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.
