Changing Economic World

Indicators of economic development(3)

• GNI per capita - average of a country's income per person per year

• dependency ratio - ratio of people at working age to those too young/old

• poverty line - minimum level of income needed for life necessities

Indicators of social development

• Birth/death rate

• Infant Mortality Rate (children who die before 1yr, per 1000)

• literacy rate

• life expectancy

• HDI rating

• standards of living - wealth and material goods available to people

What is an LIC?

Low Income Country

country with GNI under ~$1000

What is a HIC?

High Income Country

country with GNI over ~$12700

What is an NEE?

Country that has begun to experience higher rates of economic development, and normally more industrialisation

Limitations of using one development indicator

• Does not encompass all factors that make a country developed (income, health, happiness, etc)

• One measure may increase or decrease with development

• Average measurements could be skewed and mask inequality

• Economic measures =/= social measures

• death rates are poor indicators, can increase with older or poorer population

Difference between standard and quality of living

Standard: economic - wealth, comfort, material goods

Quality: social- measure of happiness

What does the HDI (Human Development Index) factor in?

• Life expectancy

• Years of schooling

• GNI per capita

more holistic viewpoint

(rated 0 to 1)

What is stage 1 of the Demographic Transition Model?

• High birth rate

• High death rate

• Low population

• No family planning/contraception

• Poor healthcare, sanitation and education

• High IMR and disease rates

• children for labour/agriculture

e.g. rainforest tribes

What is stage 2 of the Demographic Transition Model?

• High birth rate

• Decreasing death rate

• Growing population

• Attitudes to sex/families are the same

• Healthcare, sanitation and education improve

• children for labour/agriculture

e.g. Afghanistan

What is stage 3 of the Demographic Transition Model?

• Rapidly dropping birth rate

• Low, slowly decreasing death rate

• Population still grows slowly

• Industrialisation

• Agriculture --> factories

• sanitation, education and healthcare improves

e.g. India, Brazil

What is stage 4 of the Demographic Transition Model?

• low birth rate

• low death rate (fluctuates from economic situation)

• high population

• good healthcare, water and education

• children are an economic cost

• peace

• secure pensions

e.g. USA, UK

What is stage 5 of the Demographic Transition Model?

• low birth rate

• slightly increasing death rate from aging population

• slowly decreasing population

• aging population

• penalties for abortion

e.g. Italy, Germany, Japan

List causes of uneven development

• Colonialism

• Trade

• Location

• Natural hazards

• Climate

• Conflict

• Exported products

Why colonialism leads to uneven development

• Europe building empires, stealing resources and oppressing much of Asia, S.America and Africa

• historical cause

+ better infrastructure, railways, roads, hospitals, schools

- loss of raw materials, civil wars, conflicts following independence

Why trade leads to uneven development

• HICs may impose tariffs/quotas on LIC imports

- Quotas and tariffs make LIC's profit limited selling to HICs (paying tariffs, quotas limit sales)

- trade requires expensive infrastructure like airports and railways, LICs miss out

Why location leads to uneven development

- landlocked countries may depend on neighbours for import and trade

- disputes with neighbours affect landlocked countries

- mountainous landscapes limit space for crops and infrastructure

• 8 of 15 lowest HDI countries are landlocked

Why natural hazards lead to uneven development

- destruction of crops, livestock, infrastructure, hinders trade and growth

- economic cost of recovery

• e.g. Haiti (earthquake 2010, H. Matthew 2016)

+ geothermal energy

• e.g. Iceland on Mid-Atlantic Ridge

Why climate leads to uneven development

- droughts/low rainfall - poor crop irrigation, low water supply affects health

- sickness - tropical countries may have malaria

Why conflict leads to uneven development

- destruction of infrastructure/services

- death and displacement

- economic and resource cost of fighting war

- loss of education - 30mil primary school-aged children unable to go to school in 2013

Why exported products lead to uneven development

- disease/blight may affect crops - harms livelihoods of workers in LICs

- price of primary product fluctuates, harms LICs

+ manufactured goods have sturdier prices, helps HICs

• Ecuador relies on banana crop

Limitations of DTM

• Eurocentric - Many African countries may struggle to industrialise

• stage 2 has been quicker due to imported medicines and sanitation innovation

• rapid decline in birth rate in stage 3 - Chinese 1-child policy

• doesn't account for migration

• different areas in countries not represented - stage 3 Brazil with stage 1 tribes

How do population pyramids work?

• wide base = higher birth rate

• wide top = higher life expectancy, lower death rate, aging population if wider

• rapid narrowing = high death rate

• wider base = higher IMR

impacts of uneven development

• life expectancy - Japan 85, Somalia 52

• IMR - UK 4/1000, Chad 85/1000

• causes of disease: heart disease, cancer and diabetes in HICs, preventable diseases like malaria, dysentery, TB and HIV in LICs

• healthcare access / vaccinations

• in 2014, 85 richest people controlled same amount of wealth as 50% of the world

common diseases in LICs

infectious, environmental, epidemic

• cholera

• ebola

• malnutrition

• malaria (92% in Africa)

• AIDS (80% of aids deaths in Africa)

common diseases in HICs

chronic, genetic, diseases of affluence, degenerative

• arthritis

• dementia

• cancer

• heart disease

• obesity (20% of children in USA)

example of uneven development causing migration

UK --> Poland

• unemployment close to 20% in 2004, 10% in 2006 in Poland

• minimum wage in UK is almost double average wage in Poland

• Poland joined EU in 2003

• Many Poles emigrated to USA to study/be with family

+ remittances - money sent back by migrants to family

- brain drain in Poland (loss of skilled workers)

+ increased workforce in UK

- job competition and social tensions

List ways development gap can be reduced

• investment

• industrial development

• tourism

• aid

• intermediate technology

• fairtrade

• debt relief

• microfinance loans

how investment can reduce uneven development + example

Coca-Cola invested $2bn in India's economy because of its new bottling plant in New Delhi

+ multiplier effect

+ employment

- high market share in countries (60% in India)

- working in harsh, hot conditions)

how aid can reduce uneven development + example

Oxfam gave goats to over 3000 families in Malawi

+ improves income

+ increases harvests

+ manure for fertilisers

+ milk goats for food/sale

- costs of supporting goat

- not immediate benefits

how intermediate technology can reduce uneven development

Chambamontera:

• remote community in Peru in Andes mountains

• requires a sustainable energy scheme

• most inhabitants rely on subsistence farming and small-scale coffee production

• micro-hydro scheme cost US$51000 with government funding and local community

• high rainfall, steep terrain and rivers helped

advantages of Chambamontera micro-hydro scheme

+ machinery for coffee processing

+ local materials and workforce

+ minimal maintenance and operating costs

+ lets students study after dark in school facilities

+ reduced risk of fires from kerosene lighting

+ refrigeration, lighting, computer use, entertainment

how fairtrade can reduce uneven development

(just remember one icl)

• Premiums paid to producers to invest in local projects e.g. Uganda's Mabale Grower's tea factory made a road for local community to access markets

• minimum price for cotton set in 2002 for 100m households reliant on cotton

+ premiums

+ fair, stable price for producers

+ gives smaller farmers a stronger position in world market

- doesn't attract big buyers

- reduces product choice

how debt relief can reduce uneven development + example

• 68 countries agreed to cancel debts in 2005, if countries agreed to spend on education/healthcare/povery and showed no corruption

• Ghana used saved money for infrastructure/education

• Zambia had $4bn debt cancelled

example of how microfinance loanscan reduce uneven development

Grameen Bank lends an average loan of $160 to about 2 billion borrowers, mostly women

• set up in Bangladesh

+ economic activity in rural Bangladesh improved

+ purchasing solar panels and phone equipment for internet use

+ launching own businesses

- interest charged can be prohibitive, 30-50% higher than normal banks

Jamaica with uneven development before tourism

include unemployment rates

Jamaica:

• scenic, tropical island

NEE - GNI pc of $9800

• economy mainly P/S sector - bauxite mining, agriculture, oil refinery

• 13% unemployment rate, youth 40%

how tourism has helped Jamaica

• contributed to 24% of Jamaica's GDP in 2014

• one in four Jamaicans employed in tourism, often in hotels, shops or attractions

• popular areas develop quicker, Kingston has two airports and better transport, $2bn annual tourism income

steps of economic multiplier

• additional dollar spent

• dollar enters local economy

• demand in local economy increases

• + employment rate

• increased spending

example of economic multiplier

• new manufacturer starts refining oil in Nigeria (Shell)

• local firms provide Shell's refinery with components/products

• local people earn money from working in Shell

• local people spend more in local businesses

• government gets more tax money

• government invests in infrastructure and attractions to bring more industries

where is Nigeria?

• in West Africa

• next to Benin, Niger, Chad and Cameroon

• Latitude 4°14'

• north of Gulf of Guinea

social context of Nigeria

• 180million population

• 50% of Nigerians under 15

• 50/50 split of rural/urban population

• 68^ literacy rate

• 40/1000 birth rate but 17/1000 death rate

• 50/50 Christian south and Muslim north

economic context of Nigeria

• 30% employed in agriculture

• 30th highest GDP in Africa

• petroleum accounts for 40% of GDP and 80% of government earnings

• NEE, Africa's largest economy

• 12th largest petroleum producer

political context of Nigeria

• Lagos is capital

• independence in 1960

• had civil war, dictatorships, now a stable democracy

• issue with Islamic extremists like Boko Haram attacks

changing industrial structure in Nigeria

• $400bn GDP increase from 2006 to 2015

• P:S:T sector was 70:10:20 in 2000

• 30:20:50 in 2016

why Nigeria's economy is increasing

• rapid technology advancements

• investment in science and technology training

• large population = large workforce

• increased use of telecommunications, benefits global finance/trade

• many people speak English, international communication

how manufacturing stimulates economic growth in Nigeria

• used to export primary products - cocoa, timber, palm oil

• now oil accounts for 15% of its GDP and 98% of export earnings since discovery in Niger Delta in 1950s

• manufacturing and wholesale accounts for 10% of jobs each

• producing foods, textiles, leather items and detergents from chemical by-products of oil

• regular-paid work gives people secure income

• tax revenue from employment, infrastructure, foreign investments

examples of TNCs in Nigeria(3)

KFC

Unilever

Shell

role of a TNC in Nigeria

Shell:

• TNC

• invests money and expertise into oil extraction in Niger Delta

advantages of a TNC in Nigeria

employment figure and contracts % + education

Shell:

• employment for 65000 Nigerian workers directly

• 91% of Shell contracts given to Nigerian companies

• tax money allows development of infrastructure

• Shell Petroleum Development Company provides electricity and running water

• SPDC builds schools and provides over 3000 scholarships for universities

• set up program (NiDAR) against AIDS

disadvantages of a TNC in Nigeria

• exploits cheap labour

• growing wealth divide by investing only in certain regions

• poor conditions and health&safety in factories

• environmental damage

example of environmental impact of TNC in Nigeria

Bodo Oil Spill 2008

• Shell pipeline ruptured

• 600,000 barrels of oil leaked into Niger river

• harm to marine wildlife and ecosystems

• 75% of rural areas have no access to clean water due to pollution

• disrupts fishing, farming, forestry

• Shell paid ~£3500 per resident to affected families

• removing top soil layer to remove oil

When was the Bodo Oil spill?

2008

How many barrels of oil leaked into Niger river(Oil Spill)?

600000

Nigerian political links

• Chinese companies invested $1.8bn in Nigeria in 2014

• exports petroleum, natural gas and cotton

• imports refined petroleum from EU/US and cars from Brazil and USA, rice

• ECOWAS - trading group of West-African states

• African Union - economic planning and peacekeepers group, also with Niger, Chad and Benin

• UN - contributed 5th most troops to UN peacekeeping force

• OPEC - aims to stabilise price and supply of oil

Why Nigeria receives aid

• 60%+ live on less than $7 a day

• birth rate and IMR are high

• limited life expectancy, sanitation and safe water

How much money was given as aid to Nigeria and when?

• $375million in 2014

• World Bank gave most money

Why NGOs support Nigerian health projects

• reducing IMR - Aduwan Health Centre receives funds from World Bank for a new clinic to test for HIV and immunise against polio

• preventing HIV - UK Department for International Health development funded a health and HIV programme to educate rural areas

arguments for aid in Nigeria

• increases life expectancy

• reduces IMR

• reduces poverty rate

• access to safe water, sanitation and electricity

• allows people to focus on making businesses, increases development

arguments against aid in Nigeria

• costs for HICs

• country may become dependent on aid

How has Nigeria’s QoL increased?

• better infrastructure, safe water, sanitation, electricity

• more disposable income

How has HDI improved in Nigeria?

0.47 in 2006

0.5 in 2012

How has LE improved in Nigeria?

from 46 in 1990 to 53 in 2017

impact of industrial growth on Nigerian environment + figure

• harmful pollutants entering water channels in Lagos and Kadwa

• 70-80% of Nigeria's forests destroyed through logging, agriculture and urban expansion

• large-scale dams and irrigation causing desertification

• water pollution due to chemicals, soil erosion and silting from farms

impacts of urban growth on Nigerian environment

• squatter settlements common in most cities

• issue with waste disposal

• traffic congestion is an issue in Lagos and other cities, leading to large exhaust emissions

what is deindustrialisation?

• decline of secondary industry

• rise of tertiary industry

example of deindustrialisation in UK

Coventry:

• used to make many cars - sports, royalty, civilians, tractors

• used to have many employed in related jobs

• car manufacturers recently shut down many factories in Coventry - Jaguar, Peugeot

• thousands of jobs lost

decline of the inner city stages

1. industrial change/decline

2. increasing unemployment

3. decline of shops and services

4. decline of housing and environment

5. inner city in decline

what is globalisation?

growth and spread of trade, industry, people, culture and ideas around the world

• can involve outsourcing manufacturing jobs overseas

• ports/airports like Felixstowe/Heathrow allow for quick goods import/export

globalisation example of TNCs moving to cheaper places

Dyson:

• moved its vacuum cleaner company from Wiltshire to Malaysia in 2008

• 800 jobs lost

• cheaper labour and running costs

• £20 a month in Malaysia wages vs £1500 a month in UK

• workers have less income, lower standards of living

government policies example UK

• 1945-1980: state-run industries like British Rail and British Steel Corporation created by UK gov

• outdated equipment and work practices, too many employees, unrest, unprofitable

• 1980-2010: sold to private companies (privatisation)

• created competition, many older industries closed, jobs lost

• 2010-present: UK gov trying to "rebalance" economy by rebuilding secondary sector

• improving transport infrastructure, investment in manufacturing industries

advantages of post-industrial economy

• economic growth from international trade

• cheaper goods and services due to outsourcing and cheap labour

• migrants filling in jobs with worker shortages

• high-value production, workers paid more, UK earns more money

• foreign investment into UK by companies, brings new tech ,ideas and jobs

disadvantages of post-industrial economy

• outsourcing jobs causing job losses or lower wages for UK workers

• less manufacturing from imported goods - factories closed and jobs lost

• inequality - gap between low paid unskill work and high paid skilled work is increasing, hard for workers to negotiate due to outsourcing

percentage of people employed in tertiary/quaternary sector UK

81% of people

How many people are employed in the retail sector?

• retail - 4.4million people

How many people are employed in the IT sector?

IT - 1.6million people, like Microsoft and IBM

How much money was spent in the research sector?

• research - £50 billion spent in 2023

How is the finance sector of the UK

• finance - global institutions like HSBC have HQs here

science park case study

Cambridge Science Park

• north of London

• 1500+ IT and biotech companies based there

• Opened in 1970 by Trinity College

• Antibodies Cambridge is based there, worth £1bn

advantages of Cambridge Science Park

• good transport links - M11 to London, Stanstead airport

• graduates from university provide highly-educated workforce

• few traditional industries to compete for space - lower rent

• good quality of life - plenty of shops and open spaces

disadvantages of Cambridge Science Park

• overcrowded and congested city, difficult to drive or park

• house prices are high and rising

• road and rail routes need to be improved to connect to more cities

what is quarrying?

• rock is blown up

• mobile crushing units crush blown-up material into smaller parts

• limestone is used

e.g. Peak District, in Middle of England

env. impacts of quarrying

• 600 tonnes quarried every minute

• visual pollution

• noise pollution

• dust pollution

• destruction of natural landscape/deforestation

• emissions from lorries

• CO2 emissions from kilns and calcium oxide production

solutions to env. impacts of quarrying

• washing lorries to minimise dust

• sheets over limestone in lorries

• noise, vibrations and explosions monitored and minimised

• restoration of quarry once used, vegetation grown, lakes put in place

how modern industry can become more sustainable case study - nissan

Nissan Sunderland Plant:

• NE England

• builds more than 31000 vehicles on green power alone

• 19000 solar panels and 10 wind turbines

• renewable sources meet 7% of plant's energy requirements

• supports 40,000 jobs in vehicle design, engineering, production, sales, etc

area of population growth uk

South Cambridgeshire:

• city of Cambridge is one of fastest growing in UK

• 150,000 population, estimateed to rise to 175000

impacts in South Cambridgeshire uk

• rising house prices - risen by 10% since 2019

• high proportion of population are commuters (50% of commuters drive), public transport services may be reduced

• pressure on social services - health care, school places, population of 25-64yr olds increased

% of pop decline in outer hebrides

50% since 1901

current population in outer hebrides

27000

% of working age people decline in outer hebrides

21

% of pensionable aged people increase in outer hebrides

11%

impacts in area of population decline uk

• aging population as people move away (11% projected increase in pensionable age)

• decline of farming and fishing industries (4% decrease in working aged people between 2010 and 2020)

• school closures with too few children (5% birth rate drop since 2012)

• reliance on tourism (220,000 visitors in 2017)

• shops may have to close due to fewer customers

road development in UK case study

2014 "Road Investment Strategy"

•£15bn

• South-West "super highway" - turning A303 connecting to SW of UK into dual carriageway

+ 1300 new lane miles added to motorways and trunk roads to tackle congestion

+ extra lanes added to main motorways to improve links between London and the north

- expensive

- landscape and habitat destruction

port development in UK

Liverpool 2:

• new container terminal at Port of Liverpool

• deep-water quay costs £300m to construct

+ doubles port capacity to 1.5m containers/year

+ jobs

+ economy in north-west

- damage to aquatic habitats

rail development in UK

London Crossrail:

£15bn

• 33km of new lines drilled beneath central London in 2022

+ links Reading and Heathrow to Shenfield and Abbey Wood (W--E)

+ reduces journey time across London, eases congestion

+ 1.5m people within 45mins of key business districts

air development in UK

Heathrow Airport expansion

£19bn runway cost

• plane takes off or lands every 45 seconds there

+ 70,000 new jobs projected

+ $180bn made over 60 years

- 750 homes destroyed

- CO2 emissions and noise pollution

North of UK

• hills and mountains

• higher unemployment levels

• lost manufacturing and heavy industry during deindustrialisation

• 73 year life expectancy

• lower number of GCSEs

• £6900 government spending per person

South of UK

• flat lowland

• where less manufacturing was - deindustrialisation less of an issue

• faster growing population from migration

• LE = 83 years

• government spending per person: £9200

• wages are 35% higher

• house prices are 100-200% higher

strategies to reduce North-South divide

• government incentive packages - reduced taxes, site development, attracts TNCS, e.g. Mitsubishi near Edinburgh in 1975

• Planned transport improvements like HS2 and port developments

• Local Enterprise Partnerships between local authorities and governments to boots local economy (e.g. Lancashire LEP in aerospace and engineering, aims to create 50,000 jobs by 2030)

trade links of UK with wider world

• TV exports - almost quadrupled since 2004, like Downton Abbey, Dr Who and Sherlock Holmes

• UK overseas exports of goods are worth over £250bn/year

• trading with USA, Europe and Asia

• former EU member

cultural links of UK with world

• UK culture - Peppa Pig screens in over 170 countries

• migrants have brought back their own culture - foods, films, takeaways, Notting Hill Carnival (carni)