ISSUE 2

January 2016

CAPITAL
DEVELOPMENT

CONTENTS
03

EDITORS NOTE

04

SUSTAINABLE DEVELOPMENT
GOALS

05

IS INEQUALITY GOOD FOR

GROWTH?

06

6 REASONS WHY SYSTEMATIC AID

DOESN T WORK

'

07

FAMILY PLANNING POLICIES IN

CHINA

09

ON CLIMATE CHANGE

10

DEVELOPMENT IN INDIA

11

WHY VOLATILE GROWTH IS GOOD

FOR DEVELOPMENT

12

THE EASTERLIN PARADOX

13

FROM LESS DEVELOPED TO MORE

DEVELOPED IS THE MIGRATION A
GOOD THING?

16

FOSSIL FUELS: ECONOMIC

DEVELOPMENT VS THE
ENVIRONMENT

JANUARY 2016

PAGE 3

EDITORS'
NOTE
JANUARY 2016 - ISSUE 2
For this term s issue of Capital we wanted to choose a theme which was relevant to our A Level course but also appropriate for
the current economic climate. Having started learning about economic development at school, and trying to choose a topic
that would complement Geography and Economics Week we decided to base the articles for the magazine around
development. This issue of Capital looks at countries across the world at different stages of development, considers both the
positive and negative effects of development and studies the various factors that affect development levels. We have
considered a range of outlooks on the topic from the environmental impacts to the effects of migration.
'

We ve tried to look at the world around us and identify countries at very different stages of development. Focusing just on how
we re doing the UK is back on its feet after the 2008 recession and is continuing to grow steadily and the rest of the EU, apart
from a few exceptions, is still suffering from the 2008 crisis but is slowing starting to regain growth and business confidence
again.

Across the rest of the world, China s development has slowed slightly whilst India s has picked up. It is also quite exciting to see
how the MINT countries Mexico, Indonesia, Nigeria and Turkey are performing as well as seeing how countries newly
identified, as Tiger economies will do over the next few years. With political unrest and wars in some parts of the world holding
back economic development and oil prices having a large affect on certain countries it is fascinating to see how different
countries economic situations will change over the next few months and years and also how the nature of development will
change along with this.

BY GEORGIA MOSHEIM

Today we are living in a rapidly developing society. In 2015 alone, the global population increased by approximately 76 million
people, and is expected to hit 8 billion by 2024. Life expectancy in regions such as Africa and the Middle East are rising, with
infant mortality falling at a greater rate.
Development economics focuses not only on methods of promoting economic development, growth and structural change,
but also on improving the potential for the mass of the population, for example, through health and education and workplace
conditions, using both public and private channels. It involves the creation of theories and methods that aid in the determination
of policies and regulations and can be implemented at both a domestic and international level. Put simply, development
economics seeks to determine how poor countries can be transformed into prosperous ones. This branch of Economics is one
I am highly passionate about, as it seeks to improve the quality of life and living conditions of individuals in more impoverished
countries, whilst working with macroeconomic objectives to boost growth. When explored correctly, Development Economics
can bring long term and sustainable change to the worlds poorest nations.
We decided upon Development as the theme for our edition of Capital this term, as we felt it was an area of Economics that was
highly topical in todays rapidly growing society. The theme of Development allows us to focus closely on both the UK and the
international community, emphasising the way different nations are inextricably linked, as well as their ability to grow and
develop together. We hope you enjoy this issue as much as we enjoyed compiling it.
-

BY MINAL HAQ

JANUARY 2016

PAGE 4

THE UN AGREES ON NEW SUSTAINABLE

DEVELOPMENT GOALS FOR 2030
Secretary-General Bank-Ki Moon
described the 17 new goals and 169
targets to wipe out poverty, fight inequality
and tackle climate change over the next 15
years as a to-do list for people and planet,
and a blueprint for success.

ith the start of the new year, the UN

have ushered in a new set of development
goals that aim to end poverty, hunger and
assure gender equality whilst also aiming
to create a life of dignity for all over the next
15 years.
The UNs Sustainable Development Goals
(SDGs) are replacing the Millennium
Development Goals which expired at the
end of 2015. Up until now, there were 8
Millennium Goals consisting of eradicating
extreme poverty and hunger, achieving
universal primary education, promoting
gender equality and empowering women,
reducing child mortality, improving
maternal health, combating HIV/AIDS,
malaria and other diseases, ensuring
environmental sustainability and
developing a global partnership for
development. However, as a result of the
UN meeting, a new set of 17 ambitious
goals have been agreed upon for 2030.
The MDGs accomplished a lot, but
progress was uneven across regions and
countries, leaving millions of people
behind, especially the poorest and those
disadvantaged due to sex, age, disability,
ethnicity or geographic location. These
new SDGs are expected to plug the holes
left by the MDGs and go even further. UN

India is seen as particularly important for

the success of the SDGs, since improving
the lives of 1.4 billion Indians would make
a major dent in the goal of improving the
lives of all humanity. Even before the SDGs
came into effect, India told the UN that it
was already implementing the new goals
in the form of several initiatives launched
by the government.
Ambitious programmes launched by the
Indian government such as 'Make in India',
'Digital India', 'Smart Cities' and the 'Skills
India' initiative aim to boost economic
development and manufacturing in the
country, which should help lift millions out
of poverty and contribute to the progress
of the SDGs.
According to the African Development
Board (AfDB), the SDGs will have to tackle
the dual challenge of overcoming poverty
and protecting the planet, which requires
an estimated $7 trillion per year globally
out of which around $3-4 trillion per year
will be required for developing countries
simply to meet basic infrastructure, food
security, climate change mitigation and
adaptation, health, and education.
Economists around the world believe that
with such large financial implications, the
world, especially the developing part, must
find ways to raise funds in addition to the
available aid. While the debate continues
on the financial commitment of developed
countries through official development aid
(ODA) to meet SDG targets, it is
acknowledged that domestic resource
mobilization (DRM) will play an important

JANUARY 2016

PAGE 5

example to other countries like Africa.

Hopefully, with a mixture of aid from the
developed world and reform and domestic
investment from the developing world, the
UN will be able to achieve their
development goals by 2030.

role in achieving the upcoming goals.

All in all, the UN has agreed on an ambitious
set of new goals in order to try and speed up
the process of development around the world,
with countries like India helping to pave the
way to future progress and setting an

BY RIANNA SHAH

IS INEQUALITY GOOD FOR GROWTH?

he top 10% of the UK population holds 44%

of the countrys wealth compared to the
bottom 50% which owns just 9.5%. In fact, if we
were to ignore wealth distribution (which is
relatively equal compared to other OECD
countries) and focus on income distribution,
the UK has a higher level of income inequality
than several other developed countries. Of
course, high inequality itself leads to negative
consequences such as high crime levels and
possible political instability. And, furthermore,
high inequality is usually associated with a
high level of poverty, which brings about its
own negative social effects, including
inadequate education and poor living
standards. Yet, many have asked whether
some inequality is in fact needed for long term
economic growth and if there are any benefits
derived from it. A study by the National Bureau
of Economic Research showed that 24% of the
increase in inequality in the past generation
occurred because companies upped their
usage of performance pay. This suggests that
the economy is increasingly rewarding hard
workers, which is an incentive for more
diligent and productive work and increases
opportunities alongside increasing inequality.
Policymakers should try to increase the
number of jobs which receive wage growth
based on performance. Inequality is in fact
necessary in order to encourage
entrepreneurs to take risks. Without the
prospect of a substantial reward, there would
be little incentive to invest in new business
opportunities. A further benefit of inequality is
the Trickle Down Effect. By this, I mean the
way in which an increase in income for the
highest earners is passed down through

higher wages and further job creation. The

gap between highest and lowest earners may
have risen but the lowest earners may still
benefit from this. Some argue that instead of
holding back investment and growth,
inequality can instead promote savings and
catalyse growth by giving resources to those
with more power and thus more ability to
utilise these resources most effectively.
Analysis of US data showed that overall, both
high and low levels of inequality diminish
growth. In fact, what is needed, is a stable level
of inequality. This data suggested that the
optimal level of inequality in the US was
reached in. However, other evidence suggests
that inequality shortens the length of a growth
spell and therefore may not be as beneficial as
it appears. Reducing inequality evidently has
long term benefits. It strengthens our belief
that our society is fair, it improves social
cohesion and along with this, it improves
living standards through the reduction in
poverty. Policies that aim for growth without
paying attention to inequality tend to be less
effective than policies which boost
employment and education which will
eventually lead to an increase in output.
However, inequality itself is neither positive
nor negative. What matters is the source of this
inequality. An extremely unequal society in
which the majority of wealth is inherited
clearly causes many social and economic
problems. But, if hard work and innovation has
led to an increase in income inequality,
government intervention here would likely
stunt any resulting economic growth.
Policymakers need to examine the causes of
inequality before choosing how they should
act.
-

BY GEORGIA MOSHEIM

JANUARY 2016

PAGE 6

6 reasons why systematic

aid doesnt work
The idea that large donations of systematic aid can solve poverty has been at the forefront of development economics and of the policy of
international aid agencies and governments since the 1950s. Millions have moved out of abject poverty around the world since then, but that
has more to do with economic growth in countries in Asia which have received little aid. For example, the World Bank has calculated that
between 1981 and 2010, the number of poor people in the world fell by about 700 million and that in China over the same period, the
number of poor people fell by 627 million
- BY AMBER ABRAHAMS

MONEY IS NOT THE KEY

TO THE ERADICATION OF
POVERTY

It is important to recognise that poor countries are poor

because they have extractive institutions. Aid can still do
a lot of good. This money can feed the hungry, and help
the sick - but it does not free people from the institutions
that make them hungry and sick in the first place. It
doesnt people them from a system which removes their
opportunities and incentives. The removal of these
extractive institutions are the first step towards lifting a
country out of poverty, not aid.

MONEY IS NOT SPENT ON

THOSE WHO NEED IT

Often, aid comes with the condition of "good governance,

meaning transparent institutions, rule of law and lack of
corruption. In practice, this is proved by the holding of
multi-party elections. However the western mindset
wrongly assumes a that political system of multi-party
democracy means high-quality institutions and a lack of
corruption. Many African countries have dutifully held
elections but that hasn't made them any more liberal. The
still apparent corruption means aid stays at the top for
the most part, never making it to the people it is intended
to help.

FOREIGN AID MEANS POLICY IS

MADE BY MISINFORMED
BENEFACTORS

There are so many examples of people's lives practically

being shaped and designed by policy that isnt contructed
by domestic politicians and specialists and instead by
people like Bob Geldof and Bono, representatives of
"glamour aid". There are policymakers in countries who
are recipients of aid whose job it is to create and
implement policy. People have voted for a president who
is effectively disenfranchised because of donors or
because glamour aid has decided to speak on behalf of
them.

THERE IS NO
ACCOUNTABILITY FOR
FAILURE

If an agency shares the responsibility with other agencies

to achieve many different generic goals then it is not
accountable to the people it is trying to help. No single aid
agent is specifically responsible for achieving one task in
the current system of aid. Multiple institutions pursue
shared, unrealistic goals and blame failures on others.
Without this accountability, the incentive for success and
evaluation in the event of failure is weak. Even when
internal evaluation points out failure, agencies may not
hold anyone responsible or their practices. For example,
the OED in 2004 indicated how eight influential
evaluations influenced actions of the borrower in 32
different ways, but mentioned only two instances of
affecting behaviour within the World Bank itself.

THERE ARE NO MARKET

FORCES

Similarly to accountability, due to their nature, aid

agencies have no form of feedback from the consumer. In
a normal market, profit-seeking firms make a product that
is usually in high demand. They responsibility for the
product and if the product harms or does not help the
customer, they are liable and may go out of business.
There is no such system in the context of systematic aid. If
aid does not help a country, which often occurs, this is no
skin off the back for the aid agency. The aid agency still
exists and continues wasting money, unlike what would
happen in a real market.

THERE IS OFTEN NO
INCENTIVE TO MAKE GOOD
USE OUT OF THE AID

Aid lending is far too lenient. There are 50-year terms,

low interest rates and more money is lent even if a
country defaults. By contrast, with other methods of
lending such as government bonds, the capital markets
are not forgiving of corruption or failure - mess up once
and there is no more cash.

PAGE 7

JANUARY 2016

FAMILY PLANNING
POLICIES IN CHINA

hina has long had the largest

population in the world, with the
Communist Party initially implementing the
one child policy in 1979 due to fears of the
adverse economic effects of a rapidly
growing population. However, after 35
years, China officially ended their one-child
policy on October 29th. The policy was
relaxed to two-children, emphasizing the
Party's realisation of the importance of a
working population to sustain
development. This year, China saw a
massive slowdown in their economy.
Initially, China failed to reach their growth
target of 7.5% at the end of 2014 and more
recently, the August 24th stock market

crash occurred. Though the slowdown was

due to a combination of factors, one of the
reasons why China's massive economic
growth, averaging 10% for the last 10 years,
was unsustainable was due to their
working population peaking in 2012.
Furthermore, China's total population is
due to peak at just below 1.4 billion within
the next few years. This will have
detrimental effects on China's growth rate,
especially because industry, which is
labour intensive, currently fuels China's
economy.
China's current welfare system is limited,
which further exacerbates the issue of an
aging population as there are less young
people to take care of the elderly and
therefore, less tax revenue for the
government to spend to care for them.
With the number of over-65s projected to
increase sharply to 300 million by 2050, the
elderly's tendency to buy goods will further
become a barrier for China's hope to
transition to a consumer based economy.

JANUARY 2016

However, many argue that China's reform

to the two-child policy is either insufficient
or has been implemented too late, with it
having little effects to keep the overall
population from falling. Despite the
increase in allowance to two children, with
the improvements in equality in the
country, many women are focusing more
on their careers and postponing starting a
family to a later date. Improvements in
education and later marriages are also
factors that have deflated China's fertility

PAGE 8

rate to 1.66 children per woman. It is

possible that the current generation has
become indoctrinated with the belief of
China being overpopulated, choosing to
focus majority of income and wealth
towards a single child to maximise the best
opportunities for them, especially with the
rapid increase in housing and education
prices. Thus, even if the new two-child
policy may encourage a portion of couples
to have more children, it is unlikely to
prevent population decline.
Arguably, the Communist Party should
remove population restrictions all together.
Especially with changes in the mind-set of
the population, there is little evidence to
suggest that China's population would
rapidly increase if these coercion policies
were lifted. By looking at population
projections, it is clear that China's
population dividend has or will disappear
soon, with population peaking possibly
before the governments initial prediction
of 2030.
-

BY REBECCA FUNG

PAGE 9

JANUARY 2016

On Climate Change
History is here declared Francois Hollande
on 12th December, following the
finalisation of the 2015 UN Climate Change
Conference (COP 21) held in Paris, the first
ever multinational legally binding deal to
tackle global warming. With
representatives from 196 parties attending
and the entire event running for a long and
exhausting 12 days, the purpose of the
conference was to negotiate an agreement
regarding the actions that need to be taken
to reduce carbon dioxide emissions, known
as the Paris agreement.

Climate change, as we often hear at school

and in the media, is one of the biggest
problems of this generation. The Stern
Review presented to the British
Government in 2006 outlined the
economic impacts of climate change. It
estimates that, without action, the overall
costs of climate change is equivalent to
losing at least 5% of GDP, stating that the
benefits of strong, early action outweighs
the costs. The agricultural sector is
negatively impacted by climate change, as
through higher temperatures and more
frequent and extreme weather events such

as droughts and floods, the price of scarce

resources can rapidly increase, which is
especially harmful seeing as these
commodities are used as raw materials in
many other manufacturing processes.
These disasters act as a threat multiplier,
exacerbating problems such as poverty,
illness and security, impacting all parts of
the economy. Such weather events are
also capable of destroying capital used in
other sectors.
The ambitious but admirable goal
negotiated at the Paris is to hold the
increase in the global average temperature
to well below 2 degrees Celsius above
pre-industrial levels and to pursue efforts
to limit the temperature increase to 1.5
above pre-industrial levels. The deal
requires all countries to set increasingly
ambitious targets for cutting their national
emissions and to regularly report their
progress; the actual target set however is
decided by the individual country itself.
Furthermore, developed countries must
provide $100billion each year by 2020 to
poorer nations who lack the funding to
tackle their internal climate change, for

JANUARY 2016

which the UK has committed to pay 5.8

billion over five years. Several developed
countries also agreed to pitch and
encourage developing nations to also
actively prevent global warming, as it is
these nations who are generally less keen
such issues.

PAGE 10

Whilst the Paris Agreement marks only the

beginning of a long road to combating
climate change, it is a push in the right
direction and as David Cameron stated, is a
huge step forward in helping to secure the
future of our planet .
- BY BINGIE DONG

DEVELOPMENT
IN
INDIA
I
ndia is one of the most populous
countries in the world with a population
in excess of 1.2 billion.

India has sustained rapid growth of GDP for

most of the last two decades leading to
rising per capita incomes and a reduction
in absolute poverty. Per capita incomes
have doubled in 12 years. But India has one
third of all the people in the world living
below the official global poverty line. Per
capita income is $1,270, placing India just
inside the Middle Income Country

category. Despite a strong attempt to

become an open economy, exports of
goods and services from India account for
only 15% of GDP although this will rise
further in the years ahead. India runs
persistent trade and fiscal deficits and has
suffered from high inflation in recent years

India has followed a different path of

development from many other countries.
India went more quickly from agriculture to
services that tend to be less tightly
regulated than heavy industry. But, there
are some emerging manufacturing giants in
the Indian economy.
India has a fast-growing of working age, a
strong legal system, low wage cost which is
attracting a lot of FDI. India also has
a comparative advantage in many service
industries such as business software.
- BY ISHA SHAH

JANUARY 2016

PAGE 11

WHY VOLATILE GROWTH IS GOOD

FOR DEVELOPMENT

lbert Hirschman (b. April 1915, d. December

2012) was a German-born economist who spent
much of his life in Latin America after fleeing
Nazi Germany. After living in Colombia during
the 1950s, Hirschman wrote The Strategy of
Economic Development in which he argued
that economic obstacles in developing
countries could actually be used to encourage
economic growth. Low GNI per capita,
widespread poverty, high unemployment and a
lack of technology result in an imbalance of
cash flows in the economy, which provides
underdeveloped industries with the incentive to
grow. This was a revolutionary stance that
clashed with the work of the World Bank, whose
aim was to remove obstacles to development
and improve infrastructure to reduce
inefficiency during the production process.
Hirschman, however, believed that there was
no better teacher than adversity as

this would allow bottom-up economic

development from entrepreneurs, who
would learn how to cope with such volatility.
As a solution, Hirschman proposed the idea
of investment linkages: forward linkage
occurs when investment in a project or
industry encourages investment in later
stages of the production process, whereas
backward linkages encourage investment in
earlier stages and facilities for the project.
The steel industry is a common example;
forward linkage is encouraged in canned
goods and cars, and backward linkage is
created in the mining industry. This induced
industrialisation creates imbalanced growth
of different sectors, which helps to achieve
rapid development: If the economy is to be
kept moving ahead, the task of development
policy is to maintain tensions, disproportions
and disequilibria
-

BY ANDREA WONG

JANUARY 2016

THE EASTERLIN
PARADOX

ommon knowledge would tell us

that the richer we are, the happier we
are. It seems to be true. Surely nothing
could replicate that feeling when you
buy a new laptop? Or your parents get
you that bracelet you wanted for your
birthday? In a world where
experiences are now bought and
Christmas is rated on the value of your
stocking, nothing should be able to
make you any happier than having
more money.

The Easterlin Paradox is a puzzle

concerning whether we are happier and
more contented as our living standards
improve. Created by Richard Easterlin, in
the 1970s, it drew attention to figures
which indicated that, contrary to popular
belief, there is little difference between the
happiness of those living in highly
developed, high income countries in
comparison with those which are
characterised by a low income and high
poverty rates. The figures didnt just bring
into question the effects of an increased
national average income, but also that
despite (generally) each successive

PAGE 12

generation in a family being more affluent

than their parents and grandparents, there
seems to be no difference in happiness.
This would give the impression that
income has little effect on happiness. His
figures however did highlight a correlation
within each society between income and
happiness. This showed that, as incomes
increase above the average, people feel
more satisfied and content with their lives.
These results may however point towards
the competitive side of human nature as a
cause, rather than a real difference in
standard of living and happiness.
A key argument against Easterlins findings
is the lack of accurate evidence in support
of these changed in happiness. It is
almost impossible to get objective
measures of well-being, and clearly
income is one of many factors which
influences how satisfied we are with our
lives.
Easterlin argued that well-being and socalled happiness rise with average

JANUARY 2016

PAGE 13

income but only up to a point. Beyond this the

marginal gain in happiness declines, and the
negative symptoms associated with affluence
arise. This occurs within every society, at every
stage of development.
Maybe our parents were right after all- Money
cant buy happiness.
-

BY GEORGIE LANE

From less developed to more developed is

the migration a good thing?

JANUARY 2016

oland joined the European Union on 1st April

2004. By July 2006 264,555 poles had already
applied to work in the UK. They were now the
third largest ethnic group in the UK behind
Indians and Pakistanis. The number of poles in
the UK grew by 900% from 2001 to 2011. This
large influx of people has had many impacts on
the UK population, both positive and negative.

Starting with the positive impacts of Polish

migration from a demographic point of view.
Due to the baby boom after World War II,
Britain has an issue. There are more older
people, who are coming into retirement, than
younger people who are working and
supporting these older people. This puts
pressure on the younger, working people who
have to work harder due to the working worlds
loss of a large proportion of the population.
However 80% of migrants into the UK are of
working age, 18-35 years old. This is helping
to balance out the population structure of the

PAGE 14

UK, as there are more young people supporting

the increasing numbers of old people.
A positive impact of Polish migrants on UK
businesses is that they tend to be very
hardworking, they come to the country to find
better employment, so when they find it they
are determined to get the most out of their jobs,
so they often are happy to work overtime,
for just a small increase in their wages. Also as
they are often here to earn money for their
families back in Poland, they want to earn as
much money as quickly as possible, so they can
get back to Poland to be with their families. As
they are so hardworking, and dont expect as
much money as British workers, British
businesses are able to have a very efficient
abour force, also in an economic sense.
This increased employment of Polish workers is
not always a positive for the UK population.
Many British people are not as welcoming
towards Polish people as the UK businesses
that employ them. Despite having a low
unemployment rate of around 5.4%, the British
people who are unemployed or a struggling to
maintain a stable job, do not approve of
migrants taking jobs, that could have
potentially been theirs. This has created many
social issues within the UK.

PAGE 15

JANUARY 2016

Social issues that have evolved from the

influx of polish people include anti Polish
graffiti that has been spotted around various
parts of the country. The UK is known to be a
very multicultural country however this
resentment towards migrants has changed
this in some towns, as people no longer want
to work with polish people, they want them to
leave the country. You could also argue that
the increase of foreigners has menat
education level are not as high. For example a
primary school in Peterborough has to cater
for 24 different languages. This means that
progression for kids whose first language is
English is slower as they have to ensure the
kids who speak foreign languages
understand.

They withdraw money from the UK economy

and inject it into the Polish economy. The
consequence for the UK population is that it is
increasing in size, but the increase in size is not
necessarily being reflected in economic
growth, which means that money is just shared
out between a larger group of people.

However these migrants do not always

help the economy. As many Polish migrants
are economic migrants, they send
remittances back to Poland, to help fund their
families. A figure from 2009 recorded that the
UK economy loses 4.9million a day, as
migrants who are earning money in the UK,
are not spending their money in the UK, so
they arent contributed to the UK economy.

In conclusion polish migrants have had both

positive and negative impacts on the UK
population. It is hard to judge whether the
system is good for the UK population or not
because some of the migrants are very skilled
and do contribute a lot to our society, however
some do not seem to contribute as much.

Polish people also continue to use the services

our government provides, such as the schools
and healthcare system, but they are often not
giving mucn back to the country. As their
expenditure is often limited they are not paying
very much in taxes, but are costing the UK a lot
for things like interpreters. A doctors surgery in
Peterborough has received 100 new patients,
from Eastern Europe alone.

BY AASHNI PATEL

JANUARY 2016

PAGE 16

Fossil Fuels: Economic

Development vs the Environment
W
hile fossil fuels can bring
development to otherwise impoverished
nations, they can have a catastrophic
impact on the environment.

East as a whole region, while lagging behind

in terms of HDI, has experienced extremely
speedy economic development over the last
fifty years due to its abundance of fossil fuels.

There is no doubt that countries such as the

United Arab Emirates have only been able to
develop because of fossil fuels. Qatar and
Norway are the third and fourth wealthiest
countries in the world respectively, in terms of
Gross Domestic Product (GDP) per capita.
Qatars main sources of revenue are its
petroleum and natural gas supplies,
accounting for 60% of GDP. Norway also
benefits from North Sea oil. Petroleum
currently accounts for around 60% of
Norwegian exports. This has enabled Norway
to have a Human Development Index (HDI) of
0.944, the highest in the world. The Middle

However, there is a darker side to this story,

the negative effects on the environment
which can be called an example of a negative
externality. The burning of fossil fuels has
been inextricably linked to an increase in
temperature and a shift in the balance of
gases in the earths atmosphere. This is not
only perilous for other species on earth and
their ecosystems, but also for humans as well.
Climate change has recently been linked to a
number of natural disasters, as warmer
temperatures can increase the frequency of
freak events such as hurricanes, droughts and
flooding. The human cost of these events can
be huge. In 2013, Typhoon Haiyan struck the
Philippines, causing approximately 6,300
deaths. Climatologists have connected the
increasing intensity of storms such as this in
recent years to climate change.The economic
cost can also be huge. Haiyan hit an already
impoverished and relatively undeveloped
nation, and caused approximately $2 billion
worth of damage. Philippines GDP is around

JANUARY 2016

272 billion. The recent floods in the Britain

over the Christmas period are estimated to
have cost around 5 billion. Thus climate
change can have an economic cost and
hinder the economic development of nations
affected by it.
$

While the Middle East has seen a rise in the

standard of living thanks to oil, the negative
externalities of such economic development
can be huge, perhaps costing many lives and
also preventing certain countries from

PAGE 17

developing too. As other countries,

particularly undeveloped ones, look to
develop through exploiting their natural
resources, questions should be raised about
the effect this will have on the environment.
We need to discuss how to create a balance
between protecting the natural environment
and countries at risk from natural disasters
and promoting economic development in
some of the poorer regions of the world.
-

BY DAPHNE RUTNAM

EDITORIAL TEAM
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