Development Chapter 10

How do you Define and Measure Development? Key Question: How do you Define and Measure Development?

Measuring Development Gross National Product (GNP) Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year. Includes things produced inside and outside a country’s territory. Gross Domestic Product (GDP) Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year. Gross National Income (GNI) Measure of the monetary worth of what is produced within a country plus income received from investments outside the country. ** Most common measurement used today.

Per Capita GDP The difference between more developed and less developed regions is widening. On a north polar projection, LDCs appear to be located in peripheral locations. Good indicator of the spatial distribution of global wealth, the approximate level of material well being in a country, the number of countries below the poverty line. Average GDP per capita for MDCs is appx $27,000; for LDCs is $4000 The world is divided by a line that runs from the east to the west at about 30° north latitude into two regions in which MDCs take the northern section and the LDCs take the southern section; the one exception is the south Pacific. In LDCs, consumer goods such as telephones, televisions, and motor vehicles are owned by a minority of the people.

Issues with Measuring Economic Development All measurements count the: Formal Economy – the legal economy that governments tax and monitor. All measurements do not count the: Informal Economy – the illegal or uncounted economy that governments do not tax or keep track of. Correlating economic, social, and demographic indicators of development shows that a more dev country is likely to rank among the top ten in all major development indicators.

Other Ways of Measuring Development Occupational Structure of the Labor Force Productivity (the value of a particular product compared to the amount of labor needed to produce it) per Worker Transportation and Communications Facilities per Person Dependency Ratio Machines, technology, tools, equipment enable MDCs to produce materials with a high value; people are more productive in more developed countries because they have access to more technology. LDCs depend on human and animal power for production. To finance development, LDCs borrow from commercial banks. Role of site and situation

Differences in Communications Connectivity Around the World

Dependency Ratio by Country, 2005 A measure of the number of people under the age of 15 and over the age of 65 that depends on each working-age adult.

What does Development Mean? Development implies “progress” Generally refers to an improvement in material conditions. Progress in what? Do all cultures view development the same way? Do all cultures “value” the same kinds of development?

Development Models Modernization Model Walt Rostow’s model assumes all countries follow a similar path to development or modernization, advancing through five stages of development, climbing a ladder of development. - traditional - preconditions of takeoff - takeoff - drive to maturity - high mass consumption According to Rostow's, the process of development begins when an elite group initiates innovative activities.

Rostow’s Ladder of Development Assumes that all countries can reach the same level of development and that all will follow a similar path.

Is the idea of economic development inherently Western Is the idea of economic development inherently Western? If the West (North America and Europe) were not encouraging the “developing world” to “develop,” how would people in the regions of the “developing world” think about their own economies?

How does Geography affect Development? Key Question: How does Geography affect Development?

Structuralist Theory a model of economic development that treats economic disparities among countries or regions as the result of historically derived power relations within the global economic system

Classical Liberalism, Progressivism, and Neoliberalism Classical liberals like Thomas Hobbes claimed that govt was created by individuals to protect themselves from one another, and that the purpose of government should be to minimize conflict between individuals that would otherwise arise in a state of nature. Laissez-faire The contemporary conception of progressivism emerged from the vast social changes brought about by industrialization in the late 19th cent, out of the view that progress was being stifled by vast economic inequality between the rich and the poor; minimally regulated laissez-faire capitalism with out-of-control monopolistic corporations; and intense and often violent conflict between workers and capitalists, measures (like more govt intervention) were needed to address these problems. Since the 1980s, the term neoliberalism has been used by scholars primarily in reference to the resurgence of 19th century ideas associated with laissez-faire economic liberalism; its advocates supported extensive economic liberalization policies such as privatization, fiscal austerity, deregulation, free trade, and reductions in government spending in order to enhance the role of the private sector in the economy.

Dependency Theory The political and economic relationships between countries and regions of the world control and limit the economic development possibilities of poorer areas. -- Economic structures make poorer countries dependent on wealthier countries; LDCs have a higher ratio than MDCs of people under 15 and over 64, compared to those in the work force - Little hope for economic prosperity in poorer countries. The economy of East Asia – and the entire world, for that matter – is being driven in the twenty-first century primarily by China

Dollarization – Abandoning the local currency of a country and adopting the dollar as the local currency. El Salvador went through dollarization in 2001

Geography and Context * Cannot simply study what is produced. * Need to examine how and where it is produced and where the production is on the commodity chain. * Examine commodity chains and look for the kinds of economic processes operating at each link in the chain.

Commodity Chain Series of links connecting the many places of production and distribution and resulting in a commodity that is then exchanged on the world market. They usually begin in periphery countries; reap the highest profits for core countries; involve several locations around the world; located near cheap sources of labor. How processes operated at each step in the commodity chain that produced the dolomite stone for this fireplace?

Three Tier Structure Core Periphery Semi-periphery Processes that incorporate higher levels of education, higher salaries, and more technology * Generate more wealth in the world economy Periphery Processes that incorporate lower levels of education, lower salaries, and less technology * Generate less wealth in the world economy Semi-periphery Places where core and periphery processes are both occurring. Places that are exploited by the core but then exploit the periphery. * Serves as a buffer between core and periphery

Cold War The main reason Western European countries produce high value goods and services is to pay for the importation of raw materials During the Cold War, the Soviet Union emphasize to the countries in Eastern Europe that could possibly improve development rates by: heavy industry, such as machines, transportation, mining and other primary sector jobs, spread of factories to lessen the vulnerability of vital industries, locate manufacturing sites near raw materials. Eastern European countries rejected the Soviet plan because they had experienced central planning before; did not have efficient agricultural practices; had to import food from other regions, orders sent from the government were often not put into effect, much pollution Under communism, Eastern Europe was characterized by favorable balances between population and resources, investment in heavy industries such as iron and steel, governments that made the key decisions concerning the national economy The major asset of the Eastern European region is abundant reserves of many raw materials.

Gender Empowerment Measure (GEM) index designed to measure of gender equality. GEM is the UN’s Development Program's attempt to measure the extent of gender inequality across the globe's countries, based on estimates of women's relative economic income, participations in high-paying positions with economic power, and access to professional and parliamentary positions.

Compare and contrast Rostow’s ladder of development with Wallerstein’s three-tier structure of the world economy.

What are the Barriers to and the Costs of Economic Development? Key Question: What are the Barriers to and the Costs of Economic Development?

Human Development Index (HDI) UN measurement of development includes: per capita GDP, literacy rates, school enrollment rates, and life expectancy. HDI is lowest in Sub-Saharan Africa, highest in Norway Development prospects are limited in Sub-Saharan Africa b/c of capacity of land to produce food, colonial legacy, poor leadership, uneven dist of wealth globally The highest level of development within Latin America is found in southern So Am; the less developed region with the highest percentage of people living in urban areas is Latin Am

Barriers to Economic Development Low Levels of Social Welfare Trafficking Foreign Debt Structural adjustment loans Countries in Latin Am have accumulated the largest debts numerically but Sub-Saharan Afr as a % of GNI Political Instability Widespread Disease Malaria

Foreign Debt Obligations Total interest payments compared to the export of goods and services.

Foreign Debt Obligations Foreign Debt and Economic Collapse in Buenos Aires, Argentina, 2001

Widespread Disease Malaria kills 150,000 children in the global periphery each month. Tamolo, India This baby sleeps under a mosquito net distributed to villagers by UNICEF workers.

Global Distribution of Malaria Transmission Risk

Costs of Economic Development Industrialization Export Processing Zones (EPZs), maquiladoras (zones in northern Mexico with factories supplying manufactured goods to the U.S. market), and special economic zones (SEZs). Agriculture desertification Tourism

Fair Trade Term for something that emphasizes small businesses; worker-owned and democratically-run cooperatives; and requires employers to pay workers appropriate wages, permit union organizing, and comply with the minimum environmental/ safety standards. According to the international trade approach to development, a country should identify valuable assets such as abundance of agricultural products, low cost distribution networks, high quality manufactured goods, goods for export.

Export Processing Zones

Four Asian Dragons Term used in reference to the highly free-market and developed economies of Hong Kong, Singapore, South Korea, and Taiwan. These nations and areas were notable for maintaining exceptionally high growth rates (in excess of 7 percent a year) and rapid industrialization between the early 1960s (mid-1950s for Hong Kong) and 1990s. The principal asset of the Four Dragons to promote development is low labor costs.

Areas Threatened by Desertification

Economic Backwater place or condition in which no development or progress is occurring; backwaters exist when other regions in a country experience great levels of economic development and this concentration has negative effects on other regions that cannot generate high levels of ec activity. (i.e. Upper Great Plains, Lower Mississippi Valley, U.S., Buenos Aires, western China)

Think of a trip you have made to a poorer area of the country or a poorer region of the world. Describe how your experience in the place as a tourist was fundamentally different from the everyday lives of the people who live in the place.

Why do Countries experience Uneven Development within the State? Key Question: Why do Countries experience Uneven Development within the State?

Core-Periphery The pessimistic viewpoint about a lack of economic development in certain locations on the globe can be attributed to their lack of foreign investment; exploitation by core of periphery.

Locational Interdependence Theory Locational interdependence suggests competitors, trying to maximize sales, will seek to limit each other’s territory as much as possible by locating close to each other in the middle of their combined customer base. If both sellers are equidistant from their potential customers, neither has a greater advantage. The impact of a business’s geographic location on its ability to operate and make a profit; for small-business owners, understanding the connection between place and success can help guide them in researching and choosing the right place to start a business.

Locating Industries cost of labor. cost of land. market demand for goods. government policies (taxes, tariffs).

How Government Policies Affect Development Governments get involved in world markets price commodities affect whether core processes produce wealth shape laws to affect production enter international organizations that affect trade; biggest problem in promoting development through the international trade alternative is unequal distribution of resources. focus foreign investment in certain places support large-scale projects

Governments and Corporations can create Islands of Development: Places built up by a government or corporation to attract foreign investment and which has relatively high concentrations of paying jobs and infrastructure.

Government-created Island of Development Malaysian government built a new, ultramodern capital at Putrjaya to symbolize the country’s rapid economic growth.

Corporate-created Island of Development The global oil industry has created the entire city of Port Gentile, Gabon to extract Gabon’s oil resources. The country with the largest oil reserves in the world is Saudi Arabia. Organization of Petroleum Exporting Countries (OPEC) cartel est in 1960 is the primary group setting oil prices.

OPEC

Nongovernmental Organizations (NGOs) entities that operate independent of state and local governments, typically, NGOs are non-profit organizations. Each NGO has its own focus/set of goals; influential in spearheading international initiatives on social, economic, and environmental issues . Microcredit program: loans given to poor people, particularly women, to encourage development of small businesses.

Southwest Asia In terms of today’s global economy, considered the resource frontier of the world because of its oil reserves. Petroleum reserves in the Middle East are concentrated primarily along the Persian Gulf states.

How do actors in nongovernmental organizations (NGOs) mobilize political change? An Indonesian woman (on left) who migrated to Saudi Arabia as a guest worker talks with an Indonesian activist (on right) who works to defend migrant workers’ rights.

Levels of Development First World: industrialized, service-based economies Second World: Communist/centrally planned economies Third World: mainly agricultural, resource-based economies Fourth World: Third World states that have experienced some sort of economic crisis. Fifth World: Third World states that lack a functioning economy and have no formal national government.

Neocolonialism and Self-Sufficiency Neocolonialism: concept that LDCs are still economically dependent upon more MDCs for their economic livelihood. The US has the largest coal reserves in the world; Russia the largest natural gas reserves. The self-sufficiency model, or balanced growth, says a country should spread investment as equally as possible across all sectors of its economy and in all regions. The principal benefit of the self-sufficiency approach is to promote balanced growth of all economic sectors but self-sufficiency policies have encouraged inefficient industries. http://www.lewishistoricalsociety.com/wiki/tiki-read_article.php?articleId=79

Sustainable Development The idea that resources should be conserved so that people living today can meet their needs without limiting the ability of future generations to do the same. Sustainable development is a collection of methods to create and sustain development which seeks to relieve poverty, create equitable standards of living, satisfy the basic needs of all peoples, produce sustainable economic growth and establish sustainable political practices all while taking the steps necessary to avoid irreversible damages to natural capital in the long term in turn for short term benefits by reconciling development projects with the regenerative capacity of the natural environment.

Sustainable Development

Take an item of clothing out of your closet, and using the Internet, try to trace the commodity chain of production. What steps did the item go through before reaching you? Consider whether core or peripheral processes were operating at each step and consider the roles governments and international political regimes played along each step.