The Changing Economic World. 1. Key Terms

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1 1. Key Terms What is development? The progress of a country in terms of economic growth, the use of technology and human welfare. What is a HIC? A high income country. What is an LIC? A low income country. What is an NEE? A newly emerging economy. A country that is developing rapidly.

2 2. Ways of measuring development GNI: Gross National Income A measure of weath Birth rate: The number of births in a year per 1000 of the total population. You would expect a low birth rate to indicate a high level of development because women want to focus on careers instead of having lots of children. Death rate: The number of deaths in a year per 1000 of the total population. You would expect a low death rate to indicate a high level of development because of better medical care. Infant mortality: The average number of deaths of infants under 1 year of age, per 1000 live births, per year. You would expect this to be low in more developed countries because of medical care.

3 2. Ways of measuring development: Life expectancy: The average number of years a person might be expected to live. You would expect a high life expectancy to indicate a high level of development because of medical care. Literacy rates: The percentage of people who have basic reading and writing skills. You would expect this to be high in more developed countries because of better education. People per doctor. You would expect this to be low in a more developed country as there is better medical care. Access to safe water. You would expect this to be high is a more developed country because of better infrastructure. HDI = Human Development Index: A method of measuring development combining wealth, adult literacy and life expectancy together.

4 3. Limitations of economic and social measures. Economic measures are those to do with wealth. An example is GNI. Limitations with using just economic measures: This is only an average figure so there may be huge inequalities within the country with relatively few people earning large amounts of money and many people living in poverty. Informal sector work is not included in the figures which also contributes greatly to the economy in LICs. Social measures are those to do with education, health care, housing etc. Examples are Literacy rates, birth and death rates, life expectancy etc. Limitations of these measures: Data may be hard to collect in LICs due to conflict or lack of infrastructure. In poorer countries deaths may not be registered, especially in more remote areas. Social measures do not take into account wealth.

5 4. HDI There are obviously huge problems with using just economic or social measures or using just one factor to measure a countries level of development therefore combined measures such as the HDI which takes into account different things are really important. The HDI combines: GDP (a measure of wealth) Life expectancy Adult literacy To produce an overall idea of a countries level of development. A formula is used to produce a number between 0 and 1.

6 5. DTM (Demographic Transition Model) See next slide for the model which shows how birth and death rates (and therefore population growth) changes over time. Stages a country will go through over time are identified. Stage 1: High birth rate due to children being needed to work on the land. High death rate due to lack of medical care and access to clean water and food. Level of development - very low. No countries remain at stage 1 today just a few isolated rainforest tribes. Stage 2: Death rate falls due to improved medical care and access to food and clean water. This results in rapid population growth due to high rates of natural increase (birth rates higher than death rates) Level of development Low LICs such as Ethiopia

7 Stage 3: Death rate continues to fall. Birth rates start to fall due to better education and contraception. More people living in cities and working in factories so children are not needed to work the land. Level of development Improving NEEs such as India, Nigeria Stage 4: Death rate and birth rate both low Low birth rate because women now want to focus on careers rather than having lots of children. People understand the benefit of having less children. Level of development High HICs e.g. UK Stage 5: Extremely low birth rate Slightly higher death rate as there is an ageing population and more people are dying of old age. Highly developed countries such as France.

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9 Causes of uneven development: Some countries are more developed than others due to a variety of reasons: This is called the development gap. Developments gap: AQA definition: The difference in standards of living and wellbeing between the world s richest and poorest countries (between HICs and LICs). Physical causes of uneven development: Some countries are landlocked which means that they don t have access to a sea or ocean. This means they cannot trade. Climate in warm and wet places there are more diseases and pests such as mosquitos which spread malaria. Disease stops people from being healthy and working. However there are also rich desert countries such as Saudi Arabia. Extreme weather events also often hit tropical regions such as tropical storms (e.g. typhoon Haiyan) and drought (e.g. The Horn of Africa Extreme weather can destroy infrastructure which hinders development. Tectonic hazards can also set back a countries level of development such as in Haiti however, again some of the most developed countries also suffer from earthquakes (Japan.)

10 6. Causes of uneven development Economic causes of uneven development: Most of the world s trade is between richer countries which speeds up their development. These richer countries and big companies (TNCs) have a lot of power and they want to pay as little as possible for their raw materials which often come from LICs. Processing (turning raw materials into higher value goods) takes place in richer countries so they can make the money out of the products. In this way the richer countries get richer and the poorer countries cannot develop. Prices are kept low because of reasons such as oversupply and corruption. NEEs are now benefitting from trade as they expand their factories which means they are producing higher value products to sell. In order to develop, some LICS have borrowed heavily from HICs and now have to pay back debts instead of investing in economic development and infrastructure.

11 6. Causes of uneven development Historical causes of uneven development: Colonialism this is where in the 1700s-1800s European nations such as Britain and France claimed land in South America, Asia and Africa and exploited their resources (minerals as well as slaves) to aid their own development. Historical conflicts - Colonialism ended in the twentieth century e.g. Nigeria gained independence in 1960, however, this brought its own problems such as power struggles within the countries. When Africa had been divided up, the country borders did not fit with ethnic groups therefore there have been many ethnic conflicts in the affected countries. 5million deaths have been linked with ethnic conflicts in Rwanda, DRC and Uganda in the 1990s Conflicts always hold back development as money is spent on weapons instead of infrastructure and projects to help the country develop.

12 7. Consequences of uneven development disparities in health and wealth Disparities = differences. Disparities in Wealth: HICs = wealthiest. LICs = poorest North America = 35% of total global wealth. Africa s share = below 1% There are also huge differences in wealth within countries. E.g. Nigeria is now an NEE because of trading wealth from oil however increased wealth has not been spread equally among the population Nigeria is now one of the most unequal societies on Earth. Disparities in health: LICS 4 in 10 deaths are in children under 15 years (often caused by complications in childbirth). HICs 1 in 100 deaths is in children under 15 years. LICs Infectious diseases (AIDS, Malaria) are the main cause of death. HICs heart and lung disease, cancer, diabetes main causes of death. Malaria one child in Africa dies every minute despite the disease being preventable and curable. Wealthier and more developed African nations have fewer cases due to vaccination programmes.

13 7. Consequences of uneven development international migration Voluntary migration where people choose to move in search of a better life. Forced migration is where people have no choice but to move to escape war or persecution. They are called refugees. International migration from poorer countries to richer countries is increasing all the time. In 2015, poverty and conflict in Syria and North Africa led to 14million people being forced from their homes. In addition, due to technology such as mobile phones and the internet, people in poorer countries are more aware of the life in other countries and are more likely to want to go to them. Examples: 1. Forced migration - Middle East Refugee crisis 2015 people coming to Europe from Syria. 2. Economic migration from Poland to the UK Since Poland joined the EU in 2004 huge influx of Poles into the UK in search of jobs and better wages. Advantage migrants pay taxes and fill gaps in the labour market such as skilled jobs such as doctors as well as jobs such as cleaning and labouring. Money is often sent back to improve lives in Poland. Disadvantage migrants put pressure on services such as schools and health care in the UK. Often skilled workers move which means Poland loses many of its graduates abroad, hindering its development.

14 8. Strategies used to reduce the development gap. 1. Investment. What is it? This is where HICs or TNCs (Trans-national Companies) put money into an LICs with the aim of making money out of it. This could involve The development of infrastructure such as water, roads and electricity. The development of new industries. How does it help reduce the development gap? This helps poorer countries develop by providing jobs and improving infrastructure. As economies grow, poverty decreases and education increases. E.g. More than 2000 Chinese companies have now invested in Africa e.g. power plant in Zimbabwe, railways in Sudan. Problem This is improving infrastructure and helping African nations to develop but some people suggest that China is exploiting African resources to further its own development.

15 8. Strategies used to reduce the development gap. 2. Industrial development and tourism. What is it? Many countries are now developing their manufacturing (factories) and service industries (e.g. tourism) in order to develop. How does it reduce the development gap? Industrial development and tourism brings employment opportunities and creates taxes for the government. This leads to money being invested in infrastructure, schools and health care. Examples: China and Malaysia since the 1980s are examples of countries that have focussed on increasing their manufacturing industry and as a result have rapidly developed seeing an increase in wealth and quality of life. Problem? There are downside to this development of industry such as increasing pollution and its impact on health. Tourism generates a lot of income but countries can become overdependent on it which makes them vulnerable e.g. in times of global recession. (an example is the Maldives.) See also later notes on tourism.

16 8. Strategies used to reduce the development gap. 3. Aid What is it? This is when a country or non-governmental organisation (NGO) such as Oxfam gives resources to a country. In most cases aid does not have to be paid back. How can it reduce the development gap? Aid can be invested in development projects such as roads, electricity and water management. Locally it can improve quality of life if spent on health care, education and services. Examples UK spends 0.7% of GDP on overseas aid top 3 countries = Pakistan, Ethiopia and Bangladesh. There is now an increasing trend of NEEs such as China and India supplying aid to African nations. India has spent $6billion on African education projects. China aid has funded railway projects across Africa. Problem? One problem with aid is that it can be tied so in return for aid, the country may have to buy products from the donor country for example.

17 8. Strategies used to reduce the development gap. 4. Intermediate technology. What is it? AQA definition: The simple, easily learned and maintained technology used in a range of economic activities serving local needs in LICs. How does it reduce the development gap? This takes the form of small scale projects often associated with agriculture, water or health. They involve local communities and can make a real difference to quality of life. Example: Water Aid has supplied the Afridev hand pump to villages across Tanzania. This is a very simple pump that is simple to fix and maintain by the community. These pumps have contributed to Tanzania s long term development by increasing life expectancy due to less disease and education has improved as children are missing fewer days of school due to illness.

18 8. Strategies used to reduce the development gap. 5. Fairtrade. What is it? When producers in LICs are given a better price for the goods they produce. Often this is from farm products like cocoa, coffee or cotton. The better price improves income. Prices are also guaranteed which protects farmers quality of life if the global price of the product collapses. How does fair trade reduce the development gap? As part of fair trade, investment is put into local projects improving infrastructure or healthcare schemes which encourages development and improves quality of life. Problem: The high price of fair trade products in HICs limits the amount can be sold therefore this limits the number of farmers that can benefit from the scheme.

19 8. Strategies used to reduce the development gap. 6. Debt relief. What is it? HIPCs are Highly Indebted Poor Countries the 39 countries with the highest level of poverty and debt. They are unable to repay their debt and interest. After a meeting in 2005 any of these counties debts were cancelled. They had to: Demonstrate they could manage their own finances Show there was no corruption Agree to spend the saved money on education, healthcare and reducing poverty. Debt can also be written off through conservation swaps where debts are written off in return for protection of the environment. This has happened in Indonesia with the protection of forests. Example: In Tanzania, free education is now available. In Uganda, the government has used the money to provide safe drinking water to 2 million people. Problems: Corruption may mean money isn t used as intended and countries may get into further debt expecting it to be written off.

20 8. Strategies used to reduce the development gap. 7. Microfinance Loans: What are they? Very small loans which are given to people in the LICs to help them start a small business. How does this help reduce the development gap? Individuals or families can set up small businesses which helps them become self sufficient. As businesses thrive, this creates jobs and income which can then be spent in other businesses and the economy can grow. Quality of life will improve. Example: Grameen Bank, Bangladesh- set up in 1976 gave small loans to local people, often women to set up businesses. Loans are normally less than $100 with low interest. E.g. a woman uses her loan to a mobile phone which she then rents out to others as a business. She then pays the money back. Problem: Loan money still needs paying back which may be difficult if business does not succeed. Overall though these have proved a successful way of lifting people out of poverty.

21 An example of how the growth of tourism in an LIC/NEE helps to reduce the development gap - Jamaica Jamaica is an NEE. Tourism is one of the few growth sectors of the economy due to beautiful beaches, warm sunny climate and rich culture (e.g. Bob Marley and reggae music) Tourism contributes 24% of Jamaica s GDP. This is obviously good for Jamaica but can also make it vulnerable to problems e.g. if global recession prevents people taking holidays this will hit the Jamaican economy badly as they don t have other industries to fall back on. How does tourism reduce the development gap? 1. Employment tourism is the main source of jobs (e.g. in hotels) in Jamaica 200,000 mainly in the big tourist areas such as Montego Bay. These provide income which can then be spent in other businesses. This is called the multiplier effect. People learn new skills which improve their prospects of better jobs in the future. The quality of life for many has improved. Problems Jobs are concentrated in the tourist resorts so other areas do not benefit from tourism. 2. Quality of life In the tourist areas such as Montego Bay, wealthy Jamaicans live in high quality housing with a good standard of living however, close by people live in poor quality housing with few prospects. Inequalities are large.

22 Facts quiz At what stage of the DTM would you find a) LICS? b) NEEs and c) HICs? a) 2, b) 3, c) 4 and 5 Give an example of a drought The Horn of Africa, 2011 Name a disease that only affects tropical climates. Malaria Give an example of an LIC prone to earthquakes. Haiti. Give an example of an HIC prone to earthquakes. Japan. When did Nigeria gain independent from Britain? 1960 How many deaths are associated with ethnic conflics in the 1990s in DRC, Rwand and Uganda? 5million.

23 Facts quiz What is Africa s share of global wealth? Under 1% What is North America s share of global wealth? 35% Give an example of a forced migration. Syria to Europe 2015 Give an example of a voluntary migration Poland to the UK since 2004 How many Chinese companies ave invested in African nations? Over 2000 Give an example of a country that has experienced rapid industrial development recently. China or Malaysia What % of its GDP does the UK donate as aid? 0.7%

24 Facts quiz Give an example of Intermediate technology. The Afridev hand pump. Name a country that has had its debts written off. Tanzania, Uganda Name a country that has had debts written off in conservation swaps. Indonesia. Give an example of an organisation giving out microfinance loans. Grameen Bank, Bangladesh

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