Transcript Unit 3, topic 5: Bridging the Development Gap

6GEO3 Unit 3 Contested Planet
Topic 5: Bridging the Development Gap
What is this topic about?
• ‘Bridging the Development Gap’ should be seen as complimenting the
‘Superpower Geographies’ topic
• The two topics represent two sides of the same coin – the rich and
developing on one side, the poor and underdeveloped on the other
• The topic explores the causes and consequences of the development
gap
• The last section of this topic focuses on solutions – can the ‘gap’ be
narrowed?
CONTENTS
1. The causes of the gap
2. The consequences of the gap
3. Bridging the gap
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1. The causes of the gap
• The development gap relates
to global inequality
• Around 2.8 billion people live
on under $2 per day
(‘moderate poverty’)
• Some 1.1 billion people live on
less than $1.25 per day
(‘extreme poverty’)
• Over time a greater
proportion of wealth has
concentrated in the hands of
the richest 20% of people,
compared to the poorest 20%
of people (see graph)
Since 1980, the percentage of
people living in extreme poverty
has fallen from 40% to 20% of
world population, but because of
population growth the total
number of people is extreme
poverty is still very high.
Measuring development
• Measuring development levels
is a challenge.
• Traditionally development has
measured using economic data
such as GDP or GNI per capita.
• These measures fail to
recognise:
1. Income distribution
2. The local value of money
3. The non-money economy e.g.
barter and exchange
• It is also important to recognise
that development has social
and quality of life aspects
• Measures such as life
expectancy, education level,
access to sanitation are
important
This basket of goods costs 112 Indian Rupees in
India, the equivalent of £1.50*. To buy the same
basket of goods in the UK would cost around £6.
The difference in how much goods and services
really cost, is why PPP (purchasing power
parity) GDP income is used rather than ‘raw’
GDP.
Using raw GDP per capita average income in
India is about $1000, but PPP GDP per capita
income is $2800
*data for Dec 2009
• As the development cable model
(right) shows, development is a
multi-faceted process
• At its core is economic
development, but to achieve real
progress social, political,
environmental and personal
development is also needed.
• Recognising the complex nature of
development is why development
is often measured using an index,
which combines a range of data
• Indices are considered more
accurate than single data points
such as GDP per capita.
Physical Quality of Life Index
(PQLI)
Life expectancy + Literacy rate +
Infant Mortality rate
The Human Development Index (HDI)
Life expectancy at birth + Literacy rate
+ Enrolment rate + GDP per capita PPP
The Millennium Development Goals
• The MDG were adopted by the UN in
the year 2000
• The MDG are a global attempt to
measure, and actively improve,
quality of life for the poorest
people
• There are 8 Goals, with 21 targets
within these. The target date to
achieve the MDG is 2015
• The most famous Goals are
1.
2.
3.
4.
Halve the proportion of people living on less
than $1 a day
Halve the proportion of people who suffer
from hunger
Achieve universal primary education
Reduce by two thirds the under 5 mortality
rate
• Progress has been patchy, especially
in Africa and South Asia were the
problem tend to be most acute.
Explore MDG progress and annual
reports at
http://www.un.org/millenniumgoals/
The development gap
•
•
•
•
•
The geography of the development gap is more complex than a simple ‘NorthSouth divide’
Latin America has HDI levels similar to eastern Europe; China’s HDI and some
others in SE Asia are relatively high
South Asia has a concentration of levels below 0.6
Level in the Middle East are relatively high, although not in Yemen, Syria and Iraq
The picture for Africa is very complex, with the extreme north and south having
decent HDI levels, but some regions with shockingly low numbers
Core and Periphery
• Some countries remain
largely unconnected to
the modern globalised
world.
• This is especially true in
Sub-Saharan Africa , which
remains very much part of
the global periphery (see
map)
• Other peripheral regions
include north South Asia,
the Andean region, parts
of East and Central Asia.
• Growth areas (upward
transition) are much
better connected to the
global core areas.
Sub-Saharan Africa has a range of factors which make
development very challenging; these include debt
levels, landlocked states, conflict, corruption, Aids/
HIV, malaria, lack of infrastructure and
communications, low education levels, drought and
many others
Global Players
• There are a range of players involved in the development process:
Player
Role
World Bank /
IMF
These two IGOs lend money to the developing world – essentially funding
development, and as part of this process guide economic policy (the IMF). Much
of the developing world’s debt is owed to the IMF and WB.
TNCs
Invest in the developing world e.g. building factories; Foreign Direct
Investment tends to flow to low cost locations, but where people are educated
and skilled; Africa’s share of FDI is therefore small.
United Nations
Monitors the MDG, but has many component organisation which focus on
development (UNDP), health (WHO), food and farming (FAO) and environmental
issues (UNEP); often involved in disaster relief as well as longer term aid.
Governments
Developed world governments provide funding for the UN, IMF and WB. They
also provide bi-lateral aid the developing world in the form of Official
Development Assistance (ODA). Developing World governments manage their
countries path to development.
NGOs
Charities and not-for-profit organisations provide aid to the developing world,
often in a smaller, more localised way compared to Governments and IGOs.
Some NGOs receive government funding
Individuals
As consumers and voters, individuals can alter government policy both in the
developed and developing world; community led development in becoming
more common; developed world consumers may support fair trade.
Trade and development
• Trade is important to
development, because it
generates income.
• Least developed countries play a
limited role in trade:
• LDCs tend not to be part of trade
blocs, so their exports are subject
to tariffs
• LDCs often export commodities,
the price of which fluctuates
wildly (see graph)
• Cheap commodity export earn
few Dollars, but Dollars have to
be used to import manufactured
good – this creates poor terms of
trade (see picture)
• Much of the value of the products
we buy is added outside the
country which supplied the raw
materials
The 49 least
developed
countries
account for
only 0.9% of
world trade,
but have over
700 million
people
2. The consequences of the gap
• The development gap means
that poverty is common in
least developed countries,
especially in Sub-Saharan
Africa
• In many countries males still
have more access to
education than females, and
this has an impact on
opportunities later in life
(see diagram for Pakistan)
• In some situations, such as
the Indian Caste system (still
prevalent in rural India – see
pyramid), society has built
inequality into the social
system
The African countries shown all
have infant mortality rates of
over 80/1000 live births, and
under 5 mortality of over
100/1000; Sierra Leone’s 2008
rates were 160 and 278
Megacities
• Poverty and lack of
opportunity is often most
acute in rural areas*
• However, developing world
megacities contain growing
concentrations of urban
poverty
• Some 1 billion people live in
urban slums, likely to grow to
2 billion by 2030
• Slums often have:
A UN-Habitat report in 2006 stated there was
“concrete evidence that there are two cities within
one city – one part of the urban population that has
all the benefits of urban living, and the other part,
the slums and squatter settlements, where the poor
often live under worse conditions than their rural
relatives.”
Poorly built, shack housing
Limited and expensive water supply
Limited sanitation
Informal, unreliable employment
Lack of rubbish collection
Social problems such as disease,
crime
Few services such as education and
*see the rural urban data for Pakistan
health
and Guatemala on previous and next slides
Ethnic and religious dimensions
• Ethnic and religious minorities
often suffer worse poverty than
the wider population
• The data for Guatemala show a
large different between poverty
rates for Native Indians and the
White Hispanic population
• Such differences can result from
subtle prejudice, and direct
discrimination and persecution
• In South Africa, the long history of
apartheid has left a legacy of stark
differences between black and
white populations
• Often different ethnic groups live
in different geographical areas
e.g. white gated communities
versus black townships in South
Africa
2001 Census
Black South
Africans
White South
Africans
Under 15 yrs old
34%
19%
No education
22%
1%
Households with a
telephone
31%
95%
Adult mean income
$1600
$8800
East Timor
• East Timor (Timor-Leste) was a
Portuguese colony which gained
independence in 1975, and was
invaded by Indonesia in the same
year.
• Indonesia occupied East Timor
until 1999; East Timor regained its
independence in 2002.
•
•
•
•
•
The Indonesian campaign against East
Timorese resistance fighters involved
forced resettlement of 1000s of people
into camps
The death toll from fighting was high
Portuguese was banned
Around 150,000 Indonesians were
settled on East Timor as part of the
Transmigration Programme
Most businesses were taken over by
Indonesians
East Timor
Indonesia
Colony of
Portugal
Holland
Religion
Catholic
Muslim
Ave Income
$2300
$4000
HDI
0.49
0.73
Indonesia’s occupation created a
dual population of poor Timorese
and better off Indonesian migrants,
reflected in the post-independence
differences in HDI and income
Poverty reduction at a price?
• The pressing need to reduce
poverty has led some
countries to ‘go for growth’
• Both China and India (and the
‘Asian Tigers’ before them)
have opened their economies
to world trade and
investment
• This has created
employment, raised incomes
and reduced poverty
(estimates of
extreme poverty)
1980
2005
India
45%
25%
China
60%+
10%
Social and Environmental Issues
•Increased rural –v- urban inequality
•Mass rural-urban migration and rise
in urban slums
•Increased air and water pollution
from industry
•Stress on forests and water supply
as resource demands rise
•Possibility of rising debt; financial
crises
•Social problems – urban crime and
disease
•Worker exploitation and human
rights abuses
•Breakdown of traditional family
structures and community support
3. Bridging the gap
• How should the development gap be bridged?
• This question is important because there are a number of
different approaches that might be taken
• The choice of approach is influenced by political viewpoint
Neo-liberal /
Capitalist
Marxist/ Socialist
Populist
Grassroots
China, Asian Tigers
Cuba, Kerala (India)
Venezuela / Latin
America
Community based
•Market led
development,
following the
‘Modernisation Theory’
of WW Rostow
•Stressing industry and
infrastructure, free
trade and attracting
foreign direct
investment to create
jobs and raise
incomes.
•Breaking free of
capitalism and profit.
•State ownership and
planning so that profits
from industry and uses
for health and
education; usually
involves wholesale
land reform .
•State control and
limited involvement in
world trade and TNCs
•Charismatic ‘man of
the people’ leaders
create a ‘them and us’
discourse promising
social equality and
using policies that
appeal to the pockets
of ordinary people
•Critics state populism
is directionless and
leads to poor economic
decision-making
•Small-scale,
community focussed
development often
aiming to meet basic
needs rather than
hugely improve
incomes
•Often involves local or
international NGOs
who provide some
funding and other
support.
Strategies
• Development projects are often characterised as either
‘top-down’ or ‘bottom-up’: (see the next slide for examples)
Bottom up
Top Down
Scale
Small; based on one community or
area e.g. a valley
Large; often part of national planning
aims
Leadership
Community and NGOs; partnership
arrangements
Government and government agencies;
construction and engineering TNCs
Funding
source
Local people and NGOs; donations or
earned income recycled into the
community
Government, via multilateral aid (WB /
IMF) or bilateral aid; private
investment
Aims
Meeting basic needs of food, health,
education and water; small
improvements in income
Meeting national needs in terms of
energy or water supply, or transport;
profit
Technology
Intermediate / appropriate
Hi-Tech
Types of
project
Food production, water supply, small
scale renewable energy
Electricity, transport, industry and
infrastructure
Winners
Local people; the environment
Industry, urban dwellers, TNCs
Losers
Usually are none
Environment, rural people
• These three projects
show contrasting
strategies.
• ‘A’ is a small-scale,
bottom-up intermediate
technology project
• ‘C’ is a classic ‘topdown’ ‘big project’ with
clear winners and losers
• ‘B’ is less easy to
pigeon-hole as it is a
national scheme, hitech, but aimed at the
poorest and led by an
NGO with a private
partner
Aid
• Aid means assistance given to
the developing world
• Aid can be in the form of
money, food, goods, advice and
technical assistance
• Aid comes from a variety of
sources (see diagram).
• Development Aid given by OECD
countries is termed Official
Development Assistance (ODA)
• An UN target of OECD countries
giving 0.7% of their GDP as ODA
has existed for 40 years, but few
countries actually give this
amount (2006 data):
OECD average = 0.45%
USA = 0.17%
UK = 0.52%
Sweden = 1.02%
Multilateral Aid. Provided
by IGOs such as the
World Bank and IMF.
Often in the form of
loans.
Bilateral aid.
From one
government to
another; it is
often ‘tied’
i.e. for
specific
projects or
policies
Types
of Aid
Emergency relief. Given
by NGOS, IGOs and
Governments as short
term relief from a
disaster.
NGO aid.
Given by
Oxfam,
CAFOD etc ,
using ,in part,
donations
from the
public.
Investment
• Flows of money to the developing
world may be in the form of aid, but
investment is important
• When companies and TNCs invest in
the developing world this flow is
called Foreign Direct Investment
(FDI)
• FDI is motivated by profit
• FDI is used to set up factories fund
construction in the developing world
• Most FDI flows towards NICs and RICs
because they have a skilled
workforce, and large markets
• There are question marks over the
environmental and social value of
FDI is relation to pollution and
worker rights
Governments use Export Processing Zones
(EPZs)and Free Trade Zones (FTZs) to help
attract FDI. China has over 50 of these. In
these zones foreign investors receive
special tax breaks, rents are low and unions
are often banned.
The top 10 developing world locations for FDI in 2007
(in $ millions).
Notice the lack of least developed countries in the
list
China & Hong Kong
1,511,000
Brazil
328,000
Mexico
266,000
Turkey
146,000
Chile
106,000
South Africa
93,000
Thailand
86,000
Malaysia
77,000
India
76,000
Saudi Arabia
76,0000
• Some of the least developed
countries face stark development
choices
• In order to qualify for debt relief
under the HIPC scheme they must
undertake ‘structural adjustment
policies’ (SAPs)
• Critics argue that World Bank and
IMF sponsored SAPs and HIPC are
simply another way of OECD
countries controlling the least
developed world
• Others say Washington Consensus
reforms open countries and workers
up to exploitation by TNCs
• The counter argument is “Look at
China”
The Washington Consensus
This is a set of economic reforms which the
WB and IMF advise developing nations to
undertake as part of a SAP to qualify for
debt relief, and to help development. The
reforms include:
•Cutting public spending
•Currency devaluation in some cases
•Removal of import / export barriers
•Opening up to FDI
•Removing subsidies
•Privatisation and deregulation
The aim of these policies is to help a
country enter the global economy and
benefit trade.
Fair trade
• There are alternatives to FDI and Free
Trade
• ‘Fair-trade’ is perhaps the most well
known
• Fair-trade coffee, cocoa, cotton and
tea farmers receive a ‘fair price’ for
their produce, above market prices.
• The extra money improves income and
some moneys is invested in community
health and education projects
• Fair trade has grown and spread, but
how much difference does it actually
make?
•Fair Trade coffee price = $1.55 per lb,10% above market price.
• Growers get 50¢ per lb. after Fair Trade cooperative fees, taxes
and farm expenses.
•Most farmers earn $1,000 ($2.75 per day).
• According to Fair Trade researchers at the University of California,
the price needed for farmers to rise above subsistence level is more
than $2 / lb.
In 2008 fair-trade coffee
sales were $1.75 bil of
the global $70 bil
market; only $5 bil of
that $70 bil went to the
developing world
Development futures
• Bridging the development Gap is a story of both good and bad
news:
Good news
Bad news 
o In some countries, such as India and
China, the gap has narrowed
o Debts have been reduced fro some HIPC
countries, possibly giving them a chance
of a new start
o Aid in 2008 was at record levels and
many OECD countries seem serious about
the MDG
o Some initiatives such as Fair Trade have
helped, and NGOs often make a difference
with bottom-up community led projects,
but these need to be spread much more
widely
o Progress has been made with some
diseases such as Aids and Malaria
o In regions such as Sub-Saharan Africa
little progress has been made and the gap
has widened
o Many African nations will fail to achieve
their MDG targets
o The 2008-09 recession may have tipped
up to 200 million people back into poverty
and hunger, reversing progress
o Aid may be less of a priority in the next
decade as OECD countries struggle with
their own financial problems
o Corruption, conflict and bad governance
still bedevil may LDCs
o Neo-colonial relationships persist