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Global Interdependence 2017
Global Interdependence 2017
Global Interdependence 2017
GLOBAL INTERDEPENDENCE
Trade refers to the exchange of goods and services for money. The origin and continuing basis
of global interdependence is trade. The global trading system developed at the time of
European Colonial expansion. Here, a colonial division of labour emerged in which LEDCs
exported primary products, agriculture and minerals, while Europe and North America exported
manufactured goods. This remained the general pattern of World trade until the post-second
World war period when a more complex pattern of international trade emerged.
Goods and services purchased from other countries are termed imports while those sold to
other countries are termed exports. The difference between the value of a country’s imports
and exports is known as the balance of trade.
A trade deficit occurs when the value of a country’s imports exceeds the value of its exports. A
country can make up this difference by using its savings or by borrowing. A trade deficit is an
unfavorable balance of trade. A trade surplus occurs when the value of a country’s exports
exceeds its imports. This is a favorable balance of trade and contributes to GDP.
Visible trade involves items that have a physical existence and can actually be seen whereas
Invisible trade is trade in services such as travel and tourism, business and financial services.
Today, countries that do more of invisible trade are far richer than those that deal in visible trade
due to the profits involved.
1. Resource endowment. Trade results from the uneven distribution of resources over the
earth’s surface. Even the countries with an abundance of resources and a wide industrial
base cannot produce all the goods and services that their populations desire e.g.
Western Europe purchases oil from the Middle East. Canada, Brazil and Australia are
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known for exporting lots of raw materials on demand in the World. OPEC comprises of
12 oil- producing countries which dictate the prices of oil on the world market. Naturally
the countries not gifted with oil must trade with OPEC to get oil even if at times with very
high costs.
2. Increased productivity. Statistics from UK trade and investment state that companies
involved in overseas trade can improve their productivity by 34%. In doing this they gain
economies of scale. This refers to reduced costs per unit that arise from increased total
output of a product. Countries like China are able to out compete their competitors due
to increased productivity. China can afford to dump its products in the LIC’S thereby
putting them out of business. Increased productivity therefore means the surplus is
traded for profits.
4. Diversity of choice- trade enables us to access goods and services that we may not be
able to produce ourselves e.g second hand clothes from China at cheaper prices than
original cloths from Europe.
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established colonial networks overseas and have maintained such ties to varying
degrees in the post colonial period. Europeans maintained this trading relationship with
their colonies mainly for their own benefit. Colonies supplied raw materials cheaply and
these were processed into finished products which the colonies again had to buy. This
trade dependency is one of the reasons why poorer tropical countries have such limited
share of world trade with un favourable balance of trade, explaining why they are always
in debt.
7. Trade is an engine for growth and development, increased trade may help to spur
greater domestic economic growth and drive further improvements in living standards. It
mainly due to trade that Asian Tigers have emerged so powerful in the world today.
8. Locational advantage. Countries that have access to the sea are more advantaged in
global trade than landlocked countries. Accessibility to the rest of the World is easy and
cheap e.g. U.S.A, Japan, UK, Brazil, South Africa etc, other countries are centrally
located among rich countries that cultivate trade and commerce e.g Switzerland in the
heart of Europe, Canada’s manufacturing industry benefits from the closeness of the
huge American market. Some countries and cities are strategically located along
important trade routes, giving them significant advantages in international trade. For
example, Singapore, at the southern tip of the Malay peninsular, is situated at a strategic
location along the main trade route between the Indian and Pacific Oceans. Rotterdam
in the Netherlands is located at the mouth of R. Rhine on the North sea which is a
gateway to trade in the Rhinelands. Besides, landlocked countries have a locational
disadvantage, for they incur high transport costs, they are less accessible, hence, low
volume of trade, high import costs, trade deficit and therefore poverty e.g Malawi, Chad,
Zimbabwe etc.
9. Changes in the global market. The rapid growth of MICs/NICs has brought about
major changes in the economic strength of countries. An article in the Sunday Telegraph
entitled “Developing nations emerge from shadows as sun sets on the west” charted the
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financial problems that beset the west in the first decade of the new millennium,
culminating with the impact of the global recession 2008-10. “The west” is the term that
many financial writers use to describe the mature economies of the USA, Canada, the
EU, Japan, Australia and New Zealand. The article highlighted the poor decisions made
by western policy-makers, contrasting this with the powerful economic growth figures of
the BRIC nations i.e Brazil, Russia, India and China. These four together with other high-
growth nations outside of the established core group of nations, are known as emerging
markets. While the developed world grew by an average of 2.1 per cent a year in the
first decade of the 21st century, the emerging markets expanded by 4.2 per cent. Many
major investors have turned their backs on the western nations and seeking out
opportunities in the faster- growing emerging markets. The west no longer dominates the
worlds savings and a result no longer dominates global investment and finance.
10. Trade agreements/ Trade alliances/Trade blocs. Towards the end of the 1990’s a
number of regional trade agreements came into existence. Today there are in excess of
100. It is believed that just about every country in the world is involved in at least one
agreement.
These agreements strengthen the political base of a country, ensure security and can
even ensure food security between neighbours and trading partners through the use of
price fixing, quotas and tariffs. Some agreements have even worked to allow countries
into the global economy. Vietnam’s present day success is due almost exclusively to its
entry into the Asian Free Trade Area (ASEAN). Over 40% of North America’s volume of
Trade is through NAFTA- North American Free Trade Area consisting of USA, Mexico
and Canada. Non member countries have restrictions in trading with such trade blocs
i. Free trade areas – members abolish tariffs and quotas on trade between themselves but
maintain independent restrictions on imports from non-members countries e.g NAFTA -
North America Free Trade Agreement.
ii. Customs union – this is a closer form of economic integration. Besides free trade
between member nations, all members are obliged to operate a common external tariff on
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imports from non-member countries. Mercosur a trade bloc is a customs union joining
Brazil, Paraguay, Uruguay and Argentina in a single market of over 200 million people.
iii. Common markets. These are customs unions which in addition to free trade in goods and
services, also allow the free movement of labour and capital e.g COMESA.
iv. Economic unions. These have all common market characteristics but also require
members to adopt common economic policies on such matters as agriculture, transport,
industry and regional policy e.g the EU.
NB. All such arrangements have one unifying characteristic, the preferential terms that
trade participants enjoy over non-participating countries. Although no regional group has
yet adopted rules contrary to those of the WTO, there are some concerns:-
i. Regional agreements can divert trade, inducing a country to import from a member of
its trading bloc rather than from a cheaper supplier elsewhere.
ii. Regional groups might raise barriers against each other creating protectionist blocs.
iii. Regional trade rules may complicate the establishment of new global regulations.
12. Investment. This is key to increasing trade in a country. LICs and MICs that have
increased their trade have attracted the bulk of foreign direct investment e.g China,
Brazil, India and Mexico where as countries where trade has fallen in relation to national
income have not attracted much foreign direct investment especially sub-Saharan
Africa. Here businesses frequently operate in investment climates that undermine their
incentive to invest and grow. Economic, social and political instability deters investment
by making future benefits more uncertain or undermining the value of assets. Crime and
corruption represent a substantial risk to investment and increase the cost of doing
business in countries where this is a substantial problem.
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13. The terms of trade. The most vital element in the trade of any country is the terms on
which it takes place. If countries rely on the export of commodities that are low in price,
and need to import items that are relatively high in price, they need to export in large
quantities to be able to afford a relatively low volume of imports. Many poor nations are
primary product dependent, which means they rely on one or a small number of
primary products to obtain foreign currency through export. The world market price of
primary products has been generally low compared with that for manufactured goods
and services. Furthermore, the prices of primary products do fluctuate time and again,
making economic and social planning extremely difficult. In contrast, the manufacturing
and service exports of HIC’s generally rise in price at a reasonably predictable rate,
resulting in a more regular income and less uncertainty for the rich countries of the
world. The terms of trade for many LIC’s are worse now than they were two decades
ago. No wonder LIC’s are fighting to get out of poverty and have very high trade deficits.
14. The W.T.O is a factor that should be discussed in details in terms of how it affects global
trade.
Qtn. To what extent can Global inequalities in trade flows be explained in terms of
historical factors?
N.B For global inequalities in trade, refer to pages 398-399 (Nagle and Guiness- A level)
2. Describe and briefly explain the global inequalities in Merchandise trade in figure 3:1
ROLES OF WTO
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1. Progressive opening and regulation of markets.
The WTO’s mission is to open markets gradually while ensuring that rules are respected.
The origin of the organization dates back to the end of the 2nd W.W when the idea of
peaceful cooperation among people was emerging. In 1947, a number of countries
decided to open up their markets on the basis of common principles, and founded the
WTO’s predecessor -General agreement on tariffs and trade (GATT)
2. To solve trade disputes. The WTO plays the role of a trade tribunal where members may
file complaints against other members who fail to abide by the principles of international
trade. Culprits have always been punished.
3. Monitoring
The WTO regularly reviews the trade policies of its members. These reviews assess
whether WTO members are abiding by the set rules and measure the impact of their
domestic policies on international trade. This monitoring basically prevents problems
from occurring.
4. Training.
It provides training programs for government officials from developing countries e.g.
Ministry staff or custom officials. The WTO currently spends about 35 million Swiss
Francs annually on these programs. Africa is the main beneficiary, followed by Asia and
Latin America.
5. Orchestra conductor
WTO members established rules governing international trade. The WTO acts as an
orchestra conductor, ensuring that rules are respected.
6. Cooperating as appropriate with the international Monetary Fund and the World Bank with
a view to achieving greater coherence in global economic policy making. This is aimed at
building better understanding and coordination between a trade organization like IMF
and World Bank.
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AN EVALUATION OF WTO’S WORK (BENEFITS & CRITICISMS)
The WTO trading system has allowed disputes to be handled constructively. A lot of
international disputes that could lead to serious conflict have been settled because
countries can turn to WTO. Such conflicts are solved with a focus on WTO’s rules not
declaration of war, e.g the EU complained against Brazil about certain measures
concerning taxation and charges and a panel was composed, this was in 2013, in 2013
still U.S.A complained against Indonesia about the importation of horticultural products,
animals and animal feeds, Japan on 02/07/2015 requested consultations with Brazil with
respect to certain measures concerning taxation and charges in the automotive sector,
the electronics and technology industry, and tax advantage for exporters.
2. The WTO trading system has created a system based on rules rather than power which
makes life easier for all. The rules are agreements resulting from negotiations among
member governments, they are ratified by all member parliaments and all decisions taken
are generally made by consensus among all members. Smaller countries can enjoy some
increased bargaining power. Without WTO the more powerful countries would be freer to
impose their will unilaterally on their smaller trading partners. In the 10 th ministerial
conference in Nairobi, LIC’s demanded for the elimination of export subsidies on
agriculture and export products like cotton which have always led to unfair competition
with heavily subsidized agricultural products from the west.
3. The WTO has encouraged freer fairer trade. It has lowered trade barriers through
negotiation and applies the principle of non-discrimination. This has reduced costs of
production and reduced prices of finished goods and services and ultimately a lower cost
of living e.g U.S.A’s trade with China in textiles, high tech. products among others, the
WTO trading system has liberalized telephone services making phone calls cheaper.
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The rules written into the agreements allow barriers to be lowered gradually so that
domestic producers can adjust. These rules spall out when and how governments can
protect their domestic producers, for example from imports that are considered to have
unfairly low prices because of subsidies or ‘dumping’.
4. The WTO trading system provides more choice of products and qualities. Imports have
allowed people more choice and a wider range of qualities, even the quality of locally
produced goods have improved because of the competition from imports e.g the
importation of Japanese cars in U.S.A has given people a wider choice of selection and
has forced the American car manufacturing industry to improve on quality.
5. The well co-coordinated trade by |WTO has raised the incomes of many countries and
peoples World Wide. Jobs have been created and standard of living raised e.g the EU
commission calculates that the creation of its single market means that around 300,000 –
900,000 more jobs have been created, in the U.S.A 12 million people owe their jobs to
exports, 1.3 million of those jobs were created between 1994 and 1998.
6. The WTO helps to increase order, efficiency and to cut costs even more because of
important principles built up in the system. Imagine a situation where each country sets
different rules and different customs duty rates for imports coming from different trading
partners.
7. The WTO trading system has shielded governments from lobbying especially that powers
can’t persuade policy makers in the WTO. Governments have been armed against
pressure from narrow interest groups so that a wide range of sectors are covered. These
lobbyists persuade policy makers about the worthiness of their causes instead of looking
at the larger economic picture of the world.
8. The system encourages good government. The rules include commitments not to
backslide into unwise policies. Protectionism with its disadvantages damages a country
domestically and internationally. This happened in the 1930’s. WTO has through its
principles encouraged good government peace and reduction in corruption.
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9. It has stimulated economic growth by allowing freer trade, promoting peace, increasing
specialization by some countries among others. The “BRICs” have emerged powerful
partly as a result of WTO principles of freer trade.
However, the following criticisms have been brought up against the WTO:-
1. It is alleged to be fundamentally undemocratic and not transparent. The rules are written
by and for corporations with inside access to the negotiations. Countries like U.S.A,
Canada, EU and Japan are said to be much favored by the WTO. Although the majority
of other members are developing countries from Africa, Asia/Pacific and Latin America,
many of them have little say in decisions that are taken at WTO meetings. They don’t
have enough to offer from an economic standpoint to have any real power. This closes
the voices of poor countries.
Decisions are made in “green room processes”. Ministerial meetings are just for
speeches but real agreements are discussed by small gatherings of HICS invited by the
director general. That is why the cry by LICS to ask HICS to stop overly subsidizing
agricultural products has failed.
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2. The WTO will not make us safer. The domination of international trade by rich countries
for the benefit of their individual interests fuels anger and resentment that make the
globe less safer e.g developing countries in Doha round were only represented on paper
but nothing big really happened after. Several countries, including Kenya, India and
Pakistan, have been calling the WTO to force developed countries to phase out
subsidies paid to farmers whose overproduction threatens the livelihoods of farmers in
the LIC’s but nothing much has changed. Such situations make the planet unsafe.
Moreover, WTO has removed the sovereignty or powers of governments in LICS. These
countries do not decide on what they think is most important. Genetically modified foods
with questionable nutrient values have overtaken our traditional high nutrient seeds by
storm, infiltrated markets of LICS and outcompeted the local farmers.
Governments in LICS have no power over them since the WTO agreement on
agriculture calls for privatization, market access and lifting of tariffs among others.
OECD report in 2000 put US, EU and Japan subsidy rates at 20.000 US Dollars a
farmer; h how then can a poor LIC farmer compete with farmers from the west?
Impossible
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3. It is said to privatize essential services that are vital for poverty reduction such as health
care, education, Telecommunications, energy and water. This happens so mostly in the
LIC’s with their debt burdens and as a solution, through the WTO, the IMF and World
Bank create conditions under which they can either give Aid or Debt Relief, such
conditions include promoting privatization of public services and resources which are
then taken up by transnational corporations. They therefore become more expensive for
the already poor consumers.
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producing these drugs and high-tech products is criminal by WTO rules under the Trade-
Related Aspects of Intellectual Property Rights ( TRIPS)
The only option LICS are left with, is buying such drugs very expensively or allow foreign
direct investment by transnational corporations. These corporations normally take back
most of the profits to their home governments and reserve top leadership positions for
their nationals. What LIC’s need is the freedom to try to use such technology to develop
some generic drugs for the majority of their poor people. Generic drugs are allowed for
sale after the patents on the original drugs expire, this takes up to 20 years.
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5. Agriculture- This is probably the most blatant violation of the WTO principles. WTO
Agreement on agriculture commits governments to improve market access and reduce
trade-distorting subsidies in agriculture but due to pressure and manipulation from the
rich northern countries, EU, USA and Japanese agricultural products have been heavily
subsidized with disastrous effects on LIC’s who have liberalized and removed subsidies
in agriculture e.g OECD report in 2000 put US, EU and Japan subsidy rates at 20.000
US Dollars a farmer; how then can LIC farmers compete with such farmers?
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6. Many developing countries do not have the capacity to follow the negotiations and
participate actively in the ministerial meetings that take place. They end up being
passive participants and major decisions take them by surprise.
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8. As a candidate, discuss the disadvantages of “FREE TRADE” especially on
LIC’S.
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better deal and improved terms of trade. Fair Trade products include coffee, Tea, Sugar, Cocoa,
Crafts, wine, bananas, honey and flowers among others.
It operates as follows:-
1. Small –scale producers, group together to form a co-operative or other democratically
run association with high social and environmental standard. In Rwanda, Abakundakawa
and Mayogi cooperatives in the northern parts of the country are Fair Trade certified.
2. These co-operatives deal directly with companies or fair Trade distributors cutting out
middle men. Such Fair Trade distributors then send the products to stores/super markets
or Fair Trade shops such as Tesco and Sainsbury in UK.
3. HIC’s Companies pay significantly over the world market price for the products traded.
4. The higher price achieved by the LEDC co-operatives provides both a better standard of
living and saves money to re-invest in the farms of producers.
N.B. fair trade food and drinks are certified by independent third party lobbying
organizations such as “fair trade U.S.A” and institute for marketology.
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Fair Trade Logos or symbols of identification.
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ROLE OF FAIR TRADE.
The role of Fair Trade is embedded in its 10 principals.
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Fair Trading Practices. Trading fairly with concern for the social, economic and
environmental well-being of producers
Ensuring no child labor and forced labor is carried out as per United Nations
Convention on children’s rights.
Ensuring good working conditions. Providing a safe and healthy working environment
for producers and workers in line with the International Labour Organization
Conventions.
Providing capacity building. Seeking to develop the skills of producers and workers so
they can continue to grow and prosper.
Promoting Fair Trade. Raising awareness for the need of greater justice in world trade
by trading fairly with poor communities.
Respect for the environment. Caring for the environment by maximizing use of
sustainable energy and raw materials while minimizing waste and pollution.
Fairtrade evaluation.
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Qtn. Examine the achievements of
Fair Trade [20]
Fair Trade is a model of importing goods that have been created by workers
who are earning real livable wages for what they are doing. Instead of taking
advantage of the free market system to pay workers in the undeveloped world
next to nothing, producers agree to meet specific wage and production
standards in return for certain import concessions.
The overall concept of Fair Trade seems very positive upon first glance. Digging
deeper, there are some disadvantages to the Fair Trade system that must also
be evaluated. Here is a look at some of the key points to consider when
evaluating Fair Trade.
BENEFITS
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2. Discrimination is not allowed.
Workers in a Fair Trade cooperative are free from discrimination. This allows for
equal job opportunities that may not always be available to local workers. The
two points of emphasis are gender and religious discrimination. That’s why
many workers in cooperatives tend to be women as they can earn triple the
wages through Fair Trade [or more] when compared to wages earned through a
more conventional means.
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6. Organic techniques are often used to create Fair Trade products.
In the developed world, the conversation has evolved into the pros and cons of
eating GMO foods. In the Fair Trade world, there is no debate. Organic
techniques are used almost 100% of the time, creating a sustainable growing
pattern that the environment is able to support year after year.
FAILURES
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several thousand dollars, which can put the price of Fair Trade membership out
of reach for local entrepreneurs who are trying to change their communities.
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environment as well because profitable practices instead of sustainable practices
are implemented.
The Fair Trade pros and cons show that we need to make sure unethical
practices no longer stay out of sight. Instead of putting an emphasis on cheap
goods and services, we should be placing a point of emphasis on the working
conditions of those who are producing what we are using. Far too often cheap
prices exploit these workers. Fair Trade practices may not be perfect, but they
do help to stop the practice of free market exploitation.
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Terminologies used:
Answer =-----------------------------------------
Unpayable debt. An external debt when the interest on the debt is beyond the means of
a country. Such a debt is hard to pay.
Debt outstanding. Average outstanding balance
Debt service. The cash that is required for a particular time / period to cover the re-
payment of interest and amount owed on a debt.
Debt service ratio. The ratio of debt service payments (principal plus interest) of a
country to that country’s export earnings.
Debt relief- Partial or total forgiveness of debts, or slowing or stopping debt growth
owed by nations. Poor countries all over the World have been struggling to pay off debts
to banks, lending agencies e.g. MF and governments in MEDCs.
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recession of the 1980s and 1990s in Western countries plus crop surpluses which
resulted in a fall in prices and export earnings by LIC’s left many of them unable to pay
the interest on their debts. This period in Latin America is referred to as the lost decade
(1980’s) which pressed Mexico hard until its finance minister declared that the country
was unable to pay its outstanding debt in August, 1982.
2. Many of the loans that burden the World’s poorest countries were given under dubious
circumstances and at times at very high interest rates by the Western World.
Banks frequently lent irresponsibly to governments that were known to be corrupt e.g
Sani Abacha of Nigeria reportedly held 2billion USD in Swiss bank accounts in 1999
most of which was borrowed money from international creditors. Besides the Apartheid
government of South Africa is widely condemned by the International Community for
spending lots of borrowed money on police and military to repress the African majority,
further still, Mobutu Sese Seko is thought to have taken 4 billion USD to his personal
accounts. These are termed as odious debts, i.e national debts incurred by a regime for
purposes that do not serve the best interest of the nation.
3. The legacy of colonialism. Colonial powers left their former colonies with high and unfair
levels of debt when they became independent. Such debts were often at very high
interest rates e.g Haiti was forced to pay for damages France suffered during the Haitian
Revolution because they believed that International trade with France and other
countries would be the key for them to survive and thrive after the 1791 revolution. Haiti
was to pay an equivalent of 21billion USD to compensate former plantation owners who
had lost their property during the revolution. In 1947, Indonesia as a condition of
independence was required to assume the Dutch Colonial government’s debt, much of
which had been acquired fighting pro-independence rebels in the previous years.
4. In recent years much of the debt has been rescheduled and new loans have been
issued. However, new loans have frequently been granted only when poor countries
agreed to very strict conditions e.g. agreeing to free trade measures, which have opened
up their markets to intense foreign competition, severe cuts in spending on public
services such as education and health and privatization of public companies. These new
loans with their stringent measures have increased the debt crisis.
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IMF Executive Board Approves Immediate Debt Relief for
25 Countries
April 13, 2020
“Today, I am pleased to say that our Executive Board approved immediate debt service
relief to 25 of the IMF’s member countries under the IMF’s revamped Catastrophe
Containment and Relief Trust (CCRT) as part of the Fund’s response to help address
the impact of the COVID-19 pandemic.
“This provides grants to our poorest and most vulnerable members to cover their IMF
debt obligations for an initial phase over the next six months and will help them channel
more of their scarce financial resources towards vital emergency medical and other
relief efforts.
“The CCRT can currently provide about US$500 million in grant-based debt service
relief, including the recent US$185 million pledge by the U.K. and US$100 million
provided by Japan as immediately available resources. Others, including China and the
Netherlands, are also stepping forward with important contributions. I urge other donors
to help us replenish the Trust’s resources and boost further our ability to provide
additional debt service relief for a full two years to our poorest member countries.”
The countries that will receive debt service relief today are: Afghanistan, Benin, Burkina
Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea,
Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger,
Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and
Yemen.
IMF Communications Department
5. Statistical credibility problems. When unreliable data about the country’s finances exist, it
makes it impossible to predict budget deficit and to deal with the public debt. This only
worsens the country’s debt crisis. You probably heard how Nigeria became the biggest
economy in Africa overnight in 2014. This happened simply on account of changing the
method of calculating GDP- the so-called rebasing. The review ought to have been
carried out every three or five years but in this case it wasn’t done for decades. Many
countries in Africa and some European countries like Greece have suffered soaring
debts due to statistical credibility problems.
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6. Poor government spending. This has happened due to running of large deficits to
finance enormous military expenditure, public sector jobs, pension and other social
benefits. LEDCs have borrowed lots of money which has not yielded any profits in
return. Greece has also gone into a debt crisis, it’s the 2 nd biggest defense spender after
U.S.A according to NATO. In Africa Algeria is the biggest military spender with 4.48% of
GDP followed by Angola with 3.63% of GDP yet these two countries have debts to
finance.
7. Tax evasion has caused a debt crisis in so many LEDCs and MEDCs. Government tax
incomes have gone so low yet services provided by the governments are fully
consumed. This has created a situation where government can’t hardly finance their
debts e.g In Greece the scale of tax evasion can be relatively safely estimated at
somewhere between 6% and 9% of GDP, which amounts to something between 11 and
16 billion Euro’s a year.
8. When poor countries face natural disasters such as hurricanes, floods and fires, the
cost of rebuilding becomes even more of an issue when they are already burdened with
debt. This causes a debt crisis e.g Floods of Mozambique and Madagascar. World
Bank has announced giving US $73.6m for rehabilitation of roads and bridges in
Mozambique after the 2013 floods.
The Executive Board of Directors for World Bank has approved additional funds
estimated to be US $73.6m to support the management and preservation of
roads and bridges in Mozambique.
According to the World Bank, the loan will also fill the financial gap for road
rehabilitation related to floods in Southern Gaza Province, after flooding of the
Limpopo River Basin in 2013. The organization noted it was pleased to support
the country in classified road rehabilitation, upgrading and maintenance in order
to improve access.
World Bank further noted that after the 2013 flooding in the area, over 2200
kilometers of roads – constituting of more than 70% of the roads in the area –
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were damaged, making the cost to be US $183m. World Bank had initially given
out 70.15m to the Mozambican Government in 2013.
Poor countries pay a high price to service their debt, and this cost is particularly
born by people living in poverty. The massive debt payments that poor countries
owe to rich countries and to multilateral creditors like World Bank and
International Monetary Fund take resources away from investments that benefit
ordinary people and contribute to social development. According to Oxfam
International’s April 1997 report, poor country Debt Relief, ‘Debt repayments
have meant health centres without drugs and trained staff, schools without basic
teaching equipment, and the collapse of agricultural extension services.’
The obligation to meet debt service payments also means that aid from other
countries like the US is often used to refinance debt payments rather than improving
health care, education, and other social services.
The IMF and World Bank require economic restructuring (Structural Adjustment
Programs or SAPS) before a country can qualify for debt relief. These
requirements can include reducing inflation, removing price controls, reducing
tariffs and other restrictions of foreign trade, and government downsizing. While
in the long run they may help a country become more competitive in the global
market, in the short run they can lead to local business failures in the face of
global competition, massive lay-offs, lower wages, and even less investment by
government in education, health, and other social programs since governments
must cut down on their expenditure.
The debt crisis can also affect the environment. International debts have to be
paid back in creditors’, or so-called “hard currencies” like U.S dollars. This may
have made worse the harmful environmental practices that prevail in many
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countries, as governments and entrepreneurs mine their natural resources in
order to generate hard cash.
The debt burden carried by impoverished countries affects citizens in the rich
countries as well. Environmental damage has global repercussions. Widespread
poverty means that people have less money to buy goods and services from
other countries. Debt reduction for the poorest countries would not represent a
new or unique policy for countries like USA. The western world has recognized
that debt reduction can be a sound foreign policy.
Debt crisis may cause public outcry which may lead to development of political
activists who may later drag the nation into political unrest. In July 2015, Greeks
through opposition political groups took on to the streets challenging the
government’s failure to put the economy in order and called upon the reigning
government to step down.
DEBT CRISIS: large debts owed by countries overwhelm so that they become unable to service
their debts.
DEBT RELIEF
It is the partial or total forgiveness of a debt, or the slowing, rescheduling or restructuring of debt
owed by nations, individuals or corporations. The joint IMF-World Bank comprehensive
approach to debt reduction is designed to ensure that no poor country faces a debt burden it
cannot manage. To date, debt reduction packages under the HIPC Initiative have been
approved for 36 countries, 30 of them in Africa.
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2. Boosting social spending. Before the HIPC Initiative, eligible countries were, on average,
spending slightly more on debt service than on health and education combined. Now,
they have increased markedly their expenditures on health, education, and other social
services. On average such spending is about five times the amount of debt-service
payments.
3. It improves foreign direct investment potential by removing trade and investment
restrictions. This is because IMF and World Bank require as a must that countries whose
debts have been cancelled or given relief embrace liberal economies and become open
to international trade as much as possible. In the long run this may develop the country’s
economy.
4. It reduces government deficits through cuts in spending. To qualify for debt relief,
countries must show a clear program in which they will reduce their expenditure on
public services like health, education among others, this may save some of the money
that LIC’s spend on projects that do not benefit the local person in rural areas.
5. Debt relief forges international friendship between countries. The relieved country now
pledges allegiance to its former creditor and this may start other long term negotiations
in various sectors of the economy. In 2015, China cancelled 40 million US dollar’s worth
of debt owed by Zimbabwe and to date, China is the largest investor and greatest
international friend to Zimbabwe.
1. Countries have to live up to the expectations of their creditors especially World Bank and
IMF by reducing their expenditure on health, education, transport, agriculture among
others. This once happened to Malawi between 2001/02 and 2004/05 when it had to cut
subsidies to its farmers as a way of cutting down on government expenditure, which
caused widespread famine in the country, low healthcare causing lots of death.
2. Debt relief increases pressure on countries to generate exports to pay off the debt. This
is likely to increase deforestation, land degradation and other environmental damages.
Countries have to export more in order to generate hard currency to pay off such debts.
3. Some MEDCs may offer debt relief in order to pursue their own interests in LEDCs
especially dump their manufactured products. This has been so in relation to China and
Africa.
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4. It is often accompanied by a shift from domestic food cultivation to production of cash
crops or commodities for export in attempt to gain foreign currency, this has always
brought in foreign agricultural investors who out compete local farmers on top of causing
food shortages.
5. Debt relief may lead to accumulation of debt especially because the extended period of
debt payment also increases the interest rates. This accumulation of debt further leads
to a dependency syndrome where LIC’S feel they cannot survive without foreign help.
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However this has caused more misery as home industries
succumb to greater competition from highly subsidized western
world products, unemployment and profit repatriation. With
time the indebted country grows poorer and develops a
dependency syndrome on the donors.
In 2006 and 2007 the MDRI i.e Multilateral Debt relief Initiative
approved by the finance ministers of the G8 in June 2005 in
Scotland and the Inter- American Development Bank also
decided to provide debt relief to 5 HIPC’S in the western
hemisphere. At the end of 2003, Brazil, Argentina and Uruguay
had an outstanding debt of USD 48 billion but through the
MDRI, the debt fell to USD 3.1 billion in July 2006. Other
countries such as Nicaragua and Honduras were also included
in this initiative. However this helped reduce the debt burden
of a few countries.
The role of the G8. In 2005, the G8 leaders met in Scotland and
decided that 40-50 billion dollars of debts to the World Bank,
IMF and African Development Bank by 18 heavily indebted
countries be written off. However this only helps 10% of the
problem since there are more than 60 countries that need this
help, moreover the conditions attached to this cancellation only
yields more poverty and dependency of LIC’s on HIC’s.
The Jubilee Campaign is a coalition of national organizations
and local groups around the UK, calling for the unjust and
unpayable debts of the poorest countries to be cancelled.
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These work together and monitor the G8’s promise to fund
poor countries and cancel their debts. The concept of debt
cancellation and celebration is linked to the Old Testament
concept of Jubilee which meant that every 50 years people sold
into slavery or land sold due to bankruptcy would be
redeemed.
In 2010, The Jubilee campaign helped in calling for the
complete cancellation of Haiti’s debt after a huge earthquake in
the country. It has also helped to stop the payment of unjust
debts to vulture funds. Jubilee’s campaigns main aim is to “drop
the debt”.
Countries own initiatives have gone a long way in reducing the
debt burden, for example in Rwanda corruption is treated as a
crime and as open theft NOT as an administrative error. When
convicted the offender returns all the embezzled funds and
pays a fine of two or three times of what was stolen.
In many African countries such as Uganda, Kenya, Nigeria,
Benin, and Ghana among others, the economy has been fully
privatized with almost 90% of former government institutions
sold off to private companies and individuals. This has reduced
government spending and help pay off foreign debts, though
the corruption levels still make such campaigns almost useless.
Other countries like Greece have set up tax inspection units in
the country to fine and close down all businesses that evade
taxes. This has helped the government realize some income to
pay off foreign debts. However tax evasion continues in many
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parts of the country because at times the inspectors are bribed
to pay a deaf ear to some businesses.
Other countries like Ivory Coast, South Africa, Morocco and
Zambia have resorted to charging high personal income taxes
on both resident and non-resident employees on their income
in order to raise revenue for servicing foreign debts. This
however destroys internal businesses and discourage foreign
direct investment.
INTERNATIONAL AID
Aid is assistance in the form of grants or loans at below market rates.
1. Aid may be given for humanitarian purposes e.g disaster aid like that
which was given to Haiti after the 2010 earth quake and Indonesia
after the Tsunami.
2. Bilateral aid or tied Aid is strongly influenced by ties of colonialism
and re-colonialism e.g. it would be easy for Britain to give aid to
common wealth countries due to colonial connectedness.
3. Aid may be given with strings attached such that the donor country
earns more from the recipient by dominating the recipient’s economy
especially Chinese aid which is followed with dumping of Chinese
products.
Debt-trap diplomacy is a term used as criticism of foreign policy of
the Chinese government. It claims China intentionally extends
excessive credit to another debtor country with the alleged intention
of extracting economic or political concessions from the debtor
country when it becomes unable to honor its debt obligations
(often asset-based lending, with assets including infrastructure). The
conditions of the loans are often not made public and the loaned
money is typically used to pay contractors from the creditor country.
In a new tweet the Chinese Exim Bank clarifies that the bank now
has full control over Kenneth Kaunda Airport, Zambia's main
broadcast cooperation and the ZESCO Power plant. These Chinese
take-overs are a result of the total loans that Zambia are granted
by China.
4. Some aid is given after pressure from organizations like UN, OXFAM
and CAFOD towards IMF, World Bank and HIC’s to give a certain
percentage of national income or profits earned to poor countries as
humanitarian Aid.
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5. The mid 1950s Aid was given as a battle for influence between the
West and East in the developing World. USA was determined to
destroy communion by spreading capitalism such that all countries
that adopted capitalistic governments acquired large sums of Aid
inform of grants.
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Emergency or short-term aid - needed after sudden disasters such
as the 2000 Mozambique floods or the 2004 Asian tsunami.
POSITIVE IMPACT
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5. In situations where LIC’s lack the hard currency to pay for imports
such as oil and machinery. Aid will play a role of availing them with
the foreign exchange they need. i.e foreign exchange gap is solved.
6. Aid can help developing countries to acquire the technical skills
needed for developing through hiring expatriates who in turn train the
home labor i.e technical gap is solved. The South African government
has achieved a lot out of British expatriate labour in their economy.
7. Aid plays a role of creating jobs once development in sectors like
industry and transport among others have taken place.
8. Bilateral aid may create international friendship between the donor
country and the recipient country which may lead to development and
exchange of other important values e.g political support.
9. Projects that developed clean water and sanitation can lead to
improved health and living standards.
NEGATIVE IMPACT
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3. Aid can be used to put political, social or economic pressure on the
receiving country e.g Sweden and Denmark withdraw aid towards
Uganda because of Uganda’s negativity towards homo-sexuality.
4. It may be a condition of the investment that projects are run by
foreign companies or that a proportion of the resources or profits will
be sent abroad.
5. The use of aid on large capital – intensive projects may actually
worsen the conditions of the poorest people.
6. Aid may delay the introduction of reforms, for example the
substitution of food aid for land reform.
7. Some development projects may lead to food and water costing
more.
International tourism arrivals refer to visitors who stay at least one night
in a collective or private accommodation in the country visited.
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Inbound tourism means visits to a country by visitors who are not
residents of that country. Outbound tourism means visits by residents of
a country outside that country.
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REASONS FOR THE GROWTH OF INTERNATIONAL
TOURISM
Political.
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Economic
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Social
1. The Middle East led the way with an average annual growth
rate of 10% Saudi Arabia and Egypt in particular showed
strong growth as major resort destinations while the UAE is
attracting a growing number of leisure and business
travelers.
2. The next highest rate of increase was in the Asia Pacific
region with an annual average growth of 8%. This was due
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to rapid economic expansion in the region, increased
marketing of tourism opportunities and improved
transportation infrastructure.
3. Tourism in Africa rose by an average of 6% led by adventure
tourism sector.
4. In comparison with other parts of the developing world the
tourism industry in Latin America and the Caribbean
recorded much lower growth rates of around 3% over the
same time/period. In this region however the former more
mature tourist destinations like Mexico and the Caribbean
have lost out to the south and Central American countries.
5. Although the developed regions of the world remain the
largest tourism destinations their dominance is reducing and
recent growth rates have been relatively low. (N.B refer to
pages 419-420 Garret Nagle and Paul Guinness A level for
description of various trends shown)
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killed almost 200 people when bombs were set off on 4
commuter trains, and elsewhere, have lowered the number
of visitors to such countries.
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5. Exchange rate fluctuations for example, if the value of the
dollar falls against the Euro and the Pound. It makes it more
expensive for Americans to holidays in Europe, but less
expensive for Europeans to visit the U.S.A
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7. International image; a 2006 US Hollywood made film called
“TURISTAS” caused major concern in Brazil. It depicted a
group of US backpackers whose holiday in a Brazilian resort
turned into a nightmare when they were drugged and
kidnapped and then their organs were removed by organ
traffickers.
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IMPACTS OF TOURISM ON THE ENVIRONMENTS,
SOCIETIES AND ECONOMIES OF TOURIST DESTINATIONS.
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3. Displacement of people to make way for tourist
developments.
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Early 2017, around 150,000 people in Barcelona marched to
demand that the Spanish government allow more refugees
into the country. Shortly afterwards, “Tourists go home,
refugees welcome” started appearing on the city’s walls; soon
the city was inundated with protestors marching behind the
slogans “Barcelona is not for sale” and “We will not be driven
out”. Reported by the Guardian newspaper- UK
4. Abuse of human rights by governments and companies in
the quest to maximize profits. Local fishermen are denied
access to their former fishing grounds, child sex tourism is
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rampant in Thailand, water and electricity have become
expensive around tourist resorts and denying local residents
access to beaches.
5. Visitor congestion at key locations hindering the movement
of local people. This describes destinations like Barcelona.
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6. The loss of housing for local people as more visitors buy
second homes in popular tourist areas.
One of the most controversial issues of conflict is whether the
demand for second homes has a displacement effect on the
permanent residents. It has been argued that, especially in
attractive destinations, the demand for second homes has led to
an involuntary outmigration among permanent residents. Due to
the documented socio-economic differences between second
home owners and permanent residents in the countryside,
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second home buyers can outbid the competition from permanent
residents. Hence, permanent residents must buy dwellings
elsewhere, or must leave due to rising living costs through
increased property taxes in the area.
Positive
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Tourism not only creates jobs in the tertiary sector, it
also encourages growth in the primary and secondary
sectors of industry. This is known as the multiplier
effect which in its simplest form is how many times
money spent by a tourist circulates through a country's
economy.
Money spent in a hotel helps to create jobs directly in
the hotel, but it also creates jobs indirectly elsewhere
in the economy. The hotel, for example, has to buy
food from local farmers, who may spend some of this
money on fertilizer or clothes. The demand for local
products increases as tourists often buy souvenirs,
which increases secondary employment.
The multiplier effect continues until the money
eventually 'leaks' from the economy through imports -
the purchase of goods from other countries.
.
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It is an important factor in the balance of payments of
many nations. (Explain BOP)
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NEGATIVE
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jobs created are menial, low paid and seasonal overseas
labor may be brought in to fill middle and senior
management positions.
At some destinations tourists spend most of their money in
their hotels with minimum benefit to the wider community.
Locations can become over dependent on tourism. This
overdependence may become disastrous if something
strikes the industry.
International trade agreements such as general agreement
on trade in services (GATS) are a major impetus to
globalization and allow the global giants to set up in most
countries. Even if governments favor local investors there is
little they can do.
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Tourist revenues can fund the destination and management
of protected areas such as national parks and forest
reserves.
Creates awareness among people on how to sustainably
manage environments, especially if its ecotourism.
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Negative environmental impacts of tourism
Negative environmental impacts of tourism occur when the level of visitor use
is greater than the environment’s ability to cope with this use. Uncontrolled
conventional tourism poses potential threats to many natural areas around the
world. It can put enormous pressure on an area and lead to impacts such as:
soil erosion, increased pollution, discharges into the sea, natural habitat loss,
increased pressure on endangered species and heightened vulnerability to
forest fires. It often puts a strain on water resources, and it can force local
populations to compete for the use of critical resources.
Water resources
The tourism industry generally overuses water resources for hotels, swimming
pools, golf courses and personal use of water by tourists. This can result in
water shortages and degradation of water supplies, as well as generating a
greater volume of waste water.
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Golf course maintenance can also deplete fresh water resources. In recent
years golf tourism has increased in popularity and the number of golf courses
has grown rapidly. Golf courses require an enormous amount of water every
day and this can result in water scarcity. Furthermore, golf resorts are more
and more often situated in or near protected areas or areas where resources
are limited, exacerbating their impacts. An average golf course in a tropical
country such as Thailand needs 1500kg of chemical fertilizers, pesticides and
herbicides per year and uses as much water as 60,000 rural villagers.
Land degradation
Important land resources include fertile soil, forests, wetlands and wildlife.
Unfortunately, tourism often contributes to the degradation of said resources.
Increased construction of tourism facilities has increased the pressure on
these resources and on scenic landscapes.
Animals are often displaced when their homes are destroyed or when they are
disturbed by noise. This may result in increased animals deaths, for example
road-kill deaths. It may also contribute to changes in behaviour. Animals may
become a nuisance, by entering areas that they wouldn’t (and shouldn’t)
usually go into, such as people’s homes. It may also contribute towards
aggressive behaviour when animals try to protect their young or savage for
food that has become scarce as a result of tourism development.
There are also many cases of erosion, whereby tourists may trek the same
path or ski the same slope so frequently that it erodes the natural landscape.
Sites such as Machu Pichu have been forced to introduce restrictions on
tourist numbers to limit the damage caused.
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Local resources
Tourism can create great pressure on local resources like energy, food, and
other raw materials that may already be in short supply. Greater extraction
and transport of these resources exacerbates the physical impacts associated
with their exploitation.
Pollution
Tourism can cause the same forms of pollution as any other industry: Air
emissions; noise pollution; solid waste and littering; sewage; oil and
chemicals. The tourism industry also contributes to forms of
architectural/visual pollution.
One study estimated that a single transatlantic return flight emits almost half
the CO2 emissions produced by all other sources (lighting, heating, car use,
etc.) consumed by an average person yearly.
Anyway, air pollution from tourist transportation has impacts on a global level,
especially from CO2 emissions related to transportation energy use. This can
contribute to severe local air pollution. It also contributes towards climate
change.
Noise pollution from aircraft, cars, buses etc, can cause annoyance, stress,
and even hearing loss for humans. It also causes distress to wildlife and can
cause animals to alter their natural activity patterns.
Whilst it is generally an unwritten rule that you do not throw rubbish into the
sea, this is difficult to enforce in the open ocean. In the past cruise ships
would simply dump their waste while out at sea. Nowadays, fortunately, this is
less commonly the case, however I am sure that there are still exceptions.
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Solid waste and littering can degrade the physical appearance of the water
and shoreline and cause the death of marine animals. Just take a look at the
image below. This is a picture taken of the inside of a dead bird. Bird often
mistake floating plastic for fish and eat it. They cannot digest plastic so once
their stomachs become full they starve to death. This is all but one sad
example of the environmental impacts of tourism.
Source: IFL Science
Mountain areas also commonly suffer at the hands of the tourism industry. In
mountain regions, trekking tourists generate a great deal of waste. Tourists on
expedition frequently leave behind their rubbish, oxygen cylinders and even
camping equipment. This is common on Mt. Kilimanjaro in Tanzania.
Sewage
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polluted seas and lakes surrounding tourist attractions around the world. This
damages the flora and fauna in the area and can cause serious damage to
coral reefs. An example of a polluted water body in East Africa due to tourism
is Lake Victoria.
Aesthetic Pollution
Often tourism fails to integrate its structures with the natural features and
indigenous architecture of the destination. Large, dominating resorts of
disparate design can look out of place in any natural environment and may
clash with the indigenous structural design.
The development of tourism facilities can involve sand mining, beach and
sand dune erosion and loss of wildlife habitats. The tourist often will not see
these side effects of tourism development, but they can have devastating
consequences for the surrounding environment. Animals may displaced from
their habitats and the noise from construction may upset them.
For example, in order to develop the resort of Kotu in The Gambia, a huge
section of the coastline was demolished in order to be able to use the sand for
building purposes. This would inevitably have had severe consequences for
the wildlife living in the area.
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Deforestation and intensified or unsustainable use of land
Likewise, coastal wetlands are often drained due to lack of more suitable
sites. Areas that would be home to a wide array of flora and fauna are turned
into hotels, car parks and swimming pools.
Marina development
The building of marinas and ports can also contribute to the negative
environmental impacts of tourism. Development of marinas and breakwaters
can cause changes in currents and coastlines. These changes can have vast
impacts ranging from changes in temperatures to erosion spots to the wider
ecosystem.
Coral reefs
Coral reefs are especially fragile marine ecosystems. They suffer worldwide
from reef-based tourism developments and from tourist activity.
All of these factors contribute to a decline and reduction in the size of coral
reefs worldwide. This then has a wider impact on the global marine life and
ecosystem, as many animals rely on the coral for as their habitat and food
source.
Trampling
Tourists using the same trail over and over again trample the vegetation and
soil, eventually causing damage that can lead to loss of biodiversity and other
impacts.
Such damage can be even more extensive when visitors frequently stray off
established trails. This is evidenced in Machu Pichu as well as other well-
known destinations and attractions, as I discussed earlier in this post.
In marine areas many tourist activities occur in or around fragile ecosystems.
Anchoring, scuba diving, yachting and cruising are some of the activities that
can cause direct degradation of marine ecosystems such as coral reefs. As I
said previously, this can have a significant knock on effect on the surrounding
ecosystem.
For example, wildlife viewing can bring about stress for the animals and alter
their natural behavior when tourists come too close.
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QTN. Describe the stages through which tourist destinations evolve over time.
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THE LIFE CYCLE MODEL OF TOURISM.
Time
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involvement
Involvement
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CARRYING CAPACITY.
The tourist industry has a huge appetite for basic resources which
often impinge heavily on the needs of local people.
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3. Economic – the number of tourists a destination can take
without significant adverse economic implications.
4. Perceptual – the attitudes of the local people in terms of how
they view increasing tourist numbers.
5. Socio-cultural- Explain further-----------------------
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EXAMINE THE QUESTION BELOW
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What is niche tourism?
A ‘niche’ (pronounced ‘nee-sh’) tourism strategy is one that
appeals to a small number of people who are especially interested
in something. Another way to describe ‘niche’ tourism is
‘specialized’ tourism.
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Remote tourism: Visiting locations that few people can go to
because of the difficulty of getting there (and the lack of facilities
at the destination), such as the Amazon rainforest or Antarctica.
Photography tourism: Small companies offer photography
lessons as part of the holiday.
Homestay tourism: Tourists reside with a family in their
regular home for their visit, and join the family in their regular
activities such as farming.
Volunteer tourism: Tourists join in education, conservation
and other charitable projects.
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country. This means conservation efforts are more successful and
the tourism is more sustainable.
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Promotion of a single niche can put other people off going to
the location. Potential tourists may not realize that there are other
things to do and decide to go somewhere else.
ECO TOURISM
1. Minimize impact
2. Build environmental and cultural awareness and respect.
3. Provide positive experiences for both visitors and hosts.
4. Provide direct financial benefits for conservation
5. Provide financial benefits and empowerment for local
people.
6. Raise sensitivity to host country’s political, environmental
and social climate.
N.B Eco- tourism is the leading edge of sustainable tourism.
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ECO TOURISM IN ECUADOR
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allowed to exchange any personal items like cloths with
tourists or even accept gifts.
5. The local environment has preserved its culture and norms
with high levels of discipline e.g any displays of affection.
6. The environment has been protected e.g all rubbish such as
empty bottles and tubes must be taken away by visitors.
7. Visitors are not allowed to enter peoples houses without
being invited in or make promises they are not able to keep.
This protects the Quichua Indians from contagious diseases,
getting broken hearted by unfulfilled promises etc.
8. Visitors are not allowed to collect plants, insects or animals
unless with permission. This saves to flora and fauna.
9. A spirit of love and belonging towards the environment has
been cultivated among the indigenous people.
RESEARCH.
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SWITZERLAND A TOURIST DESTINATION
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FACTORS FOR GROWTH AND DEVELOPMENT.
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Switzerland is the oldest neutral country in the world since
1815, it has not fought a foreign war since its neutrality was
established by the treaty of Paris in 1815. This has helped
the country to be free of enemies, to be attractive and a
home for investments. This neutrality and political stability
has kept Switzerland a tourist destination in Europe.
The ability of the Swiss to speak many languages has
increased their ability to communicate with visitors. The
Swiss have four national languages that are widely spoken
by people in the world, these are German, French, Italian
and Romansh. Others like English are also spoken giving
the tourist industry an added advantage.
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PROBLEMS / ISSUES OF SUSTAINABILITY OF THE SWISS
TOURISM INDUSTRY.
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are practiced on a concentrated area for a considerable
period of time which leads to land degradation in form of
cealing due to soil compaction and erosion. Wildlife and flora
are disturbed by the large number of visitors.
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Century. This has reduced on snow cover and has led to the
introduction of artificial snow.
According to the travel and tourism competitiveness. Index
ranking 2015, the Swiss tourist industry ranked 6th where
Spain, France, Germany, U.S.A and UK out competed it.
With such competition, Switzerland has to improve on its
tourist destinations and persuade visitors, otherwise, more
tourist destinations in Asia, Africa and the Caribbean could
out compete Switzerland in the near future.
Forest fires in the Southern side of the Alps is a significant
hazard especially during drought seasons. The Alpine forest
fires require a relatively large amount of resources for fire-
fighting and prevention. The mountainous environment
makes firefighting very difficult, yet a rapid intervention is
required since the fires readily endanger human activities
and infrastructure. Other natural hazards especially in the
Alps are avalanches that may kill many and destroy property
e.g. there are around 20 to 30 avalanche related death in
Switzerland every year especially in the districts if Valais and
Graubünden.
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In 2016, figures issued by the Federal Statistical Office
(FSO) have revealed a structural change in where tourists
are coming from. The number of visitors from Europe, the
traditional market of Switzerland’s inbound tourism, has
been declining sharply. Meanwhile, the numbers of visitors
from China, the Gulf States, and Southeast Asian countries
had been on the rise.
But the picture changed over the winter, with tourists from
China declining for the first time.
The Swiss National Tourist Office, Switzerland Tourism,
says the new requirement for biometric fingerprint data for
visas is one of the key factors.
This has been mandatory for anyone applying for a visa to
Europe’s Schengen zone of countries, including Switzerland,
since last November. This means all Chinese must travel to
a Swiss consulate in person to apply.
About 100 million visitors visit the Alps each year as tourists
which generates close to EUR 50 billion in annual turnover
and provide 10-12% of the jobs. Jobs are created in hotels,
tour guide jobs, drivers of cable cars among others.
There has been development of modern infrastructure in
form of roads, cable ways, railways and air transport to
various tourist destinations both in urban areas and country
sides. Remote Alp areas can now be accessed.
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In a country least endowed with natural resources of great
economic importance, the service sector especially tourism
has helped boost the country’s economy with a 7.6% share
in 2015.
The high demand from tourism affects prices of many things
in tourist resorts. In Zermatt, it is almost impossible to
access land, houses, the available services are too
expensive.
Tourism has stimulated the growth of other sectors of the
economy such as agriculture and transport. This leads to a
great multiplier effect such that everybody benefits.
It has led to conservation of both fauna and flora in the
country .e.g. the bear park in Bern, Rose gardens of Bern,
pine and larch forests of Zermatt which have conserved bio
diversity hence improving the country’s natural beauty.
The big numbers of tourists in the Alps have led to
compaction, sealing and erosion of the soil.
Forested areas have been cleared to construct tourist
resorts hence impairing the landscape.
Traffic pollution, lots of waste generated by sports, noise
pollution especially at night have not only led to land
degradation but have also threatened the Fauna and Flora
especially in the forested areas of the Alps.
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The living standards of the Swiss have been improved
directly and indirectly. Many Swiss directly work in the tourist
resorts while others earn from the purchase of domestic
goods and services directly by industries within travel and
tourism.
It has led to greater understanding between the Swiss and
other people from various countries as they learn to live in
diversity. This destroys the spirit of racism and xenophobia.
It has created openings for small businesses in which start-
up costs and barriers to entry are generally low e.g. Art and
Craft Centres.
The government is provided with considerable tax revenue
from all the businesses that rise as a result of tourism e.g.
from transport, accommodation, food among others.
This revenue is uses in developing other sectors of the
economy.
Some areas of Switzerland like the Alps are too over
dependent on tourism. This affected them so much during
the period starting from 2009 up to 2014. This was
particularly bad because Switzerland is an expensive tourist
destination.
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It has led to urbanization of areas where tourist centres or
resorts are found leading to rural development in areas like
Zermatt, Interlaken, Lugano among others.
It has led to the utilization of the Alpine region. Areas that
would have been regarded as useless or waste land have
been put to use by the tourists.
Perceptual carrying capacity has been exceeded by some
tourists as below:
CHINA INSIGHT
“Too Loud, Too Rude”: Switzerland Introduces
Separate Trains for Chinese Tourists
“They’re loud and rude, and spit on the floor.”
Published
5 years ago August 27, 2015
By
Yiying Fan
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world. The number of Chinese outbound tourists exceeded 100 million in
2014, spending $155 billion.
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END.
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