Bay improved by landscaping
- New water treatment plant at Logwood, reducing pollution from hotels
- Sustainable ecotourism + community tourism expanding in isolated regions, small-scale guest houses run by locals/locals acting as guides
Disadvantages:
- Footpath erosion, excessive waste (hotels, packaging waste, etc), harmful emmisions (planes + cruise liners - pollute oceans and reduce air quality). Planes produce noise pollution. Natural areas of tourism affected negatively by unsustainable building practises (although ecotourism is popular and expanding.)
- Pressure on natural resources - already scare in some areas - tourism = less for locals
An example of an NEE experiencing rapid development: NIGERIA
General info about Nigeria
- African NEE. Has a tropical climate, North suffers from desertification. Captial = Abaja. Has the 4th densest city in the world, Lagos.
- 3rd most populous country by 2050 (~300 million people), in top 20 economies.
- Supplies 2.7% of the world’s oil - basis of initial development
- 5th largest contributor to UN peacekeeping
- Many financial services developed
- 70% of Nigerians work in agriculture, many are subsistance farmers however
- 48% population is urban
- Geographically advantageous - sea access to N. and S. America & Western Europe easily.
- “Nigeria is critical to the rest of the continent, and if Nigeria doesn’t get it right, Africa will really not make more progress” - Barrack Obama
An example of an NEE experiencing rapid development: NIGERIA (cont.)
Why is Nigeria so advantageous?
-Coastal access, tropical climate, Oil discovered in 1950s, agricultural industry + manufacturing sector, stable, democratic government, large (working) population.
