Global Studies
Developing countries and world trade
2 World development characteristics
More developed countries Less developed countries
Wealth High GNP per Capita Low GNP per Capita
Employment Secondary (manufacturing) and tertiary (Service) jobs dominate
Primary (e.g. farming) jobs dominate
Trade High volume and value Low volume and value
Communications Widespread
telecommunications, good infrastructure
Good infrastructure only in urban areas.
Energy High consumption of energy Low consumption of energy
Housing High standards of permanent
housing
Low standards of often temporary housing Population Low BR, low DR, high life
expectancy
High BR, high DR (falling), low life expectancy (rising)
Health Good healthcare Bad healthcare
Diet Balanced, high protein diet Unbalanced low protein diet Education High literacy, access to
schools
Low literacy, schooling is a privilege
Classification of countries according to development 3 world classification → Political classification
1st world → Western world 2nd world → Eastern world
3rd world → “block-free” countries → the south 5 world model
Categories
Industrial countries (IC) (Highest development) Industrial countries (IC) (High development) Newly industrialising countries (NIC)
Developing Countries (DC) (Low development) Developing Countries (DC) (Lowest development) Possible indicators
GDP/Capita
Agricultural employment Literacy rate
Life expectancy
Birthrate / deathrate / infant-mortality-rate Patents/Capita
Doctors/1000 people Teachers / 1000 people
Average number of school years
Example Correlations
Developing countries and world trade
Developing countries’ share on world trade is next to nothing. They depend on a small range of products, which often are raw material whose prices are steadily decreasing. They can’t change anything about it because they don’t have the means and / or the knowledge to produce products of a higher quality or to claim trademarks or other privileges.
Jobs in Africa
Reasons for the scarcity of jobs in Africa:
• Large informal sector → low income, little training → low productivity
• Bureaucracy and corruption
• High unit labour costs due to lower productivity
• Many young companies, only few multinational companies
• Lack of farming techniques → low value crops and products
• Commodity based economies → high exchange rates
• In South Africa: greedy unions → high labour costs, unproductivity
Types of raw materials
Agricultural
Plants
Food(-stuff)
Industrial Animals
Fuels Metals
Non-Metals
Infant mortality rate
GNP/capita
Energy consumption
GNP/capita
• Chalk
• Salt
• Sand
• Copper
• Iron ore
• Gold
• Platinum Precious metals
• Coal
• Oil
• Meat
• Fish
• Leather
• Coffee
• Cocoa
• Grain
• Cotton
• Wood
4 Distribution of important resources
Resource Countries Type
Oil Coal
Saudi-Arabia, Russia, U.S.A., Venezuela, Nigeria, Iran, UAE U.S.A., India, China, Australia, Poland
Fossil fuels Chrome
Nickel
Turkey, Russia, South Africa, India
Russia, Canada, Indonesia, Cuba, Australia
Steel finishers Copper
Iron Zinc
Chile, Australia, U.S.A., Zambia Brazil, Australia, India, Sweden Peru, Canada, Australia, Chile
Base metals
Bauxite Titan
Weipa, Guinea, Jamaica, Australia, Brazil South Africa, Australia
Gold Platinum
U.S.A. South Africa, Australia, Russia, Papua New Guinea South Africa, Russia, Canada
Precious metals
Single product economies
Cuba Sugar
Honduras Bananas
Ghana Cocoa
Egypt Oil
Bangladesh Jute
Laos Timber
Uganda Coffee
Kenya Tea / Coffee
Zambia Copper
Nigeria Oil
Resources, Reserves, Lifetime and import dependency Measured
Indicated Profitability of mining Inferred
The lifetime of resources have not decreased because of:
• Substitution
• New technology in exploration and mining
• New resources have been found (Resources become reserves due to profitability-rise)
• Recycling of materials
• New technologies are more efficient Resources
Reserves
Limits to growth
The book was published in 1972 and was commissioned by the club of Rome. The main messages are:
• Collapse is nearly inevitable
• Population and industrial development increase arithmetically
• Consumption of resources increases faster → Strain on ecosystem
• Collapse and overshoot of ecosystems and resources
• Collapse of world economy The solution:
A sustainable environment is essential for the future of mankind. Therefore the coherence of economic growth and resource depletion must be loosened.
Iron Ore
Iron ore is the biggest commodity after oil. It is omnipresent, yet not as important as oil because it is far more common and less interesting for speculations. Japan once had the market under control, using a benchmark system. Japan met with the biggest suppliers behind closed doors and negotiated a price for one year. This was possible because of Japans high demand of iron and its long-term contracts with the suppliers. Only when China started demanding iron, too, the iron prices began to fluctuate.
Oil and Coal
Highest energy consumption per Head:
1. Iceland 2. Canada 3. United States 4. Luxembourg 5. Finland
Largest energy importers:
1. U.S.A.
2. Germany 3. Italy 4. Brazil
Largest energy exporters:
1. Russia 2. Saudi Arabia 3. Canada
Largest producers of coal:
1. China 2. U.S.A.
Largest producers of oil:
1. Saudi Arabia 2. Russia 3. U.S.A.
Largest producers of natural gas:
1. U.S.A.
2. Russia
Largest oil importers:
1. China 2. U.S.A.
3. India 4. Japan
China and the U.S.A. need to import a considerable amount of oil although they’re big producers themselves.
6 OPEC (=Organisation of petroleum exporting countries) is an organisation with the goal to build a monopoly on the oil market. The members are:
Algeria, Angola, Equatorial Guinea, Libya, Nigeria, Iraq, Iran, Qatar, Kuwait, Saudi-Arabia, UAE (United Arabic Emirates), Venezuela
Germanys oil imports:
1. Russia – 35%
2. Norway – 11,8%
3. UK – 10%
Effects on the oil price Political events:
• Yom Kipur War (Israel Arabia)
• Islamic revolution (Shak was toppled)
• Iran – Iraq war
• Iraq invades Kuwait
• U.S.A. Invades Iraq Economic events:
• OPEC Price war
• Asian financial crisis
• Booming energy countries
• Financial crisis
• Glut (Überangebot) due to shale oil Effects of oil on tiny states
• Oil doesn’t reduce poverty or lengthens life expectancy
• Oil corrupts politics
• Oil erodes work ethics and corrupts society
→ Bloated civil service and bureaucracy
• Oil contracts mostly lay the foundation for exploitation
• Oil interests destabilise politics
• Rural – urban emigration Role of former colonial powers:
• Former powers get monopoly and give political support to the former colony
Chinese-African attitudes
• China invests 2 billion per year and is planning on investing more
• They have a “no strings attached” deal → no long term contracts
• Some companies treat the locals bad, others obey the local regulations
• The Chinese workers live very separated in Africa
• China could become a new colonial power in Africa, but they just want the iron ore, no political power.
Congo’s mineral wealth: Who benefits?
War→poverty→revolts→contracts to gain money & stop revolts→exploitation→corruption Die Schmiergeldjäger
The organisation “EITI” wants to fight corruption through…
… more transparency
… more control over state payments
Mining in Latin America
Companies have a hard time mining in Latin America, because the state sells them the right to mine in their countries, but they still have to work out a solution with the unwelcoming habitants. They say that mining companies pollute their environment. After some lawsuits, big companies had to stop their projects, even if they already had invested huge amounts of money. Also the locals lack the skills to provide enough food or skilled workers and often the companies are forced to deliver what the government can’t, such as infrastructure. But mining also has benefits: it helped to reduce poverty and increase economic growth, even when they foster corruption because of the high taxes they pay. The key to a successful mining site is the close cooperation with the local people.
More country classifications
Northern economically more developed countries (EMDCs) Southern economically less developed Countries (ELDCs)
8
Level of econ. development
Time 1 2 3
4 5
LDC Least developed country
LLDC Landlocked developing countries
(Landlock poses a significant barrier for international trade) Emerging countries More developed NICs
Asian Tigers NICS in South-East-Asia, such as South Korea, Taiwan or Indonesia
Human Development Index (HDI)
Because the GDP can be misleading and a country cannot be measured by looking simply at the economic growth, some experts suggest the Human Development index, that also includes the life expectancy and the expected and average school years.
W.W. Rostow’s Model of economic growth
Stage 1: A subsistence economy based on Farming. There is limited capital (money) and technology available to use resources and develop industry.
Stage 2: Resources are developed and improvements to agriculture start – often with overseas help. The beginnings of a transport network allows both resources and farm products to be exported
Stage 3: Increasing use of resources, plus investment in agriculture, transport and services. This sees the start of modern industrialisation in some core regions such as around the capital city.
Stage 4: Economic growth spreads more widely as technology and transport improve.
There is likely to be rapid urbanisation and more mechanisation in farming.
Stage 5: Rapid expansion of service industries and manufacturing declines. Social services support the less advantaged.
1: Traditional society
2: Pre-conditions for take-off 3: Take-off
4: Drive to maturity
5: Age of high mass consumption
Frog-Leap development
A frog- leap development occurs, when a society skips a step in this model. For example a traditional society all of a sudden acquires mobile telecommunications.
