Global Groupings

The Global Divide

In the past we have used the north-south divide or the Brandt Line in order to illustrate the diving developed and
developing countries. Since the 1980s when this was thought up, many countries have developed in regions
which were ‘developing’ and therefore this model is now being questioned regarding it validity.

Economic Groups
Countries can be grouped by their wealth and political groups. These are:

Grouping Explanation Examples

LDCS (least developed countries) These are the world’s poorest countries, and in 2010 43 Sudan
out of 213 countries were classed as this by the UN. 28 Ethiopia
of them were in sub-Saharan Africa. They have very basic Angola
living standards and often a low quality of life. Malawi

NICS (newly industrialised Middle income countries which have recently Hong Kong,
countries) industrialised, average earnings have risen sharply from Singapore
the 1970s. South Korea. These
are known as the
‘Asian Tigers’

Ex-Soviet States After the break up of the Soviet union in 1989 there were Croatia
15 countries left with low GDP and HDI. Some middle Russia
income countries were left. Estonia

Organisation of petroleum Since the 1980s the oil producing states have belonged Saudi Arabia
exporting countries (OPEC) to this group. There are 12 of them, and supplies oil to UAE
meet global demand, at high prices. An example is Saudi Venezuela
Arabia which is very wealthy, displaying above average
wealth. However this is not evenly distributed within the
country.

Organisation for Economic Made of 34 organisations that have high wealth, Sweden
Cooperation and Development however it is evenly distributed. It is a forum of discussion Spain
(OECD) about the economic policy issues and the environment. Australia
Some countries within are only just emerging e.g Chile.
All members promote free trade and democracy.

As you can see as you move down this the wealth is increasing. However who is in charge?

1. WTO (World Trade Organisation) - This was set up in 1993 and set laws for trading. It aims to promote free
trade by reducing barriers making it easier for poorer countries to trade. Some though believe that they act
more for helping wealthy countries.
2. G8 - A group of 8 nations founded in 1975 which is a forum for governments of the worlds biggest
economies. It is made up of UK, USA, Russia, France, Canada, Germany, Italy and Japan. It represents
65% of the worlds trade.
3. IMF (International Monetary Fund) – This organisation organises investments within countries that have little
money to spend on infrastructure. It forces service to privatise e.g. the post office which are then bought by
TNCs from developed countries. They also filter loans from the rickets countries and gives it to developing
countries as aid. This can help the country, but also put it huge amounts of debt that it cannot afford to pay
back. An example of this is the Asian Crisis of 1997 when countries such as Indonesia and Malaysia were
forced by the IMF to increase interest rates tighten fiscal policy to reduce the deficit and strengthen the
exchange rates. However this caused a minor shut down and a serious recession with mass unemployment.

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Why there are disparities in wealth?

There are many reasons for this, some of the key ones are:
- In the 1970s many African countries took out loans, which they can no longer afford to pay back. This
means that they have no money to invest in infrastructure or services.
- Profit margins were hit in developing countries due to the fact that the OPEC increased the price of oil
twice. It also kept its profits in banks within more developed countries.
- Generally the banks have lent money to countries which are at a greater level of development.
- Global interest rates doubled in the 1980s which meant that developing countries who had taken out
loans in the past struggled even more to pay back the debt. This threw them into a spiral of
deprivation, with people being unskilled (due to no education), unable to get high paid job resultantly
lowering GDP of the country. This ultimately means that debts aren’t being paid off.

There are specific countries which have been impacted by one or some of the points above and these are
Tanzania and Kenya.

Tanzania Kenya

They began with a fairly high GDP, in which they In the 1990s Kenya had a rapidly growing
have good healthcare and education. Much of the population but was plagued in debt. The government
income was due to cotton production, due to rich devoted land to cash crops, with 45% of flower
fertile volcanic soils. imported into the EU from sub-Saharan Africa. This
totalled around €250 million.
However in the 1980s the price of cotton fell
significantly, by around half. This impacted farmers The dedication to these cash crops caused a shortage
greatly, which consequently caused GDP to fall. of food and therefore 60% of the population
suffered from a lack of food. Farmers also tried to
increase yields quickly by diverting water to flowering
fields, this though caused the surrounding ecosystems
to suffer.

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