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Date	May 2017	Marks available	4	Reference code	17M.2.SL.TZ0.03
Level	Standard level	Paper	Paper 2	Time zone	Time zone 0
Command term	Explain	Question number	03	Adapted from	N/A

Question

Angola and Namibia

Angola and Namibia are neighbouring countries on the west coast of Africa.

Angola
Angola’s economy is driven by its oil sector. It is the second largest oil producer in Africa. Oil production and its supporting activities contribute about 50% of gross domestic product (GDP), more than 70% of government revenue and more than 90% of the country’s exports. Diamonds contribute an additional 5% to exports. Subsistence agriculture provides the main livelihood for most people in Angola, but half of the country’s food is still imported.
Since 2005, the Angolan government has borrowed billions of US dollars from China, Brazil, Portugal, Germany, Spain and the European Union (EU) to help rebuild Angola’s infrastructure. The global recession that started in 2008 slowed economic growth. In particular, lower prices for oil and diamonds during the global recession slowed GDP growth to 2.4% in 2009, and many construction projects stopped.
Falling oil prices and slower than expected growth in non-oil sectors have reduced growth prospects for 2015. Angola has responded by reducing government subsidies and by proposing import quotas and making it more difficult to import. Domestic fuel subsidies have been eliminated. Corruption, especially in the mining sector, is a major long-term challenge.
Namibia
Namibia’s economy is heavily dependent on the mining and processing of minerals for export. Mining accounts for 11.5 % of GDP, but provides more than 50% of foreign exchange earnings. Namibia is a primary source for high-quality diamonds. In addition, Namibia is the world’s fifth-largest producer of uranium, produces large quantities of zinc and is a smaller producer of gold and copper. The mining sector employs less than 2% of the population. Namibia normally imports about 50% of its grain requirements.
A high per capita GDP, relative to the region, hides one of the world’s most unequal income distributions. The Namibian economy is closely linked to South Africa with the Namibian dollar pegged one-to-one to the South African rand. Namibia receives 30% to 40% of its revenues from the countries in the Southern African Customs Union (SACU). Angola is not a member of the SACU.
Namibia’s economy remains vulnerable to world commodity price fluctuations and drought. The rising cost of mining diamonds, increasingly from the sea, has reduced profit margins. Namibian authorities recognize these issues and have emphasized the need for diversification.

Figure 1: Selected economic data for Angola and Namibia (2014)

[Sources: adapted from www.commons.wikimedia.org, 14 August 2014; The World Factbook, Country Reports,
Central Intelligence Agency, 2015; www.databank.worldbank.org, accessed 13 August 2015 and www.cia.gov, accessed 13 August 2015]

Define the term infrastructure indicated in bold in the text (paragraph 3).

[2]

a.i.

Define the term customs union indicated in bold in the text (paragraph 6).

[2]

a.ii.

Angola and Namibia have different Gini coefficient values. Using a Lorenz curve diagram, explain what this means (Figure 1).

[4]

Using a demand and supply diagram, explain the effect on the price and quantity of fuel consumed in Angola, caused by the elimination of domestic fuel subsidies (paragraph 4).

[4]

Using information from the text/data and your knowledge of economics, compare and contrast factors that are likely to lead to economic development in Angola and Namibia.

[8]

Markscheme

Level
0 The work does not meet a standard described by the descriptors below. [0]

1 Vague definition. [1]

The idea that it is (any one of the following is sufficient):

large scale public systems (services and facilities) of a country
necessary for (facilitates) economic activity
an addition to the capital stock of a nation
usually supplied by the government.

2 Accurate definition. [2]

For an explanation that it is (any two of the following is sufficient):

large scale public systems (services and facilities) of a country
necessary for (facilitates) economic activity
an addition to the capital stock of a nation
usually supplied by the government.

a.i.

Level
0 The work does not meet a standard described by the descriptors below. [0]

1 Vague definition. [1]

The idea that it is where countries agree to trade freely.

2 Accurate definition. [2]

For an explanation that it is a form of economic integration where member countries agree to liberalize trade (trade freely amongst themselves) and adopt a common external tariff (or common trade policies) towards non-members.

a.ii.

Level
0 The work does not meet a standard described by the descriptors below. [0]

1 The written response is limited. [1-2]

For drawing a clearly labelled Lorenz curve diagram showing the curve for Angola to be closer to the line of equality than the curve for Namibia or for an explanation that the lower Gini coefficient value for Angola means that income distribution is more equal in Angola than in Namibia.

2 The written response is accurate. [3-4]

For drawing a clearly labelled Lorenz curve diagram showing the curve for Angola to be closer to the line of equality than the curve for Namibia and for an explanation that the lower Gini coefficient value for Angola means that income distribution is more equal in Angola than in Namibia.

Candidates who incorrectly label diagrams can receive a maximum of [3].

For Lorenz curve diagram, the vertical axis should be labelled cumulative % of income or % of income and the horizontal axis should be cumulative % of population or % of population. It is not necessary to provide a label on the “line of absolute equality”. There should be labels on the Lorenz curves for Angola and Namibia. A title is not necessary.

Level
0 The work does not meet a standard described by the descriptors below. [0]

1 The written response is limited. [1-2]

For drawing a correctly labelled demand and supply diagram, with a subsidy supply curve below the market supply curve, indication that the subsidy curve is moving back to the market supply curve, and a rise in price and a fall in quantity demanded and supplied or for an explanation that the reduction in fuel subsidies will increase firms’ costs, leading to a fall in supply with a higher price and a lower quantity.

2 The written response is accurate. [3-4]

For drawing a correctly labelled demand and supply diagram, with a subsidy supply curve below the market supply curve, indication that the subsidy curve is moving back to the market supply curve, and a rise in price and a fall in quantity demanded and supplied and for an explanation that the reduction in fuel subsidies will increase firms’ costs, leading to a fall in supply with a higher price and a lower quantity.

Candidates who incorrectly label diagrams can receive a maximum of [3].

The use of P and Q on the axes is sufficient for a demand and supply diagram. A title is not necessary.

Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.

Do not award beyond Level 2 if the answer does not contain reference to the information provided.

Level
0 The work does not meet a standard described by the descriptors below. [0]

1 Few relevant concepts are recognized.
There is basic knowledge/understanding. [1–2]

2 Relevant concepts are recognized and developed in reasonable depth.
There is clear knowledge/understanding.
There is some attempt at application/analysis. [3–5]

3 Relevant concepts are recognized and developed in reasonable depth.
There is clear knowledge/understanding.
There is effective application/analysis.
There is synthesis/evaluation, supported by appropriate theory and evidence. [6–8]

Command term
“Compare and contrast” requires candidates to give an account of similarities and differences between two (or more) items or situations referring to both (all) of them throughout.

Responses may include: