Global groupings

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Economic and political groupings

Contries can be put into broad economic and political groups because wealth an power isn't shared equally throughout the world.

Most countries are classified as either more or less economically developed (MEDC or LEDC). It's now thought that this system is too simplistic - there are too many stages of development to put into two categories.

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Least developed countries (LDCs) are a goup of around 50 countries defined by very low incomes, poor health, low education, economic instability and their heavy debt to other countries e.g. Mozambique.

Their economies are usually based on agriculture, so crop failures can lead to economic disaster.

Countries are moved out of the LDC group when the conditions improve, e.g. Botswana

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Newly industrialised countries (NICs) aren't yet classified as developed countries, but aren't thought of as an LDC either.

Their economies are usually growing fast, and there has often been a recent move from a mostly agriculteral economy to one involving manufacturing and exporting.

The term was originally used for the Asian 'Tiger' economies of Singapore, Hong Kong, S. Korea and Taiwan, although people argue that they're fully developed and so shouldn't be referred to as NICs any more.

No official list of NICs, though China and India are currently thought of as NICs.

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Ex-Soviet states - Middle income countries

Russia and some of the surrounding counrties in central Asia and eastern Europe used to make up one large state called the Soviet union. A lot of independent countries have been created since the Soviet Union collapsed in 1991 - these are mostly classed as middle-income countries, e.g. Estonia.

They have growing economies, but the growth isn't as rapid as the NICs and their development hasn't reached the same level.

Recent growth in some ex-Soviet states is due to the exploitation of natural resources.

The privatisation of industries (state controlled in the soviet times) has led to economic recovery and frowth in many ex-Soviet states.

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Organisation of petroleum exporting countries (OPEC).

Group of 13 major countries oil producting countries e.g. Iran, Venezuela & Indonesia.

OPEC countries control aroung 2/3 of global oil reserves.

They make sure that they can get a fair price from oil-consuming countries. 

Some membershave left since OPEC was founded because they wanted to produce more oil than the agreed OPEC quotas allowed e.g. Gabon.

Other countried have been allowed to join e.g. Bolivia and Sudan.

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Organisation for economic cooperation and development (OECD) is a group of the 30 richest and most powerful countries. The top eight are called the G8. 

They meet to discuss and provide possible solutions to economic, environmental and social issues. 

Members of the OECD are always changing too e.g. potential new countries include Brazil, China and India.

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One of the most powerful and wealthy groups - Canada, France, Germany, Italy, Japan, Russia, USA and the UK.

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Trade blocs

Are groups of countries that make agreement to reduce barriers to trage e.g by removing tariffs. 

Blocs increase trade between members, and members can work together as a large organisation to trade with non-members. Benefits of membership of a trade bloc are linked to two important concepts: economies of scale and comparitive advantage.

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Economies of scale

The advantages companies gain because of increased sales. There's a larger market for all companies within the trade bloc because it's easier to trade with all the other members. This increases sales. More sales means more products need to be made, so companies can buy the raw materials for their products in greater numbers, saving money. Buy buying raw materials in bulk means each product costs less to make, so companies can make more profit. 

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Comparative advantage

Countries can concentrate on developing specific industries. Being in a trade bloc means it's easier to trade for all the different goods and services a country needs, because trade is less resticted. So countries can specialise in producing the things they're good at making and trade for things they're not good at making. Production will increase in each member country because they're concentrating on what they do best, so efficiency will increase in the bloc overall.

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The North American Free Trade Agreement is an example of a trade bloc. It's called NAFTA because it's an agreement between the countries of North America - USA, Canada and Mexico. 

It's made trade between the members easier by removing things like import taxes on some goods. 

Trade between the three countries has increased but there are other impacts, e.g. job losses because Mexico labour is cheaper than labour in the US.

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The groupings of countries highlights the inequalities in wealth and power around the world. Most of the world's wealth is held by a few countries e.g. the G8 hold over 60% of the gross world product, and control most of the military power. 

The goupings also show how wealth and power can change. For example, Russia didn't officially join the G7 until 1997 because of the power issues of the cold war and economic problems in Russia after the collapse of the Soviet Union.

Because wealthy countries often form groups, they become more closely intergrated. This means that they're more likely to get wealthier and develop solutions to their own economic, environmental & social problems at a faster rate. This leads to the widening gap between the poorer and the wealthier countries.

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