theme 6

• GDP GROSS DOMESTIC PRODUCT

  total value of the economy per year
• GNI GROSS NATIONAL INCOME

  the total value of all services and goods produced in a country per year
• THE POVERTY LINE

  the percentage of people who earn less than a certain amount per day

  in 2015 this was set at 1.90 by world bank
• the limitations of using indicators as a measurement of wealth is that being wealthy as a country doesn’t necessarily mean the country spends its money in a way that promotes development
• hic GNI OVER $12,736

  LIC GNI LESS $1,025
• HIC NIC IMPORT PRIMARY GOODS

  LICS EXPORT PRIMARY GOODS
• the primary goods that lics export are worth very little like coffee and bananas
• HICS NICS EXPORT MANUFACTURED GOODS which are worth lots of money
• hic nic earn a high income off manufacture goods sold at export because they are worth a lot of money
• LIC earn low income from exports as they aren’t worth a lot of money, so they remain poor as a result they borrow money and debt mounts up
• HIC NIC have more income so can afford better healthcare for the population resulting in longer life expectancy
• quota is the limited sum of goods a country can import and export within a year
• tarrif is taxes that must be paid on some imports
• HICS set prices of primary goods and set tariffs and quotas on imported goods. they give subsides to farmers within their countries
• LIC depend on trade but don’t have any control of it
• HIC NIC set tarrif and quotas which protect their own farmers and manufactured goods by making imported goods more costly than goods produced in their own country or trading block
• as LICS are so dependent on one or two products for their income, a small fluctuation in price can have huge consequences
• LIC find is hard to compete against large trading blocks and as a result the trade gap between HIC and LIC increases
• HIC NIC are more developed and can attract skilled workers from LIC

  they migrate to have higher wages, standard of living and quality of life
• LIC (malawi)

  • agriculture employs 84%
  • primary goods like tea are grown on estates primarily owned by MNC and employment is seasonal
  • a high percentage 90%+ of primary goods are exported to the uk and other HICS
  • primary goods are processed in factory’s in HICS, which the HIC pay a low price for
• LIC MALAWI

  • TARRIF AND QUOTAS set by HIC and trading blocks result in lics making very little profit on their primary goods
  • natural disasters like drought can have huge impact on lic
  • lics depend heavily on one or two crops so if one crop is destroyed they have no income
  • imported goods like fuel take up a large percentage of the country’s import costs
  • the economy relies heavily on the world bank and international monetary fund
• NIC INDIA

  • there is young skilled workforce with low wage cost compared to china and mexico
  • MNC invested heavily in india creating jobs in the manufacturing and service sectors
  • as a result they export more manufactured goods which are worth more than primary goods
  • a stable gov in india
  • english is the second language
  • developed infrastructure which is vital for any development to take place
  • a large population which results in more customers and a large attractive market
  • the international monetary fund encourages free trade between countries this results in less quotas and tariffs
• enclave tourism is all tourists activities being held in one area
• interdependence is when countries are connected to each other economically culturally politically and socially and are all dependent on one another
• MNCS BASE THEMSELVES ALL OVER THE WORLD

  • to be closer to a larger number of customers and different markets
  • access to cheaper labour and raw materials
  • to avoid tariffs by basing themselves within trade blocks
  • some countries have fewer health and safety restrictions
  • which allows them to make as much profit as possible
• ADVANTAGES OF MNCS

  • bring work to area and employ locals who receive an income
  • training also boosts local skills
  • as local wealth increases they can spend more money in local shops which boosts the local economy (this attracts other MNC to the area)
  • the MNC will pay taxes to the country they are situated in, this money can be spent on education and healthcare
  • the company brings mindedness machinery and technology to the country
  • the MNC invests in the area and brings in foreign money, which increases the country’s GDP which helps the country to develop further
• DISADVANTAGES OF MNC

  • workers usually earns a low wage and poor working conditions, very few locally skilled people are employed
  • managers and more skilled workers usually come from the country the hq is in
  • important decisions are made in the HQ, MNC could leave at any time leaving the locals unemployed
• disadvantage of MNC

  • the MNC “western image“ could have a nevative impact on local culture and way of life
  • they could use a lot of local resources which are already scarce, eg water, leaving locals with even less
  • any profits sent overseas to HIC, further increasing their GDP, which results in HIC becoming more developed and widening the development gap
  • MNCS have negative impact on the traditional industry’s within the country, farmers work in new factory’s instead of farming so as a result traditional industries are lost
• effects of globalisation in the UK (TATA STEEL)

  • increase in employment, TATA employs 50,000 people in 38 company’s
  • by buying factories in the european trading block they can avoid quotas and paying tariffs
  • due to low energy and labour costs china began to sell steel even cheaper than the uk
  • even though the EU imposed tariffs on chinese steel the uk steel industry could not compete with the lower cost of chinese steel
  • this resulted in TATA losing a lot of money in lost profit, so many jobs were lost
  • many indirect jobs were also lost, resulting in a negative multiplier effect
• CONCEPT OF ENCLAVE TOURISM

  • Travel companies often sell ‘all inclusive’ holidays.

  • Tourists pay one price for transport, accommodation, food, drinks and entertainment.

  • Cruise ships offer a similar type of holiday.

  • Tourists are reluctant to leave the hotels/cruise ship in order to buy food and drink as they feel they have ‘paid for everything’ already.

  • The consequences of this are that the economy of the local destinations benefit very little from tourism as most of the money is kept by MNCs like TUI or Royal Caribbean
• Effects of Tourism on Development in NICs/LICs

  Patterns of Development

  • ADVANTAGES; Improved infrastructure can attract new MNCs to the country, which increases the value of the NICs/LICs exports, resulting in greater GDP. A consequence of this is more money to spend on healthcare and education, which helps the NIC/LIC develop further.
• EFFECTS OF TOURISM ON DEVELOPMENT IN NIC/LIC

  PATTERNS OF DEVELOPMENT

  • DISADVANTAGES; Tourism can restrict development as many hotels are owned by MNCs. Most of the income that is created as a result of tourism will go back to the foreign countries where the MNC’s headquarters are based. This makes HICs wealthier, which in turn increases the development gap.
• Effects of Tourism on Development in NICs/LICs

  ECONOMY

  • ADVANTAGE;
  • Hotels are built.
  • This provides employment opportunities for locals in the service (tertiary) sector. Locals pay more taxes, and as a result the local area improves.
  • Tourists will buy souvenirs, which will create employment opportunities for the informal economy as well as some manufacturing jobs. Farmers will also see a boost as there is greater demand for fresh produce.
  • This will create income for locals.
• EFFECTS OF TOURISM ON DEVELOPMENT IN LIC/NICS

  ECONOMY

  • DISADVANTAGES;
  • Jobs are seasonal. Many locals are unemployed for several months of the year.
  • Employment structures change. Young people will work in hotels and the service sector rather than in traditional industries like fishing and farming
• EFFECTS OF TOURISM ON DEVELOPMENT IN LICS/NICS

  ENVIRONMENT

  • ADVANTAGES
  • Environments are protected, e.g. the creation of National Parks
  • DISADVANTAGES
  • Sensitive ecosystems such as sand dunes and coral reefs could be damaged or even destroyed
• EFFECTS OF TOURISM ON DEVELOPMENT IN LICS/NICS

  CULTURE

  ADVANTAGES

  Traditions are protected as tourists enjoy visiting historical sites and experiencing a foreign culture.

  DISADVANTAGES

  • Local dialects, languages and cultures are lost.
• EFFECTS OF TOURISM ON DEVELOPMENT IN LICS/NICS

  INFRASTRUCTURE

  ADVANTAGES;

  • Services such as Wi-Fi are made available for tourists. This allows locals to potentially benefit from a service they would not have access to without the tourism industry.
  • Roads are improved to provide access to locals.
  • Airports are improved which makes imports/exports easier. This boosts trade
• EFFECTS OF TOURISM ON DEVELOPMENT IN LICS/NICS

  INFRASTRUCTURE

  DISADVANTAGES

  • New roads and airports can destroy sensitive landscapes and increase pollution