A revision guide for GCSE Geography

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Economic Geography

• A revision guide for GCSE Geography

To advance slide click here
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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.
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But thats 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.
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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
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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!

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Development
Types of Industry
Click on the economic topic of your choice
Regional differences
Growth and Decline of Industry
Trade and Aid
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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

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Chose which type of industry you wish to study
PRIMARY
SECONDRY
TERTIARY
QUATERNARY
Click on the blue box of your choice
Click here to leave the section on type of
industry
Transnational Corporations TNCs
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Primary Industry
The raw materials can be quarried, mined or
drilled from below the earths surface e.g. oil
drilling and coal mining.

• Primary Industries are those that involve the
  collection of Raw Materials.
• (Raw materials are things that are found in or on
  the earth that havent been processed or changed).

They can be grown e.g farming and forestry
They can be collected from the sea - fishing
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A good example of a Primary Industry to look at
in more detail is farming.
There are several different types of 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

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We can think of industry as a system with
INPUTS
PROCESSES
OUTPUTS
Labour Seed Animals Manure Soil Rain Sunshine
Planting Weeding Harvesting Tending stock
Food Seed Manure
Seed, manure and food energy
Let us look at the Primary Industry of farming to
illustrate this point.
If the outputs are all put back into the system
as inputs this creates a closed system.
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Farming as a system
Farming can be a closed system where all the
outputs are put back into the system as inputs.
INPUTS
PROCESS
OUPUTS
Seeds, Manure
Subsistence farming where farmers only grow food
to feed themselves are a good example of this
type of system.
PROFITS
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
Commercial farming in MEDC countries are examples
of open systems
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How farming effects the land

• Farming 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)

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Farming is a risky business
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.
Risks 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.
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Pattern of farming in the UK
Arable Farming
The pattern of farming in the UK is largely
determined by the relief of the land and the
quality of the soil. Lets look at the different
types in turn..
Arable Growing crops Location East coast eg
East Anglia Reasons Fertile soil Flat land Low
lying well drained Less rainfall more sunshine
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Livestock Rearing
Livestock Cattle and sheep for meat and
wool Location On highland eg mountains of
Scotland and Wales Reason Nothing else will grow
there except grass, not flat, poor soil, poor
accessibility. Only need to gather livestock in a
few times per year.
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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
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Horticulture
Horticulture Flowers fruit and veg often in
greenhouses Location Small pockets around
centres of population e.g. around
London Reason Need to get produce to market
quickly or will spoil. Doesnt require lots of
room (intensive) In the south warmer and
sunnier
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Mixed Farming
Mixed Crops and animals on the same
farm Location/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.
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Common Agricultural Policy (CAP)
Introduced in 1962 it regulates farming inside
the EU. Provides grants and subsidies for
farmers Gives farmers a quota (a set amount of a
particular crop to produce)
CAP AIMS Increase food supplies for all EU
countries Keep farmers in their jobs Guaranteed
prices of selected products Make farming more
intensive Subsidies so they can compete with
cheap imports
CAP IMPACTS Positive Food supplies and jobs
secured Farmers incomes went up Created other
related jobs Impacts - Food surpluses - loss of
hedgerows - more nitrates and pesticides ? water
cycle
Constantly being reviewed and updated. Changes
include Support farmers who use fewer chemicals
and plant more hedgerows Encourage farmers to
diversify e.g. farm shop, golf courses.
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Click here to choose another type of industry
Click here to return to main menu
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Secondary Industry
Secondary industries are those where a product is
made or processed. It is often known as the
Manufacturing industry.
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We can again look at this type of industry as a
system.
Raw materials
Manufactured goods
PROCESS
OUTPUT
INPUT
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Our inputs and outputs are different from those
we looked at with farming
INPUTS Raw materials Energy Labour Trans
port 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
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To make a factory profitable
Inputs Processes Outputs
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
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Factors that influence location
Click on the blue boxes to reveal the reasons
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A good example of a Secondary Industry is that of
the iron and steel industry
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
3 main raw materials Iron ore Limestone Coke
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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
Scotland Northumberland Lancashire Yorkshire,
Derbyshire South Wales
For more about the British Steel industry see the
section on the growth and decline of industries
British Coalfields
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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).
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Click here to choose another type of industry
Click here to return to main menu
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Tertiary Industry
This is the largest group of industries in MEDCs.
It involves the service industries such as
teaching, nursing, police and retail.
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A good example of a Tertiary Industry to look at
is Tourism.

• Tourism is the worlds 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

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Tourism Multiplier Effect
Foreign visitors attracted
Extra food needed
Growth of construction industry hotels, roads,
airports etc.
Spend money (eg. hotels, on trips, souvenirs)
Local farmers grow more food
Jobs created
Local people with higher wages spend more money
More wealth generated from taxes to pay for
hotels, roads, airports etc.
Industry grows to meet demand
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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.

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Click here to choose another type of industry
Click here to return to main menu
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Quaternary Industry
The newest and smallest industrial sector where
scientists and researchers investigate and
develop new products.
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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.

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Click here to choose another type of industry
Click here to return to main menu
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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

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Advantages of TNCs
To 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
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Disadvantages of TNCs
To 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)
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Click here to choose another type of industry
Click here to return to main menu
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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 try a short test on what you have
just learnt
Click here to exit the program. Then why not
have a look at the sample GCSE questions on
Economic Geography.
44
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.
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Changes in employment structure in the UK
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.
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Lets 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.

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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.

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Availability of a workforce

• A 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.

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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.

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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.

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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.
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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.
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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).

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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.
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Domino Effect
This 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
People leave area to find work property prices
fall
Local shops loose trade (people have less money
to spend)
Unemployment rises
Area becomes run down, crime can increase and
area declines.
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These effects can be reversed if new industry
opens up in the area
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.
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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.
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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
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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.

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The EUs Economic Core

• This is the rich economic centre of Europe. It
  is sometimes called Europes Hot Banana.
• Areas away from the core are said to be on the
  periphery and tend to be less economically well
  developed.

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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.

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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

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That completes this section on the Growth and
Decline of Industry
Click this box to return to the main menu to
choose another topic
Click here to try a short test on what you have
just learnt
Click here to exit the program. Then why not
have a look at the sample GCSE questions on
Economic Geography.
64
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
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How we measure Development

• The 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.
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World development based on GDP
With the exception of Australia the world could
generally be split into the rich north and the
poor south.
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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 people
• Also 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.

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Development Index
To see how this can work lets 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
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Lets take a look at a few examples of the HDI
The HDI is an average score of these 3 variables
when countries are ranked in order.
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• 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.

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Global distribution of wealth
The world can be divided into richer and poorer
countries 25 of the worlds population live in
MEDCs and own 80 of the worlds wealth
The development gap is the contrast between
rich and poor countries.
The Development gap has grown for three main
reasons Historic Environmental Social-Economic
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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 worlds resources
5 million children die Each year from diarrhoea
Eat 2/3 worlds grain
20 suffer from hunger
Life expectancy just 50 years
Life expectancy 70 years
The Rich North
The Poor South
86 worlds industry
¾ of the worlds population
Only 1/20 of the worlds spending On health
90 of the world spending on education
85 worlds wealth
800 million unable to read or write
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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

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This cartoon sums up how the richer MEDC
countries have carved up the resources from the
LEDC countries causing them great hardship
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Development Gap

• This 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 dont receive
  much money.

76

• 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

Next year the country sell minerals and crops to
the MEDC as usual
2
The countries can fall into the cycle of debt
1
Has to pay a lot of interest on its loans
The prices of these have dropped
3
Click on the boxes to reveal the cycle
So it borrows more money
So it doesnt earn as much money as they hoped
4
6
Which leaves it short of money for imports and
development projects
5
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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.

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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

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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. Its just that they cant. 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
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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)

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So what is development ?
It is the process of change and growth
It means a chance of a good education
It means a chance to earn a good living
It means change for the better
It means the chance to live a long and healthy
life
It means freedom from poverty
It means justice for everyone
82
That completes this section on Development
Click this box to return to the main menu to
choose another topic
Click here to try a short test on what you have
just learnt
Click here to exit the program. Then why not
have a look at the sample GCSE questions on
Economic Geography.
83
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.
84

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

85
Regional Economic Change
The decline of industry in some areas has lead to
depressed areas with high unemployment.
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. Londons docklands Urban
Development Corporations (UDCs) aim to make these
areas more attractive for economic activity.
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
86
Growth and decline South Wales

• A 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
87
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.
88
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.
89
Let us look at examples of these differences.
90
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
91
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.
92
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
93
Contrasting regions in Italy

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

94
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 its 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.
95
That completes this section on Regional
Differences
Click this box to return to the main menu to
choose another topic
Click here to try a short test on what you have
just learnt
Click here to exit the program. Then why not
have a look at the sample GCSE questions on
Economic Geography.
96
Trade and Aid
Trade 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.
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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

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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.

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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
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
EXPORTS
IMPORTS
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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)

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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

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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
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You pay 1 for a chocolate bar but where does
your money go?
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.
?
Other Ingredients Cocoa farmer Transport Tax
Retailer Manufacturer
5p
Guess which is which then click on the box to
check your answer
?
8p
?
10p
?
15p
?
28p
?
34p
Total cost 100p
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Fair Trade
Fair 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
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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

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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.
• Lets look at a couple of examples from packaging
  on Geobars

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Aid

• Improving the Quality of Life in LEDCs

Many 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
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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

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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.

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Multilateral Aid

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

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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.
  

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Investment programmes

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

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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.
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That completes this section on Trade and Aid
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