Development

Poverty Huge, worldwide, inequality gap –The poorest 40% of the world’s population accounts for 5% of global income. –The richest 20 percent accounts for three-quarters of world income. –The top 20% consumes 86% of the world’s goods and services –Poorest fifth consumes about 1% of world’s goods and services

Global Inequality The three richest people in the world have wealth that exceeds the combined economic output of the 47 least-developed nations The world’s richest 200 people together have more money than the combined income of the lowest 40% (2.4 billion people) About half of the world’s people live on less than $2 a day (the World Bank’s definition of poverty

Global Inequality Girls and women are disproportionately disadvantaged. Women represent 2/3 of the world’s illiterate people and 3/5 of its poor. Stemming from cultural practices, food rations are often given to fathers and sons before daughters and mothers, resulting in greater malnourishment and disease.

Why is there global inequality? Geographic isolation, climate, and natural resources Power

Gini Coefficient Used to measure income inequality Number between 0 and 1 0 means perfect equality (all resources are evenly distributed) 1 means perfect inequality (one person has control of all resources)

Gini Coefficient Australia =.352 Mexico =.546 China =.447UK =.360 France =.327US =.408 Germany =.283 India =.325 Japan =.249

Theories of Global Inequality How does the first world explain global inequality? Modernization theory Focuses on deficiencies in poor countries – absence of democratic institutions, capital, technology and initiative Speculate how to repair deficiencies Global wealth and poverty are linked to industrialization

Modernization Theory Rostow’s stages of Economic Development (1960) 1. Traditional society – no change 2. Preconditions for take-off – traditional society challenged 3. Take-off – belief in individualism, capitalism 4. Drive to technological maturity 5. High Mass Consumption

Modernization Theory Polarizes “tradition” and “modernity” Looks at global economic integration especially by the International Monetary Find and the World Bank

Theories of Global Inequality How does the third world explain global inequality? Dependency theory Third World countries are exploited by first world countries Economic growth in advanced countries created third world poverty in its wake

Dependency theory 16 th Century capitalism developed as a global system Workers produced raw material for export to rich countries After independence, countries borrowed money from the First World in the 50s and 60s during the Cold War

Dependency theory Money was given to dictators that went to the military or the dictator’s family Oil in OPEC countries went to Western Banks and was loaned to Third World countries Interest rates on the loans went up/OPEC crisis made cost of oil go up

Dependency theory Countries went into debt to pay off loans and used this money to pay for food for their populations Success of capitalism depends on labor earnings of third world staying low Third World does not have economic independence; they give up more than they get back

World Systems Theory Capitalism is truly a global system that is held together with economic ties Three types of nations –Core –Semi-Peripheral –Peripheral