THE AGA KHAN ACADEMY, MAPUTO
DP ECNOMICS HL&SL (DP2)
ACTIVITY SHEET
Topic: The role of international trade and development
Lesson objectives:
With reference to specific examples, evaluate each of the following as a means of achieving economic
growth and economic development.
Import substitution
Export promotion
Trade liberalization
The role of the WTO
Bilateral and regional preferential trade agreements
Diversification.
Enquiry question
How do each of the following contribute towards economic growth and economic development - import
substitution, export promotion, trade liberalization, the role of the WTO, bilateral and regional
preferential trade agreements and diversification.
Key terms:
Inward looking development strategies (import substitution) - a trade and economic policy which advocates
replacing foreign imports with domestic production.
Outward looking development strategies (export promotion) - a trade and economic policy based on
prioritising the export of goods for which the nation has a comparative advantage.
Trade liberalisation - the removal or reduction on barriers to trading, including tariffs, quotas and non tariff
barriers such as licensing rules and administrative barriers.
Diversification - a policy of steering an economy away from an over reliance on a narrow range of goods and
services.
Beginning Activity
What is the difference between economic growth and economic development
(https://youtu.be/4D_36i4zVFs)?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
Activity 1: Inward looking development strategies (import substitution)
Start by watching the following short presentation which describes the policy of import substitution.
After watching the video (https://youtu.be/Y9sbjTptODk) answer the questions that follow:
(a) Summarise the term import substitution.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(b) Explain the strengths of such a policy?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(c) Explain some of the weaknesses of the policy?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(d) State some examples of nations that have used import substitution during their development phase.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
Activity 2: Import substitution in Russia
The following news reel documents the story of import substitution in Russia. After watching the video
(https://youtu.be/tJyopDIo5zA) explain why the nation has adopted the policy and explain whether or
not the policy is likely to be successful?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
Activity 3: Outward looking policies (export promotion)
Begin by watching the short video (https://youtu.be/W1ol3b-eoNs) and then answer the questions that
follow:
(a) Summarise the term export led growth.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(b) Which policies are consistent with an export led development strategy
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(c) Explain the strengths of such a policy?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(d) Explain some of the weaknesses of the policy?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(e) Why is investment in education and infrastructure key to the successful implementation of the
policy?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(f) Why is the policy likely to lead to greater income inequality?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(g) State some examples of nations that have used import substitution during their development phase.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
Activity 4: A focus on South Korea
Use information contained in the following video (https://youtu.be/tbzOQUO16j0) to explain how South
Korea used export promotion to support its own development. Why did the policy seem risky at the
time?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
Topic: The role of domestic factors
Lesson objectives:
With reference to a specific developing economy, and using appropriate diagrams where relevant,
examine how the following factors contribute to economic development.
Education and health
The use of appropriate technology
Access to credit and micro-credit
The empowerment of women
Income distribution.
Enquiry question
What role do the following factors play in contributing towards economic development - investments in
education and health, the use of appropriate technology, access to credit / micro-credits, the
empowerment of women and a more equal income distribution.
Key terms:
Micro-credits / micro loans - very small loans made to often impoverished borrowers who typically lack
collateral, steady employment, or a verifiable credit history.
Appropriate technology - machinery and technology that is cheaper and more appropriate for LEDCs than
conventional technology used in wealthier nations.
Activity 1: The connection between economic growth and development
The world's fastest growing economies 2006 - 2021
1. Using graph paper illustrate the
above on two axis.
2. What does the above table
suggest about the link between
economic growth and economic
development?
Activity 2: The role of female empowerment in development
Use the information contained in the following video (https://youtu.be/0lqkeDlWAHM) to answer the
questions that follow:
a) Explain the importance of empowering women as a way of driving development in an LEDC.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(b) What role does the UN play in empowering women?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(c) What role does the Women's cooperative play in development?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
Activity 3: The role of micro-credits
Watch the following short video (https://youtu.be/D11nCY40ZGg) which focuses on the role of micro-
credits:
(a) Explain the term micro-credits.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(b) Explain the role that micro-credits play in empowering women in LEDCs.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(c) Discuss the success of small loans for both the lender(s) and the borrower(s).
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
Activity 4: The role of appropriate technology
Using information from the following video (https://youtu.be/0UrxP7cXhbA) explain the role that
appropriate technology plays in development within LEDCs.
(a) What is meant by 'appropriate technology'?
(b) Highlight the biggest challenge facing companies looking to provide appropriate technologies.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(c) What role can micro-loans and micro-credits play in providing the appropriate technology that many
LEDCs require?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
Topic: The role of foreign direct investment (FDI)
Lesson objectives:
Describe the nature of foreign direct investment (FDI) and multinational corporations (MNCs).
Explain the reasons why MNCs expand into economically less developed countries.
Explain the characteristics of economically less developed countries that attract FDI, including
low cost factor inputs, a regulatory framework that favours profit repatriation and favourable
tax rules.
Evaluate the impact of foreign direct investment (FDI) for economically less developed
countries.
Enquiry question
How does direct investment from overseas MNCs impact on the level of development in an LEDC. Are
Western consumers prepared to pay more for their consumer goods so that working conditions in LEDCs
improve?
Key terms:
Multinational company - a company with manufacturing plants in different countries. MNCs provide direct
foreign investment to different nations. They can be done by either setting up a manufacturing plant in a
foreign country or merging / acquiring a domestic business in a foreign country. It might also be in the form of
a partnership with a domestic business.
FDI - an investment in the form of a controlling ownership in a business in one country by an entity based in
another country.
Activity 1: FDI in Africa
The following two videos focus on FDI into Africa. The first explains some of the reasons why MNCs
have chosen to invest in the continent and predicts a bright future for the continent and the second
explains some of the reasons for the more recent slowing of investment flows into Africa.
#1 https://youtu.be/jofzYoAqbsw
#2 https://youtu.be/yvsEPvak_88
(a) Explain initially why MNCs were attracted to investing in the Africa continent.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(b) Based on the second video explain some of the reasons that many MNCs appear to be reluctant to
invest in the African continent.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(c) Illustrate the impact of falling investment on a suitable diagram.
Activity 2: The benefits and costs of MNCs in developing nations
Watch the following short video (https://youtu.be/txuvc6ZOBrA) and then answer the questions that
follow:
(a) What is the definition of a MNC according to the International Labour Organisation?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(b) Where do the following MNCs have their headquarters: Sony, Amazon, IKEA, HSBC, Walmart.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(c) Describe some of the benefits to an LEDC of hosting a MNC.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(d) Why do investments from MNCs provide much needed capital into an LEDCs.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(e) What disadvantages can an MNC bring to a developing country?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(f) Why might competition for overseas investment leave an LEDC particularly vulnerable to exploitation.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(g) Outline the role of CSR (Corporate Social Responsibility) on MNCs relationship with the host MNC.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
(h) So on balance do LEDCs benefit from overseas investment.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
Topic: The role of foreign aid
Lesson objectives:
Recognise that aid is extended to economically less developed countries either by governments
of donor countries, in which case it is called official development assistance (ODA), or by
nongovernmental organisations (NGOs).
Recognise that humanitarian aid consists of food aid, medical aid and emergency relief aid and
that development aid consists of grants, concessional long-term loans, project aid that includes
support for schools and hospitals, and programme aid that includes support for sectors such as
the education sector and the financial sector.
Understand that for the most part, the priority of NGOs is to provide aid on a small scale to
achieve development objectives.
Examine the motivations of economically more developed countries giving aid and understand
that aid might also come in the form of tied aid.
Evaluate the effectiveness of foreign aid in contributing to economic development. Compare
the roles of aid and trade in economic development.
Enquiry question
What role does AID play in the development of LEDCs. What are the different types of AID provided to
LEDCs?
Key terms:
Aid - defined as any assistance provided to a country that would not otherwise have been given if left up to
market forces.
Official aid is provided to a country by another government or governmental organization such as UN or EU.
Tied aid - loans given to a nation, dependent on the condition that the funds are used to purchase goods and
services from the donor country.
Project or grant aid - aid given to a LEDC for a particular development project, in the form of a grant which
does not need to be repaid.
Technical aid - assistance provided in the form of technical help, such as the provision of doctors, teachers or
Activity 1: Recognising the different types of aid
Watch the following short video (https://youtu.be/oHiNFi_0hcI) and then make a list of the different
types of aid that a nation, such as Australia provides.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
Activity 2: What is aid?
Start by watching the following short video (https://youtu.be/tAvA_cOeeOI) and then answer the
questions that follow:
(a) What is aid?
(b) What is the purpose of aid.
(c) What are some of the different types of aid?
(d) Distinguish between the following types of aid:
i. Short term and long term aid
ii. Bilateral and multilateral aid
(e) Distinguish between development aid and humanitarian aid.
(f) Distinguish between aid provided by governments and aid provided by private organisations such as
NGOs and smaller private charities.
(g) Explain the role of aid in strengthening political alliances.
(h) Explain the role played by remittances in helping LEDCs.
(i) What figure is sent back as remittances each year to family members in the host country.
(j) Are long term loans made by Western banks to LEDCs considered a form of aid?
Topic: Multilateral development assistance
Lesson objectives:
Examine the current roles of the IMF and the World Bank in promoting economic development.
Understand that in some cases countries have become heavily indebted, requiring rescheduling
of the debt payments and/or conditional assistance from international organizations, including
the IMF and the World Bank.
Compare and contrast the extent, nature and sources of ODA to two economically less
developed countries.
Enquiry question
Understanding the role of the IMF and the World in promoting economic development.
Beginning question
Explain the difference between the IMF and the World Bank and the role both play in development
within LEDCs.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
Key terms:
IMF - an organization of 189 countries, working to foster global monetary cooperation, secure financial
stability, facilitate international trade, promote high employment and sustainable economic growth, and
reduce poverty around the world.
World Bank - an international financial institution that provides interest-free loans and grants to the
governments of poorer countries for the purpose of pursuing capital projects.
Structural adjustment policies (SAPs) - fiscal and monetary conditions imposed on nations (usually LEDCs) that
wish to access funds from the IMF or the World Bank. These are often imposed to ensure that the borrowing
nation to ensure that they are in a position to repay the loan.
Hot money flows - capital flows into nations with higher interest rates and / or expected changes in exchange
rates. This provides a source of foreign capital for the nation.
Activity 1: The difference between the World Bank and the IMF (https://youtu.be/lN3qrFA4jXc)
(a) Why were both organisations set up and when?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
(b) Explain the role of the World Bank.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
(c) Explain the role of the IMF.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
(d) What are some of the criticisms of both organisations.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
Activity 2: When a nation requires a bailout
The following video (https://youtu.be/_3ol09XwpXA) illustrates a developing nation, Pakistan who have
taken a series of bailouts from the IMF. Why has the nation requested funding from the IMF?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
Activity 3: Features of structural adjustment policies
The following video (https://youtu.be/3iD7VHkQP14) highlights some of the features of SAPs. Use the
information from the video to answer the questions that follow:
(a) Why are the policies of the two organisation sometimes called the Washington consensus.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
(b) Describe some of the features of SAPs
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
(c) Explain some of the crticisms of SAPs identfied in the video.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
(d) Why might many of the funds available to LEDCs come from organisations such as the IMF or the
World Bank?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
Topic: The role of international debt
Lesson objectives:
Outline the meaning of foreign debt and explain why countries borrow from foreign creditors.
Explain why the servicing of international debt causes balance of payments problems and has an
opportunity cost in terms of foregone spending on development objectives.
Explain that the burden of debt has led to pressure to cancel the debt of heavily indebted
countries.
Enquiry question
How do changes in the long term terms of trade result in a global redistribution of income, through
deteriorations in many LEDCs who have specialised in primary commodities.
Key terms:
Capital flight - occurs when assets or money rapidly flow out of a country, for example from the political and
economic elites in LEDCs to safe havens in Developed nations.
Debt burden - the size of a nation's total debt as a % of its GDP.
Debt service ratio - the ratio of a nation's debt service payments to its export earnings.
Beginning activity
Which nation is the world's most indebted, Zimbabwe?, Nicaragua? The response might surprise you.
Find out at: https://prezi.com/gjswcj2pqyog/the-world039s-most-indebted-nations/?
utm_campaign=share&utm_medium=copy
Activity 1
Start by investigating the level of debt, owed by the worlds 60 poorest nations in 1970 and then the
level of debt 40 years later.
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
Activity 2: A focus on capital flight in China
Watch the following short video (https://youtu.be/zoWWLpv_qVg) and then summarise how many
Chinese people are able to transfer their money out of the country despite the best efforts of the
government to prevent them from doing so. How does this illustrate the difficulty that many LEDCs
have in preventing capital from leaving their nations?
…………………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………….
