The Influence Of Economic Factors On The Development Of Two Or More Countires

Question 1

What are tariffs? How do they influence the development of African nations?

Answer 1

• Tax imposed on imports
• Roasted coffee attracts 7.5% tariff in EU, Africa tends to sell unroasted coffee (African countries earned $2.4bn from coffee sales to EU, Germany earned $3.8bn by processing and re-exporting)

Question 2

What are quotas? How do they influence the development of African nations?

Answer 2

• Limit on volume imported

- SSA produces 7.5 million metric tons of sugar, 1/5 exported to EU. 2017, quotas imposed, SSA to EU sugar declined)

Question 3

What is protectionism? How does it influence the development of African nations?

Answer 3

• Shielding country’s domestic industries from foreign competition by taxing imports
• EU charges SSA 30% tariff on processed cocoa, 60% products containing refined cocoa, suppressing growth)

Question 4

What is the AGOA trade agreement?

Answer 4

Free trade agreement between African countries and US, allows US to have low oil prices

Question 5

How might the Tripartite Free Trade Agreement (TFTA) operate and help SSA?

Answer 5

• 26 countries signed up (1/3 African economy)
• Aims include: Improve infrastructure, increased trade within Africa and start imposing tariffs
• 2004-2014 GNI of nations involved rose from $35bn to $106bn

Question 6

How does the Lagos Free Trade Zone benefit Nigeria and China?

Answer 6

Nigeria:
- Reduce dependence on importing consumer products
- Improved infrastructure e.g. Deep ports, hotels etc.
- $5bn investment
- Employment for tens of thousands
China:
- Increased access for China to African market
- Investment in area of cheap labour, land and raw materials
- Export from Africa with cheaper importation tax to EU

Question 7

Outline OPEC in Africa

Answer 7

• Cartel that produces 40% global crude oil

- 4 African members (Nigeria, Angola, Algeria and Libya), account for 8.8% of OPEC’s reserves

Question 8

Give 3 positive impacts the oil trade has had in SSA

Answer 8

• FDI from powerful MNCs
• Job creation
• Positive multiplier effect (Improved infrastructure and better quality of life)

Question 9

Give 4 negative impacts the oil trade has had in SSA

Answer 9

• Luanda, Angola, world’s most expensive expat location (Watermelons $100, chickens $200)
• Wealth gap increased
• Oil wealth = Corruption (e.g. Idriss Deby, Chad)
• Huge environmental spills (e.g. Bodo, Ghana)

Question 10

How many MNCs operate in Nigeria?

Answer 10

40

Question 11

Give 5 advantages of MNCs

Answer 11

• Employment and new skills
• Positive multiplier effect
• Local infrastructure and education improvements
• Smaller companies can grow
• Export revenues earned

Question 12

Give 5 disadvantages of MNCs

Answer 12

• Local workers poorly paid
• Poor working conditions
• Management positions taken by foreign employees
• Economic leakage of profits abroad
• Government funding to attract MNCs could have been invested into industry

Question 13

What is outsourcing?

Answer 13

• Shift operations, jobs or processes to an external contracted 3rd party
• SSA becoming particularly attractive due to low wages

Question 14

What is offshoring?

Answer 14

• Basing company’s processes or services overseas

- SSA increasing as its economic ability improves

Question 15

What is land grabbing?

Answer 15

• Contentious issue of large scale land acquisitions by MNCs, governments or individuals
• SSA experienced large land grabbing to produce biofuels or food

Question 16

Give 5 socio-economic benefits of tourism in SSA

Answer 16

• Helps diversify and stabilise local economy
• Provides government extra tax revenues through accommodation and restaurants
• Creates jobs and business opportunities
• Positive multiplier effect
• Earns valuable foreign exchange

Question 17

Give 5 socio-economic disadvantages of tourism in SSA

Answer 17

• Development of infrastructure is costly
• Inflation of property prices and goods
• Leakages (Most revenues return to developed country)
• Seasonal employment
• Tourist numbers can be affected by events such as terrorism

Question 18

Give 4 environmental benefits of tourism in SSA

Answer 18

• Money can be reinvested into ecological projects
• Higher water quality and better protection of environment
• Ecotourism one of fastest growing sectors (10-15% growth annually)
• Ecotourism encourage local community to use land and resources sustainably

Question 19

Give 2 environmental disadvantages of tourism in SSA

Answer 19

• Threat to region’s natural and cultural resources through overuse
• Increased pollution through traffic emissions, littering, sewage pollution and noise

Question 20

How does Fairtrade operate

Answer 20

Fixes price of good or commodity to ensure fair price for producer. If prices rise gets paid that price, if fall producer paid Fairtrade price

Question 21

What are the rules of Fairtrade?

Answer 21

• Part of price invested into local community

- Farmer agrees to farm environmentally friendly manner

Question 22

Give a direct impact of Fairtrade

Answer 22

2005, €80m to producers

Question 23

Give an example of an area where Fairtrade pricing has come into action

Answer 23

Mali:

• 2005-06 cotton prices fell from €0.31 to €0.24 per kilo
• Minimum Fairtrade price established (€0.36 per kilo), plus premium of €0.05

Question 24

What is the Grassroots Social Movement

Answer 24

• 427 Fairtrade towns
• 93 Fairtrade universities
• Over 5000 Fairtrade groups
• Over 2000 schools signed up to Fairtrade School Scheme

Question 25

Give the 5 goals that a Fairtrade School has achieved

Answer 25

1) Set up Fairtrade steering group
2) Produced Fairtrade school policy
3) Committed to selling Fairtrade products
4) Promotes use of Fairtrade products
5) Learn about Fairtrade issues over 3 subject areas