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The Changing Economic World - Coggle Diagram
The Changing Economic World
Development Indicators
Brandt Line
Divided the world into the rich North and the poor South
Too simplistic
Saw development in purely economic terms
It didn't tell you which countries were developing quickly (e.g. China) and which weren't developing at all
Measuring Development
Economic Development is based on
MONEY, HAPPINESS, HEALTH, EDUCATION, FREEDOM
Economic development is a process where the country's standard of living sees improvements
Human Development Index (HDI)
Made up of:
1) Life Expectancy
2) Literacy Rate
3) GNI (Gross National Income)
Tells us about social and economic factors and is up to date each year
Doesn't include war or environmental issues
Demographic Transition Model
Stage 1
Least developed - BR and DR are very high due to lack of contraception, poor healthcare, and infant morality
BR and DR are similar - no real change in population
Low and steady pop growth
Stage 2
Rapid decline in DR due to improved healthcare, diet, and higher life expectancy
BR increases due to economy and agricultural work so children are needed to work on farms
BR > DR so population grows (natural increase)
Stage 3
DR continues to decline due to change from primary to secondary industries + healthcare improves so life expectancy increases
BR falls due to the introduction of contraceptive methods and emancipation of women so they go to work instead of having children
Stage 4
Low BR and DR - fluctuations at a steady, low level so population remains stable
people want high QOL, have fewer children, and could have dependent elderly relatives so less money available to have children
Improvements in healthcare and education leading to low BR and DR
Stage 5
DR > BR due to an ageing population, caused by healthcare and treatments supporting them
More elderly relatives so naturally more deaths + less time to raise children and committed work lifestyles
Causes of Uneven Development
Historical
Colonialism
European nations colonised/took over and harmed many nations, taking all of their raw materials such as gold, which left them with no resources to trade and make money off of
e.g. Britain colonised Nigeria
Civil War
Civil war forces people to focus on fighting these wars rather than working in order to generate revenue for their country + valuable land such as farms and hospitals will either be lost or be forced to close, losing access to important services such as food and healthcare
Conflict in Syria = 90% without homes
Physical
Raw Materials
Countries without many raw materials have fewer products to export, meaning they cannot make much money so cannot spend much on projects to improve development
Landlocked
Countries that are landlocked will find it harder to trade due to having to rely on air trade, which is more expensive than using boats, this reduces the amount of money they can spend on developing services and reduces their GDP
Natural Disasters
Countries that have a lot of natural disasters (e.g. Bangladesh) have to spend more money on constantly rebuilding, meaning less investment goes towards vital services like schools and healthcare
Climate
Hot and dry climates mean that not much food can be grown, leading to malnutrition and impairing people's ability to go to work/school
Economical
Debt
LICs have to borrow money from HICs to support themselves after a natural disaster or cannot afford to support their population.
This has to be paid back w/ interest so more time is focused on paying debts back then actually investing in developing services such as healthcare
Chile has to borrow money from USA
Unfair Trade
HICs can affort to sell their products at low prices while LICs cannot and have to sell the same products at higher prices
Countries exporting primary products such as coffee or sugar will have less to spend on developing their country than a HIC selling higher value products like an iPhone
Political Corruption
A country with a corrupt government may take bribes or not invest in the correct areas of development
Consequences of Uneven Development
Wealth
Lower income leads to less money put towards developing the country and so people in LICs have lower QOL than people in HICs
UK - HIC
Ethiopia - LIC
Health
Healthcare is better than HICs than LICs due to increased income so more money can be put towards developing healthcare infrastructure and researching antibiotics, meaning that IMR, and DR increases
UK life expectancy - 81
Chad life expectancy - 53
International Migration
Many people migrate from NEEs and LICs to HICs to escape conflict as well as to provide a better future for themselves and maybe their families
Migrant workers contribute to the economies of the countries they move to instead of LICs, widening the development gap
e.g. 130,000 Mexicans legally migrate to the USA each year
Reducring The Development Gap
Investment
TNCs may invest in NEEs and LICs to increase profits which leads to improvements in services such as healthcare, schools, industrial development, and employment opportunities
Shell invested in Nigeria
Industrial Development
Building new factories and manufacturing secondary products such as cars
These have higher value than primary products so they can make even more money for countries + provide employment opportunities to make more money
e.g. China's moved from a primary to secondary industry
Fairtrade
Labels put on foods which the money made from them means that the farmers producing said products will get a fair price for their work
It also give farmers a
price guarantee
so if the global price of a crop falls, the farmers will still receive their regular income, protecting their QOL
Not all farmers in a certain area are fairtrade so it can create inequality
e.g. Moroccan farmers were given money to invest in a new hospital in the area
Microfinance
Small loans are given to people in LICs who cannot afford loans from traditional banks
this enables them to start their own business and become financially independent
they use the profits made from their businesses to invest in their local communities such as building water pumps
Interest rates could be high so people could fall into poverty, reducing development
Debt Relief
When some / all of a country's debt is cancelled or interest rates are lowered
more money can be spent on developing the local area
e.g. Zambia had $4bn of debt cancelled in 2005 and started a free healthcare scheme
There's no guarantee that the government of LICs will spent money on improving the country
Aid
When a country, charity, or NGO provides resources and money to another country
supports countries in areas of development such as food and water and allows them to focus on other areas that need developing such as free healthcare
UK spends 0.7% of its GDP on aid each year with some going to Ethiopia
Corrupt governments may not spend aid properly
Intermediate Technology
sustainable technology that is suitable to the needs, knowledge, wealth, and skills of the people
saves time for the population and gives them more time to work and earn a living, in which some money can be paid by tax to the government to invest in the local area
Countries in the Sahel use solar cookers which saves time having to burn/remove firewood
CASE STUDY - NIGERIA
Importance
Regionally
3rd largest manufacturing economy in Africa
it can export products all over the continent, increasing GDP and thus increases revenue that can be invested in developing the country
Globally
Has the 10th largest oil reserves in the world
it can exert its influence around the world by controlling the prices of oil
How has Shell impacted Nigeria?
TNCs
Companies that operate in more than one country
Set up HQs in HICs and have their manufacturing in NEEs and HICs
They may set up in LICs/NEEs as:
Relaxed Health and Safety laws
Reduced Taxes
Less stringent environmental regulations
most of the top TNCs are oil companies as oil is a very valuable economic resource
Advantages
Create jobs and offer education and training, making employees more skilled and improving their QOL
Investment will contribute to the multiplier effect
TNCs pay tax to governments, helping a country to invest in developing their country
Disadvantages
Many TNCs are owned by foreign countries so economic leakage may occur where profit is sent abroad
Poor working conditions due to relaxed health and safety laws
Shell
Advantages
Has paid $900M in taxes to the Nigerian Government
Provided direct employment to 65,000 people and a further 250,000 people in related fields
Disadvantages
Huge oil spills have impacted the livelihoods of fishermen - 14000 fishermen took Shell to court over oil spills impacting their income
Oil flares release toxic fumes into the air, impacting workers' health
Aid in Nigeria
Why is WaterAid Necessary?
171 million do not have handwashing facilities
23% practice open defecation
Impacts of WaterAid
300,000 people across Nigeria's poorest states now have decent toilets
119 communities declared free from open defecation
Examples
UK sends £300M a year to Nigeria - bilateral
Tourism in Jamaica
Employment
Tourism employs 1/4 people in Jamaica directly via hotels, transport, and attractions
More people working = reduced development gap
Tourism Growth
Visitor expenditure increased from $128M in 1975 to £3.4Bn in 2019
More money being made which can be invested into services, reducing the development gap
Disadvantage
Many of the large tourist resorts are owned by American companies so economic leakage takes place and some money goes back to the US
Tourists are responsible for a great deal of environmental damage such as natural habitat loss and a reduction in biodiversity
CASE STUDY - UK
UK Economic Changes
De-Industrialisation
Decline in UK's industries due to the reduction in raw materials and competition from NEEs because of cheaper wages and taxes
The car factory average in China is £10,000 while in UK it's £22,000
Increase in mechanisation has led to the loss of jobs in the secondary industry (e.g. car manufacturing)
Globalisation
The world becomes more connected
Factories can afford to easily relocate overseas, leading to a decrease in jobs in the secondary industry
Government Policies
Since 2010, the government has attempted to encourage the high-tech service industry and invested in infrastructure such as the HS2 and Heathrow's Third Runway
UK stopped investing in industries and factories due to increased competition from LICs and NEEs
UK Economic Futures
IT Industry
The internet enables people to communicate with other people instantly across the world
Internet access enables many people to work from home
Finance Industry
Responsible for 10% of UK's GDP and employs 1.1 billion people
Growth has helped shift the UK to a post-industrial economy where banks can handle a multitude of financial services
Services
Retailing employs 2.9M people in the UK
more people are able to work in these economy and generate revenue, which can go towards developing these industries
Research & Development
Science Parks
Most are associated with universities, enabling them to use research facilities and employ skilled graduates, stimulating development
Impacts of Industry in UK
Jaguar Land Rover, Wolverhampton
All waste produced is recycled with only a small proportion going to landfill
Solar panels generate 30% of all the plant's electricity
Rural Growth and Decline
Rural Growth
South Cambridgeshire
Good universities, highly skilled workforce
attracts people to migrate to rural areas since there are science parks nearby to work at, rather than having to commute to the city centre
this creates economic leakage however as money is spent where they commute rather than where they live
Flat land good for farming and to build properties on
Reduction in the numbers of agricultural workers as building opportunities provide a more stable income and better pay
Rural Decline
Outer Hebrides
Population has declined due to one of the larger islands, Lewis, being reduced
Less people working so less money goes into developing the area, restricting educational services and forcing school age children to move away
Improvements in Infrastructure
HS2
Connects major cities such as London, Manchester, and Birmingham together
reduces the N/S Divide by connecting major cities, helping people in the North get jobs in important companies in the South
Costs £80bn of tax + not fully operational until 2031
Heathrow's 3rd Runway
Addition of another runway increases the amount of goods traded and the amount of tourists flying into the UK
77000 jobs will be created to meet these demands, increasing employment
Will increase the pollution of CO2 and create air pollution, leading to potentially more deaths
Liverpool2
Will more than double the port's capacity to over 1.5 million containers a year
reduces the amount of freight traffic on roads
North-South Divide
Causes
De-Industrialisation
Manufacturing industries, traditionally in the north, have closed
Unequal Government Spending
Government spends £12000 per person in London while in the North it's only £8000
Growth of the Financial and Service Sector
Tertiary and Quaternary Sectors inherently make more money than primary and secondary sectors so the increase in industries in London, leads to London generating more revenue and being more developed than areas in the north
Ways to Reduce
Local Enterprise Partnerships
Local councils and businesses work together to create jobs and investment. Councils invest in whatever businesses need
Humber LEP had £530M and created 6000 jobs
Northern Powerhouse
New mayors for Northern cities have been elected, giving these cities more power, who decide where the money is spent rather than governments in London
However transport spending is still greater per person in London than the North
e.g. Mayor of Greater Manchester given £1B to invest in the cities
Devolution
More power to northern councils and mayors so they can make their own decisions and spend money on the infrastructure they neec
However council funding is being cut by the Government
UK and the Wider World
Trade Links
Strong trade links with USA, Europe, and Asia
UK exports are worth £250B per year so boosts our GDP
Culture
Creative industries are strong (e.g. music and TV), and licenses are sold world wide, generating a huge income
Sales in 2016 grossed £1.3B
Transport
The channel tunnel that connects UK with mainland Europe is quick (35 min)
generates employment to manage channel tunnel
