Chapter Five – The Changing Economic World

Economic development exhibits global variations and affects quality of life. It is not just about wealth but also about the availability of essential services and human rights.

Definition of Development: The term relates to "the progress of a country in terms of economic growth, the use of technology, and human welfare."
Development can be analyzed on multiple scales:
- Local Scale: Examining disparities within a community (e.g., wealth differences within one estate).
- National Scale: Comparing health and wealth across regions (e.g., differences in life expectancy between Scotland and England).
- Global Scale: Observing substantial differences in quality of life across countries and continents.

Low Income Country (LIC): GNI per capita is typically below \$1,045. These countries often rely on primary industries (agriculture).
Newly Emerging Economy (NEE): Countries experiencing rapid industrialization and economic growth (e.g., Brazil, India, China).
High Income Country (HIC): GNI per capita exceeds \$12,746. These economies are dominated by tertiary and quaternary sectors.

Economic Indicators:
1. GNI per head: Gross National Income divided by the population. It includes income received from abroad (e.g., profits from UK companies like BP).
2. Human Development Index (HDI): A composite index (0 to 1) considering life expectancy, GNI per capita at PPP, and mean/expected years of schooling.
Social Indicators:
1. Birth Rates: Number of live births per 1,000 people per year. Higher in LICs due to the need for manual labor and high infant mortality.
2. Death Rates: Number of deaths per 1,000 people per year. Declining universally but still high in some LICs due to poor healthcare.
3. Infant Mortality: Number of infants who die before their first birthday per 1,000 live births.
4. People per Doctor: The total population divided by the number of registered doctors.
5. Literacy Rate: Percentage of the population over age 15 who can read and write.
6. Access to Safe Water: Percentage of people who can get clean water within 1 ext{ km} of their home.
7. Life Expectancy: The average number of years a person is expected to live.

Mapping techniques, particularly choropleth maps, utilize color coding to signify values. While useful, they can hide internal variations (e.g., urban vs. rural).

First, Second, and Third Worlds: 1945 classification by the UN.
- First World: Capitalist countries (e.g., USA, UK).
- Second World: Socialist/communist countries (e.g., former USSR).
- Third World: Non-aligned, often less developed nations.
The North-South Divide (Brandt Line):
- An imaginary line from the 1971 Brandt Report that divided the wealthy North from the poorer South.
- The North: Wealthy, industrialized, high education (approx. 95\% access).
- The South: Predominantly agricultural, lower income, located mostly in the Southern Hemisphere.

Simplistic and outdated; many "Southern" countries like China and Brazil are now major economies.
Fails to recognize the rise of BRICS (Brazil, Russia, India, China, South Africa) and MINT (Mexico, Indonesia, Nigeria, Turkey) nations.

Generally, development indicators correlate positively (e.g., as GNI increases, literacy usually increases).
Negative Correlation: As GDP per capita rises, infant mortality rates typically fall.

Economic Factors:
- Debt: Many LICs spend a large portion of their GNI on interest payments rather than services.
- Primary Product Dependency: LICs export raw materials (low value) while HICs export manufactured goods (high value).
World Trade Barriers:
- Tariffs: Taxes on imported goods that make LIC products more expensive in HICs.
- Quotas: Limits on the amount of goods that can be traded.
Physical Factors:
1. Disease: Tropical climates harbor diseases like Malaria, which reduces the effective workforce.
2. Landlocked status: Lack of coastline makes sea trade difficult and expensive.
3. Climate Hazards: Frequent droughts or floods destroy crops and infrastructure consistently.
Historical Factors:
- Colonialism: Colonial powers extracted resources from LICs, leaving behind unstable economies and political systems.
- Conflict: Civil wars divert funding from education and health to military spending.

Wealth Disparities: The richest 1\% of the world’s population owns more than the rest of the world combined.
Health Issues: Life expectancy in HICs (e.g., Japan, 84 years) contrasts sharply with LICs (e.g., CAR, 53 years).
Migration: Economic migration occurs as people seek better jobs (pull factors) or flee poverty/war (push factors).

Stage 1: High birth/death rates (no countries currently here).
Stage 2: Death rate falls rapidly; birth rate remains high (e.g., Afghanistan).
Stage 3: Birth rate begins to fall; population growth slows (e.g., India).
Stage 4: Low birth/death rates; stable population (e.g., UK).
Stage 5: Birth rate falls below death rate; population decline (e.g., Germany, Japan).

Investment (FDI): TNCs (Transnational Corporations) build factories in LICs, providing jobs and infrastructure.
Intermediate Technology: Simple, easily maintained tools (e.g., gravity-fed water pumps) that empower local communities without requiring high-cost specialist repairs.
Fairtrade: Guarantees a minimum price for farmers in LICs, ensuring they can survive even if global commodity prices drop.

Economic Impact: Tourism contributes to 12\% of Kenya's GDP.
Positive: Jobs for over 600,000 people and increased tax revenue for national parks like the Maasai Mara.
Negative: Foreign companies often take the profits (leakage), and tourism can cause environmental damage (e.g., vehicle tracks erosion).

Importance: Nigeria has the largest economy in Africa and is a major oil producer.
TNCs in Nigeria: Shell Oil provides significant tax revenue but has been criticized for oil spills in the Niger Delta.
International Aid: Nigeria receives billions in aid to help combat malaria and improve education quality.

De-industrialization: Decline in manufacturing (Secondary sector) due to automation and foreign competition.
Post-Industrial Economy: The UK is now dominated by the Quaternary sector (finance, IT, research), which contributes heavily to the national GNI.