Transcript Models of Development ppt

Road to Development
• Comparative vs. Absolute Advantage
– http://www.youtube.com/watch?v=Vvfzaq72w
d0
• 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?
• 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?
Schools of Thought
• Basketball – man-to-man or zone?
• Goals of education – prepare everyone for
college or different options of technical classes
• 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
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
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
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
Rostow - Stages of Growth
1. Traditional Society
•
Village in Lesotho. 86% of the resident workforce in
Lesotho is engaged in subsistence agriculture.
Copyright: Tracy Wade, http://www.sxc.hu/
Characterised by
– subsistence economy
– high levels of
agriculture and labor
intensive agriculture
– Wealth allocated to
nonproductive
activities (religious,
military)
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, http://www.sxc.hu
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, http://www.sxc.hu
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, http://www.sxc.hu
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, http://www.sxc.hu
USA Path to Development
• Stage 5: early 20th century
• Stage 4: late 19th century
• Stage 3: middle of 19th century
• Stage 2: first half of 19th century
• Stage 1: prior to independence
• Possible 6th stage – Postindustrial
– Service replaces industry
– Information replaces energy as key resource
• Origin of common use “industrialized”
country
• All countries follow the same model of
development
– For countries that have developed in modern
times – only China has followed THE model of
development
Criticisms
• Western bias that urban and industrial = a
better life. Development does not
necessarily lead to high consumption, can
mean social welfare
• 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)
Criticisms
• Does not account for
– Colonialism
– Culture
– Deindustrialization
• Increased dependence on MDCs – when
concentrating resources in a “takeoff”
industry, then buy necessities from MDCs
Balanced Growth
• through Self-Sufficiency
• A country should spread investment as
equally as possible across all sectors of its
economy and in all regions.
– Incomes in rural areas keep pace with urban
incomes
– Businesses remain independent of foreign
corporations
– Limit imports through tariffs and quotas
• 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
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
International Trade Approach
• Some countries have switched from selfsufficiency 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
• Dollarization: abandoning existing currency in
favor of an industrialized countries (In 2001, El
Salvador abandoned the colon and now uses
American dollars)
International Trade Approach
• Foreign Direct Investment (FDI) –
investment made by a foreign company in
the economy of another country
• 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
International Trade Approach
International Trade Approach
What is the term used for the factories located here?
Models of Development
• Structuralist Models
– Dependency Theory
– Regional disparities are a structural feature of
the global economy
• Neo-Colonialism
– 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
Dependency Theory
• Dependency helps sustain the
prosperity of the dominant regions and
the poverty of the lesser regions
• Based on generalizations that pay little
attention to regional differences in
culture, politics, and society
World-Systems Theory
• Immanuel Wallerstein
• A development theory that includes
geography, scale, place and culture in
addition to economics
• Divide world into
– Core
– Semi-periphery
– Periphery
Three Tier Structure
Core
Periphery
Processes that incorporate higher
levels of education, higher
salaries, and more technology
* Generate more wealth in the
world economy
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
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
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
Core Periphery Model
• Semi Periphery
– 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
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
Development Indicators
• Economic: GNP, PPP (Purchasing Power
Parity), per capita energy consumption
• Noneconomic: HDI, gender equity, calorie
intake
Development Indicators
Development Indicators
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
BRIC
• Brazil, Russia, India, and China
• aka “the big four”
• 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
GDP
10 Largest Economies
(measured in USD)
More fun …
• MIKT
• N – 11 – id by
Goldman Sachs
as high potential
of becoming
world’s largest
economies – in
addition to BRICs
• Mex, Indonesia,
S. Korea, Turkey
• Bangladesh,
Egypt, Indonesia,
Iran, Mexico,
Nigeria, Pakistan,
Philippines,
Turkey, S. Korea,
Vietnam
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.
Millennium Development Goals
The eight MDGs break down into 21 quantifiable targets that are
measured by 60 indicators.
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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
http://www.undp.org/mdg/basics.shtml
Ghana & MDG
Ghana
• Ghana, is a west African country,
bounded on the north by Burkina Faso.
• On the east it is bounded by Togo
• On the south it is bounded by the
Atlantic Ocean, and on the west by
Côte d'Ivoire.
Accra
• The capital city of Ghana is Accra
• Total population of Ghana is
approximately 23,382,848
• Languages spoken include Akan, Ewe,
Twi and English
Cassava
Tree
Cedi
• The money used in Ghana is the New
Ghana Cedi. 1 Ghana Cedi is worth
about 78 cents in U.S. dollars.
Democracy
• Ghana is a democratic nation with a
history of peaceful transfers of power.
Young people can vote at age 18 years of
age.
• Formerly a British colony known as the
Gold Coast, Ghana was led to
independence by Dr. Kwame Nkrumah
• On the 6th of March, 1957, Ghana
became the first sub-Saharan colonial
African nation to achieve
independence.
Empire of Ghana
• The country is named after the ancient
Sudanic empire of Ghana, from which the
ancestors of the inhabitants of the present
country are thought to have migrated.
Gold and Ghana
In medieval times, Ghana was the
source of much of the gold that
found its way across the Sahara to
North Africa and Europe.
Gold is still an important part of
Ghana’s economy but today Ghana
is known more for its cocoa .
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Cocoa from Ghana is considered to be
among the finest cocoa in the world.
Most of Ghana’s cocoa production is on
small farms of 4 to 5 acres.
From the 1900s cocoa growing spread in
Ghana.
720,000 cocoa farmers in
Ghana
• Today there are currently close to
720,000 cocoa farmers in Ghana and
approximately 2 million in West Africa.
West Africa supplies 70% of
the world’s cocoa and Ghana
is the second largest
producer.
Price of cocoa on the world market
• The price of cocoa on the world market
changes frequently. Going up and down.
The changing price of
cocoa on the
international market
means cocoa farmers
have no long-term
security.
Fixed Scales
On the local scene,
farmers face
additional problems.
They are often
underpaid by local
cocoa buyers using
‘fixed’ scales that
show a lower
reading than the
actual weight of their
cocoa beans.
Bounced Checks
Sometimes they are paid with checks that
bounce or vouchers which the farmers
have trouble cashing.
• The problems Ghanaian cocoa
farmers face globally and locally
often push their incomes below the
poverty line.
• They lack the money they need to
buy, tools, fertilizers and pesticides
to grow cocoa.
• They also lack the money they need
to pay for clothes, medical care, and
school fees for their children.
Rich get richer
• The experiences of Ghanaian cocoa
farmers are like those of many farmers all
over the world.
• They are caught in a trading system
that benefits the multinational
companies based in the richest
countries.
• They are at the mercy of local people who
cheat them.
Farmers’ Cooperatives
• Farmers in Ghana are forming ‘Fair Trade’
cooperatives to solve the problems they
face.
Kuapa’s Mission
Kuapa Kokoo (Fair Trade Cooperative)
works to:
• to empower farmers in their efforts to
gain a dignified livelihood
• to increase women's participation in all
of Kuapa's activities
• to develop environmentally friendly
cultivation of cocoa
Buy Fair Trade
Chocolate
• You can support farmers and their
families by buying Fair Trade
chocolate.
• Fair prices for chocolate bars means
a better life for farmers and their
families.
Cote d’Ivoire
Ghana & MDG
• Read Ghana MDG articles
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
1999 - 58%; 2003 – 69%
Projected 2015 – 83%
Improve Maternal Health Reduce Maternal Mortality Levels
Target 2015 – 54/100,000 1993 – 280; 2003 – 230
live births
Projected 2015 – will not be met
Core Periphery Model