GEOGRAPHY 9696/4

GLOBAL INTERDEPENDENCE

TRADE FLOWS AND TRADING PATTERNS.

VISIBLE AND INVISIBLE TRADE

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.

REASONS WHY COUNTRIES TRADE AMONGST THEMSELVES/CAUSES OF GLOBAL

INTERDEPENDENCE OR FACTORS AFFECTING GLOBAL TRADE.

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.

3. Differences in Technology. Advantageous trade can occur between countries if the

countries differ in their technological abilities to produce goods and services e.g African
countries with low technology depend on Japan for Motor vehicles. Furthermore, U.S.A
and Europe trade with LIC’S in software products due to their advanced technology. In
order to protect the interests of their businesses, rich countries have raised the levels of
protection on intellectual property rights meaning that you can never reproduce certain
products but only rely on them for supply of such products e.g Microsoft in USA, hence
trade surplus which contributes to higher GDP compared to LIC’S whose technology is
so low.

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.

5. Political / historical reasons. Historical relationships, often based on colonial ties,

remain an important factor in global trade patterns. For example, the UK still maintains
significant trading links with common wealth countries because of the trading
relationships established at a time when those countries were colonies. Such links are
weaker than they once were, but in many cases they remain significant. Other European
countries such as France, Portugal and Belgium, the Netherlands and Spain also

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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.

6. Increased competition. Increased Global competition may help to spur domestic

productivity improvements and give firms a better incentive to innovate and improve their
products.

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

FORMS OF ECONOMIC INTEGRATION

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.

11. Comparative advantage. The concept of comparative advantage is an important part of

classical theory on international trade. This states that different countries will specialize
in producing those goods and services for which each is best endowed. Each country
will then trade a proportion of these goods and services with other nations to obtain
goods and services that it needs, but for which it is not favorably endowed. In the
modern global economy countries tend to concentrate on the goods and services they
are best at producing resulting in specialization in production and employment e.g.
Germany with Mercedes Benz, Japan with high tech products, Scotland with Whisky,
Belgium with chocolate and Switzerland with watches.

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)

1. Describe the trends shown in figure 3.2

2. Describe and briefly explain the global inequalities in Merchandise trade in figure 3:1

THE WORLD TRADE ORGANIZATION

QTNS

1. Examine the role of the World trade Organization

2. Evaluate the work of WTO with the help of one or more examples.
3. Why has the WTO been so heavily criticized?

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)

1. The system helps to promote peace.

This helps trade to flow smoothly and providing countries with a constructive and fair
outlet for dealing with disputes over trade issues, e.g when governments are confident
that others will not raise their trade barriers, they will not be tempted to do the same, this
will promote co-operation. The WTO has played a role in creating and reinforcing this
confidence.

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.

4. Issues of intellectual property rights.

The western world developed so many years back in science and technology. They did
this through imitations and trials, came up with drugs and high-tech products and
got rights over their creative ideas that any attempt to imitate or have trials about

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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.

7. It is also criticized for absence of proper environmental regulation and resource

management. Increased trade might cause so much adverse damage to the
environment compared to the gains from trade. In an era of global warming and potential
environmental disaster, increasing GDP may be the least important. The over
exploitation of scarce resources by TNC’s in LIC’s has to be controlled too, WTO should
know that sustainable resource exploitation is key to this planet.
The WTO is criticized for undermining national environmental protection laws. In 1998,
India, Malaysia and Thailand filed a complaint against US for refusing to import their
Shrimp. USA refused to import this shrimp with a reason that these countries never used
shrimp harvesting measures that allow sea Turtles to escape and this contravened
environmental laws. WTO then ruled against USA saying it was discriminative in refusing
shrimp from Asia yet other countries from Latin America exported shrimp to USA without
necessarily using devises that allow sea Turtles to escape.
Further still, TNC’s do not mind about the environment, to them its about profits. In 2002,
Angola fined Chevron 2 million dollars for oil spills in the country. Further still, TNC’s
have been involved in the clearing of rain forests in Indonesia, Papua New Guinea in the
recent past. This has called for lots of protests among peoples of the world.

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 8. As a candidate, discuss the disadvantages of “FREE TRADE” especially on
LIC’S.
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QTN. Examine the importance of the World Trade Organisation. [20]

THE NATURE AND ROLE OF FAIR TRADE.

 QTN. Describe the role and nature of fair Trade.

Fair trade is an alternative approach to conventional trade and is based on a partnership

between producers and consumers. It is a system of international commerce based on dialogue,
transparency and respect. When farmers can sell on fair trade terms, it provides them with a

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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.

DIFFERENCES BETWEEN FAIRTRADE SUPPLY CHAIN AND CONVENTIONAL

TRADE SUPPLY CHAIN.

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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.

 Creating opportunities for Economically Disadvantaged Producers. This reduces

poverty by making producers especially in LIC’s economically independent.

 Transparency and Accountability. Producers are involved in important decision

making such as choosing their leaders in the co-operative society, what to use the fair
Trade premium for and how much profits have been achieved for a certain period
among others.

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  Fair Trading Practices. Trading fairly with concern for the social, economic and
environmental well-being of producers

 Payment of a fair price. Paying producers a fixed price by mutual agreement,

ensuring socially acceptable wages depending on the location.

 Ensuring no child labor and forced labor is carried out as per United Nations
Convention on children’s rights.

 Commitment to non-discrimination, gender equity and women’s empowerment and

freedom of association. There has to be respect to trade union rights and rejection of
any discrimination based on gender, religion or ethnicity.

 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.

 Describe and explain the nature and role of Fairtrade.

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

1. There is an excellent wage system in place.

Living wages are more than just a few cents per hour when involved with the
Fair Trade model. Many cooperatives offer remarkably higher wages for workers
than what the general market supports on a local basis. Many cooperatives also
make investments within local communities to support their workers, including
modern medical care, schooling options, and the teaching of sustainable food
growing practices. This means that community benefits in Fair trade extend to
more than just basic needs. Roads, schools, hospitals have been built as a
result of the high fair trade premium earned.

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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.

3. Child labor can be reduced. 

Children are very much a commodity in the undeveloped world. Many children
work long hours without any form of payment – or if they do earn money, it is a
fraction of what is actually deserved. Fair Trade practices help to eliminate the
need for child labor because workers earn fair wages and that lessens the need
of families to make their children work to help support the household. This
means children can receive an actual education instead.

4. Social conditions can dramatically improve. 

With over 20 years of Fair Trade cooperatives operating in some areas, there
has been a dramatic improvement in the social conditions that small villages
and communities have experienced. Better business education has led to higher
levels of profitability while safety and health improvements have been made
simultaneously. Farming practices have become more efficient, creating higher
yields with less effort. In return, a higher standard of living has been achieved.

5. It allows small business owners to become internationally

competitive.
Small cooperatives and business owners who become certified as Fair Trade can
become instantly competitive with large businesses on the international stage.
This means large scale buyers are unable to exploit workers or force
competitive cooperatives out of business because pricing and distribution is
handled equally when products are imported.

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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.

7. Producers are assured a minimum price no matter what happens. 

Once Fair Trade certification has happened, the cooperatives and producers are
guaranteed a specific return for the goods that they are producing. The
minimum price can never fall below market level, which is why so many invest
into local communities. Community investments drive up market prices,
ensuring that a better margin can be achieved on the goods being produced.

8. Multiple products are traded. 

Farmers in LIC’s can deal in a variety of products such as coffee, honey,
banana’s, cocoa, flowers, wine, crafts among others. This ensures that farmers
have a variety of products to deal with instead of being limited to a particular
fair trade product.

FAILURES

1. There are natural limits to the success that can be achieved. 

Fair trade cooperatives can do a lot of good for a community, but ultimately
their success is naturally limited to the local population centers where workers
are. This can create divides within a community because some workers may not
qualify to be part of the cooperative and may not receive the many benefits that
coop workers are able to receive.

2. There are very high fees associated with this model. 

In order for an organization, an individual, or a cooperative to become certified
as Fair Trade, they must undergo a costly and rigorous examination period.
There are joining fees that must be paid if accepted and there are annual fees
that must be paid to maintain that certification. The cost can be upwards of

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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.

3. There is a limited customer base around the world. 

Because the fees are high and because workers earn competitive rates, Fair
Trade products have a premium price associated with them when compared to
“regular” products that fall outside of this type of market. The higher prices
weigh on consumers who are living paycheck to paycheck, usually causing them
to choose a cheaper product of similar quality.

4. The amount of product choice is greatly reduced. 

There are two primary products people purchase a lot when it comes to Fair
Trade goods: chocolate and coffee. Although there are numerous other goods
that are available for sale, these niche products don’t have a very large market.
This means that eventually there won’t be demand for what is being created
and this could endanger jobs and even the existence of the cooperative itself. It
becomes a guessing game for survival and even the best educated guesses can
often be wrong.

5. There is little accountability enforced on producers. 

Efforts have been made to cut down on abusive labor practices, but slavery and
child labor still help to fund Fair Trade products after the certification period
elapses. There is no real way to make sure these bothersome components of
trade do not exist because there is no authoritative central authority in place.

6. Big buyers aren’t generally attracted to the Fair Trade model. 

The biggest buyers of products in the world today are looking at the overall cost
of their inventory purchase. If factory farming and assembly line production can
create goods that are of a similar quality for a price that is 20-30% lower, then
the big buyers will purchase the cheaper product. This makes it difficult for Fair
Trade suppliers to get a real foot in the door and ultimately that harms the

24
environment as well because profitable practices instead of sustainable practices
are implemented.

7. The standards of community development have lapsed over the

years. 
Not only has the Fair Trade model been accused of manipulating and distorting
the global economy, but some of the poorest workers and farmers are
completely thrown out of the system. This means the Fair Trade model may be
driving certain workers out of business so it can support itself, which is contrary
to why this model was started in the first place.

8. There is no drive to create better efficiencies. 

If there is a guaranteed minimum price, then there is no real motivation to
improve the efficiencies of production processes. Ultimately this means the
consumer is paying more for something without just cause.

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.

DEBT AND AID AND THEIR MANAGEMENT

A debt is a sum of money that is owed or due, here, debt is considered at the national scale
rather than the personal level.

25
Terminologies used:

 Principal. The total amount of money you have borrowed in a loan.

 Interest. The charge for the privilege of borrowing money, typically expressed as annual
percentage rate. In simple terms, it’s the amount of money paid for the use of someone
else’s money. Assume you borrow 100 USD at 6% for one year, how much interest will
you pay?

Interest= Principal x rate x time

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.

CAUSES OF THE DEBT CRISIS

1. It began with the Israeli – Arab war of 1973 -74 which resulted in a sharp increase in oil
prices. Governments and individuals in the oil producing countries invested profits from
oil sales in the banks of affluent countries. Eager to profit from such a high level of
investment, these banks offered relatively low-interest loans to poorer countries to fund
their development. These countries were encouraged to exploit raw materials and grow
cash crops so that they would service their loans with export profits. However periods of

26
 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.

27
IMF Executive Board Approves Immediate Debt Relief for
25 Countries
April 13, 2020

Washington, DC – Ms. Kristalina Georgieva, Managing Director of the International

Monetary Fund (IMF) issued the following statement:

“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.

28
 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 –

29
were damaged, making the cost to be US $183m. World Bank had initially given
out 70.15m to the Mozambican Government in 2013.

IMPACT/PROBLEMS/EFFECTS OF DEBT AT THE NATIONAL SCALE

 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

30
 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.

 General reduction in revenue from exports trade since a percentage of income

from exports has to be used to service foreign debts.

 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.

STRENGTH’S / ADVANTAGES OF DEBT RELIEF

1. It allows a country’s loans to be rescheduled in order to make them more manageable.

This reduces debt service, for the 36 countries receiving debt relief today, debt service
paid has declined by about 1.8% points of GDP between 2001 and 2014.

31
 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.

DISADVANTAGES/ WEAKNESSS OF DEBT RELIEF

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.

32
 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.

ASSESS THE SUCCESS OF ATTEMPTS TO OVERCOME THE

INTERNATIONAL DEBT CRISIS
The United Nations, IMF and World Bank have been
fundamental in debt restructuring. Argentina was the first
country to negotiate the payment of its debt in 1956 within the
framework of the Paris club. Debt restructuring has often
brought temporary relief, but with interest added over a longer
time period the overall debt has simply increased. This has the
problem with most sub-Saharan countries.
In the mid 1990’s a more comprehensive global plan was
formulated. The IMF and World Bank 1996, formulated the
Heavily Indebted Poor Countries (HIPC) initiative to make sure
the poor countries paid off their debts in a more manageable
manner. To qualify for this assistance, countries involved have
to pursue IMF and World Bank Structural Adjustment Programs
(SAPS).
Under SAPS governments must reduce inflation, remove price
controls, reduce tariffs, downsize government workers, all
intended to reduce on expenditure and pay back the debt.

33
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.
34
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
35
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.

REASONS WHY COUNTRIES OR BIG WORLD BANKS MAY BE

WILLING TO ASSIST OTHER COUNTRIES IN THEIR DEVELOPMENT
OR WITH AID.

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 inform of loans may be given for economic reasons. It generates

profits after a given period of time for the donor countries. What do these
large outflows consist of? Well, some of it is payments on debt. Developing
countries have forked out over $4.2tn in interest payments alone since
36
1980 – a direct cash transfer to big banks in New York and London, on a
scale that dwarfs the aid that they received during the same period. Another
big contributor is the income that foreigners make on their investments in
developing countries as a result of the conditions imposed by IMF and
World Bank and then repatriate back home. Think of all the profits that BP
extracts from Nigeria’s oil reserves, for example, or that Anglo-American
pulls out of South Africa’s gold mines.

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.

37
 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.

TYPES OF INTERNATIONAL AID

There are basically two types of international aid. These are;-

1. Official government aid

2. Voluntary aid

 Official government aid can be divided into:-

i. Bilateral aid, which is given directly from one country to another.
Bilateral aid can be “tied aid”
ii. Multilateral aid, which is provided by many countries and organized
by international bodies such as the United Nations.

 Voluntary aid is run by non-governmental organizations (NGOs) or

charities such as Oxfam, ADRA, Action Aid and CAFOD. Such NGOs
collect money from individuals and organizations. (Emergency aid /
relief aid)

38
  Emergency or short-term aid - needed after sudden disasters such
as the 2000 Mozambique floods or the 2004 Asian tsunami.

IMPACT OF AID ON RECEIVING COUNTRIES.

POSITIVE IMPACT

1. Emergency aid in times of disaster saves life e.g Haiti 2010

earthquake would have destroyed lots of life in its aftermath if it
wasn’t for emergency aid from WHO.
2. Provision of medical training, medicines and equipment can improve
health and standards of living. The largest hospital in Niger is one of
the most advanced healthcare facilities in West Africa built and
funded by China.
3. Aid for agriculture can help increase food production and so improve
the quality and quantity of food available.
The New Alliance for Food Security and Nutrition was created in
2012 and it seeks to lift 50 million people out of poverty by 2022
through partnerships between the G8 members, African nations and
the private sector. This will increase food production in 10 African
countries namely, Benin, Nigeria, Burkina Faso, Ivory Coast, Ethiopia,
Ghana, Mozambique, Senegal, Malawi and Tanzania. Around 50
TNC’s such as Unilever, Cargill and Monsanto are also involved.
4. Aid will help LIC’s to accumulate enough capital which will be
invested in industry and infrastructure, that is the “Savings gap” is
solved. For example the standard gauge railway that has just been
constructed by Chinese aid in Kenya.

39
 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.

10. Aid can reduce poverty. The UK government poverty reduction

budget support aims at reducing poverty in many LIC’s especially in
Sub-Saharan Africa.

NEGATIVE IMPACT

1. Aid can increase the dependency of LEDCs on donor countries.

Sometimes aid is not a gift, but a loan, and poor countries may
struggle to repay.
2. Aid may not reach the people who need it most corruption may lead
to local politicians using aid for their own means or for political gain.

40
 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.

THE DEVELOPMENT OF INTERNATIONAL TOURISM

Tourism is defined as travel away from the home environment for

leisure, recreation, business and professional reasons for at least
one day but not more than one year.

International tourism receipts are defined (by WTO) as expenditure

of international inbound visitors including their payments to national carriers
for international transport. They also include any other payments or
payments afterwards made for goods and services received in the
destination country.

International tourism arrivals refer to visitors who stay at least one night
in a collective or private accommodation in the country visited.

41
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.

Mass tourism is an organized movement of large numbers of people to

specialized locations. This type of tourism is unsustainable. Alternative
tourism involves small groups of people or individuals traveling to places
that are not popular tourist destinations.

Examples of mass tourism may be beach holidays, skiing on mountains,

taking a cruise, cultural or historic, pilgrimages etc.

42
REASONS FOR THE GROWTH OF INTERNATIONAL
TOURISM

Political.

1. Many governments have invested heavily to encourage

tourism e.g according to capital investment worldwide 2019,
by country, investors in USA invested the most capital into
travel and tourism industry, reaching USD 209 billion in 2019
followed by china with USD 169.9 billion. Other countries
43
 that have invested heavily in tourism are France, Spain, and
Switzerland among others. In Sub-Saharan Africa, Rwanda
is one of those countries whose tourism sector is heavily
invested in. The country has one of the rarest animal species
in its northern province, the mountain Gorilla.
2. Good political environments/countries have attracted tourists
because safety is guaranteed especially U.S.A, Switzerland
among others. Where safety is not guaranteed, for example
in Afghanistan, Pakistan, South Sudan, tourism has declined
greatly.
3. Many rich nations have given holiday entitlement to their
nationals. This means that people can take holidays during
the year and swells the number of tourists. Vacation time
today is mandatory by all governments to employees and
these are different from country to country. The European
Union by law grants all employees a minimum of 4 weeks
paid vacation per year.
4. Government backing for major international events such as
the Olympic Games and the World cup is a cause of tourism
for that particular time. In the June-July 2014 World Cup in
Brazil, the country received over 1m tourists for the two
months according to CCN.

44
Economic

5. Majority of the population has gained a good standard of

living which has increased their real and disposable
incomes.
6. An increase in the number of tourist destinations within the
middle income range i.e they are affordable with less
complicated travel procedures. Today expensive tourist
destinations in Europe have been foregone for cheaper and
nice destinations in Latin America, Asia and Africa. China for
example is the most visited country in Asia.
7. The heavy marketing of shorter foreign holidays aimed at
those who have the time and disposable income to take an
additional break. This in the west happens during summer
when so many companies market foreign holidays.
8. The rapid improvement of air miles, a wider range of route
and airline companies.
9. Globalization has increased business travel which in turn
promotes tourism. When business or organizations start
operating on an international scale, tourism also develops.
10. Highly developed media has highly developed tourism.

45
Social

11. An increase in the average number of days of paid

leave even in the developing countries which increases the
average length of vacation and holiday periods.
12. High levels of international migration over the last
decade or so it means that more people have relatives and
friends living abroad whom they have to visit.
13. An increasing desire to experience different cultures
and landscapes.
14. Hospitality levels on the international scene have
increased for many reasons but among them to attract
tourists for business purposes.

TRENDS IN THE GROWTH OF TOURISM. “(pgs 419-420) main

textbk we use please”

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

46
 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)

CAUSES OF TOURISM FLUCTUATIONS.

1. Natural disasters such as earthquakes, volcanic eruptions,

floods and other natural events can have a major impact on
tourism where they occur. Especially among tourist
destinations in the ring of fire e.g. In 2010 alone, Indonesia
had more than 200 earthquakes across the country.
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48
2. Natural processes such as coastal erosion and rising sea
levels are threatening important tourist locations around the
world. Torres Straight Islands in Australia with its extreme
weather and erosion is avoided by tourists.

3. Terrorism. Terrorist attacks or the fear of them can deter

visitors from going to certain countries. The September 11
2001 terrorist attacks on New York, the November 2015
attacks in Paris, the deadly 2014 attack in Madrid Spain that

49
 killed almost 200 people when bombs were set off on 4
commuter trains, and elsewhere, have lowered the number
of visitors to such countries.

The terror attacks of September 11, 2001 had an immediate and substantial impact on

worldwide travel. The attacks induced substitution away from air travel generally and
caused a shift in the preferences of travelers for particular destinations especially USA.

4. Health scares. For example, the severe acute respiratory

syndrome (SARS) epidemic in 2003 had a considerable
short-term impact on tourism in China and other countries of
South East Asia. The on-going Covid19 will decrease visitors
in heavily affected countries such as China, Italy and USA.

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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

6. Political uncertainties. Governments may advise their

citizens not to travel to certain countries if the political
situation is tense.
“Britain Advises Nationals to Avoid Travel to Iraq, Iran. ... We now advise
British nationals against all travel to Iraq (and) we now advise against all but essential
travel to Iran," Britain's Foreign Office said in a statement. "The first job of any
government is to keep British people safe," the statement said.Jan 4, 2020

51
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.

8. Increasing competition. As new, more exciting destinations

increase their market share, more traditional destinations
may see visitor numbers fall considerably.

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IMPACTS OF TOURISM ON THE ENVIRONMENTS,
SOCIETIES AND ECONOMIES OF TOURIST DESTINATIONS.

Social and cultural impact (negative)

1. The loss of locally owned land as tourism companies buy up

large tracts in the most scenic and accessible location. e.g.
in Frigiliana- Spain

2. The abandonment of traditional values and practices as

tourist pass over their cultural values to the natives in the
tourist destinations.

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3. Displacement of people to make way for tourist
developments.

54
 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
55
 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.

Overtourism is the perceived congestion or overcrowding from an

excess of tourists, resulting in conflicts with locals. The term has only
been used frequently since 2015, but is now the most commonly
used expression to describe the negative impacts ascribed to
tourism.
The World Tourism Organization (UNWTO) defines overtourism as
"the impact of tourism on a destination, or parts thereof that
excessively influences perceived quality of life of citizens and/or
quality of visitor experiences in a negative way". This definition shows
how overtourism can be observed both among locals, who view
tourism as a disruptive factor that increasingly burdens daily life, as
well as visitors, who may regard high numbers of tourists as a
nuisance.

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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

 It can increase the range of social facilities for local people

e.g hospitals can be built, piped clean water, roads among
others.
 It can lead to greater understanding between people of
different cultures as they learn to live in diversity.
 Family ties may be strengthened by visits to relatives living
in other regions and countries.
 It can help develop foreign language skills in host countries.
 A multitude of cultures coming together for major
international events such as the Olympic Games can have a
very positive global impact of global unity.

ECONOMIC IMPACT (POSITIVE)

 Tourism benefits other sectors of the economy,

providing jobs and income through the supply chain.
This is called the multiplier effect because jobs and
money multiply as a result of tourism development.

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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)

It provides governments with considerable tax revenue. Revenue

from Gorilla trekking in Volcanoes National Park grew by 25 per cent in
2018 to $19.2M from the previous year, latest Rwanda Development Board
data indicates.
The money was earned from sale of 15,132 gorilla permits during the year.
The statistics released by the board points to a rise in revenue from gorilla
trekking after the revision of permits prices from $750 to $1500 in 2016.
In 2016 prior to the increase of permit price, 22,219 were sold, raking in
$15m in revenue.

 It can create openings for small businesses in which

start-up costs and barriers to entry are generally low
especially art and crafts centres and souvenir shops.

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NEGATIVE

Economic leakages from LEDCs to MEDCs run at a rate of

between 60% and 75% such economic leakages include;-

i. Payments to foreign companies which build tourist

infrastructure
ii. Remittances sent home by foreign workers.
iii. Payments to foreign owners of hostels and other facilities
iv. Transport cost paid to airlines and other carriers
v. The cost of goods and services imported for the tourist
industry.
vi. Foreign debt relating to tourism.

 Tourism is labour intensive, providing a range of jobs

especially for women and young people. However most local

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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.

POSITIVE ENVIRONMENTAL IMPACT.

 Landscaping and sensitive improvements to the built

environment have significantly improved the overall quality of
some areas.

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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.

Depletion of natural resources

Tourism development can put pressure on natural resources when it
increases consumption in areas where resources are already scarce. Some of
the most common noted examples include using up water resources, land
degradation and the depletion of other local 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.

In drier regions, like the Mediterranean, the issue of water scarcity is of

particular concern. Because of the hot climate and the tendency for tourists to
consume more water when on holiday than they do at home, the amount used
can run up to 440 litres a day. This is almost double what the inhabitants of an
average Spanish city use. 

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65
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.

Picturesque landscapes are often destroyed by tourism. Whilst many

destinations nowadays have limits and restrictions on what development can
occur and in what style, many do not impose any such rules. High rise hotels
and buildings which are not in character with the surrounding architecture or
landscape contribute to a lack of atheistic appeal.

Forests often suffer negative impacts of tourism in the form of deforestation

caused by fuel wood collection and land clearing. For example, one trekking
tourist in Nepal can use four to five kilograms of wood a day!

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.

Because of the seasonal character of the industry, many destinations have

ten times more inhabitants in the high season as in the low season. A high
demand is placed upon these resources to meet the high expectations tourists
often have (proper heating, hot water, etc.). This can put significant pressure
on the local resources and infrastructure, often resulting in the local people
going without in order to feed the tourism industry.

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.

Air pollution and noise 

Transport by air, road, and rail is continuously increasing in response to the

rising number of tourists and their greater mobility. In fact, tourism accounts
for more than 60% of all air travel.

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.

Fortunately, technological advancements in aviation are seeing more

environmentally friendly aircraft and fuels being used worldwide, although the
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problem is far from being cured. If you really want to help save the
environment, the answer is to seek alternative methods of transportation and
avoid flying.

Noise pollution can also be a concern.

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.

Solid waste and littering 

In areas with high concentrations of tourist activities and appealing natural

attractions, waste disposal is a serious problem, contributing significantly to
the environmental impacts of tourism.

Improper waste disposal can be a major despoiler of the natural environment.

Rivers, scenic areas, and roadsides are areas that are commonly found
littered with waste, ranging from plastic bottles to sewage.

Cruise tourism in the Caribbean, for example, is a major contributor to this

negative environmental impact of tourism. Cruise ships are estimated to
produce more than 70,000 tons of waste each year. 

The Wider Caribbean Region, stretching from Florida to French Guiana,

receives 63,000 port calls from ships each year, and they generate 82,000
tons of rubbish. About 77% of all ship waste comes from cruise vessels. On
average, passengers on a cruise ship each account for 3.5 kilograms of
rubbish daily – compared with the 0.8 kilograms each generated by the less
well-endowed folk on shore.

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

The construction of hotels, recreation and other facilities often leads to

increased sewage pollution. 

Unfortunately, many destinations, particularly in the developing world, do not

have strict law enrichments on sewage disposal. As a result, wastewater has

69
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. 

A lack of land-use planning and building regulations in many destinations has

facilitated sprawling developments along coastlines, valleys and scenic
routes. The sprawl includes tourism facilities themselves and supporting
infrastructure such as roads, employee housing, parking, service areas, and
waste disposal. This can make a tourist destination less appealing and can
contribute to a loss of appeal.

Physical impacts of tourism development

Whilst the tourism industry itself has a number of negative environmental
impacts. There are also a number of physical impacts that arise from the
development of the tourism industry. This includes the construction of
buildings, marinas, roads etc.

Construction activities and infrastructure development

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 

Construction of ski resort accommodation and facilities frequently requires

clearing forested land. Land may also be cleared to obtain materials used to
build tourism sites, such as wood. I’ll never forget the site when I flew over the
Amazon Rainforest only to see huge areas of forest cleared. That was a sad
reality to see.

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.

Evidence suggests a variety of impacts to coral result from shoreline

development. Increased sediments in the water can affect growth. Trampling
by tourists can damage or even kill coral. Ship groundings can scrape the
bottom of the sea bed and kill the coral. Pollution from sewage can have
adverse effects.

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.

Physical impacts from tourist activities

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The last point worth mentioning when discussing the environmental impacts of
tourism is the way in which physical impacts can occur as a result of tourist
activities. This includes tramping, anchoring, cruising and diving.

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.

Anchoring and other marine activities 

 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.

Alteration of ecosystems by tourist activities 

Habitats can be degraded by tourism leisure activities.

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.

73
THE LIFE CYCLE MODEL OF TOURISM.

Time

 Butlers model of the evolution of tourist areas attempts to illustrate

how tourism develops and changes over time.
74
 In the first stage the location is explored independently by a smaller
number of visitors.
 If visitors’ impressions are good and local people perceive that real
benefits are to be gained then then number of visitors will increase as
the local community becomes actively involved in the promotion of
tourism.
 In the development stage, holidays, companies from HIC’s take
control of organization and management with package holidays
becoming the norm.
 Eventually growth ceases as the location loses some of its former
attraction. At this stage local people have become all too aware of the
problems created by tourism.
 Finally decline sets in, but because of the perceived economic
importance of the industry, efforts will be made to re-package the
location which, if successful may either stabilize the situation or
result in renewed growth (rejuvenation)

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76
involvement

Involvement

77
78
79
CARRYING CAPACITY.

The tourist industry has a huge appetite for basic resources which
often impinge heavily on the needs of local people.

A long – term protest against tourism in Goa highlighted the fact

that one five –star hotel consumes as much water as five local
villages, with the average hotel residents using 28 times more
electricity per day than a local person in such situations tourist
numbers may exceed the carrying capacity of a destination by
placing too much burden on local resources.

The concept of carrying capacity has sometime been taken

beyond just the ability of the physical environment to
accommodate visitors without resultant deterioration or
degradation.

Carrying capacity has four elements;

1. Physical – the overall impact on the physical environment

e.g. foot path erosion.
2. Ecological – the number of tourists that can be
accommodated without significant impact on the flora and
fauna.

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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-----------------------

RECENT DEVELOPMENTS IN INTERNATIONAL TOURISM.

The growth of special interest (niche) tourism

Niche tourism refers to how a specific tourism product can be

tailored to meet the needs of a particular audience. Locations with
special interest (niche) products are able to establish and position
themselves, as niche tourism destinations. Such may include:-

1. Theme parks and holidays village enclaves

2. Gambling destinations
3. Cruising
4. Heritage tours and urban tourism
5. Wilderness and eco-tourism
6. Cultural / historical interest
7. Medical and therapy travel
8. Religious tourism
9. Working holidays

10. Sports tourism

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EXAMINE THE QUESTION BELOW

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83
 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.

Examples of niche tourism are:

 Adventure tourism: Climbing major mountain peaks is

difficult, and requires lots of training, planning and equipment.
Most tourists could not do this type of tourism. Examples include
the Nepalese Himalayan Mountains with Mount Everest the top
attraction.
 Movie location tourism: While many people would be
happy to visit a place used as a location for a movie set, few people
make it the main focus of their holiday. Examples of places that
have a specialized focus are Salzburg (the location of the Sound of
Music), and New Zealand (location for the Lord of the Rings
trilogy) (Rough Guides, 2017). The principle also extends to TV-
set tourism such as Game of Thrones sets in Spain, Northern
Ireland and Croatia (CNTraveler, 2017).
 Heritage tourism: Mostly focused on history and culture,
this type of tourism is increasingly popular but remains relatively
small-scale compared to the mass tourism of beach holidays.
Examples of locations that market themselves for heritage
tourism include many Italian cities (such as Venice, an example of
a tourism hotspot), the Beijing (the Forbidden Palace and the
Great Wall), and Machu Picchu in Peru.

There are many other examples of niche tourism including (but

not limited to):

 Nature tourism: Going on safari or to see a particular

landscape such as Victoria Falls on the Zambezi river.

84
 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.

Niche tourism: benefits and risks

A national tourism strategy is a government policy that
encourages tourism that brings benefits to the country. Niche
tourism is often promoted by national tourism strategies because
it is seen as a more sustainable way of developing tourism:

 There are relatively low numbers of tourists (advantages of

low numbers should be explained)
 They are genuinely interested in seeing the destination as it
is, rather than demanding changes to it such as more hotel
facilities( advantages of this should be explained)
 They are often willing to pay more to see a unique
environment

Therefore, the tourist attraction (such as architecture, local

culture, a rainforest and so on) is more likely to be preserved
because it is now economically and socially valuable to the

85
 country. This means conservation efforts are more successful and
the tourism is more sustainable.

However, niche tourism must be carefully chosen. This is because

of several negative factors:

 There are relatively few tourists, so it is unlikely to be scaled

up as a huge growth industry.
 Niche tourism is susceptible to ‘shock’ events. For example, if
terrorism begins to affect people visiting religious buildings, those
tourists might not travel – which means the whole tourist
industry is at risk.
 Niche tourism often attracts people from a very specific
demographic group, whose tastes may change too quickly for the
destination to adapt. For example, a TV set location may be
popular only as long as the TV show is on the air, after which
tourism may decline.
 Because of the relatively small number of tourists, a
destination may suddenly lose its customers because of
competition. For example, an island might have a tourists but
then an island in the new location improves its tourist
infrastructure and people choose to go elsewhere.
 Too many niche tourists means too many people doing the
same thing, resulting in those same tourists having a negative
experience. A good example is scuba diving off some Thai islands,
where the number of visitors has put off some from going back.
 Family decisions about holidays usually involve compromise.
If the destination caters to only one type of tourist, that person
may not go to the destination because there is nothing for their
partner or family to do.

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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

It refers to responsible travel to natural areas with a purpose of

conserving the environment and improving the well-being of local
people.

PRINCIPLE OF 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

Found in the Carribean, Ecuator has a great diversity of flora and

fauna. It contains 10% of the World’s plant species. Much of the
country is protected by national parks and nature reserves.

As visitor numbers began to rise, Ecuador was anxious not to

suffer the negative externalities of mass tourism evident in many
other countries. Tourist industry leaders were all too aware that a
very large influx of visitors could damage the country’s most
attractive eco systems and harm its images as a “green”
destination for environmentally conscious visitors.

IMPORTANCE OF ECO TOURISM IN ECUADOR

1. The indigenous quichua Indians have been provided with a

new alternative way of making a living. The profits from
tourist receipts are also shared by these people.
2. Income is earned by the region which in turn develops the
local infrastructure e.g. roads and hospital.
3. Human pressure con the flora and fauna has been greatly
reduced.
4. Protection of community members from any contagious
diseases brought in by visitors e.g Quochua people are not

88
 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.

THE MANAGEMENT OF A TOURIST DESTINATION.

RESEARCH.

- A case study of one tourist area or resort

- Factors behind its growth and development.
- Illustrate the issues / problems of sustainability it faces
- Evaluate the impacts of tourism on local environments,
society and the economy.

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SWITZERLAND A TOURIST DESTINATION

The country is found in Western Europe bordered by Germany in

the North, Austria in the East France in the West and Italy in the
South. Switzerland is a land locked mountainous country and
land locked.

Despite that, she boasts of one of the greatest tourist destinations

in Europe.

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FACTORS FOR GROWTH AND DEVELOPMENT.

 Switzerland is located in the heart of Europe amidst very

wealthy countries such as Germany, Italy, France, and
Austria among others. People in these countries have
enough disposable income that they can use to visit
Switzerland with its magnificent scenery.
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 Switzerland has a variety of tourist attraction ranging from
the great Alps glacial scenery, winter sports like skiing and
ice skating, swimming in the clear blue lakes of the Swiss
plateau, sport fishing, the old town of Bern which is a world
heritage site since 1983, Cascading waterfalls such as the
Rhine falls – Schaffhausen, mountain climbing in the Alps
among others.

 Switzerland boasts of the existence of efficient transport and

communication networks that transport visitors to all corners
of the country. The cable cars that transport tourists with fun
throughout the Alps rugged mountainous region, the
tramways which are powered by electricity and link people to
various destinations in urban areas, world class air ports
such as Zurich airport, Bern airport, Lugano airport, a dense
network of bus companies etc.

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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.

 The favorable government policy of developing the tourism

industry as an alternative source of income since
Switzerland is a land locked country with virtually no natural
resources and its annual trade balance is usually in the red,
owing to the economy’s reliance on large quantities of
imported raw materials for industry. A lot of capital is
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 therefore invested in the country’s tourism industry making it
the 6th most visited destination in the World by 2015.
 Availability of world class developed resorts and hotels to
accommodate tourists of any social, economic and political
class e.g the 5-Star four seasons hotel in Geneva, Hotel
Villa, Kempinski Grand Hotel etc. These are facilitated with
well-trained hospitable tourism staff and Swiss Cuisine
characterized by chocolate and Cheese, emmental cheese,
vacherin and appenzeller are famous Swiss products.

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PROBLEMS / ISSUES OF SUSTAINABILITY OF THE SWISS
TOURISM INDUSTRY.

For tourism to be counted as sustainable, it must meet the

following criteria:

Issues of sustainability of Swiss tourism include:

 The Alps have been the selling point of Switzerland

successful tourist industry for more than a century. The
Alpine region as a whole receives 100 million visitors every
year which puts it under enormous pressure. For example, in
winter which is a ski season a significant number of slopes
need to be artificially enhanced by fake snow. Winter sports

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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.

 There has been deforestation to make way for holiday

resorts and for some tourist resort like Zermatt in the Alps,
wild animals such as the Red deer, Brown bear and Wolves
are disturbed by noise and encroachment by tourists leading
to migrations and physical attacks on tourists. Higher altitude
skiing areas have affected forests since trees have to be
cleared to create ski slopes.
 The big number of tourists in Switzerland has contributed to
great pollution of water, land and air. Traffic congestion in
tourist resorts spills out exhaust gases, lots of waste
generated by sports and boats on water.
 The tourist industry is affected by climate change. The rise in
greenhouse gases have increased temperatures by over 6°c
compared to pre-industrial times by the end of the 21st

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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.

AN EVALUATION OF SWITZERLAND’S TOURIST INDUSTRY

ON THE ECONOMY, LOCAL ENVIRONMENT AND SOCIETY.

 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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

Switzerland has introduced special coaches for Chinese

tourists, as locals consider them to be ‘loud’ and ‘rude’.
The news has triggered mixed reactions amongst
Weibo’s netizens.

A ccording to China’s National Tourism Administration (中国国家旅游管理

局), China now sends more tourists abroad than any other country in the

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world. The number of Chinese outbound tourists exceeded 100 million in
2014, spending $155 billion.

Although destination countries welcome the money spent by Chinese

travelers, locals often can’t stand the chaos and hassle some Chinese tourists
bring to their countries. They consider them to be loud, rude, pushy, and all
over the place.

“They’re loud and rude, and spit on the

floor.”
 
Such is the case in Switzerland, visited by one million Chinese tourists every
year. Locals and Swiss tourists often feel harassed by the
Chinese, Heute reports, especially on the famous Rigi Railways. Chinese
tourists are said to be “loud and rude”, and they “spit on the floor”. Their
misbehavior has lead Rigi Railways to take special measures: since August
there are extra trains for ‘Asian tourists’, and from September extra ones for
‘international guests’. There are also special signs on the toilet explaining
tourists how (not) to use the toilet, according to Heute.
Although Rigi Railways officially has opened extra train carriages for ‘Asian
guests’, a local Swiss newspaper clearly stated they were especially meant for
Chinese, its headline being: “Zu laut, zu frech – Schweiz führt Extra-Züge für
Chinesen ein” (“Too Loud, Too Rude: Switzerland Introduces Extra Trains for
Chinese Tourists”).

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
END.

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