(i) Describe the relationship shown on the graph.

(ii) Suggest two possible reasons for this relationship.

Briefly explain how debt relief can reduce global disparities.

(i) The relationship is negative/the lower the GNI per capita, the higher the share of informal employment [1 mark]; exemplification using countries from the graph [1 mark]. The final [1 mark] should be reserved for reference to data/quantification or an anomaly.

(ii) Award [1 mark] for each possible reason, and [1 mark] for development and/or exemplification.

eg limited formal employment opportunities [1 mark] results in many attempting to make a living through informal employment [1 mark].

Possibilities include:

• limited formal opportunities linked to country’s level of development/GNI
• large agricultural sector, most of which is informal/subsistence
• lack of education and/or capital – lacking skills that would enable formal businesses to be started or attract large formal employers eg TNCs
• most informal economic activities require little capital to set up/so are more prevalent in low income countries
• GNI not recording informal sector US$, so appears lower if higher percentage of economy is informal
• informal sector not being able to generate enough money
• informal sector being labour intensive versus capital intensive.

Accept other valid suggestions.

Answers should explain/imply that they know what debt relief is [1 mark] and how receiving it frees up money that would have exited the highly indebted nation [1 mark].

The remaining [2 marks] should explain how this money could be put to use in a way that reduces disparities/that helps that nation develop.

Award [1 mark] for each valid explanation, and [1 mark] for each further development/exemplification of how this can reduce global disparities or contribute to economic and social development.

Possibilities include:

• this revenue could be spent on development projects possibly related to MDGs eg construction of schools/hospitals hence reducing global disparities in social development
• alternatively it could be used to fund projects which boost the nation’s economic development such as infrastructure allowing for increased trade, hence reducing economic disparities between nations.

(i) This was generally well answered and many candidates scored full marks if they also made use of the data in the graph to exemplify the relationship.

(ii) On the whole this was well answered although some candidates struggled, as it was obvious that they did not understand the term “informal employment”. There was a tendency for the second reason in the answer to mirror the first point, this reduced the marks awarded.

This was well answered at times with many responses explaining what debt relief is and how it can increase the amount of money available to a government to fund development projects. There were some good answers with reference to the HIPC (heavily indebted poor countries) initiative of the IMF and the World Bank. Weaker candidates struggled with a clear understanding of debt relief often confusing it with aid. There were a number of candidates who did not attempt this question at all.