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)

 

 

Compulsory case study: Africa

Africa compulsory case study 

AIM: To develop an understanding of the complexities of economic impacts across the African continent and how it could lead to disasters for poor and vulnerable people.

Background

  • 55 countries
  • 34% of the 15-24 year old population is illiterate 
  • African economies are on the brink of collapse thanks to international debt and to make things worse they are having to cope with some of the malicious impacts of climate change.
  • The continent as a whole is warmer by half a degree than in the 1900s.
  • Most African economies are heavily dependent on agriculture which is heavily on the environment. 
  • Water is already a scarce resource in Africa, in 2007 14 countries were officially declared as water stressed. So decreased rainfall has made conditions much worse than they were before.

What has global warming brought to Africa?

  1. Droughts 
  2. Rainy seasons are unreliable and overall rainfall is decreasing
  3. Rains are more localised – the rain that ended the 2005-2006 drought were not widespread across the whole of the continent

So why are these impacts a problem?

Firstly, the competition for water will increase and this can lead to conflicts especially since major freshwater stores such as the Nile cross countries. Not just conflict but people will become reliant on poor quality water stores which can lead to water-borne disease such as cholera.

How does this affect the economy?

Well as more people become prone to water-borne diseases this puts more stress on healthcare. This puts pressure on the governments budget to provide enough welfare for all these people. Also, if more people are ill then they won’t be able to work to their fullest and this will reduce productivity.

Physical and human impacts on Africa 

Physical Impacts

Human Impacts

Fragile impacts may not survive and 20-50% of species in Africa could face extinction

Reduction in food supply (climate change affects rainfall which affects crop production)

Many low-lying coastal countries in Africa are vulnerable to rising sea levels.

Malaria will increase due to increased humidity and rainfall. This puts pressure on  the health care system.

Coral beaching

Increased cyclones

Deforestation and desertification 

So why is Africa so vulnerable?

Well climate change brings a range of problems all over the globe. However, to make the situation worse Africa has a debt crisis. The have a debt to some of the world’s richest countries, the repayments of these sometimes exceed their entire GNP. In 2007 the G8 wrote off the debt to 18 countries but there is still the vast majority of countries which still have their debt.

One method of coping with this debt is by opening doors to international trade. This means by increasing the production of cash crops (crops sold for income rather than the country’s own food supply). However, this has led to much forest clearance.

According to Oxfam this clearing of forests is likely to worsen. Not just to write off debts but because of global warming.  They argue that extreme weather such as droughts will expose soils to erosion from the wind. The puts stress on land and this kind of stress can lead to desertification e.g. animals have to graze on a smaller piece of land leading to that area of land being over -grazed.

Put all these factors together and we learn that it is Africa’s food security which is under threat and that is a major concern for authorities there. 

Test your definitions…

define the following:

  1. Debt crisis
  2. Food security
  3. Cash crop
  4. Desertification
  5. Coral bleaching 

Answers

  1. This is where many African countries have become so heavily indebted that repayments sometimes exceed their entire GNP.
  2. This is the extent to which a country can rely upon food supplies e.g. upon weather or if unable to grow all its food then the extent that it can rely on imports.
  3. These are crops which are grown for income not domestic food supply.
  4. This is the process when fertile land turns into futile desert
  5. This is the whitening of coral due to stress induced death. There are many causes of this e.g. changes in water temperature

Social and economic factors affecting population and migration in the UK

Social and economic factors affecting population and migration… (UK)

SOCIAL FACTORS

ECONOMIC FACTORS

Population factors

  1. Infant mortality increased
  2. Increased number of women in the workforce
  3. Increased divorce rates
  4. Medical advancements have increased
  5. The acceptance and availability of contraception have increased
  6. Women are having children later
  7. Fashion/Lifestyles have changed
  8. People are more aware of health
  1. Increased and improved education and training
  2. The cost of raising children has increased
  3. The need for children has decreased
  4. There was a depression in the 1930s
  5. A global recession in 2008 (oil crisis)
  6. Better economic incentives elsewhere compared to kids
  7. It is more profitable and economical for women to work rather than have kids.

Result?

  1. We have an ageing population.
  2. Our birth rate has decreased
  3. Our death rate has fallen too
  4. Natural increase has fallen too
  5. The replacement level has reduced too

Migration factors

  1. English is claimed to be a universal language
  2. The UK once had a large empire hence it has  many colonial links
  3. There are also many ethic enclaves which influence friends and families decisions to migrate
  4. More displaced persons due to conflicts such as the war in Iraq
  5. “Health tourists” are becoming popular
  6. We have a generous welfare system
  7. Has the world’s best universities and people are reluctant to go back after studying
  1. The EU has a free movement of labour act with A8 and A2 countries
  2. Exchange rates means that sometimes people can earn 10 times as much in the UK than elsewhere
  3. There is political stability in the UK
  4. Economic migrants are popular
  5. Remunerations and child benefits even if the child is in the source country are easy to access
  6. The retirement age is increasing in the UK

Result?

  1. Immigration has increased
  2. Emigration of economically active people have fallen
  3. Net immigration
  4. Immigrants manly from EU sources (esp. Eastern Europe)
  5. The ageing population are migrating to spain

The Basic Economic Problem

The basic economic problem is the problem that in the real world there are scare resources, that is limited quantities of resources and unlimited wants of these resources. Economists have to be able to make distinction between a want or a need in order to see whether they are limited or unlimited. Needs is something humans need for survival e.g. food. Wants are something, which are not needed for survival e.g. an iPod.

Resources have to be allocated which means choices have to made. The basic economic problems means that societies need to decide:
– What to produce
– How to produce it, and
– For whom to produce it

Every time we make a choice we fail to choose another option and the benefit lost from the next best opportunity is called opportunity cost. For example, right now you have chosen to watch this video your opportunity cost might be talking to your friend on the phone.

There are four factors of production that bring some form of output to the world. These are:
1. Land- includes premises and all natural resources e.g. timber, farming
2. Labour – workers and human resources
3. Capital – all manufactured resources e.g. machines, vehicle, building tools
4. Entrepreneurship – Involves risk taking, setting up a new business etc.

Out of production we get to two types of goods: economic goods and free goods. Economic goods are goods that are made from resources, which are scarce like oil. So free goods are goods made from resources, which are not scare like air.

Sustainable resources are those, which can be exploited over and over again because they can renew themselves e.g. sunflowers. In contrast, resources such as coal and oil cannot be replaced therefore are not sustainable.