| Date | November 2019 | Marks available | 4 | Reference code | 19N.2.HL.TZ0.3 |
| Level | Higher level | Paper | Paper 2 | Time zone | Time zone 0 |
| Command term | Explain | Question number | 3 | Adapted from | N/A |
Question
Economic development in two West African countries
Ghana
- Ghana is the world’s second largest cocoa producer and Africa’s second largest gold producer. It is one of Africa’s fastest growing economies and has made major progress in achieving persistent economic growth.
- Over the last decade, Ghana has enjoyed increasingly stable and improving democratic governance. Four successful elections during the decade have strengthened the effectiveness of key national institutions, improved investor confidence and created an environment that promotes investment and growth.
- Ghana enjoys a high degree of media freedom; the private press and broadcasters operate without significant restrictions. The media are free to criticize the authorities without fear of punishment, says the non governmental organization (NGO) Reporters Without Borders. The private press is allowed to express criticism of government policy, which increases the accountability and transparency of the government.
- Although Ghana’s growth has been fairly strong, the source of growth has always been dominated by commodities and the capital-intensive services sector. Neither of these has a direct effect on poverty reduction. Growth in rural areas is often limited by basic infrastructure, such as roads. This limits the ability of people in rural areas to access markets in urban areas.
Nigeria - Nigeria is Africa’s leading oil producer. In 2016, it experienced its first full year of recession in 25 years. Global oil prices reached a 13-year low and oil production was drastically cut. Oil has continued to dominate Nigeria’s growth pattern, but the volatility of oil-dependent growth prevents progress in social and economic development.
- On the political front, the transition from military dictatorship to democratic rule has been acclaimed as one of Nigeria’s major successes in the last decade. The 2011 general election, supported by the United Nations, was widely acknowledged by international observers and domestic monitors as one of the freest and fairest elections conducted in the country in recent years.
Ghana and Nigeria - Both Ghana and Nigeria have cut fuel subsidies in order to reduce their budget deficits. This has had severe consequences for low-income households.
Table 1: Selected economic data for Ghana and Nigeria
[Source: adapted from UNDP Ghana country profile, http://hdr.undp.org, accessed 19 February 2019;
UNDP Nigeria country profile, http://hdr.undp.org, accessed 19 February 2019; About Ghana, http://hdr.undp.org,
accessed 19 February 2019; About Nigeria, http://hdr.undp.org, accessed 19 February 2019]
* measles: a highly contagious disease that is one of the leading causes of death among young children
State the reason for the difference between Ghana’s GNI per capita and its GDP per capita (Table 1).
Define the term Gini coefficient indicated in bold in Table 1.
Using an externalities diagram, explain why the percentage of infants receiving measles vaccinations in Nigeria indicates the existence of a market failure (Table 1).
Using a demand and supply diagram, explain how the cut in fuel subsidies may have had “severe consequences for low-income households” (paragraph [7]).
Using information from the text/data and your knowledge of economics, compare and contrast the level of economic development in Ghana and Nigeria.
Markscheme
Candidates who incorrectly label diagrams can be awarded a maximum of [3].
For an externalities diagram, the vertical axis may be price, p, or costs/benefits. The horizontal axis may be quantity or q. A title is not necessary.
An alternate approach would be to draw a subsidy diagram that shows what happens to price as the subsidy is reduced.
Candidates who incorrectly label diagrams can be awarded a maximum of [3].
For a demand and supply diagram, the vertical axis may be price, or p. The horizontal axis may be quantity or q. 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.
Command term
“Compare and contrast” requires the candidate to give an account of similarities and differences of two situations, referring to both of them throughout.
Responses may include:
- definition of economic development.
- references to the Sustainable Development Goals (or MDGs) as a way of measuring achievements towards development goals.
Economic analysis, focusing on economic development, may include:
- Lorenz curve
- poverty cycle
- long run / short run
- elasticities relating to commodities.
To explore the impact on:
Similarities between Ghana and Nigeria:
- Both are dependent on commodities, which makes them vulnerable, and may impact on economic development through unstable government revenues.
- Both are low-income countries, which implies a low level of development.
- In both countries, the GNI per capita is lower than their GDP per capita (Table 1), which means that there is a net outward flow of income, possibly reducing economic growth and development opportunities.
- There is some indication of some good governance in both Ghana (paragraph [2]) and Nigeria (paragraph [6]). Good governance/accountable governments are more likely to pursue pro-poor development strategies.
- Both countries are similar in terms of income distribution (Table 1), though this figure is quite high. A more equitable distribution of income is a development objective, so both are doing rather poorly.
- Both countries have cut fuel subsidies (paragraph [7]), which had negative impacts for low-income households, who may now not be able to afford other necessities.
Differences between Ghana and Nigeria:
- Although both are dependent on commodities, Ghana seems more diversified (paragraph [4]), and so may be less vulnerable than Nigeria to swings in oil prices.
- Paragraphs [2] and [3] suggest several factors leading to good governance and security in Ghana. There is incomplete information to judge governance in both countries.
- Although Nigeria’s GNI per capita is higher than Ghana’s (Table 1), its HDI is lower than Ghana’s, suggesting that the benefits of Nigeria’s higher level of economic activity are not being used to achieve development objectives.
- A higher proportion of people are living in poverty in Nigeria, as measured by people earning less than PPP US$1.90 per day (Table 1), although this figure does not necessarily indicate the number of people living near to this poverty line.
- The health indicators for Ghana are all more favourable in terms of economic development, showing that people are healthier and living longer lives (Table 1).
- The education indicators are all more favourable for Ghana, indicating that more people have access to an education, and that this has favourable implications for future development (Table 1).
- The data given provide a small picture of development in Nigeria and Ghana and more information would be useful. However, it appears that Ghana is more economically developed than Nigeria, despite its lower average national income.
Any reasonable evaluation.
