Context for question 1
Source material: Will Senegal escape poverty?
| Senegal fact file | 2023 |
|---|---|
| population | 19m |
| gross domestic product (GDP) | $31bn |
| workers’ remittances as a percentage of GDP | 9% |
| Human Development Index (HDI) value | 0.517 |
Senegal, a north‑east African country, has some of its workers employed in other countries. These workers send a percentage of their wages home to relatives. This money is known as workers’ remittances. Due to their relatively low incomes, most Senegalese households spend all of these remittances. However, some households do not spend all of the money they receive when interest rates are high or when confidence is low.
A relatively high proportion of workers in Senegal are employed in agriculture. The crops grown in Senegal are affected by extreme heat and droughts. These weather conditions are one reason why the country grows the crop, sorghum, which does not need much water during its growth. Sorghum is low in calories and so can help people who consume it to lose weight.
Senegal is a net exporter of sorghum. It is also the largest African exporter of rice after Nigeria. Greater use of capital equipment in the production of both sorghum and rice could affect productivity. This may reduce the deficit on the current account of Senegal’s balance of payments.
The Senegalese Government wants to develop the country’s secondary and tertiary sectors to improve the country’s economic performance. It also expects that this will reduce poverty as measured by those living on $6.85 or less a day. Table 1.1 shows GDP per head and the percentage (%) of population living in poverty in selected countries.
| country | GDP per head ($) | percentage (%) of population living in poverty |
|---|---|---|
| Canada | 55 520 | 0.7 |
| Iceland | 73 500 | 0.0 |
| Papua New Guinea | 3 010 | 80.0 |
| Romania | 15 820 | 7.1 |
| Senegal | 1 600 | 75.6 |
| South Africa | 6 770 | 40.1 |
A related aim of the Senegalese Government is to increase the country’s HDI value. Governments can use fiscal policy measures to improve the three components of their HDI value, including life expectancy.
Changes in fiscal policy can also affect the markets for Senegalese products including gold. Among the influences on the price elasticity of demand for gold are changes in income, the availability of substitutes and the extent to which gold is seen as a luxury.