Optional Unit 6: Global Interdependence
Global Interdependence examines how economies, people and environments are linked across borders: trade, aid, debt, multinational investment and development. The exam expects you to measure inequality with indicators and to evaluate whether linkages help or harm poorer countries.
Rules that decide marks
- Indicators: GDP/GNP per capita, HDI (income, health, education), Gini coefficient and dependency ratio. Use at least two to compare countries.
- Trade: comparative advantage, tariffs and quotas, and terms of trade. Countries exporting primary commodities face price volatility and tariff escalation, so they earn little from what they sell.
- TNCs bring FDI, jobs and technology but may repatriate profits, use transfer pricing and dominate local markets.
- Aid types: bilateral, multilateral, emergency, development and NGO aid. Tied aid and aid that bypasses local institutions are weaker; aid works best with good governance and local ownership.
- Debt: HIPC relief and structural adjustment conditions; fair trade and the Sustainable Development Goals as alternative routes to development.
Worked example
Country X exports cocoa beans and imports chocolate. Explain its weak trading position. Reasoning: cocoa has low value added and volatile prices, while chocolate carries high value added and brand premium. Tariff escalation in destination markets discourages processing in Country X, so earnings are unstable and depend on weather and speculation. Fair-trade premiums and processing at origin raise and stabilise income.
Traps that cost marks
- Describing poverty without any indicator.
- Treating all aid as automatically beneficial.
- Giving one-sided TNC answers with no evaluation.
- Confusing globalisation with development - they are not the same thing.