Cambridge International as and a level Economics Ebook

Prebisch-Singer hypothesis
. Th
ose developing 
economies that are dependent upon agricultural products 
may receive relatively low prices for their exports while 
having to pay relatively high prices for their imports.
Prebisch-Singer hypothesis: 
a theory that suggests 
that the terms of trade tend to move against developing 
economies so that developing economies have to export 
more to gain a given quantity of imports.
KEY TERM
Developed economies tend to export mainly manufactured 
goods and services. Th
ey also tend to export a wide range 
of products. Some developing economies, in contrast, 
rely heavily on exporting a narrow range of products. For 
example, in 2012 exports of coff ee accounted for 60% of 
Ethiopia’s export revenue.
Classification according to urbanisation
Developing economies tend to have a relatively high 
proportion of their populations living in rural areas but 
also rapid rates of rural-urban migration. Th
is migration 
can put pressure on the infrastructure, housing and 
schools in urban areas.
Most developed economies already have the 
majority of their populations living in urban areas. As 
a result, there is relatively little growth in the urban 
population of developed economies. For example, in 
2013, 83% of the population of the USA was living 
in urban areas and the rate of rural-urban migration 
between 2003 and 2013 was 1.3% per year. In contrast, 
24.2% of the population of Burkina Faso lived in urban 
areas in the same year and the rate of rural-urban 
migration was 7.3%.
SELF-ASSESSMENT TASK 
9.12
Population changes
In the recent past, Spain was Europe’s largest recipient of 
immigrants. Its population grew from 40 million in 1999 
to more than 47 million in 2010 largely as the result of 
immigration coming from, for example, Bolivia, Morocco 
and Romania. In 2010, however, the position changed. 
Migrants began to return home and more Spanish people 
emigrated. This reversal from net immigration to net 
emigration combined with one of the world’s lowest birth 
rates is causing the population to decline for the first 
time since records began.
The decline in the size of Spain’s population and the 
increase in the average age of the population are 
causing a number of problems. One is that they are 
reducing Spain’s economic growth rate. With very 
little productivity growth, Spain’s economic growth 
rate had been largely driven by increases in the size 
of the country’s labour force. Another problem is that 
the ratio of workers to pensioners is declining. There 
is also the problem of Spain’s national debt, which in 
2014 amounted to 105% of GDP. In addition, with so 
many empty houses and flats, a smaller population 
depresses the housing market further.
Spain’s population decline is in contrast with the 
relatively rapid rise in population in some African 
Read the feature below and then answer the questions that follow.