trial 3

Question 1

Benefits of Aid

Answer 1

Can provide immediate relief

Provides a starting point for development – FDI may follow a big infrastructure project

Basic needs are met – food, shelter, clothing

Advice & assistance can be given by experts to ensure good procedures are in place quickly

It provides public and merit goods that may only have been available to those who can afford it

Debt relief enable a developing country to reinvest revenue/profit rather than have that money leak out of the economy in the form of debt repayments.

Question 2

Disadvantages of Aid

Answer 2

May not reach those most in need – may end up being used for city wide projects not rural areas

Diverted into military
investment or prestige projects.

Funding for capital expenditure (new road) may not be matched by funding for current expenditure (repairs and maintenance).

Tied aid may distort consumer choice for developing nation.
Donor dependency – economy skewed towards aid.

Food aid can drive prices down for local farmers – disincentive to produce.

Question 3

Emerging economies

Characteristics:

Answer 3

Rapid economic growth

Rapid improvements in productivity

Improving standards of living

Rapid industrialisation

Improving standards of living

Rapid industrialisation

Attractive to fdi

Question 4

Describe ways in which the rapid growth rates in emerging economies might affect the UK economy.

Answer 4

Emerging economies provide a market for UK goods and services. (1) Their populations have increasing disposable incomes to spend on UK exports. (1 development mark) This may improve the UK’s Balance of Payments.
(1 development mark)

UK firm’s costs of production may increase due to increased demand on finite worldwide resources. (1)

UK firm’s costs of production may decrease due to cheaper raw materials/components from emerging economies. (1) This may negatively effect the Balance of Payments. (1 development mark) Firms may shed labour to cut costs, causing unemployment.

Question 5

types of trade barriers

Answer 5

Quotas – this reduces choice and makes products more expensive for the consumer e.g. fish plus it causes job losses in the industry affected e.g. food production.

Tariffs (or import duties) – could cause inflation; it is unfair to the consumer who is looking to maximise their effective demand or improve their standard of living.

Embargoes – a black market for the product could occur meaning it gets sold regardless of the quality or the fact that taxes are not paid. Innocent businesses may find trade blocked if they have a trade partnership with a country being punished.

Subsidies – costs the economy money (taxes) to produce a good we could get cheaper elsewhere – e.g. the CAP means we do not benefit from Africa’s comparative advantage in agriculture meaning poor countries cannot trade their way out of poverty.

Question 6

developed country characteristics

Answer 6

High per capita income.

Low incidence of poverty.

High standard of living.

Narrow income inequalities.

Low growth rate of population.

Low level of unemployment.

Question 7

Describe ways in which the rapid growth rates in emerging economies might
affect the UK economy.

Answer 7

Emerging economies provide a market for UK goods and services. (1) Their populations have increasing disposable incomes to spend on UK exports. (1 development mark) This may improve the UK’s Balance of Payments.
(1 development mark)
 UK firm’s costs of production may increase due to increased demand on finite worldwide resources. (1)
 UK firm’s costs of production may decrease due to cheaper raw materials/components from emerging economies. (1) This may negatively effect the Balance of Payments. (1 development mark) Firms may shed labour to cut costs, causing unemployment. (1)
 UK exporting firms may face increased competition. (1