Section B - The Changing Economic World

Development

the progres in economic growth, use of technology and improving welfare that a country has made

global development gap

the difference in development between more and less developed countries

Name 10 measures of development check using orange book/spec

1. GDP

2. HDI

3. GDP per capita

4. Birth rate

5. Death rate

6. Infant morality rate

7. People per doctor

8. Literacy rate

9. Access to safe water

10. Life expectancy

DTM

Demographic Transition Model

Shows how birth rates and death rates affect population growth

Stage 1 DTM

Birth rate: High and fluctuating

Death rate: High and fluctuating

Population growth rate: 0

Population size: low and steady

Example: some tribes in Brazil

Stage 2 DTM

Birth rate: High and steady

Death rate: Rapidly falling

Population growth rate: very high

Population size: Rapidly increasing

Example: Gambia

Stage 3 DTM

Birth rate: Rapidly falling

Death rate: slowly falling

Population growth rate: high

Population size: Increasing

Example: India

Stage 4 DTM

Birth rate: slowly falling

Death rate: low and steady

Population growth rate: negative

Population size: slowly falling

Example: Japan

Physical factors causing uneven development

1. A poor climate

2. Poor farming land

3. Few raw materials

4. Lots of Natural Disasters

Economic factors causing uneven development

1. Poor trade links

2. Lots of debt

3. An economy based on primary products - e.g. in 2018 when the price of cocoa dropped below the cost of production in Ghana, many farmers had to rely on subsidies from the government. Wealthy countries can also force down the prices of the raw materials they buy from poorer countries.

Historical causes of Uneven Development

• Colonisation

• Conflict

  • In 2008, Syria had a HDI value of 0.65. In 2016, after five years of war, this had dropped to 0.54.

Consequences of Uneven Development

• Wealth

  • GNI per head in the UK is over 40 times higher than in Chad

  • In 2017, the richest 10% of Kenya’s population earned on average 23 times more than the poorest 10%

• Health

  • In Chad, infant mortality is 73 per 1000 births, whereas in the UK it is 3.7 per 1000 births.

• International migration

  • Over 130,000 people migrate from Mexico to the USA legally each year, with thousands more entering illegally, in search of better paid jobs and a higher quality of life.

Strategies to reduce the global development gap

• Investment

• Aid

• Fair Trade

• Intermediate/appropriate technology

• Microfinance loans

• Industrial Development

• Debt Relief

Investment

Between 1987 and 2018, Vietnam received FDI worth over US$182 billion, which helped develop many industries, including motorbike manufacturing and telecommunications.

FDI

Foreign-Direct Investment

When people or companies in one country buy property or invest in infrastructure in another

Aid

In 2018-19, the UK provided over £180 million in aid to South Sudan, funding 17 projects that included improving access to water, healthcare, and education.

Fair trade

• Giving farmers in LIC’s a fair price for the goods they produce

• Buyers pay extra on top of that so that farmers receive a premium to help develop their local area.

• In 2016, Fairtrade tea farmers in Malawi used some of their premium to expand their local hospital, build a new school and install a pipeline for clean water.

Intermediate/appropriate technology

• Solar-powered LED lightbulbs are used in parts of Nepal, where the only other lighting options are polluting and dangerous kerosene lamps.

• This allows people to work, and children to study after dark.

• As a result, skills, incomes and industrial output can increase.

Microfinance loans

• When small loans are given to people in LIC’s who may not be able to get loans from banks.

• This enables them to start their own businesses and become financially independent.

• Grameen Bank in Bangladesh offers interest-free loans without a collateral to help beggars build financial capacity.

Industrial development

• In countries with a very low level of development, agriculture makes up a large portion of the economy.

• Developing industry boosts GNI and development, as productivity, skills, and infrastructure are improved.

Debt Relief

• Debt relief means that the country has more money to spend on development.

• In 2005, Zambia had $4 billion in debt cancelled.

• In 2006, the country had enough money to start a free healthcare scheme for millions of people living in rural areas.

Tourism in Kenya

• Kenya is an LIC in East Africa.

• It attracts tourists because of its culture, safari wildlife, warm climate and unspoilt scenery.

• Kenya’s government is trying to boost tourism to increase development. For example:

  • Visa fees for adults were cut by 50% in 2009 to make it cheaper to visit the country. They were also scrapped for children under 16 to encourage more families to visit.

  • Landing fees at airports on the Kenyan coast have been dropped for charter airlines.

• Tourism increased from 0.9 million visitors in 1995 to 1.4 million in 2017

Benefits of tourism in Kenya

1. Tourism now directly contributes nearly 4% of Kenya’s GDP - money that can be spent on development and improving quality of life. Since 2000, Kenya’s HDI value has increased from 0.45 to 0.59.

2. Over 1.1 million are directly or indirectly employed by the tourism industry - that’s 9% of all employment in Kenya

3. Businesses and Kenya’s government have invested in transport infrastructure to encourage more tourists to visit, which can also benefit local people. The new Madaraka Express railway link’s Kenya’s capital, Nairobi, to the coast. This has created jobs, halved journey times and made it cheaper for people to travel.

4. The 24 national parks charge entry fees to tourists. This money is used to maintain the national parks - this helps to protect the environment and wildlife, so tourists keep visiting.

Negatives of tourism in Kenya

1. Only a small proportion of the money earned goes to locals. The rest goes to big companies, often based in HIC’s, so it doesn’t help to close the development gap.

2. Some Maasai communities have been forced off their land to create national parks and game reserves for tourists.

3. Tourist vehicles damage the environment by destroying vegetation and disturbing animals.

4. In recent years, tourist numbers have fluctuated - especially following terrorist attacks in Kenya. This means that tourism isn’t a reliable source of jobs and income.

Nigeria Location

• West coast of Africa

• Borders the Gulf of Guinea (which is part of the Atlantic Ocean) in the south.

• It is four times the physical size of the UK.

• It is the most populous country of Africa, with the 7th largest population worldwide.

Nigeria regional importance

• Fastest growing economy in Africa

• Highest GDP in Africa, at US$472.6 billion in 2022

• 3rd largest manufacturing sector in Africa

• Largest agricultural output

• Highest number of cattle

• One of the main founders of the African Union was the president of Nigeria in 1963

Global Importance

• Second-largest film industry in the world (Nollywood), in front of the United States and in front of India

• Nigeria is the 13th largest producer of oil according to the US Energy Information Administration. 

• Produces world-renowned “Sweet Oil”, which is in high demand due to its low amount of impurities.

• 5th largest contributor to UN peacekeeping missions

Environmental context of Nigeria

North: Semidesert and tropical savanna grasslands. Nomadic grazing of cattle is the primary type of agriculture in the region.

Jos plateau: cooler and wetter upland region. A range of field crops is typical here, including cotton and millet.

South: high temperatures and high annual rainfall - mostly rainforest. Tree crops in this area include cocoa, palm oil and rubber.

Political context of Nigeria

• Gained independence from the UK in 1960.

• Power struggles resulted in a series of dictatorships and civil war.

• Stable government for the first time in 1999.

• Elections were seen as free and fair for the first time in 2011 and 2015.

• Nigeria is a leading member of African political and economic groups, as well as international organisations such as the UN.

Social context of Nigeria

• A socially diverse country

• Multi-ethnic, multi-faith country, with Christianity, Islam and traditional African religions being practised widely

• Economic inequality between the north and south of Nigeria has created new tensions which has led to some instability in the country

Cultural context of Nigeria

• Nigerian music is enjoyed across the continent and beyond

• Nigerian cinema is the second-largest film industry in the world

• Nigerian football team has won the Africa cup of Nations three time and several footballers have played for Premier League sides

Why is Nigeria’s industrial sector changing

• Mechanisation and rural-urban migration have led to a decline in the number of people employed in agriculture.

• Manufacturing and services have grown due to Nigeria’s increased political stability.

• Countries such as China, the USA, and South Africa have heavily invested in Nigeria.

Nigeria’s changing economy

• Almost half of Nigeria’s population live on less than US$1 per day

• According to the UK Department for International Development (DFID), despite having the largest economy in Africa, around a third of Nigerians live below the national poverty line.

Balance between different sectors in Nigeria’s economy

• Employment in services gone from 33% in 1991, to 50% in 2020

• Employment in industry also gone up, from just 9% in 1991 to 27% in 2020, tripling over 3 decades.

• Employment in agriculture declined from 58% in 1991 to 23% in 2020

• Today, services accounts for 50% of Nigeria’s GDP, industry 27% and agriculture 22%

• Oil accounts for over 90% of it’s exports

How is the manufacturing industry stimulating economic development in Nigeria

• People have a more secure income through regular paid work, increasing the home market for purchasing products such as electrical appliances, cars, and clothes.

• The growth in manufacturing leads to the multiplier effect as other industries develop to supply parts.

• Tax revenue increases, and more people are in formal employment.

• Foreign investment is attracted by a thriving industrial sector, leading to further economic growth.

• Chemical by-products from oil processing have led to the growth of chemical industries such as soaps, detergents, and plastics.

Role of TNCs in Nigeria

• TNCs such as shell constructed oil and gas drilling platforms around the Niger Delta

• Linked to these, pipelines around the Gulf of Guinea transport oil to large tankers that ship it to Europe and the USA, where it is refined to produce petrol and other oil-based products.

• TNCs make far higher profits from refined oil.

• To keep more oil profits within the country, the Nigerian government set up the Nigerian National Petroleum Corporation (NNPC) to form joint ventures with TNCs.

Environmental impact of oil in Nigeria

• Farmland has been damaged by leaking oil pipes, meaning crops no longer grow in some areas.

• Kills fish in the sea and the delta.

• Oil combustion releases greenhouse gases and also causes respiratory problems for local people.

• According to the Guardian, 40 million litres of oil are spilt in the Niger Delta each year, compared to 4 million in the US

• Life expectancy in the Niger Delta is ten years below the national average.

• The contamination of fish and crops has destroyed livelihoods, destroyed local employment opportunities and pushed many into militancy.

• A 2018 Journal of Health and Pollution study found that more than 12,000 oil spill incidents occurred in the oil-rich region between 1976 and 2014

How are Nigeria’s political relationships changing?

• Nigeria was an integral part of the British Empire, meaning political and trade connections were primarily with the UK and other Empire members.

• After independence in 1960, Nigeria has remained a part of the Commonwealth, maintaining its robust ties with the UK while expanding its relations with other regions, notably Africa, Asia, and the USA.

• Nigeria holds a prominent political position within Africa, contributing significantly to economic planning through the African Union and participating actively in peacekeeping initiatives under the United Nations.

• Nigeria’s relations with China are on the rise, with the country reaping the benefits of increased investment, a prime example being the US$12 billion funding for a new 1,400-kilometre railway project.

How are Nigeria’s trading relationships changing?

• Nigeria primarily imports refined petroleum products from the European Union and the USA, automobiles from Brazil, mobile devices from China, and essential food grains like rice and wheat. Most of these imports originate from China, the USA, and the EU.

• Nearly half of Nigeria’s exports are to the EU, comprising commodities like crude oil, natural gas, rubber, cotton, and cocoa. Most of Nigeria’s crude oil arrives in India, China, Japan, and South Korea. Around 30 per cent of Nigeria’s cotton is shipped to Australia and 15 per cent to Indonesia. Meanwhile, cocoa is exported to Barbados for processing.

• Nigeria is a member of multiple trade associations, such as the Economic Community of West African States (ECOWAS), which has its headquarters in Abuja.

Advantages and Disadvantages to TNCS

Advantages

• international links that provide access to markets around the world

• bringing financial investment into the host country’s economy

• providing jobs and training to local people

• higher wage levels

• introducing new technology that might otherwise not be available

• 96% of employees are Nigerian

Disadvantages

• profits leave the country and benefit shareholders, often in HICs.

• paid wages tend to be lower than in the home country of the TNC.

• causing significant environmental damage without taking responsibility for cleaning up.

• being able to withdraw from a country if circumstances change,

• powerful TNCs can exert pressure on governments,

• raw materials are exported before being refined, which reduces profits in LICs and NEEs,

Why does Nigeria need aid

• a low life expectancy at about 54 in 2017 according to the World Bank

• the high infant mortality rate at 100 child deaths under 5 (per 1,000 live births)

• low literacy rates with only 44% of children attending secondary school

• only 42% of children aged 1 to 2 years are immunised against measles

• the high death rate from Malaria

Examples of aid in Nigeria

• Short-term: in 2017, the UN World Food Programme helped 400,000 people in Nigeria who had failed crops due to conflict in the area.

• Long-term: the UK government has funded health and HIV programmes, providing health education in rural areas, This will help protect people against infection in the future and help them to work and improve their own lives.

• Top-down aid: in 2014, the World Bank approved a US$500 million loan to fund development projects and diversify the economy to reduce over-dependence on oil exports.

• Bottom-up: ActionAid built a health centre in Aduwan and trained local women to educate mothers about the importance of immunising their children.

Issues with giving aid in Nigeria

• Corruption in the government and individuals means aid is lost or not given to the right people

• There have been claims aid money has been used to supply the Navy

• Donors of aid may have political influence over who does and does not benefit. In addition, they may use donations to promote themselves.

Effects of economic development on Nigeria’s quality of life

• HDI steadily increasing from under 0.47 in 2005 to 0.535 in 2017

• One of the fastest-growing rates of HDI in the world

How is the UK’s economy changing

• Since the 1960s, manufacturing has declined, and tertiary and quaternary industries have grown.

• In 2017, these industries employed 83% of the UK’s work force, and this proportion is increasing.

• Important industries include:

  • Services

    • Retail employs about 4 million people in the UK

  • Finance

    • The UK, especially Central London, is home to many global financial institutions.

    • Some, like HSBC, have their global headquarters in the UK.

  • Information technology

    • Over 670,000 people work in IT, for companies like Microsoft

  • Research

    • Makes use of the UK’s skilled university graduates.

    • In 2016, over £33 billion was spent on R&D in the UK.

Where are science and business parks usually found?

1. On the outskirts of cities near to housing and good transport links

2. Near universities so that research businesses in science parks can work with university researchers

Why are the number of science and business parks increasing

• There is a large and growing demand for high-tech products. Science parks can help develop new technology for these products.

• The UK has a high number of respected research universities for businesses on science parks to form links with

• Clusters of related businesses in one place can boost each other.

Three main causes of economic change in the UK

• De-industrialisation

  • The UK’s industrial base declined as increased automation led to job losses in manufacturing industries.

  • As other countries industrialised, they could produce goods more cheaply than the UK - this increased competition forced some UK manufacturing industries to close.

• Globalisation

  • A lot of manufacturing has moved overseas, where labour costs are lower e.g. M&S manufactures clothes in India and China

  • Some TNCs have moved some of their tertiary and quaternary operations to the UK - Apple employs nearly 6500 people in the UK

  • Trade with other countries is an increasingly important part of the UK’s GDP. The proportion of the UK’s GDP that comes from foreign trade increased from 38% in 1965 to 62% in 2017

• Government policies

  • Government decisions on investment and support for businesses affect the economy

  • In the 1980s. several key manufacturing industries that had been owned and run by the government were privatised, leading to major job losses but increased efficiency.

  • Since the 1980s, the government has carried out a lot of deregulation - removing restrictions and taxes on businesses to encourage entrepreneurs and investors to move to the UK. This has helped attract tertiary and quaternary industries.

  • Membership of trade agreements and organisations makes it easier for companies in the UK to operate across the world and move their manufacturing overseas.