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3. To what extent to natural disasters influence patterns of contemporary trade
Patterns of contemporary trade are very distinguished and ACs are increasingly exporting more services and capital whereas LIDCs are more dependant on the primary sector trade and less so on services and capital. Natural disasters influence the patterns of trade but the extent to which they actually influence the trade patterns is largely dependant on the nature and scale of an event.
One way that natural disasters influence patterns is by influencing the patterns of capital flow. An areas such as Haiti which is prone to cyclones and earthquakes is likely to receive less FDI from MNCs. Areas which are prone to natural disasters will deter MNCs from funding because there is increased risk of industry collapse and so, the productivity within the company is reduced and so, it could lead to less profit for an MNC. Therefore, MNCs will not fund in such areas as often as there is too large risk. So, the flow of FDI and capital will be concentrated on the more safer and less prone parts of the world (for example, far away from a plate boundary) and thus, the flow of capital is not evenly distributed and will be influenced by the frequency of an event. Furthermore, less FDI and capital flow into a country can influence the patterns of merchandise trade for a country. An area such as Haiti which is prone are more likely to rely on the primary sector and do not have the resources or expertise to be able to access the more high value tertiary or secondary sectors and so, their main exports will be primary products. Thus, natural disasters can also influence the types of products and merchandise which come from an area and as a result, it can influence the contribution of a country to the GVC or the GSC. So, natural disasters will influence patterns of capital and merchandise trade to a great extent and can create concentrated regions of capital and merchandise flow but it is largely dependant on the frequency of an event because a country which is less prone to disasters is more likely to be able to access FDI and be able to have a greater productivity capacity (for example, Bangalore in India) and thus, will have greater access to the GVC and GSC.
Natural disasters can also influence the primary sector of trade in an area. Areas which are closer to volcanoes are more likely to have fertile soil and so, farming is a common practice in these areas and can increase the amount of farming in the area. for example, mount merapi in Indonesia has high levels of subsistence farming within the area and as a result, farming makes up 41% of the Indonesian economy. So, the proximity to volcanic hazards can influence the employment sector within a country and can lead to certain sectors such as farming becoming more dominant and so, the country is more likely to export certain types of goods and be more dependent on different merchandise industries. But this depends on the proximity to the hazard as areas (such as Bangalore) which are further from hazards as less likely to benefit from the fertility of the soils and so, there is greater prevalence of secondary and tertiary sectors in such countries and so, such countries are more likely to export high valued manufactured good and services and have a greater access to the GVC. So, natural hazards can play a big role in determining the dominant industry within an area but the extent to which they influence what sector dominates depends on the proximity to a hazard and this can be demonstrated by volcanoes where the soil quality is greater and so, people will have to be more reliant on the farming sector and rely more on the exporting of these types of goods.
Natural hazards therefore influence patterns of trade as they influence the flow of capital, merchandise and the dominant sector but the extent to which they influence these factors is largely dependant on the proximity and frequency of the event but generally, areas which are prone to hazards are more likely to be dependant on primary sectors (with a few exceptions) whereas areas which are less prone have greater access to FDI
and the tertiary sector.
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