AEB 2008 A revision guide for GCSE Geography To advance slide click here

AEB 2008

A revision guide for GCSE Geography

To advance slide click here

What is Economic Geography?

You may have heard the phrase that money makes the world go around….

Well in some ways it does. Or at least it has a big effect on how the countries in the world work.

Economic Geography is the study of how countries make and spend their money and how that affects the world we live in.

But that’s not all…Economic systems bring together physical and human resources. Most countries have to trade in order to get all the resources they need.

Trade between countries is not always fair and has lead to great differences in the levels of development in countries around the world.

It is these factors that have brought about the world we live in today that we study in Economic Geography.

What is Economic Geography?Economic Geography is the study of how different countries make and spend their money.

You will see how economic systems bring together both physical and human factors.

We will see how the earths resources are used and how trade between countries for these resources is not always fair.

We will also be looking at the impact of economic change

How to use this Revision Session for Economic Geography

• Click on the topic of your choice on the following slide

• Read through the animated section to the end

• Then choose either to return to the main menu and choose another topic, or exit and try a quiz.

• Finally look at the example GCSE questions on Economic Geography and have a go at being an examiner!

Regional differences

DevelopmentTypes of Industry

Growth and Decline of Industry

Trade and Aid

Click on the economic topic of your choice

Types of Industry There are 4 main types of industry

Primary – The collection of raw materials

Secondary – Manufacturing a product

Tertiary – Providing a service

Quaternary – Research an development

Chose which type of industry you wish to study…

PRIMARY SECONDRY TERTIARY QUATERNARY

Click on the blue box of your choice

Transnational Corporations TNCs

Click here to leave the section on type of industry

Primary Industry

• Primary Industries are those that involve the collection of Raw Materials.

(Raw materials are things that are found in or on the earth that haven’t been processed or changed).

The raw materials can be quarried, mined or drilled from below the earths surface e.g. oil drilling and coal mining.

They can be grown e.g farming and forestry

They can be collected from the sea - fishing

A good example of a Primary Industry to look at in more detail is farming.

• Arable – growing crops• Pastoral – Rearing animals• Mixed – both animals and crops on the same farm• Horticulture – Flowers, fruit, vegetables often in

greenhouses• Commercial – Growing to sell the produce• Subsistence – Growing to provide food for the family• Extensive – Using large area with little labour eg. Hill

sheep farming• Intensive – Small amount of land using a lot of labour or

technology• Sustainable – Farming that causes minimal impact on

the environment

There are several different types of farming….

We can think of industry as a system with …

INPUTS PROCESSES OUTPUTS

Let us look at the Primary Industry of farming to illustrate this point.

LabourSeedAnimalsManureSoilRainSunshine

Planting

Weeding

Harvesting

Tending stock

Food

Seed

Manure

If the outputs are all put back into the system as inputs this creates a ‘closed system’.

Seed, manure and food energy

Farming as a systemFarming can be a closed system where all the outputs are put back into the system as inputs.

INPUTS PROCESS OUPUTS

Seeds, ManureSubsistence farming where farmers only grow food to feed themselves are a good example of this type of system.

Or farming can be an open system where the outputs are sold and part of the money made pays for new inputs (the rest is profit).

INPUTS PROCESS OUPUTS

Money from sales

PROFITS

Commercial farming in MEDC countries are examples of open systems

How farming effects the landFarming takes up more land than any other human

activity. It has a great impact on the natural environment e.g soils and water. Often these impacts are very harmful.

Large areas of rainforest are cleared to provide room for cattle ranching and the soils rapidly loose their fertility.

Overuse of land in countries with growing populations can lead to desertification and deforestation

Farming can change a natural ecosystem into an Agro-ecosystem (one that is controlled by the farmer)

Farming is a risky businessRisks can be Physical..

Floods wash away soils or ruin crops

Droughts kill plants and animals

Diseases – can affect both plants and animals

Earthquakes or Volcanoes ruin valuable farmland.

Risks can be Economic..

Changes in the market cause a drop in demand for types of produce

Quotas – governments may put limits on certain products

New technology may increase costs or cause unemployment.

These effects or those of a bad harvest caused by bad weather and much more keenly felt in the pooper LEDC countries where farmers are often only existing just above the poverty line.

Such an event may cause them to dip below the poverty line. Farmers in MEDC countries are more able to survive such dips.

Pattern of farming in the UK

Arable: Growing cropsLocation:East coast eg East AngliaReasons:Fertile soilFlat landLow lyingwell drainedLess rainfallmore sunshine

The pattern of farming in the UK is largely determined by the relief of the land and the quality of the soil.

Let’s look at the different types in turn..

Arable Farming

Livestock Rearing

Livestock: Cattle and sheep for meat and woolLocation:On highland eg mountains of Scotland and WalesReason:Nothing else will grow there except grass, not flat, poor soil, poor accessibility.Only need to gather livestock in a few times per year.

Dairying

Dairying:Cows kept for milk etc.

Location/Reason:Nearer centres of location – not such high land but not flat enough to grow things eg South Wales, West Midlands

Horticulture

Horticulture:Flowers fruit and veg – often in greenhousesLocation:Small pockets around centres of populatione.g. around LondonReason:Need to get produce to market quickly or will spoil.Doesn’t require lots of room (intensive)In the south – warmer and sunnier

Mixed Farming

Mixed:Crops and animals on the same farmLocation/Reason: Everywhere else!ie where its not mountainous, not the best quality soils but has a mixture of land that will grow grass and some that can support crops – often in rotation.

Common Agricultural Policy (CAP)Introduced in 1962 it regulates farming inside the EU.Provides grants and subsidies for farmersGives farmers a quota (a set amount of a particular crop to produce)

CAP AIMSIncrease food supplies for all EU countriesKeep farmers in their jobs

Guaranteed prices of selected productsMake farming more intensiveSubsidies so they can compete with cheap imports

CAP IMPACTSPositive

Food supplies and jobs securedFarmers incomes went upCreated other related jobs

Impacts- Food surpluses- loss of hedgerows- more nitrates and

pesticides water cycle

Constantly being reviewed and updated. Changes includeSupport farmers who use fewer chemicals and plant more hedgerowsEncourage farmers to diversify e.g. farm shop, golf courses.

Click here to choose another type of industry

Click here to return to main menu

Secondary Industry

Secondary industries are those where a product is made or processed.

It is often known as the Manufacturing industry.

We can again look at this type of industry as a system.

INPUT PROCESS OUTPUT

Raw materials Manufactured goods

Our inputs and outputs are different from those we looked at with farming

INPUTS

Raw materials

Energy

Labour

Transport costs

Capital

Government Grants

PROCESSES

Work by hand

Work my machines

Heating

Adding chemicals, water or other materials

OUTPUTS

Goods for sale to people

Goods for sale to other companies

Waste products

To make a factory profitable…

The costs of all the inputs and processes must be less than the money made from selling the final product.

One way to help this is to keep the costs low. This may effect where the industry is located

Inputs & Processes Outputs

Factors that influence locationClick on the blue boxes to reveal the reasons

A good example of a Secondary Industry is that of the iron and steel

industry

3 main raw materials:

Iron ore

Limestone

Coke

Steel is a vital material at the heart of the modern world. Essential in industry, agriculture and transport. In the home, in sport and in building, packaging and engineering, steel products are everywhere. Steel also forms the basis of the machinery for the making of nearly every product we possess. Without it, wood and glass cannot be shaped, stone cannot be mixed, other metals cannot be melted and formed and plastics cannot be manufactured. Without steel our modern world would not exist. Chairman of British Steel

Steel Making first developed n the UK during the industrial revolution in the 1800s

Depends on bulky raw materials (coal and iron). Also produces bulky products so transport costs can be high.

Often located near to the coal fields or close to a port as it is cheaper to transport these goods by sea e.g Port Talbot South Wales

British Coalfields

Scotland

Northumberland

Lancashire

Yorkshire, Derbyshire

South Wales

For more about the British Steel industry see the section on the growth and decline of industries

A more modern example of a manufacturing or

secondary industry is that of a car manufacturer. Again looking at this as a system….

INPUTS

Steel, glass, plastic, power supplies, robots, labour, capital, upholstery, rubber, government incentives

PROCESSES

Welding, testing, operating machinery, administration, research, factory maintenance

OUTPUTS

Cars, Wages, profit, waste,

A lot of these more modern manufacturing plants have replaced the older more traditional industries such as iron and steel in the UK. (See later section on growth and decline of industry).



Tertiary Industry

This is the largest group of industries in MEDCs. It involves the service industries such as teaching, nursing, police and retail.

• Tourism is the world’s fastest growing industry (More money and more leisure time have helped this increase)

• There is some form of tourism in nearly every country in the world

• It gives many LEDCs the chance to improve their economies

• Better transport networks have opened up the world

A good example of a Tertiary Industry to look at is Tourism.

Tourism Multiplier Effect

Foreign visitors attracted

Spend money (eg. hotels, on trips, souvenirs)

Jobs created

Extra food needed

Local farmers grow more food

Local people with higher wages spend more money

Industry grows to meet demand

More wealth generated from taxes to pay for hotels, roads, airports etc.

Growth of construction industry – hotels, roads, airports etc.

So Tourism can help an economy grow, but there is a negative side too.

• Only 45% of revenue from tourism reaches the host country (kept by foreign tour operators)

• Tourism can grow so large and popular that it destroys the environment the tourists come to see.

• Tourist may not respect or even disturb the local cultures.



Quaternary Industry

The newest and smallest industrial sector where scientists and researchers investigate and develop new products.

Footloose industries

• Footloose industries are not toed to particular sources of materials or markets, and have a free choice of locations.

• These industries tend to be either Tertiary or Quaternary industries.



Transnational Corporations (TNC)

• Many MEDCs have set up factories in LEDC countries in an effort to maximise profits.

• These are called Transnational because they are companies that have operations is several nations.

• Examples of TNCs include Nike, Adidas or many other clothing firms

Advantages of TNCsTo the TNC

Cost are low – cheap labour so profits are high

Raw materials are local

Few health and safety regulations that could be expensive to meet

To the LEDC

Jobs provided for local people

Higher wages than some other local work

Can use money on education and health care

Develops links with other countries

To MEDCs

Shoppers can buy goods more cheaply in shops

Disadvantages of TNCsTo the LEDC

TNCs can close factories without warning and move to other countries

Workers work long hours in poor conditions

Products are no use for local markets

Can have a bad effect on the environment

To MEDCs

Cheaper imports mean that local factories in the MEDC may close and lead to unemployment

An increase in imports can affect the trade balance (see later section on trade and aid)



That completes this section on the types of Industry

Click this box to return to the main menu to choose another topic

Click here to exit the program. Then why not have a look at the sample GCSE questions on Economic Geography.

Click here to try a short test on what you have just learnt

Growth and Decline of Industry

Industry has changed a lot in the last 50 years especially in MEDC countries.

This has had an impact on the growth of cities, the distribution of population and had a social and economic effect.

Changes in employment structure in the UK

Today

Primary

Secondary

Tertiary

1950

Primary

Secondary

Tertiary

In 1950 the employment structure in the UK looked like this:-

However, today it looks very different.

Let us investigate some of the reasons for this.

Let’s first look at the Location of Industry

The location of industry is influenced by a number of factors:-

• The location of raw materials and power supplies

• The availability of a workforce (supply of labour)

• The location of the market (where they need to sell the goods)

• Market influences or changes and government policies

Let us see how these work and how they have lead to a change in the employment structure.

Location of raw materials

Industries grew up near their raw materials to reduce transport costs especially if they were bulky.

This lead to different areas specialising in certain industries.

Availability of a workforceA factory can only locate where there are enough

people available to work for them. They may need to be specialised with particular

skills (this may lead to similar industries grouping together)

Or they may need large numbers of unskilled workers (who they will train up themselves)

Labour costs vary around the country so industries will try to locate where these are cheapest to keep their costs down.

Location of Market

If the cost of transporting raw materials cost more than the finished product the industry will locate close to them.

However, if the finished product is more expensive to transport (it may be larger or more expensive to insure) then the cheaper location will be nearer the market.

Market influences and Government policies

Some industries will locate within the country that they market the product to avoid import taxes.

Governments may encourage certain industries into certain areas to help with unemployment problems

Land may be cheaper in some areas than others and this will effect input costs.

Decline of Traditional Manufacturing

Many of the traditional ‘heavy’ manufacturing industries (like iron and steel) have declined and been replaced by the ‘light’ assembly industries (like electronics)

Changes in technology have lead to old methods being replace by robots and computer controlled production.

Competition from other countries with lower costs (such as cheap labour) means that some companies loose out to those places that can make and sell the products cheaper.

This lead to a reduction in the percentage of people employed in the UK in secondary industry falling from 40% to 26% from the 1970s to the 1990s.

0 10 20 30 40

1990

1970

Percentage employed in manufacturing

British Iron and Steel Industry

The production of Iron and Steel requires large quantities of bulky raw materials. Improved technology has reduced the amounts we need (for example to produce 1 ton of iron in 1880 we needed 10 tonnes of coal where as we only needed ½ ton in 1990).

0

2

4

6

8

10

1880 1990

Tonnes of coal

Tonnes of coal

However, most of the local raw materials have become exhausted and now have to be imported. This expense put together with high labour costs her have meant that it is now cheaper to import our steel from other countries than to produce it here. (eg from Korea and other Far east countries)This has lead to the closure of many steel plants around the country (as you will see later in a slide about the changing location of industry in the UK) and caused great unemployment problems in these areas.

Domino EffectThis shows what knock on effects can happen after the closing down of an industry in an area.

Factory closes down Transport firms loose business and close

Local shops loose trade (people have less money to spend)

Unemployment rises

People leave area to find work – property prices fall

Area becomes run down, crime can increase and area declines.

Factory opens up Transport get new business

Local shops start to thrive as people now have more money to spend

Unemployment falls

People move into the area – property prices rise

This is why the government will encourage new businesses to set up in depressed areas by giving them grants and other incentives. An example of this is the high-tech industries such as Sony and LG moving into South Wales.

These effects can be reversed if new industry opens up in the area

Growth of High Tech Industries

High Tech industries are those that developed due to Information Technology and use micro-electronics. They are sometimes referred to as the SUNRISE industries.

These do not need to be near raw materials as their input materials are usually small and easier transported. They tend to prefer to be near fast transport links an are often built away from old industrialised areas on greenfield sites. These are FOOTLOOSE industries that can locate anywhere.

A good example of an area of this type of industry is M4 corridor.

Changing locations of industry in the UK

Let us see how this has changed the locations of industries within the UK

To see more on this go to section on Regional Differences.

1970s 1990s

Regional Economic change - EU

We have seen how regions that used to house heavy industry have experienced a decline.

The map shows the main industrial regions of Western Europe. This ‘Heavy Industry Triangle include areas now in decline that qualify for EU grants to try to attract new industry into the area.

The EU’s Economic Core

This is the rich economic centre of Europe. It is sometimes called Europe’s ‘Hot Banana’.

Areas away from the core are said to be on the periphery and tend to be less economically well developed.

Growth of industrialisation in LEDCs

The graph shows typical employment structures for MEDC and LEDC countries. However, we are now seeing the emergence of NICs (Newly Industrialised Countries.

Employment structure in an LEDC and an MEDC

0% 20% 40% 60% 80% 100%

LEDC

MEDC

Primary

Secondary

Tertiary

Newly Industrialised Countries (NICs)

These sometimes called ‘tiger economies’ have grown due to investment from other countries, an abundance of cheap labour and the development of new skills especially in the electronics field.

Examples of such countries are to be found in south east Asia – South Korea, Taiwan and China

That completes this section on the Growth and Decline of Industry




Development

The Development of a country is a measure of how mature a country is in terms of its economic growth, social systems and infrastructure

How we measure DevelopmentThe Development of a country is often

measured by its wealth or GDP.

Gross Domestic Product (GDP) is the total income of a country per year in $ US divided by the number of people in the country.

The map on the next slide shows how this was done (Brandt report in the 1970s) to divide the world into ‘rich developed north’ and the ‘poor developing south’.

World development based on GDP

With the exception of Australia the world could generally be split into the rich north and the poor south.

The Human Development Index (HDI)

However development is not just about money.Some LEDC countries do have money, but it is kept by a

few powerful peopleAlso some GDP is not taken into the calculation as farmers

do not make produce to sell, but do have enough to eat. Also there may be a lot of informal jobs where money is exchanged without record.

So another system that takes in other factors as well was developed.

The HDI is an average score of variables that take into account life expectancy and education as well as GDP.

Development Index

To see how this can work let’s take a look at some development indices from two very different countries – UK and Ethiopia.

GDP

Life Expectancy

Infant Mortality Rate

Calorie intake

Energy Used

Urban population

Literacy rate

Number of people per doctor

Lets take a look at a few examples of the HDI

Country Life expectancy

Adult literacy GDP per capita ($)

HDI

Japan F83 M77 99% 37,640 0.937

Canada F83 M76 99% 19,380 0.95

UK F81 M74 99% 19,260 0.916

Gambia F56 M51 36% 320 0.57

Mali F49 M46 27% 250 0.22

The HDI is an average score of these 3 variables when countries are ranked in order.

This gives a different view of world development – see map below.

This is more accurate as it takes into account the social side of the development and not just the economic.

Global distribution of wealthThe world can be divided into richer and poorer countries – 25% of the world’s population live in MEDCs and own 80% of the world’s wealth

The ‘development gap’ is the contrast between rich and poor countries.

The Development gap has grown for three main reasonsHistoricEnvironmentalSocial-Economic

Click on the boxes to reveal some of the terrible facts on the unfair distribution of

wealth in the world.Use 7/8 of the

world’s resources

Eat 2/3 world’sgrain

Life expectancy70 years

86% world’sindustry

85% world’swealth

90% of the worldspending on

education

Life expectancyjust 50 years

20% suffer fromhunger

Only 1/20 of the world’s spending

On health

¾ of the world’spopulation

800 million unable to read or write

5 million children dieEach year from

diarrhoea

The Rich North The Poor South

Growth of the Development Gap

Historic reasons – some LEDCs are past colonies of richer European countries that took some of their raw materials and when they went left them with little industry or education

Environmental reasons – poor climate, poor soils or very few natural resources to trade

Social economic reasons – often countries at war, little manufactured goods (have to import them from other countries) and may have borrowed money and now need to pay back the loans

This cartoon sums up how the richer MEDC countries have carved up the resources from the

LEDC countries causing them great hardship

Development GapThis gap may continue to grow:-

LEDCs have mainly primary industries and therefore have only cheap goods to sell

They have to by most of their expensive manufactured goods from MEDCs.

So they have to spend a lot but don’t receive much money.

Employment structure in an LEDC and an MEDC

0% 20% 40% 60% 80% 100%

LEDC

MEDC

Primary

Secondary

Tertiary

They have to borrow money from MEDCs to finance any development and then pay back the interest on these loans.

‘The total owed by the poorer countries to the richer ones stands at a staggering one trillion pounds’ Friends of the Earth

So it borrows more money

Has to pay a lot of interest on its loans

Next year the country sell minerals and crops to the MEDC as usual

The prices of these have dropped

So it doesn’t earn as much money as they hoped

Which leaves it short of money for imports and development projects

The countries can fall into the cycle of debt

Click on the boxes to reveal the cycle

2

1 3

4 5

6

Closing the Development Gap

Although the richer countries have the technology and money and control most of the manufacturing. It is the poorer countries that often provide the raw materials.

Closing the Gap

• This may be achieved in time either by the use of Aid or Investment from the richer countries.

• For more detail on the types of aid that can be provided see the section on ‘Trade and Aid’

‘The amount of money owed by the poorer countries to the richer ones now stands at a

staggering one trillion pounds’ Friends of the earth’

‘Third World countries want to pay the money back. It’s just that they can’t. If it were only a questions of paying the initial loans, the Third World would have done this many times over. But repaying debt means paying off high interest charges. In 1982 the total amount that the Third World owed to the developed countries was $860 billion. Since then debtor countries have repaid thousands of billions, yet they still owe $2,000 billion’

Oxfam

Investment programmes

Some countries have developed from LEDCs to NIC (newly industrialised countries) due to investment.

They are countries with high populations that provide a motivated cheap work force that attracted investors. They also have a large home market for the goods.

However, these growing industries are causing many pollution problems and working conditions can be poor (there is more information about such Multi National Corporations in the ‘Trade and Aid ‘ section)

So what is development ?

It means change for the better

It means a chance of a good education

It means justice for everyone

It means a chance to earn a good living

It means the chance to live a long and healthy life

It means freedom from poverty

It is the process of change and growth

That completes this section on Development




Regional Differences

We have seen how the wealth and development of the world can vary between countries, but it can also vary within a country.

In a previous section we have seen how growth and decline has changed location/distribution of industry in the UK.

Regional Economic ChangeThe decline of industry in some areas has lead to depressed areas with high unemployment.

But many of these area have become thriving centres of new industry.

The government has targeted such areas to attract new industry by giving a range of incentives for new businesses to set up here.

These area are known as ‘ASSISTED AREAS’

We can split these Assisted areas into three types:

Assisted areas – are areas that need to attract new industry

Enterprise zones – focus aid on specific areas of decline such as old inner-city areas eg. London’s docklands

Urban Development Corporations (UDCs) aim to make these areas more attractive for economic activity.

Growth and decline – South WalesA good example of an assisted area is South Wales

South Wales was once famous for its coal and steelworks (using local coal and iron ore), but once these closed down they left areas of high unemployment.

The Welsh Development agency offered

money to companies to set up in the

area.

This attracted many high-tech industries such as Sony, Panasonic and LG.

Over 300 international companies chose South Wales as the best location in Europe

Who wins….

New Industries gain:

Large available workforce

Area with good transport links

A base within the EU so within their main market (no import taxes to pay)

Government grants and incentives

South Wales gain:

New employment providing money

New people move into the area attracting more shops to open and house values to rise.

Brings new life to an area that was into decline.

However, not all of South Wales has benefited. The narrow steep-sided valleys like the Rhondda do not have the space needed to site these new large factories.

North South Divide UK

The patterns of growth and decline of industry within the UK has lead to a split between the richer south with higher employment and the more depressed regions in the north.

Let us look at examples of these differences….

The North and West:

Higher- unemployment

(those employed are generally in manufacturing)

infant mortality

Lower- Weekly earnings

House prices

Number of cars

The South and East

Higher- Weekly earnings

House prices

Number of cars

Employment (mainly in the service industries)

Lower- infant mortality

This is a pattern that is repeated throughout Europe

This map shows differences in GDP throughout the region.

The darker the colour the higher the GDP.

The areas with the highest GDP are concentrated in the centre of the EU.

These areas with low GDP are also generally areas with high unemployment.

This map shows the unemployment of different regions in the EU (the darker the colour the higher the unemployment,

The highest rate of unemployment are on the edges of the Eu eg. Greece, Spain, and Ireland

Contrasting regions in Italy

Italy is another good example of a country with a divide between north and south in terms of economic differences.

The North – The industrial Heartland – with the large cities of Turin, Genoa and Milan.

Reasons for its success:

Rich soils and plenty of water – so good for agriculture

Large flat plain – room to build factories

Better climate – less extreme temperatures

Good access to the rest of Europe.

The South – it’s problems.

Area of steep slopes – difficult to develop.

Poor network of roads and rail.

More extreme climate

Lack of raw materials.

Thin dry soils

It is mainly a region of agriculture but farming here is difficult.

(They do have tourism here)

These regional differences have lead to migration from the south to the north of the country (over 4 million people have moved since 1950).

The Italian government is trying to attract new industries to the south in the same way we saw about South Wales, but their success has been more limited.

That completes this section on Regional Differences




Trade and AidTrade is the buying and selling of goods between countries.

Aid is when one country will give help and support to another which may help it to grow or develop.

Trade

No country provides everything it needs so it has to trade with other countries.

Goods that come into a country are called imports

Goods that go out from a country are called exports

Balance of Trade

The difference between the cost of imports and the value of exports is called the trade balance

If a country earns more from the sale of its exports than it spends on its imports it is said to have a trade surplus

If a country spends more on its imports than it makes from the sale of its exports it is said to have a trade deficit.

Global patterns of Trade

• Most LEDCs export low value raw materials• These are then processed by MEDCs who make

manufactured goods that have higher profits• So MEDCs have a higher share of the total world exports

by value.

LEDCs MEDCs

EXPORTS

IMPORTS

‘Cheap’ foods eg tea, coffee,

Materials rg rubber, cotton

Very few

‘Expensive’ manufactured goods eg. Cars, computer

‘Cheap’ materials that it processes into manufactured goods

Trading Groups

Many countries of the world belong to trading groups to encourage trade between those countries.

These will encourage tariff free trade between them.

Examples of these groups are

The EU (European Union)

NAFTA (North American Free Trade Association – USA Mexico and Canada

OPEC (Organisation of Petroleum Exporting Countries)

Free Trade

These trade agreements gave an unfair advantage to the MEDCs.

In 1994 the World Trade Organisation was set up to encourage free trade between all countries

Why trade is not fair to the LEDCs

Many of the products we take for granted, such as tea, coffee and chocolate come from poorer countries.

These products are quite expensive in the UK, but the people who supply the raw materials only earn a small amount of money.

Most of the profit is made by the manufacturers and shops

Other Ingredients

Cocoa farmer

Transport

Tax

Retailer

Manufacturer

You pay £1 for a chocolate bar – but where does your money go?

8p

10p

5p

34p

28p

15p

Total cost 100p

The cost is split between the farmer who spends all year growing and harvesting the cocoa beans the retailer or shop that sells you the bar, the cost of the milk and sugar that are added, the manufacturer who mixes these ingredients and wraps it, transport costs and the tax the government collects.

Guess which is which then click on the box to check your answer

?

?

?

?

?

?

Fair TradeFair Trade tries to address these issues by making sure the producers get a fair price for their products. They will advertise this fact on the products that are sold here so you can see if you are buying a fair trade product.

They will also tell you their aims

Fair Trade

• A way of doing business that gives the suppliers of the raw materials a fair wage.

• It also ensures safer working conditions

• Limits the work done by children

• Helps set up co-operatives that help the LEDCs process their own raw materials

Fair Trade Federation

• You can find several examples of Fair Trade in action as you go shopping.

• Products operating under the Fair Trade Federation will display this logo.

• Let’s look at a couple of examples from packaging on Geobars

AidImproving the Quality of Life in LEDCsMany people in the UK and other MEDC donate money to improve the quality of life in LEDCs. This may be prompted by national fund-raising activities eg. Comic Relief or in response to a disaster appeal. This money tends to be targeted into specific areas or projects.

Most LEDCs also receive larger donations form other sources – there are 3 types

Voluntary Aid

Bilateral Aid

Multilateral Aid

Voluntary Aid

This has nothing to do with governments and depends on voluntary contributions.

Examples of groups that provide voluntary aid include: Oxfam and Action Aid

Bilateral Aid

This is aid between two countries.

It may be a loan of money to an LEDC for a particular project and it does tie that country to the MEDC.

Multilateral Aid

When rich countries give money to poorer countries through international banks e.g The World Bank and the International Monetary Fund

Problems with Aid

• It can encourage the country to become dependant on donations

• Many countries that receive the aid have corrupt governments and the money does not always go to the people that need it

• Aid is only a ‘sticking plaster’ – it covers up a problem for a while but does not solve the cause.

Investment programmes

In recent years some LEDCs have developed their economies rapidly with outside investment in their manufacturing industries.

Trade in the EU

There is a lot of trade between countries within the EU. It is the worlds single largest market. Between half and three quarters the trade of most EU countries is within the EU

Quota or import duties have limited imports from non-EU countries. This can prove very expensive for some LEDCs. Some countries such as Japan have got around this problem by setting up factories within the EU (e.g. the high-tech industries in South Wales).

Many EU countries still trade with former colonies e.g the UK still has strong links with Kenya.

That completes this section on Trade and Aid




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Economic Geography.

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Documents

AEB 2008 A revision guide for GCSE Geography To advance slide click here