Download 2017 Pre-Release Pack

Pre-Release 2017: Bridging the Development
Gap: Development in Panama, Costa Rica and
Nicaragua
SUMMARY DOCUMENT
Unit Three: Contested Planet
Contents:
Section 1
Key Terminology
Background Information:
Panama
Costa Rica
Nicaragua
Historical Context
Development and Development Goals
Section 2
Transoceanic mega-projects: The Panama Canal
Transoceanic mega-projects: The Nicaragua Canal
Transoceanic mega-projects: China´s Transoceanic
Railway
Section 3
Examples of possible questions
1
1.1 KEY TERMS
Page No.
Key Term
Definition
Isthmus
A narrow strip of land connecting two large land areas
otherwise separated by bodies of water
Migration
The movement of people of one place to another
Emigration
The act of leaving a country to settle permanently in
another
Economic migrantion
The movement of people from one area or country to
another in order to improve their standard of living
Forced migration
The movement of refugees and internally displaced
people as well as people displaced by natural or
environmental disasters, chemical or nuclear disasters,
famine or development projects
Remittances
The transfer of funds; a transfer of money by a foreign
worker to an individual in his or her home country
Income poverty
When a families income fails to meet an established
threshold that varies across countries
Poverty rates
The ratio of people who’s income falls below the poverty
line; taken as hard of the median household income of
the total population
Extreme poverty
The amount of the population living under $1.25 a day.
Changed in 2015 to $1.90
Indigenous groups
Social groups with a social and cultural identity distinct
from the dominant society. They may have historical ties
to a particular territory and are vulnerable to being
disadvantaged in the development process.
Informal employment
Jobs performed outside the formal structures that govern
taxes, workplace regulations and social protection
schemes,
Youth unemployment
The % of labour force 15-25 who are out of work
2
Millennium Development The Millennium Development Goals (MDGs) are the
Goals
world's time-bound and quantified targets for addressing
extreme poverty in its many dimensions-income poverty,
hunger, disease, lack of adequate shelter, and exclusionwhile promoting gender equality, education, and
environmental sustainability.
Ecotourism
Tourism which attempts to minimise the environmental
impacts and promote cultural and ecological
understanding
Globalisation
The economic process of increased global connections
and inter-dependance resulting from rapid increase in
trade, financial flows, global trade and migration.
Intermodal containers
A leader standardised shipping container which can be
used across different modes of transport without
requiring the freight itself to be unloaded.
Containerisation
Transportation of cargo in standardised (intermodal)
containers.
Mega-projects
An extremely large scale investment project, which may
cost in excess of US$5billion
Transoceanic megaprojects
An extremely large scale investment project, which may
cost in excess of US$5billion, which traverse an ocean
Locks
A short section of a canal enclosed by gates, designed to
raise or lower a vessel from one water level to another.
Biodiversity hotspot
A biogeographic region that is both a significant reservoir
of biodiversity and is treated with destruction. There are
25 of these areas.
3
1.2 Theories of Development/Key Concepts
Links to the pre-release?
Rostow´s
model
Modernisation
Theory
Cumulative
Causation
Dependancy
theory
core-periphery
Globalisation
TOP TIP: Refer to the development documents in the appendix to help you!
4
1.2 DEVELOPMENT INDICATORS
Match up the following:
Freedom index, Life Expectancy, Secondary school enrolment rates, Poverty Line, Income
per person, Annual GDP, Infant Mortality Rate (per 1000 live births), Happy Planet Index,
(Human), National Poverty Line,, Poverty Rates, Ecological Footprint
A measure of human well being and environmental
impact that was introduced by the new Economics
Foundation.
Calculated using wellbeing times life expectancy and
inequality of outcomes, divided by the ecological
footprint
A broad measure of human freedom around the world
through the use of 76 indicators of personal, civil and
economic freedoms
The average number of years a person is expected to live
The percentage of the population of school age who are
enrolled in school
This measures the average income earned per person in a
given area (city, region, country, etc.) in a specified year. It
is calculated by dividing the area's total income by its
total population.
5
The monetary value of all the finished goods and services
produced within a country's borders in a specific time
period
The number of deaths under one year of age occurring
among the live births in a given geographical area during
a given year, per 1,000 live births occurring among the
population of the given geographical area during the
same year.
The line below which a persons´s minimum nutritional,
clothing and shelter needs cannot be met in a country.
The new global poverty line is set at $1.90 using 2011
prices (was previously $1.25)
The ratio of people who’s income falls below the poverty
line; taken as hard of the median household income of
the total population
6
1.3 Country Information: PANAMA
KEY STATISTICS
Population: 3.6 million
Area: 75,517 square km
Major Languages: Spanish, English
Major Religion: Christianity
(Source: UN World Bank)
PHYSICAL GEOGRAPHY
Overview
Forested, volcanic mountains extend from the Coasts Rica border to the Colombian
boarder. The east is characterised by rainforests, rivers and swampy low lands.
Natural Hazards
Hurricanes, earthquakes, volcanoes, floods, landslides.
•
December 52, 2003 magnitude 6.0 earthquake shook Puerto Armelles (2 dead,
hundreds homeless)
• Hurricane Mitch (1998) : 7,000 people dead, 250,000 homeless.
• Arenal volcano erupted in 2010, in 1968 it destroyed the town of Tabacon.
A BRIEF HISTORY1
• US supported it’s succession from Columbia in 1903, and secured a sovereign
zone in which to build the Panama canal. The canal was completed in 1914.
• 1968-1969 Panama was under military rule.
• US invaded Panama in 1989 to depose a former ally, military ruler Manuel
Noriega, over his repressive rule and drug trafficking.
1
BBC country profiles
7
• 1999 Panama takes full control of the canal.
• Juan Carlos Varela, who won the presidential election in 2014, leads the
conservative Panamenista Party.
• 2016 Panama is revealed as a popular tax haven when the ‘Panama Papers’ are
released.
1.4 Country Information: COSTA RICA
KEY STATISTICS
Population: 4.8 million
Area: 51,1000 sq Km
Major languages: Spanish (official)
Major Religion: Christianity
(Source: UN World Bank)
PHYSICAL GEOGRAPHY
Overview
Tropical forests are home to many species of flora and fauna, including 1,000
species of orchid and 850 species of birds. The beaches of the Caribbean coasts
also attract tourists.
Natural Hazards
1991: Magnitude 7.6 killed 27, damaged the Limón rail line so severely that
repairs have never been attempted. 2004- Magnitude 6.2 quake near the Pacific coast tourist destination Manuel
Antonio killed 8 locals and damaged several buildings and roads. 8
A BRIEF HISTORY2
• Gained independence from Spain in 1821 (fully independent by 1838).
• 1948: six-week civil war over a disputed presidential election result.
• Democracy since 1953, oldest working democracy in Latin America.
• 1958-73 Costa Rica is mainly governed by conservative administrations.
• 1963-64 Irazu Volcano erupts, causing serious damage to agriculture.
• High level corruption led to two former presidents being arrested in 2004.
Rafael Angel Calderon is sentenced to 5 years in jail.
• A free trade deal approved by the US in 2007.
• First woman to be elected president was Laura Chinchilla, who took up office in
2010. She held socially conservative views.
• Luis Guillermo has been president since 2014. His ´Rescue Plan´ is focused on
anti-corruption, economic growth and reducing income inequality.
1.5 Country Information: NICARAGUA
KEY STATISTICS
Population: 5.9 million
Area: 120,253 sq km
Major languages: Spain, English, Indigenous
(Source: UN World Bank)
PHYISCAL GEOGRAPHY
Overview
A wide variety of climate and terrains, but can
be roughly divided into Pacific lowlands, the
2
BBC Country Profiles
9
wetter and cooler central highlands, and the Caribbean lowlands. Presence of
wildlife rich rainforests.
Natural Hazards
19 volcanoes - (due to northeastward subduction of the Cocos Plate beneath the
Caribbean plate along the Middle American Trench) e.g. Cerro Negro and
Concepción.
1998: Hurricane Mitch killed thousands and caused billions of dollars of damage.
A BRIEF HISTORY3
• Nicaragua gained independence from Spain in 1821.
• An American mercenary assumes power in 1856 and becomes the first
president.
• Carlos Solórzano was elected president in 1924 along with vice president Juan
Bautista Sacasa.
• President Solórzano forced out of power win 1925 by a conservative group;
Sacasa flees.
• 1926-1927 civil war started by former vice president, Saracas, returning to
Nicaragua and claiming presidency.
• Guerilla conflicts led by Saracas were ongoing.
• In 1934 the US withdraws, leaving Nicaraguan military officer, Anastasio Somoza
to lead a dictatorship.
• The Somoza family governed Nicaragua from 1930-1979.
• In 1978 the Sandinista National Literation Front lead a violent uprising
against the regime.
• In 1979 the Sandinistas´ National Liberation Front replaces the Somoza family
• Also in 1980 conflict broke out between the Sandinistas and the Contras, a US
backed anticommunist group.
• 2% of Nicaragua's population died in the conflict´, during which the Contras
were backed by US funding and CIA support.
3
BBC country profiles
Source: http://www.fsdinternational.org/country/nicaragua/devissues
10
• US-Nicaraguan tensions are high due to new governments leftist orientation
• The US withdrew FDI, halted trade and aid as they perceived the Sadinista´s
government as a communist threat.
• Civil war ended in 1990 with the election of Violeta Chomorro
• Former Marxist guerrilla leader Daniel Ortega made a comeback in the
November 2006 presidential race.
• Ortega is reelected in 2011 amid controversy (the courts blocked the main
opposition coalition from participating in the election; Mr Ortega is in charge of
the courts, and international observers were banned by the government from
overseeing the casting of ballots).
Additional notes
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
11
INDICATORS OF DEVELOPMENT COMPARED
Green: Most
Amber: Middle
Red: Least
Costa Rica
Panama
Nicaragua
From the resource
Freedom Index Scores (rank)
39
49
79
Human well being
7.3
7.3
5.7
79.3
76.1
74.0
Ecological footprint (gha)
2.5
3
1.6
HPI score
64
57.8
57.1
13900
19630
4670
23
28
32
99.5
90.9
77.9
Infant Mortality Rate (per 1000 live
births)
10
18
24
Urban population (%)
79
66
58
Percentage of workforce in
agriculture
13
17
30
48.5
50.7
47
Life expectancy
Income per person (US $PPP)
Population aged 0-14
Population with electricity (%)
Additional Indicators
GINI Index
HDI
Literacy rates
GDP
GDP Per Capita
GDP real growth rate
Internet users
Debt as % of GDP
Health expenditure as % of GDP
World Disaster Risk Index
12
Thinking Questions
Which country is most developed?
Which is least? Consider economic, environmental, social and
political indicators.
REMEMBER: You may be asked to compare the levels of development between
countries in an exam, or you may be asked to explain these differences (See
section 2.0 for ideas)
Additional notes
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
13
Panama’s Development
ECONOMIC OVERVIEW
• Trade and market liberalisation and privatisation of state-owned enterprises in
1990s helped secure international investment for Panama.
• FDI encouraged thorough tax regulation and guaranteeing ease of business
• Economy is primarily based on a well-developed service sector.
• Panama has a large logistics and storage services sector, as well as a modern
banking and insurance industry.
• Agricultural sector has lost importance over the year.
• The Panama Canal accounts for 10% of trade.
• The Colon Free Trade Zone (CFZ) is the second largest free port in the world
and accounts for more than 7.0% of the national economy.
• Trans-Panama Pipeline allows for the transport of crude oil between the Pacific
and Atlantic coasts.
• Bilateral free trade agreement with the USA since October 2012.
• Significant investments in infrastructure development projects e.g. metro
systems which opened in April 2014 and enhancements to Tocumen
International Airport.
ACHIEVEMENTS
Increase in GDP
• Benefitting from revenue generated by the Panama Canal.
Strategic spending plan:
• Ricardo Martinelli (President 2009-2014) implemented a USD 15 billion strategic
spending plan in key sectors including: financial services, agriculture, logistics,
tourism, as well as in airport, port and road infrastructure.
Expansion of infrastructure and reformation of teacher training
• The Ministry of Education’s budget increased from US$1 billion in 2013 to
US$1.29 billion in 2015 under President Varela (2014).
Improving education
• Increase in secondary school enrolment, led by female enrolment
14
• Increasing female enrolment in higher education (53% of students in higher
education are women).
Improving health
• Declining fertility and mortality rates, suggesting development levels
increasing.
• Expansion of access to clean water.
• Health expenditure was 5.9% of GDP in 2016.
DEVELOPMENT CHALLENGES
Social Challenges
• High poverty and extreme poverty rates amongst the indigenous communities
e.g. in indigenous territories, known as “comarcas”, poverty is above 70 percent
and extreme poverty above 40 percent4.
• Lack of education/skills (literacy rate 95%).
Environmental Challenges
• Loss of agricultural productivity due to land being lost as a result of soil
erosion and desertification
• Poor resilience to natural disasters
Political/Economic Challenges
• Poor long term planning- change in administration every 5 year means
progress can be inconsistent
• Poor infrastructure and inadequate access to sanitation
• High levels of debt (US$23 billion) and concerns over future stability with 25
European and American banks severing ties with Panama over money
laundering concerns
• Decreasing GDP growth (2011: 11.8%, 2014 6.1%)
• Very poor income distribution
WHY DO THESE CHALLENGES STILL EXIST?
Poor government spending
• e.g. on un-targeted subsidies for fuel, water and electricity
4
Source: http://www.worldbank.org/en/country/panama/overview
15
• Better policies needed for an increased social investment needed to tackle
alarming levels of inequality
Poor educational systems
• Out of 139 nations, Panama's primary education ranks 129th, according to the
World Economic Forum's "Global Competitiveness Report" for 2010-2011.
• 365,000 prospective students in Panama unable to pursue post-secondary study
due to lack of available spaces
• Relaxed child labour laws- minimum working age of 15 isn't always adhered to
and agricultural and domestic industries allow children to work from age 12
Corruption
• Martinelli accused of profiting personally from construction boom
Risk Profile:
Source: http://www.inform-index.org/Countries/Country-profiles/iso3/PAN
16
Costa Rica`s Development
ECONOMIC OVERVIEW 5
• Abolished army in 1949, allowing for increased spending elsewhere
• Political stability attracts investment
• Free Trade Zones (FTZ) law in 1981. First this attracted low-tech sectors
(textiles), and gradually attracted companies in high-tech sectors (electronics,
advanced manufacturing, medical devices) . By 2014, FTZs accounted for 53
percent of exports, and Costa Rica’s economy is very intensive in FDI (4.2
percent of GDP) due to political stability and relatively high education levels
• Decision by Intel to set up a semiconductor assembly and test plant in Costa
Rica in 1996 was clearly a turning point in attracting foreign investors. Examples
of TNCs include Abbott Laboratories (now Hospira), Baxter Healthcare, and
Procter and Gamble have invested in the country.
• Electronics, medical devices, and other manufactured goods now make up
about 60% of goods exports.
• Member of CAFTA-DR since 2009 (Dominican Republic-Central America Free
Trade Agreement)
• Tourism continues to bring in high levels of foreign exchange
ACHIEVEMENTS6
Economic growth
• Benefited from steady economic growth
• Well diversified exports
• Only 1.6 percent of the population lives under the global US$1.90 poverty line.
Improvements in healthcare and education
• Healthcare access for all
5
(Source: CIA Factbook https://www.cia.gov/library/publications/the-world-factbook/geos/cs.html)
6
Source: https://openknowledge.worldbank.org/bitstream/handle/10986/22023/K8319.pdf?
sequence=4&isAllowed=y
17
• Sustained social spending (20% of GDP) has resulted in improved education,
healthcare, clean water, sanitation and access to electricity
• Life expectancy at birth improved from 61.6 years in 1960 to 72.5 years in 1980
and to 79.7 years in 2012, similar to the OECD average of 80.7 years.
Strong Environmental Protection Policies
• Payments for Environmental Services (PES) program has been successful in
promoting forest and biodiversity conservation; making Costa Rica the only
tropical country in the world that has reversed deforestation.
WHAT CHALLENGES STILL EXIST?
• Poverty reduction has stagnated, and between 2010 and 2014, with poverty
increasing by 0.4 percentage points
• Inequality is rising
• Poor infrastructure, high energy costs and weak investor protection and
difficulties enforcing contracts still deters investment into Costa Rica
• Insufficient maintenance on existing infrastructure has led to congestion and
poor quality public transport such as railways.
• Increasing debt is eroding social security measures
WHY DO THESE CHALLENGES STILL EXIST?
Social Factors
• Nicaraguan migrants (an important source of unskilled labour) put strain on
social welfare system Little growth in sectors providing low-skilled jobs (e.g.
construction and agriculture)
• Many indigenous groups have poor school completion
Political/Economic Factors
• Poor government communication around infrastructure projects has led to
strikes and protests agains some infrastructure projects e.g. the USD $650
million toll road Corredor San José - San Ramón, had its contract rescinded in
2013
• Increasing taxes are forcing more into the informal sector
18
• Rising public debt due to increased government expenditures
• The shift from a two party to a multiparty political system in the last 15 years has
resulted in more complex and lengthy reform processes
• Infrastructure investments difficult due to excessive institutional
fragmentation, which reduces transparency and accountability of public sector
agencies, poor strategic planning, which results in haphazard infrastructure
development and poor intermodal connections
Risk Profile:
Source: http://www.inform-index.org/Countries/Country-profiles/iso3/PAN
19
Nicaragua´s Development
ECONOMIC OVERVIEW
• Economically dependant on export of low value primary products (Textiles and
agriculture combined account for nearly 50% of exports)
• Massive debt relief by the International Development Association
• Poverty remains high and the second poorest in the Western Hemisphere, has
widespread underemployment and poverty.
• The Dominican Republic-Central America-United States Free Trade Agreement
(CAFTA-DR) has been in effect since April 2006 and has expanded export
opportunities for many Nicaraguan agricultural and manufactured goods.
ACHIEVEMENTS
Improvements in infrastructure and sanitation
• Improved access to drinking water, sanitations and ameliorated its life
expectancy, infant and child mortality and immunization rates
• World Bank board of directors approved US$ 96.8 million credit to help improve
road systems for nearly 550,000 residents of urban and rural areas of the country
(March, 2017)
WHAT CHALLENGES STILL EXIST?
•
•
•
•
•
•
High levels of inequality
Poverty remains high
High levels of public debt (350% of GDP in 1990´s)
Indigenous groups still lack basic healthcare services
Low literacy rates and school enrolment
Poor infrastructure, particularly in the more remote areas
20
WHY DO THESE CHALLENGES EXIST?
Social factors
• Roman Catholic religion, non-existent sex education and rural culture prevents
people, especially adolescents, accessing to contraception. Creates
perpetuating cycle of poverty.
• Reliance on low value added exports
Political factors
• Poor social funding, for example whilst primary education is free and
compulsory, schools and students must pay for their own materials. Only 72% of
children finished primary school in 2009 7
• Corruption and the erosion of democracy under Ortega`s leadership
(appointment of his wife as Vice-President and prominent roles for his son and
daughter widely thought to be a move to attempt to secure a dynastic
succession similar to the Somoza family dictatorship)
Risk Profile:
Source: http://www.inform-index.org/Countries/Country-profiles/iso3/PAN
7
The Guardian
21
TASK: What comparisons can you make between the countries?
Consider the following factors:
Economic
Political
Environmental
Social
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
22
Millennium Development Goals
Background:
The 8 millennium development goals were set the United Nations in 2000, with a
target of completion in 2015. These 8 goals have largely been considered
effective, and are being built in on the Seventeen Sustainable Development Goals.
Some Examples:
Goal 1: Eradicate extreme poverty and
hunger
A graph to show Poverty headcount at $1.90 a
day (PPP) in Panama, Nicaragua and Costa Rica.
23
Goal 4: Reduce Child Mortality
A graph to show infant mortality rates in
Panama, Nicaragua and Costa Rica.
Goal 7: Ensure environmental
sustainability
A graph to show the percentage of the
population with access to sanitation in
Panama, Nicaragua and Costa Rica.
24
Extrapolated data from the graphs:
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
25
Sustainable Development Goals (SDG´s)
What are they?
• Otherwise known as global goals, they were developed by the UN in 2015
• The sustainable development goals are time-bound, quantified targets for
addressing extreme poverty
• The 17 Sustainable Development Goals (SDGs) – part of a wider 2030
Agenda for Sustainable Development – building on the success of the
Millennium Development Goals (MDGs).
• Each goal has specific targets to be achieved over the next 15 years
26
Additional Notes:
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
27
SECTION 2: TRANSOCEANIC MEGAPROJECTS
THE PANAMA CANAL
The impacts of the original construction:
Social: High worker mortality rate: 200 a month
killed during the French attempt to build the
canal, 27,000 died. Overall Indigenous groups
and rural communities forced off their land.
Water directed away from the eastern side of
the country. Many subsistence farmers found their
land too dry. 12,852 people were hired, though mostly migrant workers from the
West Indies as Panamanians were too expensive.
Environmental: Flooding the area behind the dam on the Chagres River, which
became known as Gatun Lake. Huge water requirements. Pristine rainforest lost
(more than 150 square kilometres). This region is an important migratory route for
animals including eagles and jaguars, remaining forest was fragmented.
Conservation of forest either side of the canal to protect the water source (660 KM2
corridor)
Economic: Expensive: French firm which began building went bankrupt. Canal
route is within American territory with very little trickle down to the Panamanian
economy. After 1991, the USA relinquished control of the canal and this lead to a
huge economic advantage for Panama as they can collect tolls on the ship using
the canal. This leads to other benefits (positive multiple effect). Time saved on long
and dangerous routes around the continent has facilitated global trade and allowed
for globalisation.
28
PANAMA CANAL EXTENSION PROJECT
Background
• Referendum in 2006 Panamanians approved a referendum (2006) to expand the
canal
• September 2007 at a total cost of US$5.2 billion due to increasing demand
• Funded by canal revenue and $2.3 billion financing package (e.g. European
Investment Bank lent US$500 million)
• The cost did not include interest on the loans taken to fund the project
• Chanel has been deepened and widened
• New locks built to accommodate 95% of ships currently in use, expected to drop
to 87% by 2019
• Aims to raise the maximum operating level of Gatun Lake from 26.7 to 27.1
metres, to improve the Canal’s water supply. The project will enable additional
water storage capacity for Gatun Lake by nearly 200 million cubic metres, which
will allow for approximately 1,100 additional transits every year.
• Project began in 2007
• June 26th 2016 opening
29
Social
Advantages
• No significant relocation of communities needed.
• It is possible that the money generated could be invested in schools and
hospitals.
• 76% of Panamanians approved the expansion
• Creation of about 30,000 construction jobs
• Increasing demands on water could lead to water stress elsewhere
Disadvantages
• 24% of Panamanians did not approve the expansion in 2006
• Construction jobs are low skilled and many temporary
Economic
Advantages
• Improvement of navigational channels (dredging) allows large ships benefit from
economies of scale
• Government expected to double the revenue it receives from the Panama Canal
Authority, to reach around $2bn in 2021
Wider economic advantages
Benefit to US markets that rely on exports e.g. cotton Industry; New Jersey plans to spend
$2.7 billion on enlarging its terminals and shipping lanes
Disadvantages
• Cost: 5.2billion through loans and investment of revenue from the canal.
• Lost revenue due to 16 month delay in completion estimated at $200 million.
• Still cannot accommodate largest ships so less to remain competitive.
Environmental
Advantages
• Increased shipping may lead to the transfer and establishment of non-indigenous
species that.
• More efficient transport as larger ships, known as post-Panamax vessels, can use the
canal , meaning less pollution through the reduced use of fuel which may have a
positive impact on climate change.
30
• Shorter journey time, since ships are not waiting to traverse the canal or take longer
routes such as the Suez Canal.
• Reforestation of previously degraded land to preserve water supplies. Whilst this will
increase carbon sequestration, some studies suggest little impact on water supplies8
‑
Disadvantages
• Increased shipping may lead to the transfer and establishment of non-indigenous
species.
• Increased water withdrawals from Gatun Lake (more than 55 million gallons for each
ship).
• Substantial increased demands on the watershed during dry seasons.
Political
Advantages
• Government seeks to benefit
• Will collect $1.6 billion annually from passage fees, a significant sum in a country
with a total budget of $25 billion, thus further strengthening the nation’s social
programs and economy.
• The revenue it receives each year from the Panama Canal Authority (ACP) is
expected to double to around $2 billion in 2021
• Panama Savings Fund has been set up to manage the increased revenue, which
can, for example, be used in the event of a natural disaster
Disadvantages
• Could lead to political instability if the government fail to make a good return on
their investment
• Already criticised as too little too late, since the new canal will still not be able to
fit the largest vessels
• The government has doubled it´s budget deficit to negative 4.2% (2016)
8
Proc Natl Acad Sci U S A. 2013 Jun 4; 110(23): 9326–9331.
31
Key Player
Summary
Additional Notes
Panama Canal
Authority
Panama
Government
Local communities
China Harbour
Engineering
Company Ltd. (The
4th locks)
32
Panama Canal Expansion, Additional Notes:
Include any future challenges (e.g. water stress and the impacts of climate change)
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
33
PANAMA CANAL: 4th Locks
• Proposed development would allow it to accommodate the largest ships.
• Would allow ships to carry 18,000 containers including 400-meter-long ´Triple E´
vessels.
•
•
•
•
Would become a competitor for those ships using the Suez Canal.
Estimated cost $16-$17 billion (cheaper than the Nicaraguan canal).
Funded by revenue from the canal itself as well as bonds and loans.
CHEC (China Harbour Engineering Company), a subsidiary of a state-owned company,
has shown an interest in building the 4th locks.
• Chinese involvement could increase political tensions, (particularly with the anti-China
Trump administration).
• It could take up to 15 years to build.
4th Locks, Additional Notes:
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
34
NICARAGUA CANAL
Background9
• In 2013 the Nicaraguan government granted HKND a concession for the
construction of the canal, as well as a series of sub-projects (e.g. an oil pipeline,
a highway, a railway system and international airports, a tourist complex…).
• No EIA was developed in advance10 so the Nicaraguan government have been
heavily criticised.
• British company ERM, employed by HKND, carried out an EIA after the
commission was given.
• HKND will build the 186 mile (200km) long canal and run it for for 116 years
• The largest civil engineering project in history, it will require the removal of
4.5bn cubic metres of earth11.
• More than 70 past proposals to construct a route across this stretch of the
Central American isthmus.
• The canal will be between 27-29m deep, with a maximum bottom depth of
280m.
• Concerns over feasibility of the project as funding is not secured and the
HKND have no prior experience.
• The project started in December 2015 with the upgrade of roads around the
site
9
Source: http://hknd-group.com/portal.php?mod=view&aid=235
10
http://pubs.acs.org/doi/ipdf/10.1021/acs.est.5b00215
11
The Guardian ´Land of opportunity -and fear- along route of Nicaragua´s giant new canal, 2015
35
Social Impacts
Advantages
• The government estimates that 400,000 people will be lifted out of general
poverty by 2018 due to the revenue the project will bring.
• Employment and opportunities for training and developing skills.
• Compensation offered for displaced peoples and resettlement area included
power, water, sanitation, education, policing and security facilities.
Disadvantages
Water supply
• Lake Nicaragua is an important source of fresh water for local people (e.g. living
in San Juan del Sur and Cardenas).
• Fresh water increasingly scare as a result of climate change.
Forced migration and Impacts on indigenous groups
• Forced migration of groups to make way for development under Canal Law
840- little chance of appeal against compensation figures.
• Many communities in the Southern Atlantic Autonomous region are indigenous,
and the land belongs to them e.g. Rama.
• Resettlement of 7,200 families and 29,000 citizens living along the canal
including a Rama-village with 25 households will have to be resettled (the only
village where the native language is still spoken).
• Protests 11 injured in November when police used tear gas and rubber bullets
to disband protesters.
• Resettlement of 7,200 families and 29,000 citizens living along the canal
including a Rama-village with 25 households will have to be resettled (the only
village where the native language is still spoken).
• A study by the International Federation of Human Rights found that all 131
people it surveyed complained of state intimidation.
36
Economic Impacts
Advantages
• Substantial increases in the level of employment.
• Some universities offering courses related to the shipping and canal industry.
• Impacts on global trade- A shorter route to able to accommodate vessels with
capacity up to 25,000 TEU which is twice the size of vessels allowed to pass
through the Panama Canal after expansion.
• Increased efficiency and operating costs lowered
Disadvantages
• Ecotourism opportunities on Lake Nicaragua lost e.g. on Ometepe Island
• Benefits HKND rather than Nicaragua - also through the subproject offered
• Estimated cost of $50 bn
Political impacts
Advantages
• Increased revenue to allow for increased government spending (see economics
section).
• Building the canal incurs no upfront costs- government will increase revenue
from the development of ports etc.
• Economic gains can be reinvested in increased social spending.
Disadvantages
• Government heavily criticised for lack of transparency and little public
consultation.
• Government criticised for passing a new law which allows the land to be taken
away from indigenous groups.
• Political instability a risk if the project fails.
37
Location of the Canal
Map source: https://www.theguardian.com/world/2015/jan/20/-sp-nicaragua-canalland-opportunity-fear-route
Environmental Impacts
Advantages
• Provides and alternative option for employment, which may reduce pressure on
Nicaraguas natural resources. Deforestation currently occurring at al alarming
rate.
• Large scale reforestation either side of the canal.
• The project will assist the Government in moving the illegal residents currently
located in Indio Maiz ecological reserve.
Disadvantages
• Significant impact on MesoAmerica Biological Corridor, which incorporates the
nearby Bosawas Biosphere Reserve, the Indio Maíz Biological Reserve and the
Cerro Silvia Nature Reserve.
38
• Large amounts of biodiverse-rich rainforest and wetlands will be destroyed,
around 400,000 hectares- biodiversity hotspot.
• Shipping and the construction and operation of deepwater ports8 on the Atlantic
and Pacific coasts will affect the nesting and egg-laying habitats of several
endangered sea turtles and threaten coral reefs and mangroves.
• Important migratory route for birds.
Impacts on Lake Nicaragua
• Conservationists say the canal will disrupt the lake ecosystem with pollution,
traffic, noise, salinity.
• Dredging may release these contaminants to the lake, already present in the
form of heavy metal and pesticide residuals.
• Dredging will be compulsory to make the lake deep enough for ships.
• Locks will need to be constructed both sides of the lake.
•Pollution in the form of diesel.
•Threat of introduction of new
species and pathogens from bilge
discharge.
•Ometepe islands itself is a UNESCO
reserve.
•Likely to be very susceptible to the
effects of sediment resuspension due
to its shallow depth (13m average).
•The arrival of non-native fish can
have catastrophic results, as
demonstrated by the dramatic decline
in Lake Nicaragua's cichlid fish
population since the introduction of
African tilapia in the 1980s.
Cichlid fish, jaguar and harpy eagles are among the many species threatened by the Nicaraguan Canal
39
• Could lead to hypoxia (a sharp decrease in biodiversity)
• Species at risk include bull-sharks, large tooth sawfish and other endemic fish
species.
40
Nicaragua Canal: Key Players
Key Player
Summary
Additional notes
CATO institute
New Economics
Foundation
China Harbour
Engineering Company
HKND Group
UNICEF
International
Development
Association
World Bank
Nicaraguan Government
Nicaraguan Canal
Authority
41
Nicaragua Canal, Additional Notes:
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
42
CHINA´S TRANSOCEANIC RAILWAY
• In 2013, China proposed a Transcoeanic Railway across Honduras
• Discussion between CCEC (China Harbour Engineering Company) and Honduran
Government.
• It would be 600km with 10 lines, and an estimated cost of US$20 billion
• Miguel Servellón, an official with the state agency promoting the project, said it was “still a
long way from happening,” listing obstacles like a complex environmental approval process.
Honduras Background
• In 2014 more than 33% of its population lived in poverty
• In rural areas 6/10 households live in extreme poverty
• In 2015, the country’s economy grew by 3.6 percent and is expected to grow by 3.5
percent in 2016.
• The highest level of economic inequality in Latin America.
• One of the world’s highest homicide rates (67 homicides per 100,000 inhabitants in
2014)
• Vulnerable to shocks in the agricultural sector
• Susceptible to adverse natural events such as hurricanes and droughts. World Bank
studies have highlighted the importance of improving the quality of education and
diversifying sources of rural income given that most of the country’s poor live in rural
areas and depend on agriculture for their livelihood.
43
Possible Impacts of the Transoceanic Railway
Environmental
Social
Economic
Political
May cut through areas of
protected land such as the
Parque Nacional Sierra de
Agalta, a 27,000 hectare national
park which holds the largest
tracts of virgin cloud forests in
Central America with more that
400 species of bird and 61
mammal species.
Would provide jobs in
construction
Facilitate trade and
transport
Positive multiplier effect
Increase GDP/
reduce
government debt
Increased developments at the
south-western end of the
proposed route would take place
in Refugio de Vida Silvestre
Punta Izopo. Currently fairly
inaccessible, important
mangrove habitats are home to
caimans, turtles and many bird
species.
Manufacturing
Industries may
Disruption to National
develop alongside the Parks could damage
railway
tourism (e.g. popular
hiking trails in Pico La
Disruption to
Picucha and Talgua
indigenous people
Caves)
including the Lenca
who live in the south
Development could have
western region
a negative impact on
growing ecotourism
Could bring a flow of industry
migrant workers
Allow for
increased
government
spending
elsewhere in the
economy e.g.
education and
hospitals
Will reduce cost of
transport of raw materials
to other countries e.g.
China
Damage an ecologically
important area- Proposed route
cuts through cloud forests and
tropical forests
Open up forests for exploitation
Encourage logging by
decreasing transportation costs
44
China´s South American Transoceanic Railway?
Background
China has proposed a Transoceanic Railway (also
known as he trans-Amazonian railway).
Political/Social
Campaigners for Indigenous rights are concerned
that indigenous land will be opened up for
development
Disruption to unconnected tribes . Unknown
impacts for example from disease like the measles
to which they have no resistance
Will bring a flow of migrant workers, creating pressure on infrastructure and services
Economic
Reduce costs of transport for raw materials including oil, iron ore, soya beans and other
commodities to China
Some construction carried out by local firms, therefore providing employment
Environmental
Main concerns include the Isconahua Reserve and Vale do Rio Jurauá
Cut through endangered habitats
Will open up access for deforestation, cattle ranchers, poaching and illegal mining
Indirectly the railway could exacerbate deforestation by making logging more profitable
Disruption to Peruvian cloud forests
45
SECTION 3: Examples of Questions
Development, Poverty and Inequality
Compare the development levels between Panama, Coasts Rica and Nicaragua
Explain the differences in development levels 46
! between Costa Rica, Nicaragua
and Panama
Explain how physical and human factors have influenced development in Central
America
Explain why there are barriers to development in some countries within Central
America
Assess the extent to which progress has been made towards bridging the
development gap in the region
Assess the economic and political factors that affect poverty levels in the region. To what extent is Costa Rica more developed than its neighbouring counties?
Transoceanic mega-projects
Assess the environmental and economic consequences of the different
transoceanic mega-projects in the region
Examine the environmental and political challenges to the different transoceanic
mega-projects in the region.
Assess the extent to which transoceanic mega-projects are a sustainable solution
for promoting development in Central America
Evaluate the potential for success of the different transoceanic mega-projects in the
region.
Examine the environmental and political challenges to the different transoceanic
mega-projects in the region.
46
SECTION 3: ESSAY PLANS
Compare the development levels between Panama, Coasts Rica and Nicaragua
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
47
Explain how physical and human factors have influenced development in Central
America
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
48
To what extent is Costa Rica more developed than its neighbouring counties?
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
49
Assess the environmental and economic consequences of the different
transoceanic mega-projects in the region
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
50
Examine the environmental and political challenges to the different transoceanic
mega-projects in the region.
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
51
Examine the environmental and political challenges to the different transoceanic
mega-projects in the region.
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..….
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
52
APPENDIX
Source: http://www.inform-index.org/Countries/Country-profiles/iso3/PAN
53