1. Road to Development

2. U.S. Health Worse Than Nearly All Other Industrialized Countries
Bin Laden blames Industrialized countries for climate change
These are headlines from past news stories. What is meant by the word industrialized?

3. What does it mean for a country to be called industrialized?
What does it mean to a developed country?
Can all countries become developed countries?
Do you think all countries will have a large number of factories?

4. What does it mean for a country to be called industrialized?
It is more than the country has factories – Industrialized implies MDC.
What does it mean to a developed country?
Almost a synonym for Industrialized – MDC – good HDI, tertiary sector of economy
Can all countries become developed countries?
Can all kids go to college? Technically, yes. Should all kids go to college? Are all students above average? Will all countries become MDCs? Will all countries have a good quality of life for their people? These are really 2 different sets of questions – can you tell the difference?
Do you think all countries will have a large number of factories?
In other words, do you have to have manufacturing to be developed?

5. Schools of Thought Look up what is meant by “Schools of Thought”
There are 2 schools of thought about economic development
Liberal Models
All countries can become developed
A liberal model is Rostow’s Model
Structuralist Models
There is a structure in place which prevents LDCs from achieving development
A structuralist model is Dependency Theory

6. Models of Development Liberal Modernization Models by definition
All countries are capable of development
Economic disparities are a result of short term inefficiencies in local or regional market forces
Focus on International trade

7. Rostow’s Modernization Model of Development
Developed by W.W. Rostow (1950s)
develop economically by concentrating scarce resources on expansion of its distinctive local resources – to trade internationally
aka Ladder of Development

8. Rostow’s Modernization Model of Development
Developed by W.W. Rostow (1950s)
1950s Rostow analyzed success of Industrialized nations – US, Can, UK, FR, etc. They developed a certain way – he used this to pattern his Ladder of Development
develop economically by concentrating scarce resources on expansion of its distinctive local resources – to trade internationally
In other words, capitalize on available resources to trade internationally
aka Ladder of Development Only one path to development – follow the ladder in order only

9. Rostow - Stages of Growth
Traditional Society
Characterised by
subsistence economy
high levels of agriculture and labor intensive agriculture
Wealth allocated to nonproductive activities (religious, military)
Village in Lesotho. 86% of the resident workforce in Lesotho is engaged in subsistence agriculture.
Copyright: Tracy Wade,

10. Rostow - Stages of Growth
Traditional Society
Characterised by
subsistence economy – the crops grown for the year are consumed by years’ end, for example – a mom with a subsistence job her bills for a month take her whole month’s pay check
high levels of agriculture and labor intensive agriculture
Wealth allocated to nonproductive activities (religious- like building temples & monuments, military – like N. Korea’s building nuclear bombs while the people are starving)

11. Rostow - Stages of Growth
2. Pre-conditions:
An elite group initiates development
Investments in technology and infrastructure
Commercialization of agriculture
The use of some capital equipment can help increase productivity and generate small surpluses which can be traded.
Copyright: Tim & Annette,

12. Rostow - Stages of Growth
2. Pre-conditions:
An elite group initiates development -
Investments in technology and infrastructure
Commercialization of agriculture – growing cash crops like cotton or wheat, which can be stored, transported, and profited from

13. Rostow - Stages of Growth
3. Take off:
Increasing industrialization in limited areas (food or textiles)
Foreign investment increases
Infrastructure improvements
Some regional growth
Economy still dominated by traditional practices
At this stage, industrial growth may be linked to primary industries. The level of technology required will be low.
Copyright: Ramon Venne,

14. Rostow - Stages of Growth
3. Take off:
Increasing industrialization in limited areas (food or textiles) –
either processing the cash crop from Stage 2 Take off or
For example, Mozambique grew cashews then developed cashew processing (value added!)
Or hosting a textile plant
Good beginning factory because relies on unskilled labor
Foreign investment increases
Foreign companies would be the ones to open the textile factory
Infrastructure improvements
Construct roads, electricity, running water in the area of the factory
Some regional growth
Around the area of the factory
Economy still dominated by traditional practices
For example, 20 miles out there are dirt roads, no electricity, and subsistence agriculture

15. Rostow - Stages of Growth
4. Drive to Maturity:
Develops broad manufacturing and commercial base
Industry more diversified
Increase in levels of technology utilized
As the economy matures, technology plays an increasing role in developing high value added products.
Copyright: Joao de Freitas,

16. Rostow - Stages of Growth
4. Drive to Maturity:
Develops broad manufacturing and commercial base
Begin manufacturing a variety of goods
Industry more diversified
ditto
Increase in levels of technology utilized

17. Rostow - Stages of Growth
5. High mass consumption
High output levels
Mass consumption of consumer durables
High proportion of employment in service sector
Service industry dominates the economy – banking, insurance, finance, marketing, entertainment, leisure and so on.
Copyright: Elliott Tompkins,

18. Rostow - Stages of Growth
5. High mass consumption
High output levels
Mass consumption of consumer durables
Consumer durables are big, last for several years products like refrigerators, dishwashers, cars
High proportion of employment in service sector

19. USA Path to Development
Stage 5: early 20th century
1920s or 40s? More shop keepers, restaurants, etc.
Stage 4: late 19th century
1880s Variety of manufacturing such as textiles, steel, food production
Stage 3: middle of 19th century
1850s the north has some manufacturing but there is regional growth only
Stage 2: first half of 19th century
1800s commercialization of agriculture, like cotton, tobacco
Stage 1: prior to independence
Subsistence agriculture

20. Possible 6th stage – Postindustrial
Service replaces industry
Information replaces energy as key resource

22. Rostow con’t Origin of common use “industrialized” country
All countries follow the same model of development
However, for countries that have developed in modern times – only China has followed THE model of development

23. Criticisms Western bias that urban and industrial = a better life.
Development does not necessarily lead to high consumption, can mean social welfare Scandinavian countries have high taxes which are used to invest in health care and education = high quality of life
Assumes LDCs will achieve each level of development before advancing
Uneven resource distribution (Zambia’s one commodity market of copper developed trouble when world copper price fell)

24. Criticisms Does not account for
Colonialism as in countries which became independent after 1950s
Culture – not all cultures value western style life & business
Deindustrialization MDCs are using LDCs for manufacturing
Increased dependence on MDCs – when concentrating resources in a “takeoff” industry, then buy necessities from MDCs

25. Balanced Growth through Self-Sufficiency
Think 1960s-ish – Colonies have just become independent and don’t want to be entangled with foreign countries so discourage trade.
A country should spread investment as equally as possible across all sectors of its economy and in all regions – as opposed to Rostow which has regional growth
Incomes in rural areas keep pace with urban incomes
Businesses remain independent of foreign corporations
Limit imports through tariffs and quotas

26. India followed this policy
Made imports difficult
Discouraged Indian businesses from exporting
Could not convert Indian money into other currencies
Encouraged production of consumer goods for Indian citizens
Provided subsidies for struggling companies

27. Problems
Inefficiency: without true competition, companies have little incentive to improve techniques, technology, products, etc
Large Bureaucracy: needed to administer the controls – complex and corrupt

28. International Trade Approach
Some countries have switched from self-sufficiency approach to international trade
according to the World Bank – international trade countries have seen 4% growth, self-sufficiency countries 1%
LDCs are exporting more manufactured goods rather than agriculture or mining goods

29. International Trade Approach
Dollarization: abandoning existing currency in favor of an industrialized countries (In 2001, El Salvador abandoned the colon and now uses American dollars)

30. International Trade Approach
Foreign Direct Investment (FDI) – investment made by a foreign company in the economy of another country – so BMW opening a factory in S. Carolina is FDI
Only 1/3 of investments went from a MDC to a LDC (only 10% went to African nations)
Transnational Corporations are major sources of FDI
PBS learning media – Ethiopia Going Global

31. Models of Development Structuralist Models Dependency Theory
Regional disparities are a structural feature of the global economy unlike Rostow who said disparities are short term
Neo-Colonialism – MDCs controlling LDCs economically
Gabon – interior forest (plywood producing region) connected by rail with capital; 2nd largest city and capital are not connected by road or rail (deBlij 247)
Old method of industrializing is no longer possible because other factors have changed

32. Dependency Theory
Dependency helps sustain the prosperity of the dominant regions and the poverty of the lesser regions

33. The inner circle is 1990 data, the outer 2003.
How did China’s economic sectors change from 1990 to 2003?
How did India’s economic sectors change from 1990 to 2003?
Which country followed Rostow’s Modernization Model?

34. Tertiary India
Inda is known for call centers – (look up call center if you need to) – Why was India a good place for call centers?
India has priced itself out of call centers – call centers are now moving to less expensive countries.
India has moved to higher skill tertiary jobs, such as
Preparing American tax returns – sometimes if you take your taxes to an American accountant, the tax filing is completed by a qualified, Indian accountant in India. This a good thing because the work is done cheaper and the American accountant has time to work with customers on more difficult accounting situations.
Reading x-rays and images – MRI facilities can let qualified Indian doctors in India read the image and alert your personal doctor of issues.
Medical tourism – When the doctor tells a patient that a kidney transplant will be necessary, the next stop is with the financial advisor. The financial advisor works with the insurance company, looks at your income, etc. and determines the patient’s part of the transplant costs. If the surgery is considered “optional” then the surgery is not scheduled until payment is made. The average cost of a kidney transplant in 2011 was $262,000. But the patient can fly to India, stay in a world-class hospital and save 70-90% Check it out!

35. World-Systems Theory Review… Immanuel Wallerstein
A development theory that includes geography, scale, place and culture in addition to economics
Divide world into
Core
Semi-periphery
Periphery

36. 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

37. Core Periphery Model Core Regions
High levels of socioeconomic prosperity
Dominant players in global economic game
Anglo America HDI .94
Japan and the South Pacific HDI .93
Western Europe HDI .92

38. Core Periphery Model Periphery Poor regions Dependent on the core
Do not have much control over their own affairs
Southeast Asia HDI .71
Middle East HDI .66
South Asia HDI .58
Sub Saharan Africa HDI .47

40. Core Periphery Model Semi Periphery Latin America HDI .78
Regions that exert more power than periphery regions but are
Dominated to some degree by the core
Latin America HDI .78
East Asia HDI .72
Eastern Europe HDI .80

41. Core/periphery Can be applied at the local scale
LA is the core of S. California region
Alaska is in the periphery of the US
Johannesburg is core of South Africa
Can refer to the different level of processes in the same country
Most of the US operates with core processes, however the rural mountain regions of WVa operate with periphery processes

42. Development Indicators
Economic: GNP, PPP (Purchasing Power Parity), per capita energy consumption
Noneconomic: HDI, gender equity, calorie intake

43. Four Dragons Aka Four Tigers or Gang of Four
S. Korea, Singapore, Taiwan, & Hong Kong
Lacked natural resources
Strongly influenced by Japan’s success
Concentrated on handful of manufactured goods
Low labor costs; Sell to MDCs
Focusing on research & hi-tech industries

44. Four Dragons
Aka Four Tigers or Gang of Four anything 4, Asian, & economic
S. Korea, Singapore, Taiwan, & Hong Kong know these places
Lacked natural resources – so couldn’t do Rostow
Strongly influenced by Japan’s success
Concentrated on handful of manufactured goods
Low labor costs; Sell to MDCs – Got into manufacturing cheap, easy to sell to MDCs stuff. Over time, have improved quality. For ex. Japanese cars used to be cheap cars but over time became top of the line. Kia (a Korean company) use to advertise how inexpensive. Now becoming nicer
Focusing on research & hi-tech industries – reinvested profits in research

45. BRIC Brazil, Russia, India, and China
aka “the big four” – these should be the next big economies. All are big & populated
At a similar stage of advanced economic development
There has been a shift away from the G7 economies (Fr, Ger, It, UK, US, Jap, Can)
BRICs have begun meeting to coordinate global economies – similar to EU
Some include South Africa for BRICS

46. GDP

47. 10 Largest Economies (measured in USD)

48. More fun … Mex, Indonesia, S. Korea, Turkey MIKT
Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, S. Korea, Vietnam
MIKT
N – 11 – id by Goldman Sachs as high potential of becoming world’s largest economies – in addition to BRICs
These are the next set of countries to watch – carefully examine the N-11 List. Usually countries wouldn’t be on a list with Bangladesh but this time it is because they are in the right place to develop a booming economy.

49. Millennium Development Goals
Adopted by world leaders during a United Nations summit in the year 2000 and set to be achieved by 2015, the Millennium Development Goals (MDGs) provide concrete, numerical benchmarks for tackling extreme poverty in its many dimensions. The MDGs also provide a framework for the entire international community to work together towards a common end – making sure that human development reaches everyone, everywhere. If these goals are achieved, world poverty will be cut by half, tens of millions of lives will be saved, and billions more people will have the opportunity to benefit from the global economy.

50. Millennium Development Goals
The eight MDGs break down into 21 quantifiable targets that are measured by 60 indicators.
Goal 1: Eradicate extreme poverty and hunger
Goal 2: Achieve universal primary education
Goal 3: Promote gender equality and empower women
Goal 4: Reduce child mortality
Goal 5: Improve maternal health
Goal 6: Combat HIV/AIDS, malaria and other diseases
Goal 7: Ensure environmental sustainability
Goal 8: Develop a Global Partnership for Development

51. Ghana & MDG
In 2005, predicting will not accomplish goals for period.

52. Ghana & MDG Goal Measure ½ Poverty & Hunger Target 2015 – 14%
Underweight children
1992 – 27%; 2003 – 23%
Projected 2015 – 21 %
Universal Education
Target 2015 – 100%
Primary School Enrollment
%; 2003 – 69%
Projected 2015 – 83%
Improve Maternal Health
Target 2015 – 54/100,000 live births
Reduce Maternal Mortality Levels
1993 – 280; 2003 – 230
Projected 2015 – will not be met

53. Africa Rising: Jeffrey Sachs says Ghana's future looks bright
Ghana & MDG
Africa Rising: Jeffrey Sachs says Ghana's future looks bright
Because of good governance in the past, and now oil production, Ghana is likely to reach all of the Millennium Development Goals toward ending extreme poverty and child mortality.
By Clair MacDougall, Correspondent / January 11, 2012
News reports now say Ghana will reach MDG by 2015.

54. Core Periphery Model