Chapter 10: By Zharen

How do you define & measure development? Commodity chain Formal/informal economy Development models –Rostow’s Modernization Model

Commodity Chain Series of links connecting places of production & distribution in order to make a commodity for the world market. –Gaining wealth depends on which link in the chain the production is. –More links=more value

Formal Economy Legal Gov’t taxes & monitors Included in Per Capita GNI Ex. Things with sales taxes, etc. Illegal or unauthorized Unaccounted for Ex. Babysitting, trafficking, etc. Informal Economy

Rostow’s Modernization Model Aka the ladder of development By Rostow Grew from decolonization movements of the 60’s Answers how the countries moved forward Controversy: not all movement is the same

Stage 1: Traditional Society (subsistence farming, static/rigid society, doesn’t like change) Stage 2: Preconditions for Takeoff (commercial exploitation, progressive leadership) Stage 3: Takeoff (manufacturing sector, urbanization, industrialization, technology) Stage 4: Drive to Maturity (industrial & commercial base, technology diffuses, specialization, int’l trade, modernization, population growth slows) Stage 5: High Mass Consumption (high incomes, widespread production, most workers in service)

How does geography affect development? Dependency theory –Dollarization Structuralist theory World systems theory

Dependency Theory Political & economic relationships between countries & regions have created arrangements that control & limit the development possibilities Ex. Colonialism- Colonies became dependent on the colonial powers because of the political & economic structures forced on them Furthers the gap between dominant and subordinate countries

Dollarization poorer country ties its currency value to a wealthier country’s currency or poorer country changes its currency to the richer one Ex. El Salvador changed from the colon to the American dollar because Salvadorians in the USA were sending remittances home

Structuralist Theory People built, organized, and structured the world economy in such a way that it can’t be changed easily Economic disparities are result of history in the global economy placing wealth and power in some areas over others Explains how neo-colonialism came about –Note: neo-colonialism is how major world powers control the economies of poorer countries, even if politically independent.

World Systems Theory Wallerstein’s Countries are linked interdependently by political & economic competition Started with European exploration  places became more connected (others not)  social change 3-tier structure developed: world divided into… –Core: process generates wealth, high socioeconomic prosperity, high contribution to world –Periphery: process requires little education, technology, and wages –Semiperiphery: buffer between core & periphery

What are the barriers to and costs of economic development? Barriers: –Low social welfare –Foreign debt –Political instability –Disease Costs: –Industrialization –Agriculture

Barriers to Economic Development Low levels of social welfare –Poor social conditions mostly in periphery –High birth & death rates, low life expectancy, malnourishment, lack education (gendered), trafficking Foreign debt –In history: after decolonization wave, IMF & World Bank gave structural adjustment loans for reforms in economy/government, but problems in repaying loans (Ex. Argentina) –When repaying loans, can’t simply use country’s budget because that money is needed for development Political instability –Gap between rich and poor, competition for control of government, corruption, mostly in periphery and semiperiphery, Widespread disease –Vectored disease (spread by intermediate host/vector usually in moist/warm climates to enhance biological activity), Malaria (“silent tsunami”; infectious disease spread by the parasites in mosquitoes’ saliva, seen in tropical places) –Solutions: pesticides(success in Sri Lanka), new nonvirulent ones, nets

Costs of Economic Development Industrialization –Pollution –Export Processing Zones- special manufacturing export zones made by the government to attract industries Offer good tax, regulatory, & trade agreements Ex. Maquiladoras, Special Economic Zones –NAFTA=North American Free Trade Agreement- US, MX, CA, helps further industrialization by creating manufacturing plants Agriculture –Large-scale modernized agriculture in periphery produces for foreign markets while helping the native land very little –Lower yields, can’t afford tools, little education, unfavorable land –Desertification- humans destroy vegetation & erode soils because of overuse for farm purposes

Why do countries experience uneven development within the state? Economic disparity- Poverty not just in periphery, but also in regions of the core Governments get involved  make islands of development (concentrations of economic development in a city) NGOs!

Nongovernmental Organizations Independent organization Usually nonprofitable Have specific goals to improve development Microcredit program- program of an NGO for South Asia and South America. –Gives loans to poor (particularly women) to encourage small business development –Alters gender balance