The Changing Economic World

Question 1

What is development?

Answer 1

The progress of a country in terms of economic growth and social conditions (use of technology, human welfare), and quality of life of the people living there. It is more than wealth as it includes things such as happiness and the state of the environment.

Question 2

What are LICs?

Answer 2

The 30 countries the World Bank classifies as having low average incomes US$1045 or less. Agriculture plays an important role in the economy.

Question 3

What are NEEs?

Answer 3

The 80 countries beginning to experience higher rates of economic growth. They have more factories and are industrialising, with TNC investment due to globalisation.

Question 4

What are HICs?

Answer 4

The 80 countries the World Bank classifies as having high average incomes US$12736 or more. Office work has overtaken factory work and there is a high proportion of work in the quaternary sector.

Question 5

What are aspects of quality of life?

Answer 5

Economics - job security, income, and standard of living
Physical - diet and nutrition, water supply, climate, and environmental quality
Social - family, friends, education, and health
Psychological - happiness, security, and freedom

Question 6

Define the term ‘indicators of development’

Answer 6

Measurements that tell us how developed a country is

Question 7

What are some development indicators?

Answer 7

GNI per capita, birth rate, death rate, infant mortality rate, life expectancy, people per doctor, literacy rate, access to safe water

Question 8

What is GNI per capita, what does it measure, and what are its limitations?

Answer 8

Gross national income per capita: the total goods and services produced and income from overseas investments divided by population. It measures wealth (economic). It is hard to value services and in rural countries lacking markets some data may be miscalculated.

Question 9

What is birth rate, what does it measure, and what are its limitations?

Answer 9

The number of births during a year per 1000 people. It measures education quality and availability of birth control (social). Some births may not be recorded and artificial fluctuations e.g. governments encouraging/ discouraging births may skew the data.

Question 10

What is death rate, what does it measure, and what are its limitations?

Answer 10

The number of deaths during a year per 1000 people. It measures quality of and access to healthcare (social). Some deaths may not be recorded in poorer, rural regions, and it disadvantages countries with a natural hazard risk and ageing populations.

Question 11

What is infant mortality rate, what does it measure, and what are its limitations?

Answer 11

The number of deaths of children under one year of age per 1000 live births. It measures sanitation and healthcare (social). In isolated regions deaths may not be recorded, official figures are sometimes underestimates.

Question 12

What is life expectancy, what does it measure, and what are its limitations?

Answer 12

The average number of years a person can be expected to live. It measures quality of and access to healthcare and safety (social). It is often difficult to survey and is distorted by a high infant mortality rate.

Question 13

What is people per doctor, what does it measure, and what are its limitations?

Answer 13

The number of people divided by the number of doctors. It measures access to healthcare (social). In some NEEs mobile phones are used for healthcare advice, which is not included in the figure, it does not measure healthcare quality.

Question 14

What is literacy rate, what does it measure, and what are its limitations?

Answer 14

The percentage of people with basic reading and writing skills. It measures access to education (social). It is hard to carry out surveys in rural or dangerous areas or squatter settlements and ‘basic’ is hard to define. It is only one part of education.

Question 15

What is access to safe water, what does it measure, and what are its limitations?

Answer 15

The percentage of people who have access to water that does not carry a health risk. It measures sanitation (social). Flooding and poor maintenance can lower the figure, and sometimes poorer people in LICs choose to use untreated water, even with treated water available, because of cost.

Question 16

What is the main issue with development indicators?

Answer 16

They fail to show disparity of differences within a country. Often they are higher in the core region and lower in the periphery, but this is averaged out.

Question 17

What is the core region of a country?

Answer 17

An area based on the urban area, which has the majority of the services, business and people

Question 18

What is the periphery of a country?

Answer 18

The rural, remote countryside with less services and primary industry

Question 19

What is the Human Development Index?

Answer 19

A composite measure, combining several development measures into one formula (income from GNI per capita, life expectancy, years of schooling etc.). Together these measures provide a figure between 0 and 1.

Question 20

What are some reasons for a country lacking in development?

Answer 20

Inaccessible locations - landlocked countries restricting trade
Natural and biological hazards - e.g. malaria
Location along the Sahel - desertification reducing food availability
Extractive, unstable political institutions
A lack of central power - South Sudan is in civil war

Question 21

What different factors can influence population growth?

Answer 21

Government policies - either - these can either encourage e.g. subsidies or discourage e.g. One Child Policy people to have children
Education of women - decline - allows them to control their fertility. Some may also choose to prioritise a career
Exponential growth - growth - the more people there are, the more people can have children
Better farming methods - growth - more food at lower prices means more children survive
Better health care and sanitation - growth - less disease so less death
Access to contraception - decline - people can choose when to have children

Question 22

What are the stages of the demographic transition model?

Answer 22

Stage 1 - slow population increase. High fluctuating birth and death rates. Untouched tribes e.g. in the Amazon
Stage 2 - early expanding. High birth rates and falling death rates. LICs e.g. Sierra Leone
Stage 3 - late expanding. Falling birth rates. NEEs e.g. India
Stage 4 - steady population. Low birth and death rates e.g. UK
Stage 5 - declining population. Low death rate and even lower birth rate e.g. Japan

Question 23

What are the reasons for the different stages on the demographic transition model?

Answer 23

Stage 1 - people have lots of children in order to have some survive to adulthood. Healthcare is poor and disease is widespread
Stage 2 - access to modern healthcare means death rate drops while birth rate lags behind and stays high
Stage 3 - raising children becomes more expensive and education improves, so birth rate falls
Stage 4 - birth and death rates level out
Stage 5 - people choose not to have children and death rate rises as the population ages

Question 24

Why might birth and death rates not always correspond to the level of development?

Answer 24

Conflict or a natural disaster may temporarily drive up the death rate
Some HICs are experiencing a rising death rates as the population ages and more people are aged over 80
Some countries may have cultural factors such as religions that encourage childbirth, which may slow its decline

Question 25

What is overpopulation?

Answer 25

Where there are too many people for the available land and resources

Question 26

What are some effects of overpopulation?

Answer 26

Falling incomes - too many people are going for too few jobs
Environmental degradation - over grazing of land and water supplies can lead to soil erosion and desertification
Reduced health and happiness - as a result of malnourishment, which helps with the spread of disease

Question 27

What are the benefits associated with population growth?

Answer 27

A country can industrialise, which requires lots of workers. This earns more money than primary industries. This can also attract TNCs. People are human resources.

Question 28

What are the historical causes of uneven development?

Answer 28

Ease of agriculture and trade
Colonialism of most of the ‘global south’ in the 1700s-1900s
Conflict as a result of colonialism: the ‘divide and conquer’ strategy and the creation of states based on resources e.g. the Sykes-Picot agreement resulted in violence, slowing development

Question 29

What are the economic causes of uneven development?

Answer 29

TNCs buying materials and food at low prices from LICs
Corrupt leaders embezzling funds
Fluctuating resource prices
Exclusive economic institutions restricting development

Question 30

What are the physical causes of uneven development?

Answer 30

Coastlines allow for easy global trade
Navigable rivers also allow for trade and agriculture
Natural disasters harm countries and damage infrastructure

Question 31

What is the development gap?

Answer 31

The difference in standards of living and wellbeing between the world’s richest and poorest countries (HICs and LICs)

Question 32

How can internal disparities in wealth be measured?

Answer 32

The Gini coefficient shows inequality in a country on a scale from 0-1. A coefficient on 0 means everyone in the country would have exactly the same income, while a coefficient of 1 would mean that one person controlled all the wealth. It is higher in LICs and NEEs than HICs in general.

Question 33

Why has uneven development led to LICs becoming dependent on HICs and some NEEs?

Answer 33

Investment is required for development, and as LICs lack wealth, leaders often turn to NEEs and HICs to gain loans. This has created lots of debt, forcing a close relationship in order to gain debt forgiveness. Aid also often comes with guarantees that the countries work together.

Question 34

How does uneven development lead to disparities in health?

Answer 34

In LICs there are:
More people per doctor
Less availability of more expensive, effective treatments e.g. vaccines
A lack of doctors in rural areas

Question 35

What is migration?

Answer 35

The movement of people from place to place

Question 36

What is an economic migrant?

Answer 36

A person who moves voluntary to seek a better life, such as to find a better paid job or benefits like education and healthcare

Question 37

What is a refugee?

Answer 37

A person who is forced to move from their country or origin as a result of civil war or a natural disaster such as an earthquake or climate change (environmental refugee).

Question 38

How does uneven development lead to international migration?

Answer 38

LICs face more common conflict such as the Syrian civil war. This helped lead to fourteen million people being forced from their homes in 2015, an all time high
As internet access becomes more common in LICs people are becoming more aware of the development gap
In the ‘brain drain’ people in NEEs and poorer HICs (e.g. Latvia) highly educated people have little opportunities for high skilled work and so move to other HICs e.g. the UK

Question 39

What are remittances?

Answer 39

Where migrants send a portion of their wages home, usually to their family. This allows for development, as it is a non-state funded investment e.g. in Nepal remittances contribute 25% of GNI.

Question 40

What strategies can be used to reduce the development gap?

Answer 40

Industrial development 
Investment by TNCs
Tourism
International aid
Use of intermediate technology 
Fair trade
Debt relief
Borrowing through micro-finance loans

Question 41

How does trade lead to wealth?

Answer 41

Very few countries can meet all their own needs, e.g. they may have an unsuitable climate for growing some foods or lack raw materials for industry. All countries have some strengths, providing an opportunity for trade, generating the income needed for economic development.

Question 42

Why does trade in primary products achieve low prices; why are manufactured products sold at higher prices?

Answer 42

Primary products generally need work done on them for the, to be useable, so prices factor this in. Overproduction and import tariffs also reduce their prices.
In contrast, manufactured products have already had this work done on them when they are processed to make things. This increases their price as they are ready to use.

Question 43

What is the multiplier effect?

Answer 43

The idea that development in an area creates more development in a cycle, as people and governments have more money to spend and invest.

Question 44

How does industrial development create a multiplier effect?

Answer 44

A factory creates employment for workers and money, through taxes, for the government
Money can be invested in schools, roads and services
The population becomes better educated and healthier
This creates opportunities for new investments such as supply industries, shops and community facilities

Question 45

How can the development gap be reduced by development from TNCs?

Answer 45

TNCs invest money into countries, called foreign direct investment (FDI), when they start production or open shops there. This can create a multiplier effect by helping other local businesses to thrive, creating work, which gives people more disposable income.

Question 46

Why do TNCs invest in NEEs and LICs?

Answer 46

Reducing transport and income costs: transport is cheaper over shorter distances, and tariffs can be avoided within a country. This lowers costs, raising profits.
Looking for new markets: over one billion people in NEEs now have a ‘middle-class’ income and lifestyle. TNCs such as McDonalds have built shops there to capitalise on this.
Looking for cheap labour: labour costs are lower in NEEs and LICs. This creates employment, but workers are sometimes exploited and may have a low quality of life.

Question 47

What is international aid?

Answer 47

A gift of money, goods, or services that does not need to be repaid, usually given from HICs to LICs and some NEEs

Question 48

What are the two types of international aid?

Answer 48

Official development assistance (ODA), given by governments and paid for by taxes
Voluntary aid, given by individuals and distributed by NGOs and charities

Question 49

What is international aid targeted at?

Answer 49

Specific long term development goals for people in LICs and NEEs. Countries are given money for certain projects or on certain conditions that should encourage development.
Short-term emergency relief to cope with immediate problems caused by disasters.

Question 50

What are some examples of international aid?

Answer 50

The DR Congo was given a US$73m grant by international donors to help it build a dam and hydroelectric plant, creating jobs
The One Laptop per Child policy is partly funded by Google and has distributed hundreds of thousands of free laptops to children and teachers in Africa and South America
The UN spends lots on the health of pregnant women in LICs to lower infant mortality rates

Question 51

Where does the UK normally spend its aid?

Answer 51

In Commonwealth countries, such as India and Nigeria

Question 52

What is intermediate technology? Give an example

Answer 52

Technology a local community can take ownership of and learn to maintain.
Water Aid installed water wells with hand-pumps in Tanzania to provide clean water.

Question 53

What is Fairtrade?

Answer 53

A project that aims to give producers a better price for the goods they produce and a price guarantee, meaning producers will still receive a regular income even if prices collapse

Question 54

What is debt relief?

Answer 54

Writing off debt. Often leaders in LICs misused and embezzled loans given to them, so the countries did not develop and could not pay off their debt. They are now heavily indebted, so forgiving this debt allows them to spend money on things that will develop the country, rather than debt repayments.

Question 55

What are micro-finance loans?

Answer 55

Loans given to individuals in LICs and NEEs. They may only be a few hundred dollars, but aim to kick start development at a local level. For example, they may allow a subsistence farmer to buy better seeds and fertilisers, so they can grow enough to sell some, giving them money to further expand.

Question 56

Why is Tunisia a popular tourist destination?

Answer 56

Climate - it has a Mediterranean climate, with hot summers reaching 40 degrees and mild winters
Links with Europe - it is close to Europe and was previously owned by France, giving them close links
History and culture - Tunisia contains seven UNESCO World Heritage Sites
Physical landscape - there are beaches, mountains and desert

Question 57

How has the Tunisian government encouraged tourism?

Answer 57

Cheap package holidays - by working with TNCs like Thomas Cook, they have created cheap holiday deals
Building the Tunis-Carthage International Airport to allow for more tourism

Question 58

How has Tunisia developed since the 1960s?

Answer 58

Life expectancy has increased from 42 to 75
Average income quadrupled in the 1970s
GNI per capita was US$4230 in 2014
Schooling is now compulsory for girls
Literacy rates have increased from 66% in 1995 to 79%

Question 59

What are some environmental and economic costs of Tourism in Tunisia?

Answer 59

Pollution - some beaches have been polluted with untreated sewage from hotels
‘Leakage’ of profits - TNCs like Thomas Cook keep a large percentage of profits, limiting the money being reinvested locally and slowing the rate of development

Question 60

How has terrorism limited development from tourism in Tunisia?

Answer 60

In 2011 two terrorist attacks on tourists in Tunisia (at the Museum Bardo in Tunis and at a beach resort in Sousse) killed 63 people, mostly tourists. As a result British tourism is down 90% as European governments no longer say it is safe. 17 hotels closed and there was an estimated US$500m cost to the economy.