Saturday, August 2, 2014

What is Free Trade? IGCSE AND GCEO LEVEL

What is Free Trade?

Free trade is a system of trade policy that allows traders to trade across national boundaries without interference from the respective governments.

Reasons for Free Trade

Domestic Non-availability: A nation trades because it lacks the raw materials, climate, specialist labour, capital or technology needed to manufacture a particular good. Trade allows a greater variety of goods and services.

Cost effectiveness: It is cheaper to buy from other countries rather than producing themselves.

enefits of Trade

Lower prices for consumers: When there is free trade, consumers can free to buy goods from the producer who is willing to sell at the lowest prices. Hence consumers gain from lower prices.

Greater choice for consumers: With free trade, consumers have access to variety of goods and services from different producers across the globe. This means more choice.

Ability of producers to benefit from economies of scale: Producers have access to a larger market thus they can produce more at lower cost and benefit from economies of scale.

Ability to acquire needed resources: Through free trade producers can not only sell in a large market but also gain from purchasing from suppliers across the world.

More efficient allocation of resources: When there is free trade, the most efficient producers get the opportunity to produce due to their cost efficiency. This leads to productive efficiency.

Increased competition: In free trade producers from different regions can compete with each other in terms of price, quality and variety. Increased competition leads to efficient allocation of resources.

Source of foreign exchange: Free trade involves the transaction of goods and services between nations. In order to purchase goods from abroad (imports), we need foreign currency. This is possible through exporting of goods to other countries.

Free Trade diagrams

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Video 2

Professor Friedman clarifies the motives of protectionism and explains why free trade policies benefit the masses.

Friday, August 1, 2014

IGCSE structured notes, Barriers to growth of less developed economies?

Barriers to growth of less developed economies

Rapid population growth neutralises growth in GDP. The ultimate effect is that GDP per capita remains the same or comes down.

Human resources: Lack of training and high level skills makes the workforce less productive.

Lack of natural resources: If the country is lacking in natural resources, growth can be difficult. Moreover, if the country has good natural resources, but they are not managed properly then there will be less development.

Inefficient use of resources: If there is no optimum utilisation of workforce, or if the firms are inefficient due to lack of competition.

Too much dependence on agricultural products: Developed countries which import these products from less developed countries usually pay very low prices for it. Moreover, they further process these products and sell it for higher prices to LDCs.

Poor infrastructure: Lack of infrastructure such as poor transport and communication is another reason which hinders growth for LDCs.

How does population pyramid work?

The Population Pyramid—what it is and how it works

Bar graphs are a handy way to illustrate numbers. For example, if we were to graph the number of males and females in Canada for various age groups according to the 1961 Census, the result would be the illustrations below.

(Click on image to enlarge)

If we were to display these graphs horizontally, make a mirror image of the one for women, and then join them together, we would have a population pyramid—exactly as seen below.

This population pyramid shows at a glance the distribution of the Canadian population in 1961.

You can see that the pyramid narrows toward the top. This is because the death rate is higher among older people than among younger people.

There are also a few bulges and narrower parts in the middle part of the pyramid. For example, there are not as many people in their 20s as in their 30s in Canada in 1961. The people in their 20s in 1961 were born during the Depression, a time of economic hardship in Canada when people were having fewer children.

In 1961, the pyramid had a wide base. In fact, when we add the percentages for the three lowest age groups, we find that 35% of the population was under 15. These are the “baby boomers,” a large group of people born between 1947 and 1966 when the economy was growing and prospering.

By analysing population pyramids and identifying trends, we can learn a lot about our society. These statistics give governments and others one of the tools they need to make informed decisions that will affect our lives today and in the future.

Statistics Canada information is used with the permission of Statistics Canada. Users are forbidden to copy the data and redisseminate them, in an original or modified form, for commercial purposes, without permission from Statistics Canada. Information on the availability of the wide range of data from Statistics Canada can be obtained from Statistics Canada's Regional Offices, its World Wide Web site at www.statcan.gc.ca, and its toll-free access number 1-800-263-1136.

IGCSE AND GCEO NOTES.What is Population pyramid?

What is Population pyramid?

A population pyramid, also called age-sex pyramid and age structure diagram, is a graphical illustration that shows the distribution of various age groups in a population (typically that of a country or region of the world), which normally forms the shape of a pyramid.

It typically consists of two back-to-back bar graphs, with the population plotted on the X-axis and age on the Y-axis, one showing the number of males and one showing females in a particular population in five-year age groups (also called cohorts). Males are conventionally shown on the left and females on the right, and they may be measured by raw number or as a percentage of the total population.

Young population

Generally a population pyramid that displays a population percentage of ages 1–14 over 30% and ages 75 and above under 6% is considered a "young population".

This pattern generally occurs in developing countries, with a high agricultural workforce.

Ageing population

A population pyramid that displays a population percentage of ages 1–14 under 30% and ages 75 and above over 6% is considered an "aging population".
Usually found in developed countries with adequate health services, e.g. Australia).

A country that displays all or none of these characteristics is considered neither.

Uses of Population pyramid

Population pyramids can be used to find the number of economic ‘dependents’ being supported in a particular population.
Population pyramids can be used to observe the natural increase, birth, and death rate.

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GCEO O' LEVEL NOTES, IGCSE -Optimum Population

Optimum Population

It is the number of people that will produce the highest per capita economic return given the resources available, and their full utilization. Should the population rise or fall from the optimum the output per capita, and standard of living, will fall.

A country is said to be under populated if it has insufficient people to make full use of the resources available. On the other hand a country is overpopulated if there are too many people and few resources. There will be diminishing returns.

IGCSE ECONOMICS NOTES. FACTORS AFFECTING POPULATION GROWTH

Factors affecting the population

The Birth Rate

It is the average number of the children born in a country compared to the rest of the population. In other words, it is the number of births for every 1000 people in the country.

Birth rate=	Number of live births	X 1000
	Total population

Factors affecting the birth rate in a country

Existing age-sex structure
Availability of family planning services
Social and religious beliefs - especially in relation to contraception and abortion
Female employment
Economic prosperity (although in theory when the economy is doing well families can afford to have more children in practice the higher the economic prosperity the lower the birth rate).
Poverty levels – children can be seen as an economic resource in developing countries as they can earn money
Infant Mortality Rate – a family may have more children if a country's IMR is high as it is likely some of those children will die.
Conflicts
Typical age of marriage

The Death Rate

The number of people who die each year compared to every 1000 people in the population is known as death rate.

Death rate=	number of deaths	X 1000
	Total population

Factors affecting Death rate in a country

Medical facilities and health care
Nutrition levels
Living standard
Access to clean drinking water
Hygiene levels
Levels of infectious diseases
Social factors such as conflicts and levels of violent crime

Net Migration

Emigration is when a person moves out of the country.
Immigration is when a person moves into a country.
Net Migration is the difference between emigration and immigration.

If net immigration is positive it will lead to a population increase, a negative net immigration will lead to a fall in population of the country.

Dependency Ratios

It is the number of people in work with the total population of the country.

Dependency ratio =	Total Population
	Number of people in work

Dependent Population usually consists of children, students, housewives, the unemployed and old age pensioners.

Affects of increase in dependent population

Lower standard of living

An increase in the dependent population will mean that people in work have more people to support and thus the living standard of the country will fall.

Balance of trade

If the people in work cannot produce enough goods and services to satisfy the need of the growing dependent population then the country has to spend its income on importing these goods and services, which will lead to an unfavourable balance of trade.

Changes in Population pattern as a country becomes more developed

As an economy becomes more developed the following characterisitics might be noticed in its population stucture.

Change in Occupational structure

primary sector will continue to fall
secondary sector will first rise, and then fall
tertiary sector will continue to rise.

Age structure

average age of the population will rise
there will be an ageing population
Birth rate and Death rate will fall

Geographical structure

there will be a movement out of the rural areas and into the urban areas.

Introduction to population

Changes in world Population

The world population is the total number of living humans on Earth at a given time. As of July 2008, the world's population is estimated to be just over 6.684 billion. In line with population projections, this figure continues to grow at rates that were unprecedented before the 20th century, although the rate of increase has almost halved since its peak of 2.2 percent per year, which was reached in 1963. The world's population, on its current growth trajectory, is expected to reach nearly 9 billion by the year 2042.

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Saturday, August 2, 2014