💷 The Changing Economic World

Development & the gap

Development can be measured using GNI per head, which measures wealth, life expectancy, infant mortality and literacy, which measure quality of life and people's wellbeing, and the composite HDI, which combines several measures into one figure. Every measure has limitations: averages hide inequality within a country, data can be unreliable, and wealth does not always reflect wellbeing, which is why several measures are usually used together.

The Demographic Transition Model (DTM) describes how birth and death rates change as a country develops. In stage 1, both rates are high. In stage 2, the death rate falls due to improved medicine and clean water, causing the population to grow rapidly. In stage 3, the birth rate falls due to contraception, education and women's empowerment. In stage 4, both rates are low, and in stage 5, births fall below deaths, leading to an ageing population, as seen in Japan and Germany.

The development gap exists for physical reasons, such as being landlocked, having a hostile climate, natural hazards or disease, and for economic and historical reasons, such as colonial extraction, dependence on primary products with unstable prices, unfair trade terms, debt and conflict. The consequences include a wide gulf in wealth and health between countries, and migration towards places offering greater opportunity.

The gap can be narrowed through investment, industrial development, aid that works best when it is long-term and locally led, intermediate technology, fair trade, debt relief, microfinance, and tourism, such as Kenya's safari economy, although tourism income is often reduced by profit leakage to foreign-owned companies.

NEE case study — Nigeria

Nigeria has Africa's largest population and economy, and is a major oil exporter and regional power. Its economy is rebalancing, with agriculture's share shrinking while manufacturing, telecoms and finance grow, spreading jobs more widely and reducing dependence on the oil price.

TNCs such as Shell in the Niger Delta bring investment, jobs and technology into Nigeria, but they also take profits out of the country, and oil spills have wrecked farmland and fisheries. Aid helps fight malaria and other health gaps, but it can create dependency or be lost through corruption. Nigeria's growth also carries an environmental cost, including pollution in the Niger Delta, deforestation, and air pollution in Lagos. Exam answers should weigh up both the benefits and the costs before reaching a judgement.

The changing UK economy

Deindustrialisation saw the UK's coal, steel and shipbuilding industries decline as cheaper competitors emerged abroad, and the UK is now a post-industrial economy, with services making up around 80% of it. Science parks now cluster near universities, and business parks near motorways. Modern industry can also be greener, using on-site renewables, recycling water, and restoring old quarry sites.

The North-South divide means wealth is tilted towards the south-east of England. This is being countered by devolution, including metro mayors, transport investment such as HS2 and the Northern Powerhouse, and enterprise zones. The UK also remains closely connected to the rest of the world through trade, the Commonwealth, its reworked relationship with the EU, Heathrow Airport and the Channel Tunnel, and the undersea cables that make it a hub for global internet traffic.