Question
Question 3 (5 marks)
Explain how debt and trade inequality act as barriers to development in LICs.
Mark scheme (AO2, 5 marks):
- LICs borrowed heavily in the 1970s → commodity prices fell; interest rates rose in the 1980s → could not repay → debt repayments consumed government revenue that could have funded education/healthcare (1–2 marks)
- LICs export raw materials (low value) and import manufactured goods (high value) → unfavourable terms of trade → little wealth retained (1–2 marks)
- LICs are price takers on global commodity markets — commodity prices fluctuate → export income unpredictable (1 mark)
- HICs impose trade barriers (tariffs, subsidies) on imports that protect their own farmers → LIC agricultural exports cannot compete (1 mark)
5 marks · take your time before peeking.
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Generated by TopMyGrade AI · cross-check official sources before relying on the mark-scheme phrasing.