1. Development Part 2: “Paths to Development”

2. What is Development? Reread/review prior information (Part 1)
Criticisms of the “development” concept (#5)
One single path/trajectory toward development?
Is “industrialization” always necessary?
Have commodity chains broken the link between industrialization and increasing prosperity?
See article on website “Arrested Development”
Western bias (values materialism, is industry good?)
discounts international influence
Countries don’t operate in a vacuum
See Wallerstein’s World System’s Theory
See p 464 – 465 for alternative discussion
Bhutan measures Gross National Happiness (GNH) based on psychological well-being, time use, community vitality, culture, health, education, environmental diversity, living standard and governance.
Don’t confuse with criticisms of GDP/GNI
Informal economy, inequality, neg. externalities (pollution)

3. Paths to Development? Five stages
International Trade Model/Rostow’s model of development
Five stages
Traditional society
subsistence agriculture
govt. funds spent on military/religion
Rigid social structure (example: female subservience)
technology slow to change

4. Paths to Development? Five stages
International Trade Model/Rostow’s model of development
Five stages
Traditional society
Preconditions to “take-off”
elite, well-educated (usually in West) take lead
identify assets to exploit (raw material, cheap labor, etc.)
investment in new technology and infrastructure (transportation, clean water systems, etc.)
hope to stimulate PRODUCTVITY

5. Paths to Development? Five stages
International Trade Model/Rostow’s model of development
Five stages
Traditional society
Preconditions to “take-off”
Takeoff
rapid growth in limited industries
Example?
Textiles
these industries achieve technological advances and become productive
“Industrial Revolution”, growth takes hold, urbanization increases, tech and mass production breakthroughs

6. Paths to Development? Five stages
International Trade Model/Rostow’s model of development
Five stages
Traditional society
Preconditions to “take-off”
Takeoff
Drive to Maturity
technology diffuses from initial industries
Workers become more skilled and specialized
International trade increases
Modernization
Population growth slows

7. Paths to Development? Five stages
International Trade Model/Rostow’s model of development
Five stages
Traditional society
Preconditions to “take-off”
Takeoff
Drive to Maturity
Age of Mass Consumption
shift from heavy industry to consumer goods
High incomes, wide spread production of consumer goods
Majority of workers enter service sector jobs

9. Paths to Development?
International Trade Model/Rostow’s model of development
Five stages
Why optimistic?
Eastern/Southern European growth, Japan
LDCs have tons of resources to exploit
Examples of international trade approach
The “Four Asian Dragons” or “Four Asian Tigers”
Taiwan, Singapore, South Korea, Hong Kong
“Baby Tigers” , “Tiger Cubs” trying to follow pattern
Malaysia, Thailand, Vietnam, Indonesia, Philippines
Petroleum-rich Arabian Peninsula states
Current example?
See “Ghana” article on website for how the International Trade Model works in real life.

10. FIGURE 9-1

11. Paths to Development? International Trade Model
Problems/criticisms (#11 diff. from text)
single commodity
depends on world price (cocoa in Ghana, oil in Venezuela)
could lead to loan default if price collapses
therefore, commodities are often leased/controlled by outsiders (MDC corps) who keep lion’s share of profits
development (technology, skills, etc.) doesn’t diffuse to people as a whole but only to those connected to foreign investors
with reliance on cash crops must buy food
hunger, less money for investment
income inequality
result of both this model & structural reform programs (later)

12. Paths to Development self-sufficiency model Characteristics:
Barriers are established to protect local businesses
Three most common barriers = (1) tariffs (tax on imported goods), (2) quotas, and (3) restricting # of importers
“protectionism”

13. Tariffs
Review impact of tariffs from class notes

14. Paths to Development self-sufficiency model Characteristics:
Barriers are established to protect local businesses
Three most common barriers = (1) tariffs (tax on imported goods), (2) quotas, and (3) restricting # of importers
“protectionism”
Distribution/pace of development = even but low
Investment spread across economy
Goal is to develop national industries and
reduce poverty over consumerism
Two major problems with this approach:
Inefficient businesses are protected
A large bureaucracy is needed to regulate/monitor barriers
costly
could lead to corruption
growth of black market

15. Self-sufficiency vs. Int’l trade approach
International trade approach triumphs
Countries switch because evidence indicates that international trade is the more effective path toward overall development
Example: India

16. Self-sufficiency vs. Int’l trade approach
International trade approach triumphs
made easier by globalization
“Neo-liberalism”
Dominant economic/political theory by end of 20th c.
Reduce government intervention in markets
Favored by:
Multinational corps., Big Business, Wall St. = Republicans
Bill Clinton, Pres. Obama, Rahm Emanuel = Democrats
NAFTA, TPP (Trans-Pacific Partnership)
Global economic power shifts from states to corps.
WTO (World Trade Org.) = referee on global trade
Enforces trade agreements
Helps reduce trade barriers = “free trade”
Allows for non-penalized retaliation or fines.
Eliminate restrictions on the movement of $
Criticisms:
Left = anti-democratic, favors wealthy corps., ignores the poor
Right = national sovereignty is violated (see TPP)

17. FIGURE 9-29

18. Rostow’s “modernization”, “ladder of development” or “int’l trade” approach to development
Losers
Winners
Low skill workers (MDCs)
Highly paid union workers in manufacturing
Unconnected LDC
Small businesses/domestic manufacturing
Prices are undercut
Downward wage pressure
Will wages decr. or stagnate for skilled workers as well?
Govt. workers privatized
can tertiary jobs be outsourced, automated, globalized?
Multinational corporations
Low wages, higher profits, higher stock prices
Stockholders, investors
In LDCs
People/regions connected to int’l trade or the “core”
Consumers
Lower prices
BIG Q? Will low prices continue to offset wage stagnation?

19. Sustainable Development

21. What is Sustainable Development?
achieving human development goals while at the same time conserving natural systems and…
Conservation
use of resources to meet human needs while maintaining them for use by future generations.
Preservation
Keep resources in their present condition. Don’t touch! (nat’l parks)
meeting the needs of the present without compromising the ability of the future generation. But the dilemma…
Econ. growth/wealth ↗ consumption (depletion) ↗ pollution ↗
WWF says we are overcapacity in use of resources
How would you classify this point of view?
Neo-Malthusian
Others say, “resources” can be redefined
How would classify this point of view?
Environmental possibilism/anti-Malthusian
What types of resources do we worry most about depleting?

22. Energy Consumption Usage is split 50/50 between MDC and LDCs
But per capita usage in 3x higher in MDCs
MDCs must import supplies from LDCs to meet needs
LDCs using more due to development, causing price ↑
China is expected to be the world’s biggest energy user by 2015
As LDCs develop , we must find ways to fuel their growth (hopefully clean)

23. Non-renewable Energy
5/6ths of world’s energy supply from 3 main sources:
fossil fuels = coal, natural gas, and oil
Enhanced extraction = fracking = polluting water, earthquakes
Local/personal goal = reduce “carbon” footprint

24. Renewable Energy (sustainable?)
Biomass = wood/ethanol/sugar cane
sometimes more energy to grow crops than energy produced
deforestation, reduction in soil fertility
Geothermal energy (energy from the Earth’s interior)
most accessible near fault lines, volcanic areas
Hydroelectric power
2nd largest source of electricity after coal
Three Gorges Dam (China) = environmental disaster
Nuclear energy
high cost to build, radioactive wastes, accidents are catastrophic!
Chernobyl, Fukushima
Solar energy
intermittent (not consistent). Storage? Need batteries = expensive
recently cost = nonrenewable energy in certain areas = grid parity
Incr. efficiency, Chinese manufacturing/government support
Wind power
noisy, lethal to birds and bats, visual blight

25. Other major depletable resource?
Water

28. Aral Sea (USSR diverts water for irrigation)

29. Sustainability Question. How do we reduce pollution
Sustainability Question? How do we reduce pollution? (to leave a cleaner Earth for future generations)
Recycling (pollution control starts at home)
“Think globally, Act locally”
Reduce throwaway/non-biodegradable packaging
No more styrofoam
“cap and trade” or “emissions trading”
uses a market concept
polluters given allowances to pollute by a govt. agency
Markets formed to buy unused allowances from those who don’t use them
Sold to those who wish to pollute more than their allowance.
Industries most able and willing to reduce pollution will do so and profit from their surplus credits
Therefore, pollution reduction is incentivized!
it rewards companies to pollute less
Increases costs/punishes those who pollute more

31. Paris Agreement (2016)
Limit global warming to 2° C (w/eventual goal of 1.5° C)
In order to meet 1.5° C, must abandon fossil fuels by mid-century.
Who pays to meet goals? Unspecified. Rich countries will have to pay up to $100b to succeed. Incl. China/India????
How often will this be verified? Starting in 2023 every five years.
Who will verify? No 3rd party like the UN’s IAEA (International Atomic Energy Agency). Countries agree to a technical expert review.
Who pays for damages? US “wants to help” but w/limits
Who is ultimately responsible? Common but differentiated responsibility. Everyone has some but MDCs have the most
Trumps withdraws from agreement 2017

32. Environmental Racism e-waste shipped to LDCs (China)
hazardous materials w/in populated areas in LDCs
Union Carbide in Bhopal, India

34. Environmental Racism e-waste shipped to LDCs (China)
hazardous materials w/in populated areas in LDCs
Union Carbide in Bhopal, India
Water scarcity in the occupied West Bank

36. Environmental Racism e-waste shipped to LDCs (China)
hazardous materials w/in populated areas in LDCs
Union Carbide in Bhopal, India
Water scarcity in the occupied West Bank
City dumps, brownfields, incinerators, etc.
Often located in or next to low-income, minority neighborhoods
We’ll come back next unit

37. Barriers to Development
Structure and geography of the world economy (Wallerstein’s World Systems Theory)
Social conditions
Lack of female empowerment
Demographic trap (stress this is circular!!!!)
high CBR, IMR, dependency ratio leads to a lack of funds for development which in turns leads to high CBR
Lack of education (overall and gendered)
Trafficking (domestic servants, street vendors, prostitution)
Disease
weakens labor force, creates orphans
malaria, HIV/AIDs
Political Corruption and Instability
dictatorship, coups, corruption discourage investment

38. Biggest problem = Financing development
LDCs require money to fund development
FDI = foreign direct investment
Major source = transnational corps

39. Foreign Direct Investment
Figure 9-30

40. Financing development
LDCs require money to fund development
FDI = foreign direct investment
Major source = transnational corps
Int’l organizations as lenders:
The World Bank
Loans to make reforms, strengthen financial institutions, infrastructure projects
IMF (International Monetary Fund)
Provides loans to countries with debt payment issues
Goal = protect international trade
demand “structural adjustment programs”
realign spending priorities, cut non-productive spending (pensions)
eliminate govt. bureaucracy, cut/privatize govt. jobs
reduce taxes

41. Nongovernmental organizations (NGOs)
Independent non-profits (Gates Foundation, Clinton Foundation, Carter Center)
Some funds can be misappropriated → admin. salaries, travel, etc.
example of a successful policy = microcredit program
Loans to small entrepreneurs in LDCs (largely women) which are guaranteed by others in the village = 98% repayment rate
Why is targeting women for development is good strategy?
Demographic impact (brings down CBR)
Socioeconomic impact (women will use funds to feed children, relegated to domestic sphere)

42. Impacts of Development
establishment of Export Processing Zones (EPZs)
Favorable tax, regulations, etc. for foreign firms
Maquiladoras (Mexico), Special Economic Zones (China)
Can lead to unequal development within states

45. Islands of Development
Cities/capitals/ports = Islands of Development
concentrated economic development, foreign inv. $
Forward capitals built to draw investment to interior or to be a centripetal force.
Brasilia (Brazil),

47. Islands of Development
Cities/capitals/ports = Islands of Development
concentrated economic development, foreign inv. $
Forward capitals built to draw investment to interior or to be a centripetal force.
Brasilia (Brazil)
Islamabad (Pakistan), Abuja (Nigeria)
Washington DC

48. Impacts of Development
Agriculture
Diff. of modern agriculture to produce export crops
↑ intensification → ↑ desertification
Country must import food for people
Tourism (mixed impact)
Brings in huge $, now > than oil
requires infrastructure spending that could be spent on natives
creates jobs but largely low-paying, “dehumanizing”?
profits go to multinational corps.
harsh juxtaposition of tourist wealth and native poverty marks cultural landscape

49. Haitian Contrasts

50. Sustainable Tourism? “eco-tourism”
Visits to fragile, pristine, and relatively undisturbed natural areas
Pros
“low-impact”, small scale alternative to mass tourism.
helps fund conservation
benefit local people
Increases environmental awareness
Cons
threaten indigenous cultures
Relocation
ecosystem degradation
travel impact on global env.
Integrity of ecotourism org.

51. Fair trade approach
Products are made and traded in a way that protects workers and small businesses in LDCs
Two sets of standards
Fair trade producer standards
Must be “small”, democratic, high product quality, use ecologically friendly growing methods, etc.
Fair trade worker standards
Collective bargaining, working conditions, minimum wage, etc.
Producers and workers usually earn more
Consumers (MDCs) usually pay higher prices
Fair trade coffee: Shade-grown produced by certified fair-trade farmers, who then sell the coffee directly to importers
Guarantees a “fair trade price”
At least 40% goes to grower
Over 500,000 registered farmers
Produced in more than 20 countries
commitment by Starbucks, Dunkin Donuts and other chains
Demand must come from the consumer!

52. Fair Trade