Transcript Ch. 10 and 14

Ch. 10 and 14
Development and Globalization
GNP vs GDP vs. GNI
• GNP- Gross National Product
• Total value of all goods and services produced
by a country’s economy in a year
• Includes all products produced by citizens of
a country, whether they are located within a
country or not
• Example- McDonald’s, an American company,
food made and sold in Japan counts towards
our GNP, not Japan’s
• GDP- Gross Domestic
Product
• Total value of all goods and
services produced within a
country’s borders in a year
• Example- the McDonald’s in
Japan counts towards
Japan’s GDP, not ours
• GNI- Measure of the value
of what is produced within
a country plus income
received from investments
outside of the country.
• Most Common
Measurement Used Today!
• Usually divide by total
population to get per capita
GNI.
• -Big gap between rich and poor
countries
• -Use GNP per capita as one
measure of wealth
• USA- $37,610
• Japan- $34,510
• Luxembourg- $54,430
• India- $2880
• Types of Economy:
• Formal- Legal economy regulated
by gov’ts
• Informal- illegal or uncounted
economy that gov’ts don’t
monitor or tax
• Items not included in GDP, GDP,
or GNI:
• Secondhand sales- garage sale,
used car
• Illegal products- drugs,
prostitution
• Intermediate products- tires on a
new car, flour in baked bread
Annual GDP per Capita
Fig. 9-2: Annual gross domestic product (GDP) per capita averages over
$20,000 in most developed countries but under $5,000 in most less
developed countries.
Measuring Development
• Developed Countries- high levels of
urbanization, industrialization and a high
standard of living
• Underdeveloped Countries- opposite end of
the development scale
• Negative economic and social conditions, low
per capita income, poor nutrition and health
care
• -Development can be measure by GNP index
-using GNP index can be controversial
because:
• Problem with the reliability of data
• A GNP can seem high (Kuwait) but may not reflect
development
• Doesn’t reflect the standard of living of the average
citizen
• Only accounts for formal transactions
• Doesn’t account for side effects
–
–
–
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Resource depletion
Environmental pollution
Energy efficient devices will lower GNP
Harmful products cause an increase in other goods and
services (example- cigarettes increase health care)
Alternate Measures of Economic
Development
• Occupational structure of the labor force.
– High % in agriculture=not developed
• Productivity per worker
– Total production  labor force
• Consumption of Energy per person
– High usage of electricity=highly developed country
• Transportation and communication facilities per person
– Infrastructure per person
– Roads, telephones, airlines, TV (etc
• Consumption of manufactured metals per person
– Steel, copper, aluminum
• Dependency ratio
– # of old and young people in a population that must be supported by
100 employed people
• Social indicator rates (statistics such as:)
– Employment
– Literacy
– Infant mortality
– Life expectancy
– Caloric intake per person
– % of income spent on food
– amount of savings
China vs USA- Taken from National
Geographic, March 2004
• some countries come out in the same position no
matter which measure is used
• none of these approaches puts a clear dividing line
• more of a continuum- some countries are in a better
position than others
See Attached Continuum Line
-began using the term “developing”
• underdeveloped sounds negative (poor)
• developing has replaced underdeveloped
Human Development Index
Fig. 9-1: Developed by the United Nations, the HDI combines several
measures of development: life expectancy at birth, adjusted
GDP per capita, and knowledge (schooling and literacy).
Telephones per Population
Fig. 9-4: Mean telephone lines per 1,000 persons, 2002. MDCs have
several dozen phone lines per 1,000 persons, while the poorer
developing countries may have less than 10.
Student-Teacher Ratios
Fig. 9-5: Students per teacher, primary school level. Primary school teachers
have much larger class sizes in LDCs than in MDCs, partly because
of the large numbers of young people in the population (Fig. 2-15).
Persons per Physician
Fig. 9-6: There is a physician for every 500 or fewer people in most
MDCs, while thousands of people share a doctor on average in
LDCs.
Calories per Capita
Fig. 9-7: Daily available calories per capita as percent of requirements. In MDCs,
the average person consumes one-third or more over the required
average minimum, while in LDCs, the average person gets only the
World Bank Income Groups
• 4 Categories
• Low-income economies- 56 countries
• Many in Africa and Asia (only 4 in the Western
Hemisphere: Haiti, Honduras, Guyana, Nicaragua)
• Middle-income economies- most are found in Middle
and South America
• Lower-middle-income economies- 47 countries
• Upper-middle-income economies- 18 countries
• High-income economies- oil rich nations in SW Asia
and countries such as:
• USA, Canada, Australia, Japan, Western Europe
Models of Development
• liberal models- believe all countries are capable of
development
• Countries are all at the same stage of economic development
but economic differences cause short term inequality
• structuralist models- global structure cannot be easily
changed
• Unequal power
• Concentration of wealth in only some areas
• Difficult for poor to improve
• Believe all countries will NOT go through the same stages of
economic development
Modernization Model
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One of the most influential liberal models
Made by Walt Rostow in the 1960’s
All countries follow the 5 states of development
Stage 1
– Traditional- subsistence farming, resistance to technological change
• Stage 2
– Preconditions of Takeoff- progressive leadership moves a country towards
flexibility and openness
• Stage 3
– Takeoff- industrialization, increase in urbanization
• Stage 4
– Drive to Maturity- technology spreads, industrialization specialization,
international trade, population growth slows
• Stage 5
– High Mass Consumption- high incomes, many goods and services, majority of
workers in the service sector
Rostow’s Ladder of Development
Rostow - Stages of Growth
• The work of American Walt
W. Rostow
• Rostow is an economic
historian
• Countries can be placed in
one of five categories in
terms of its stage of growth:
A child in Sierra Leone making breakfast.
Which stage would a country like Sierra Leone
fit in?
Copyright: Dave Dyett, http://www.sxc.hu/
Rostow - Stages of Growth
1.
•
Traditional Society
Characterised by
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Village in Lesotho. 86% of the resident workforce in
Lesotho is engaged in subsistence agriculture.
Copyright: Tracy Wade, http://www.sxc.hu/
subsistence economy –
output not traded or
recorded
existence of barter
high levels of agriculture
and labour intensive
agriculture
Rostow - Stages of Growth
2. Pre-conditions:
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
– Development of
mining industries
– Increase in capital use
in agriculture
– Necessity of external
funding
– Some growth in
savings and investment
Rostow - Stages of Growth
3. Take off:
– Increasing
industrialisation
– Further growth in
savings and investment
– Some regional growth
– Number employed in
agriculture declines
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:
– Growth becomes selfsustaining – wealth
generation enables further
investment in value adding
industry and development
– Industry more diversified
– Increase in levels of
technology utilised
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
Criticisms:
• Too simplistic
• Necessity of a financial infrastructure to channel any savings that are
made into investment
• Will such investment yield growth? Not necessarily
• Need for other infrastructure – human resources (education), roads,
rail, communications networks
• Efficiency of use of investment – in palaces or productive activities?
• Rostow argued economies would learn from one another and reduce
the time taken to develop – has this happened?
Structural Change
• Structural change models focus on the
different productivity levels of economies
• Process of structural change determines the
rate of development
• Can such structural changes be
accommodated?
Structural Change
• Less developed nations – tend to be dominated by
primary industries – low value added, difficult to
generate wealth and thus sources of investment
• Developed nations – diverse economies, high value
added, high levels of investment
• Structural change can be encouraged by incentives
Employment Changes by Sector
Fig. 9-3: Percentage employment in the primary, secondary, and tertiary
sectors of MDCs has changed dramatically, but change has been
Dependency Theory
• Structuralist model
• dominant Core countries control and limit economic development
possibilities of less well off areas
• colonialism made countries dependent on imperial powers (the
country that ruled them)
• this is still evident today in the wealth and poverty of these regions
• Ex: dollarization- abandoning local currency in favor of adopting the
dollar (El Salvador did this in recently).
• Criticisms
• little hope for countries that were controlled by external powers
• but some of these countries’ economies have improved
World-Systems Theory
• Core- regions that have achieved high levels of
socioeconomic prosperity and are dominant players in
the global economy– Set up technology and require high education
– Bring money to the core through high wages and benefits
• Periphery- poor regions that are dependent on the
Core (and often Semi-Periphery) and do not have as
much control over their own affairs
– Requires lower education, lower technology, and lower
wages
• Semi-Periphery- more powerful than the peripheral
regions but still dominated by the Core
• This model focuses on economic relationships
• Core uses periphery for cheap labor, cheap production, and
profits in the core mainly
• Does not assume socioeconomic change will occur at the
same time
• Example: Japan became industrialized and developed a strong
economy, but this does not mean it will happen the same way
for Sudan)
Core and Periphery in World Economy
Fig. 9-22: This north polar projection of the world shows that most of the
MDCs are in a core area north of 30° N latitude. The LDCs are
mostly on the periphery of this map.
Barriers to Development:
• Low Levels of Social Welfare in the Periphery
• Political instability, corrupt leaders, and misdirected
priorities
• Misuse of aid, and cultural resistance to modernization
hamper development
• Suffer from numerous demographic, economic, and social
issues
• Poor nutrition, high incidence of disease, and health-care
facilities are inadequate, no clean water & lack public
sewage
• High birth rates, high death rates, low life expectancy
• Trafficking- sending children to work into conditions they
do not choose (mostly girls)
More and Less Developed Regions
Fig. 9-8: The less developed regions include Latin America, Sub-Saharan
Africa, Middle East, South Asia, East Asia, and Southeast Asia.
Foreign Debt:
– IMF (International Monetary Fund) and the World Bank
strive to help countries stimulate their economies
– Done through structural adjustment loans- loan money to
countries in they agree to reform their government or
make changes determined by the loaners
– Americans and Europeans head up these groups and
usually try to make changes that would benefit the core
countries
– Loans also must be paid back plus interest (which most
can’t afford)
• Now foreign debt crisis is affecting economic wellbeing of low- and middle-income countries- can’t
invest in the future if paying off debt
Debt as Percent of Income
Fig. 9-20: Many developing countries have accumulated large debts relative to
their GDPs. Much of their budgets now must be used to finance their
debt.
Foreign Investment Flows
Fig. 9-21: Three-quarters of foreign investment flows from one MDC to
another. Only one-quarter goes from an MDC to an LDC.
Minerals in Africa
Fig. 9-9: Although several African countries have important minerals, the
world prices of many of these have lagged the prices of industrial
products, services, and energy.
Widespread Disease:
• Vectored diseases are prevalent- spread from person to
person by a host (like mosquito)
• Malaria kills 150,000 children in periphery EACH MONTH!!
• Spreading DDT (pesticide) has been tried to eliminate
malaria
• Mosquitoes usually bounce back after treatments are done
to cause more problems and DDT harms the environment
and people’s health
• Now people are bioengineering mosquitoes to prevent
them from contracting malaria
– These mosquitoes will breed with others, causing all to stop
spreading the disease
– may or may not work in all areas
Gender-Related Development
Index (GDI)
Fig. 9-10: The GDI combines four measures of development, reduced by
the degree of disparity between males and females.
Female–Male Income Differences
Fig. 9-11: Women’s income is lower than men’s in all countries, but the
gender gap is especially high in parts of the Middle East, South
Asia, and Latin America.
Gender Differences in School
Enrollment
Fig. 9-12: As many or more girls than boys are enrolled in school in more
developed countries, but fewer girls than boys are enrolled in
Economic Options
• Countries seeking to climb out of a peripheral
position often look to industrialization
• Some industries exist in virtually all periphery
countries
• Some countries seeking to accelerate economic
development have undergone massive
industrialization
• Some poorer countries have realized that
economic progress is achieved through the
transformation of an entire society as well as
industrial growth
• Export Processing Zones (EPZ’s) offer good tax incentives,
few regulations, and draw foreign firms to locate there
– We have already studied Mexico’s Maquiladoras- on border with
the US
– Also China has SEZ’s (special economic zone) set up good
manufacturing areas near ports to ship goods out
– Both of these benefit the core countries, and offer little in the
way of wages or benefits to the host’s laborers
• Some governments have made agriculture, not industry,
their main priority because it will benefit the entire society
– Most are grains or fruits being grown with out-dated equipment
– Desertification affecting many, causing more disparity for the
workers
• Tourism has helped many countries in the Caribbean and Middle America
bring in wealth and employment
– This has both pros and cons
• To start tourism the “host country” must make a huge investment
(hotels, resorts etc)
• This is money that could have been used to help the citizens with
more critical need
• Often does not benefit local populations
• Hotels often owned by multinational corporations
• Sometimes jobs are dehumanizing and subservient
• Often takes scarce commodities from the host countries
• But tourism can bring in many jobs (In the Bahamas the Atlantis
Hotel)
• Usually does not contribute to “hosts” development
• All periphery countries continue to face enormous obstacles
Income and Demographic Change,
1980–2004
Fig. 9-19: Per capita GDP has increased more in MDCs than in LDCs
during this period, while population growth and infant
mortality have declined more rapidly in MDCs than in LDCs.
Government Policies Affecting
Development:
• Governments may discourage production of
agricultural products, causing prices to rise
• May put taxes on goods that are imported
(cotton in a shirt causes price to rise if
imported and taxes are placed on them)
• May support projects to import from places
that will cost more for the purchaser of
products
Governments Create Islands of
Development:
• Peripheral countries have built their own steel mills
and national airlines to serve symbols of "progress"
(Egypt and Indonesia)
• Malaysia made an ultra-modern capital to serve as
progress
• Gabon has cities developed by the oil industries,
providing jobs and exporting oil
• NGO’s (Non-Governmental Organizations) –Typically
non-profit, not run by governments, all with their own
set of goals
• Ex: Microcredit programs- loans to women to start
their own businesses and to stimulate development
Female Literacy Rates
Fig. 9-13a: Female literacy is lower than male literacy (Fig. 9-13b) in many
LDCs, with significant gender gaps in parts of the Middle East,
Africa, and South Asia.
Male Literacy Rates
Fig. 9-13b: There is a gap in literacy rates between MDCs and LDCs as well
as between men and women in many LDCs.
I. What is Globalization?
• A set of processes that are
– Increasing interactions
– Deepening relationships
– Heightening interdependence
• Without regards to country borders
• ALSO globalization has:
• A set of outcomes that are
– Unevenly distributed
– Varying across scales
– Differently manifested
• Throughout the world
•
• According to Andrew Kirby- “. . . we live in a
world, as opposed to a neighborhood or region.”
• -what does it mean to live “in a world?”
Networks- a set of interconnected
nodes without a center
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Ideal network- ideas flow in all directions, horizontally structured
Types of networks:
financial
transportation
communication
government
trade
• Last 20 years has changed networks b/c of globalization
(information technology)
• Now- where technology exists, more globalization happens and we
see uneven outcomes of globalization because of this
Time-Space Compression
• Access or lack of access to information technology
networks creates this
– Suggests that global cities (in the core) are more
interconnected through communication and
transportation networks
– This causes periphery to be more removed than ever from
development and globalization
– Spreading more quickly:
• in 1992, 10- cell phone and 2.5 internet subscribers per
1000 in core;
• in 2002, 582 and 382.6 per 1000 for these
measurements
Global Cities
• Measured by their connections to other cities
through trade, travel (airports), and
communication
• Largest is London, then NY, then Tokyo.
II. At What Scales Do Networks
Operate in the Global World?
• Development Networks
• Non-Governmental Organizations (NGO’s)- have
created many global networks
– Goals: (Participatory Development) to get the locals
engaged in decisions for development and not to allow
only core countries to decide who will develop and what
will happen world wide
– Also allows locals to decide what it means to be developed
– Success in programs should not be decided by core
countries
• Ex: Farmers told to farm a certain way (new irrigation methods)
• Some don’t participate, so success should only be measured by
those that try
Local Currencies
Vancouver Island - - - - - - - - - - - - - - - -- -
• Uneven development affects ALL countries
• Economic downturns and unemployment are common in
local places
• Local Exchange Trading Systems (LETS) are sometimes the
result
• Ex: Vancouver Island lost 50,000 jobs (nearly the whole
island)
• They decided to have their own form of exchange. . . Barter
or Trade
• They would trade plumbing services for wood working
services, etc.
• Ex: Argentina- economy in shambles, they are using around
5000 different currencies today
Networks in Media
• Print, Radio, TV, Entertainment, Songs, Games,
Movies, MapQuest, Internet
• All of these are controlled by 6 global
corporations b/c of mergers in the last 20 years:
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Time-Warner
Disney
Bertlesmann
Viacom
News Corporation
• Vivendi Universal
Vertical Integration- Practiced by these companies because they
own a variety of points along the production and consumption
chain of a commodity
Networks in
Media
• 2003 report says companies compete for 3 things:
– Content
– Delivery
– Consumers
• This is more easily done through synergy:
• Cross production of vertical products
• Ex: Great America Theme Park- see Nick Jr. land, meet Blue’s Clues
and Dora the Explorer, VH1/MTV Stage for karaoke, ride Top Gun
roller coaster & see Sponge Bob.
• All of these are owned by the same company, giving all profits to
the same place.
Vertical Integration also changes
geography of flow if ideas by
• Gatekeepers- people or corporations who control access to information
– Choose not to tell a story, and so it is not told
– Choose to promote only certain candidates, improving their chances for
election
– Only promote certain products that they are selling, so we don’t know about
others
• Weblogs
• Gov’ts historically decide what stories to tell
• Today, the internet allows anyone to tell
whatever they want (about 8 million users)
• Weblogs are ways an individual can create
local, regional, or global networks and exist
separate from the global network of media
Networks of Retail Corporations
• Typically, Retail companies practice
– Horizontal Integration- ownership by the same firm of a number of
companies that exist at the same point on the commodity chain
• Ex: The Gap, Banana Republic, Old Navy- all owned by the same
company!!
• Also: Taco Bell, KFC, Pizza Hut, A&W, Long John Silvers- all owned by
PepsiCo
• Studies show that Retail networks create a Local Presence,
connecting with the consumer
• Global manufacturing corporations (Wal-Mart, Costco, Ikea) do not
and draw protest from localities when they want to build stores
III. How have Identities Changed in a
Globalized World??
• Gillian Rose: Identity is how we make sense of
ourselves
– Identity happens at different scales, local,
national, regional, & global.
– Ex: you may be a traveled person, but you never
saw anything but global cities so you only
experienced a GLOBAL CULTURE (McDonalds, Wal
Mart, etc.)
Globalization networks link us with the
world through the information we see
• We could choose to ignore the news, internet, or other
methods of obtaining global information
• We still are attached to the world by:
– What we wear
– Who we identify with
– What products and movies we purchase
Personal Connectedness
» When a tragedy occurs in the world, we have a desire to
– Personalize it
– Localize it
– By doing this, we can identify with the rest of the world; thus
creating a global awareness
– Trade Center Attack (left)
– Trade Center Memorial Lights (below)
• There are two ways in which people recognize
tragedies in the local spaces:
» Spontaneous Shrines- done in the short term
» Permanent Shrines- done for the long term
» Terrorist attack sites have been memorialized in the short term with
personal signs with the word “closure” for people to express their
grief
» The World Trade Center is taking longer to memorialize
– So many people are connected to the area (what should be built?)
– So many people lost and are attached to this (who to remember)
– A permanent shrine must be discussed, approved, funded, and then
created. . . all taking time