Global Groupings

Global Groupings 

AIM: In this post I want to show you how we can classify countries economically and politically. Then I want to explore how these groupings can change over time as a result of international trade agreements and changes in wealth and power.

Originally it was only Western countries like the UK and  the USA who were fortunate enough to be rich. However, in recent years we have seen that some countries such as Singapore have been lucky enough to join this group. The richest countries where TNCs like to base themselves are in the continents of Europe, North America and Europe. This grouping is known as the triad. Around 80% of all global wealth and trade is concentrated in this triad, which is linked through a complex system of global finance, stock exchanges, international airports and government centres. 

Economic groupings

In geography we tend to measure economic development in countries through their GNI (Gross National Income). In the past the Brandt line was the common way to economically group countries ‘rich North’ and ‘poor South’. However, the world is more complex than this and international trade has changed this making the Brandt line dated. So in the table below, there are some examples of economic groupings.

Group

Examples

Explanation 

MEDCs (More economically developed countries)

UK, USA, Canada

Services account for 70%+ jobs. These are high income countries.

NIC (Newly industrialized countries)

China, Brazil, Taiwan

These are service economies with significant manufacturing industry. Primary and Secondary sectors are decreasing.

Recently industrialized countries 

Thailand, Indonesia, Tunisia 

Significant primary industry but in cities manufacturing industry is starting to grow.

LEDCs (Less economically developed countries)

Egypt, Peru, the Philippines island

Primary industry provides 40%+ jobs. These are low income countries where development is slow.

LDC (Less developed countries)

Malawi, Bangladesh, Haiti

Dependent on primary industry. High levels of poverty exist and they are in the low income bracket. They are claimed to be getting poorer in real terms.

Political groupings 

Political groupings are sometimes referred to as inter-government organisations (IGOs) because they consist if countries which have signed some sort of protocol or agreement which is usually to aid economic development. So lets look at some of the groupings in the table below.

Grouping

Members?

Role

Global importance?

European Union (EU)

27 European countries inc. UK

Economic union allowing international trade and population movement.

31% of the world’s GDP

Organization for Economic Cooperation and Development (OECD)

30 Democratic and market economies – 25 of which are fully developed.

Monitors economic performance and reduces corruption and bribery. It is like economic maintenance for rich countries.

75% of world’s GDP.

Organization of Petroleum Exporting Countries (OPEC)

12 Major oil exporting countries in the middle east

Aims to safeguard oil exporting countries  and has a large influence on global oil price.

65% global oil reserves

Group of eight (G8)

UK, USA, France, Canada, Germany, Italy, Japan, Russia

An informal forum for super-rich and powerful countries

65% of global GDP

Group of twenty developing nations (G20)

21 countries including Brazil, China and India

To press developing nations to open their markets to world trade

20% of global GDP

Group of 77 (G77)

Most African, Asian and Latin American nations

They give a collective voice to developed nations

Influence is decreasing especially after China left.

Trading Blocs…

So what are trading blocs?

These are countries grouped together to improve their economic interests and trade patterns. 

What can they do?

Formal trading blocs such as the European Union (EU), North American Free Trade Area (NAFTA), Southern Common Market (MERCOSUR), Organisation for Petroleum Exporting Countries (OPEC) and Association of South East Asian Nations (ASEAN) allow free trade without taxes, tariffs or quotas between member states. If any another nation outside the bloc wishes to trade with them they have to pay a tariff. This helps protect the trading blocs.

So are there any powers stopping these trade blocs?

The World Trade Organisation (WTO) is constantly trying to remove trade barriers between trading blocs because free trade is seen to be as something good. So the world is constantly caught between the two forces of trading blocs and the World Trade Organisation.

So how has international trade lead to changes in wealth and power?

    1. There are many organisations such as OECD which support wealthy countries. Therefore, these countries such as the UK has maintained their ‘top slot’ in the world.

 

  • The ‘Asian Tigers’ NICs have developed to almost the standard of developed countries thanks to the economic injections brought in by international trade.
  • In the last 10 years, BRIC countries have formed which means that there is increased economic strength and power in these once LEDC countries.
  • Asian and Latin American countries, NIC and RIC, have grown in a ‘boom and bust’ fashion due to the fluctuations in international trade.
  • Many African countries have barely benefited, with populating outstripping economic growth, there is income stagnation. 
  • Also, many African countries such as Senegal are left worse of than before because they cannot cope with the cheap prices that Western countries demand. Particularly as they are not exposed to capital goods to help them out. 

 

So what are the three organisations which aim to help the global economy?

    1. World Trade Organisation (WTO) – They aim to reduce trade barriers and tariffs between various countries and trading blocs in the world.
    2. World Bank –  They promote investment globally and provide loans for countries who agree to certain conditions.
    3. International Monetary Fund (IMF) – This forces countries to privatise government assets. They encourage TNCs to buy these assets and open up international trade. Some say this is why poorer countries have sold of their assets to large TNCs.

 

 

Review Questions 

  1. Define triad (2)
  2. Name two economic grouping and give examples of countries involved (4)
  3. What measurement for economic development did geographers used to use? What was wrong with it? (3)
  4. What is the new way geographers measure economic development? (1)
  5. Give two examples of political groupings and explain them? Provide details. (8)
  6. What are trading blocs and give an example (2)
  7. What two organisations are constantly in conflict and why? (3)
  8. Give two ways in which international trade has changed the distribution of global power and wealth? (2)
  9. What is the IMF? (3)
  10. What does ASEAN stand for?(1)

 

Suggested Answers (There are other answers but this is what I came up with)

  1. Triad is the three continents: North America, Asia and Europe (1) where TNCs like to base themselves (1)
  2. MEDCs (More economically developed countries) (1) e.g. UK, USA, Canada (1). LDC (Less developed countries) (1) e.g. Bangladesh, Malawi, Haiti (1)
  3. The Brandt line (1) which simply split the world into the two hemispheres and state that the North was rich and the South was poor (1) This method is dated because this has changed with the world e.g. Australia and Singapore are in the Southern hemisphere but are rich (1)
  4. GNI (Gross national Income)
  5. EU (European Union) (1) consists of 27 countries (1). It allows free trade and movement of population (1) It provides 31% of the global GDP (1) OECD (Organisation for economic cooperation and development) (1) this consists of 30 democratic and market economies (1) They monitor economic performance and seek to reduce corruption and bribery (1) They produce 75% of the world’s GDP (1)
  6. Trading bloc are groups of countries that seek to develop their economic interests and trade patterns (1) e.g. MERCOSUR (Southern Common Market) (1)
  7. The World Trade Organisation (WTO) (1) and various trading blocs such as NAFTA (North American Free Trade Area) (1). This is because trading blocs encourage free trade between groups of countries not between the whole world whereas the WTO seeks to encourage global free trade (1)
  8. Rich and powerful countries such as the UK have maintained ‘top slots’ in the world thanks to organisations such as the OECD (1) BRIC countries have been given increased power and economic strength thanks to international trade (1)
  9. The International Monetary Fund (1) encourage the privatisation of government assets (1) and they usually encourage TNCs to buy these assets (1)
  10. ASEAN – Association for South East Asian Nations (1)

 

 

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