Transcript neoliberal counterrevolution: The 1980s school of

Chapter 9 Study Guide: Development
Economic development is the development of
economic wealth of countries or regions for
the well-being of their inhabitants.
Can be defined as efforts that seek to improve
the economic well-being and quality of life for a
community by creating and retaining jobs and
increasing the tax base.
Why give to the poorest people in the
world?___________
Why shouldn’t we give to the
poor?___________
What could be
the
consequences
of not helping
poor countries?
________
Geography’s Slogan: Where? Why
there? Why Care?
A failed (failing) state common
characteristics:
• a central government so weak or ineffective that it has
little practical control over much of its territory
• an inability to provide reasonable public
services
• widespread corruption and criminality
• refugees and involuntary movement of
populations
• sharp economic decline
• the inability to interact with other states as a full
member of the international community.
The term 'failed state' is a term of imprecise
quantitative definition which is often used by
political commentators and journalists
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Development geography is the study of the
Earth's geography with reference to the
standard of living and quality of life of its
human inhabitants.
Geographically, the single most important feature
of economic development is that it is uneven.
High-speed rail in Europe
Inequality in economic development often has a
regional dimension
For example China has huge disparities of wealth
between the rich coastal provinces and the poor
interior.
The Brandt Line is a visual depiction of the North-South
divide, proposed by German Chancellor Willy Brandt
in the 1970s. It approximately encircles the world at a
latitude of 30° N, but dipping south so as to include
Australia and New Zealand in the "Rich North".
The North-South Divide is the socio-economic
and political division that exists between the
wealthy, known collectively as "the North", and
the poorer countries or "the South.“
G8
Although most nations comprising the "North"
are in fact located in the Northern
Hemisphere, the divide is not primarily defined
by geography.
CIA
The global digital
divide is often
characterized as
corresponding to
the North-South
divide.
Economic Structure
The three-sector hypothesis is an economic
theory which divides economies into three
sectors of activity:
primary sector: economic activities that are
concerned directly with natural resources of any
kind (agriculture, mining, fishing, and forestry)
secondary sector: Manufacturing (construction)
activities that transform raw materials into more
usable forms. They add value by making wheat into
flour, copper ore into wire, and silicon into computer
chips, and by assembling sophisticated components
into computers, airplanes, and cars.
tertiary sector: economic activities involving
the sale and exchange of goods and services.
(Post Industrial Society)
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retail, banking,
law, education,
government,
insurance,
health care,
tourism,
accounting,
advertising,
and
entertainment
Primary Activities
– Brown Collar
Secondary Activities
– Blue Collar
Tertiary Activities
– White Collar
Quaternary Activities
– Gold Collar
3 Phases of development
First phase: Traditional civilizations (or
pre-industrial)
Workforce quotas:
• Primary sector: 70%
• Secondary sector: 20%
• Tertiary sector: 10%
This phase represents a society which is
scientifically not yet very developed, with a
negligible use of machinery. The state of
development corresponds to that of
European countries in the early Middle
Ages, or that of a modern-day developing
country.
Second phase: Industrialization
• Workforce quotas:
• Primary sector: 20%
• Secondary sector: 50%
• Tertiary sector: 30%
More machinery is deployed in the primary
sector, which reduces the number of
workers needed.
Third phase: Post-Industrial
• Workforce quotas:
• Primary sector: 10%
• Secondary sector: 20%
• Tertiary sector: 70%
The primary and secondary sectors are
increasingly dominated by automation,
and the demand for workforce numbers
falls in these sectors.
The economic structure of the
economy is the percentage of
each sector.
The United States
economic structure
is something close
to the following
• primary sector less
than 4% of the labor
force
• secondary sector
about 22%
• tertiary sector just
over 74%
Structure of China’s economy(2008):
• agriculture (39.5%)
• industry (27.2%)
• services (33.2%)
Quantitative (numerical)
indicators of development:
social, demographic, and
economic
Social Indicators: Development
indicators based on a country’s success
in meeting the basic needs of its
citizens.
This includes: Education often measured by
literacy (% of people who can read and
write) and number of school years
attended.
Health: nutrition (calories per day, calories
from protein, percentage of population
with malnutrition), population per doctor
etc
Welfare: government assistance to the
unemployed, veterans, elderly, poor,
disabled orphaned, access to clean water
and sanitation etc.
Demographic indicators
(characteristics of a human
population) include life
expectancy, number of children,
population growth,
And infant mortality rate: the annual number of
deaths of infants less than one year of age per
1,000 live births may be the best single index
Reveals: nutrition, education, sanitation, health
Demographic data is used to distinguish
MDCs and LDCs.
Economic Indicators:
Development indicators based on a country’s
economic production (how much), what it
produces, and how it produces. 5 indicators
especially useful in distinguishing between
MDCs and LDCs are GDP per capita,
economic structure (% in primary, secondary
or tertiary), worker productivity, access to raw
materials, and availability of consumer good
(all explained in textbook)
GDP (gross domestic product) is, the total
market value of goods and services
produced within the borders of a country,
regardless of the nationality of those who
produce them.
GNP (gross national product) is the total
market value of goods and services
produced by the residents of a country,
even if they’re living abroad.
So if a U.S. resident earns money from an
investment overseas, that value would be
included in GNP (but not GDP). And the
value of goods produced by foreign-owned
businesses on U.S. land would be part of
GDP (Toyota).
In geography the difference between the two
is not important. Both are used to compare
countries.
The overall GDP or GNP of a country is not
very useful because countries have such
different populations. Therefore we divide
the overall GDP/GNP by the population
and get a per person number which is
called per capita. This makes it much
easier to compare how well people are
doing in different parts of the world.
Total GDP
However, using GDP/GNP per capita also has
many problems.
• It does not take into account the distribution
of the money which can often be extremely
unequal as in the Brunei where oil money
has been collected by the monarchy and has
not flowed to the people of the country.
• GNP does not measure whether the money
produced is actually improving people's lives
Gini coefficient is commonly used as a
measure of inequality
of income or wealth
• The figure rarely takes into account the
unofficial economy, which includes
subsistence agriculture and cash-in-hand or
unpaid work (Informal sector), which is often
substantial in LEDCs.
• In LEDCs it is often too expensive to accurately
collect this data and some governments
intentionally or unintentionally release
inaccurate figures.
• The figure is usually given in US dollars which
due to changing currency exchange rates can
distort the money's true street value
Therefore, GDP/GNP is often converted
using purchasing power parity (PPP) in
which the actual comparative purchasing
power of the money in the country is
calculated.
This purchasing power exchange rate
equalizes the purchasing power of different
currencies in their home countries for a
given basket of goods. Using a PPP basis
is arguably more useful when comparing
differences in living standards on the whole
between countries because PPP takes into
account the relative cost of living, rather
than just a GDP/GNP comparison.
ppp
Correlating economic, demographic and social
indicators show that different indicators of
development are associated with each other TQ
A major health care problem for people in
Africa and Asia low literacy rates. TQ
Composite or qualitative indicators combine
several quantitative indicators into one
figure and generally provide a more
balanced view of a country. Usually they
include one economic, one social and one
demographic indicator.
The Human Development Index (HDI)
is an index combining measures of:
•
•
•
•
life expectancy
literacy
educational attainment
GDP per capita
The basic use of HDI is to rank countries(0-1)
A HDI between
• 1 and 0.8 is considered high (good)
• 0.8 and 0.6 is considered medium
• 0.6 to 0.4 is considered low.
Pattern
Gender Empowerment Index
1. women’s incomes
Why do women make less than men in the US?
Gender Differences in School Enrollment
2. participation in the labor force as
administrators, managers, and
professional and technical positions
3. % of parliamentary seats held by women.
• Boardrooms in emerging markets are
increasingly populated by women. In China,
women account for 32 percent of senior
managers, compared with 23 percent in the
U.S. and 19 percent in Britain. In India, 11
percent of CEOs are women, compared with 3
percent of Fortune 500 bosses in the US.
Women in the US Congress
•
•
36 women have been or are currently serving as
the governor of a U.S. state. 7 are currently
Take home FRs
Forces affecting the rate of economic
development
The factors affecting the rate of economic
development may be political, social,
physical or historical.
Another way to look at the forces affecting
economic development is to consider
external forces, which are forces affecting
the country from elsewhere, and internal
forces, which are factors operating from
within the country.
External forces affecting the rate of
economic development:
• culture contact played a significant role in economic
development. For countries that were colonized by
European powers, colonization brought mixed
blessings. On one hand, many resources were
exported at very low prices with few direct benefits for
the colony. On the other hand, transport and other
infrastructure were often built. Of course, the
infrastructure was designed to help the colonial power
rather than the local population, and so railways (to
take one example) were often built to the sites of
mines or other resources rather than to centers of
population. Notwithstanding these problems, culture
contact inevitably brings new ideas to a country, some
of which may be beneficial in speeding economic
development.
• Trade between countries allows countries
to exchange resources and products it has
in abundance for other goods that it lacks.
In this way, trade helps most countries to
advance, presuming the terms of trade are
negotiated fairly for all parties.
• Japan lacks most natural resources, but
through trade it has overcome these
shortcomings and has developed economically
to a very high level.
•
Financial flows into a country can help economic development
by providing funds for investment that the country itself lacks.
These funds allow factories to be built and resources to be
developed, providing employment and taxation revenue for the
government that can be used to provide services and build
infrastructure elsewhere in the country. Of course, unless the
financial flow is a gift in the form of aid, overseas investors
always demand a profit on their investments, so the other side
of financial flows is the outflow of profits and interest payments.
By the early 2000s, the need to repay debt on borrowings and
the profits on investments meant that the net flow of money in
the world was from LEDCs to MEDCs.
• When foreign investment occurs in a country, it
is often accompanied by an inflow of new
technology, leading to technological change,
new techniques and ways of doing things.
Provided that the technology is appropriate for
the country, this usually helps to encourage
economic development.
• technology which is suitable for an MEDC, such
as a labor saving machine, will not be
appropriate for an LEDC, which would have to
find scarce money to buy a machine to replace
labor, which is abundant.
• Appropriate technology for an LEDC will
therefore be cheap, and will allow production
processes to remain fairly labor intensive.
• Transnational corporations can play an
important role in LEDCs these days. Like
colonization, they can be a mixed blessing for
LEDCs, and indeed some people believe that
transnational corporations are a new form of
colonialism in which corporations rather than
countries oppress less powerful groups of
people, but do so economically rather than
politically. Benefits that transnational
corporations can bring to LEDCs include the
investment funds and the new technology.
• Bilateral (between two countries) and
multilateral (between several countries) trade
agreements can assist the economic
development of countries within the agreement,
but may slow the economic development for
countries outside the agreement.
• One of the most successful multilateral
agreements for promoting economic
development has been the formation of the
European Union. The European Union has
resulted from a series of multilateral
agreements over a period of more than half a
century.
• Other significant multilateral agreements
include NAFTA (the North American Free Trade
Association) and ASEAN (the Association of
South East Asian Nations).
Internal forces affecting the rate of
economic development:
• Infrastructure refers to the services and facilities
needed to support productive activities, and as
well as transport, examples include
telecommunications, electricity, water, port
facilities and other public services. It is a
general principle that countries with a high level
of infrastructure will develop more rapidly than
countries that do not have these facilities,
everything else (such as political systems,
levels of corruption etc) being equal.
• The political systems and planning
mechanisms in a country also influence the rate
of economic development. As a generalization,
economies with open policies towards trade
and investment (such as Hong Kong, South
Korea, the United States and Australia) have
faster and more stable economic growth than
economies with closed or less transparent
political systems (such as North Korea, Russia
and Saudi Arabia).
• Rapid population growth is considered by
some people to slow down economic
development, although opinions differ on this
point. Malthusians (believe there are too
many people) argue that each extra person
is a consumer, taking a share from a fixed
pool of resources.
• On the other hand, some argue that each extra
person is a productive resource that produces
more than it consumes.
• There is no clear correlation between the rate of
population growth and the rate of economic
development.
• At first sight, we would expect that availability of
natural resources would significantly affect the
rate of economic development. We would
expect that the more natural resources a
country possesses, the faster would be its rate
of economic growth. In fact, there are examples
of wealthy countries with very few natural
resources (such as Japan, Hong Kong and the
Netherlands) as well as wealthy countries with
abundant resources (such as USA, Germany,
Canada and Australia).
• Similarly, there are poor countries with
abundant natural resources, such as Papua
New Guinea, Myanmar, Venezuela and Nigeria
— such countries either do not have the finance
to develop the resources or corruption is so
great that the rate of economic development is
impeded.
• Internal capital formation means the ability
of a country to find its own funds to invest
in development projects. People in LEDCs
typically earn low incomes, forcing them to
spend a large proportion of their income
on basic necessities such as food, clothing
and shelter. This leaves very little surplus
for savings, and therefore banks have very
little funds available for investment.
• This creates a cycle of impoverishment, known as the Vicious
Cycle of Poverty. In summary, low incomes lead to low
investment, which lead to low levels of savings, which lead to
low levels of productivity, which perpetuate low incomes.
Unless some way can be found to break the vicious cycle of
poverty, it becomes self-perpetuating.
• In cases where the vicious cycle of poverty is broken
successfully, the foundation of sustainable economic
development is usually agriculture.
• In LEDCs, a large proportion of the population are
farmers. Therefore, if development is to have an
impact on most of the population, it must have an
impact on the agricultural sector of the economy.
A sound farming sector is needed:
• to provide a food surplus to feed city dwellers
• to provide surplus labor for growing manufacturing
and service sectors of the economy
• to enlarge exports
What are LEDCs like?
•
Every Less Economically Developed
Country is unique. Nonetheless, LEDCs
do share some common characteristics,
which may include some or all of the
points listed below.
A very high proportion of the population
is involved in agriculture, usually about
70% to 90%.
•
•
People are often underemployed and/ or
involved in the informal sector.
There is little income per person, and so many
people exist near the subsistence level. The
major proportion of people's expenditure,
therefore, is on food and necessities. Savings
are low, which means that investment in new
equipment and infrastructure is also low. In
severe cases, malnutrition may result at a
personal level.
•
Most exports comprise a narrow range of
primary products (agriculture and mining
products, obtained directly from the ground),
such as foodstuffs and minerals. Examples
include sugar, cocoa, timber, rubber and tin.
This causes long-term problems as the prices
of primary products have tended to fall when
measured against imports of secondary
(manufactured) and tertiary (services)
products. Over-dependence on one or two
primary product exports makes LEDCs
vulnerable to shifts in the global economy.
•
Housing and other services, such as
education, sanitation and transport are
inadequate
•
Levels of technology are low, tools and
equipment are limited, simple and expensive
(unless hand made using traditional
technology and local materials). There is an
emphasis on animate energy — animals and
people — rather than inanimate energy,
based on energy sources such as oil or
electricity.
•
•
Many farms are very small in area and
dispersed, as holdings are continually subdivided as population increases. This makes
the use of machinery almost impossible.
Depending on the stage of the demographic
transition model reached, birth rates tend to
be high, and if death rates have fallen with
medical advances, population growth rates
may be high also.
•
•
•
•
There is overcrowding in many rural areas.
There is high illiteracy and use of child labor
Governments are often unstable, coups are
relatively common, especially in South
America and to some extent Africa, and quite
a number of LEDCs are controlled by military
governments.
People are very dependent on their natural
environment. People tend to live within the
confines of their environment as they have
limited means to change their surroundings.