Measures of Development Ch 17 APHG
Traditional Society
A Stage of Rostow's Model Of Economic Growth (Stage 1) -Depends upon the primary sector activities for subsistence -Uses limited technology -Carries out local or regional trading -Enjoys limited socio-economic mobility EX: English colonies in N. America in the 17th century EX: Medieval Europe EX: No entire country is at this stage today
Pre-Condition for Takeoff
A Stage of Rostow's Model Of Economic Growth (Stage 2) -improves infrastructure (roads, electrical grid, water systems) -Improves farming techniques and shifts toward commercial ag -Exports agricultural and raw materials -Diffuses tech. more widely -Starts individual socio-economic mobility EX: US in early 19th century EX: Nigeria today EX:Afganistn today
Take-off
A Stage of Rostow's Model Of Economic Growth (Stage 3) -Open to major tech. innovations -Starts industrialization and primary sector begins to shrink -Spreads entrepreneurial mentality -Begins to urbanize -Initiates self-sustaining growth EX: US, mid 19th century EX: Japan, late 19th century -Bangladesh today
Drive to Maturity
A Stage of Rostow's Model Of Economic Growth (Stage 4) -Creates new industries while strengthening existing ones -Improves energy, transport, and communication systems -Sees economic growth greater than pop. growth -Invests in social infrastructure (schools, hospitals, ect) EX: US, late 19th century EX: Germany, early 20th century EX: Brazil today
High Mass Consumption
A Stage of Rostow's Model Of Economic Growth (Stage 5) -Spends money on non-essential goods (consumerism) -Purchases of high order goods became common -Desires to create an egalitarian society -Supports a strong tertiary sector EX: US, early 1920s to present EX: Japan, mid-1950s to present
Conglomerate Corporation
A firm that is comprised of many smaller firms that serve several different functions.
Four Asian Dragons (Tigers)
Among 1st to adopt international trade model were South Korea, Singapore, Taiwan, & Hong Kong. Singapore & Hong Kong, British colonies until 1965 and 1997, respectively, have virtually no natural resources. South Korea and Taiwan have traditionally taken their lead from Japan. Lacking natural resources, the four dragons (tigers) promoted development by concentrating on producing a handful of manufactured goods.
What is the Brandt Line?
An imaginary line that separates the "North" (more developed) part of the world from the "South (less developed part of the world -named after Willy Brandt= a German politician interested in development NOTE: Austrailia and New Zealand are considered part of the North economically, even though geographiclly located South
Cottage Industry
An industry in which the production of goods and services is based in homes, as opposed to factories.
foreign direct investment
(FDI) The investment made by a foreign company into the economy of another country -grew rapidly in 1990s -Does not flow equally around the world -Only 2/5 of foreign investment in 2010 went from developed countries to developing countries; the other 3/5 was from one developed country to another developed country -FDI is also not evenly distributed between developing countries= 40% in 2010 went to China and 20% to Brazil, Russia, and Singapore -the major sources of FDI are transnational corp. that invest and operate in countries other than the one in which the company headquarters are located -Of 500 largest trans. corp in the world= 384 in developed countries and China 61 of 116 headquarters in developing countries
Gini coefficient
(Gini Index) meaures the distribution of income within a pop -0 means everyone has equal pay= higher the # the more ineqaulity -developing countries= tend to have higher numbers than developed countries
transnational corp. and women
-As bus. have opened in developing countries, they often employ women b/c they are avialble and will work for low wages -B/c of very low birth rate in Japan and Singapore, w/o women there would be extreme labor shortages
Comparing annual incomes of pp and the total acculmulated wealth of pp around the world can be complicated by...?
-Countries have different curriencies= must convert to one currency -The value of currency changes over time= converting amounts of money to their specific amount in a specific year -Prices vary within different countries= convert amounts to *purchase power parity (PPP), which is based on what an amount of money can buy*
Criticisms of Wallerstein's model
-Downplays the role of culture. Ex: Focuses highly on US economic influence (investments/purchases of raw materials), but it pays little attention to the pervasive influence of US culture (movies, music, tv, etc) -Outdated= based on industrial production, but most of the world is already post-industrial. Core economies now have transformed into high-tech, high-skilled tertiary economies -limited practical use= suggests countries can change status, but does not express how -fails to recognize the role of nongovernmental organizations (NGOS)
Example of Countries with Low/High GII
-Gender equality is most advanced in Europe and leats advanced in West Africa and Southwest Asia LOW: Slovenia Switzerland Germany Denmark Austria HIGH: Cote d'Ivoire Afghanistan Chad Niger Yemen
Historian Immanuel Wallerstein
-In 1970s proposed the *World System's Dependency Theory* -It is a dependency model= all countries depend on one another -The model included political and economic elements
UN Millennium Declaration
-Made by the UN in 2000 -8 key development goals/measurable indicators for each target -According to the program, the global efforts produced the most successful anti-poverty program in history -lifted one billion pp out of extreme poverty, reduced hunger, and increased the number of girls attending school
Environmental Degradation
-Sustainable development includes reducing air/water pollution, reducing waste through recycling and composting, and fighting climate change Climate change can... -If climate is warmer= diseases once confined to areas around the equator could spread and devastate new areas -If ocean levels rise= pp along the coast would be forced to move or pay large sums of money to hold back water -If storms and droughts become extreme, pp with the fewest resources to move or protect themselves will be at great risk
2030 Agenda for Sustainable Development
-Un launched this -established a new set of goals in order to tackle probs facing countries as they develop (Same concept as the Millennium Goals)
Core dominance
-achieved initial dominance through the industrial production of goods= leading to political control through colonization (as countries gained independence, colonization nearly vanished) -Core countries maintained supremacy by controlling the production of goods in countries of the semi and periphery (called neocolonialism) -Large multinational companies, often headquatered in developed countries, had signifigcant influence over economies of semiperiphery and periphery
Human Development Index (HDI)
-created by a Pakistani economist named Mahbub ul Haq -combines economic measure (GNI per capita) with several social measures such as life expectancy and educations level -rankings of countries by HDI and income are often similar EX: Norway ranks first in HDI and 6th income EX: Us ranks 11th in HDI and 8th in income -countries that invest heavily in education and medical care rank higher in HDI than in income EX: Ireland ranks 6th in HDI but 22nd in income EX: Cuba ranks 67th in HDI but 114th in income -Some countries that are rich in oil and natural resources often place higher in income and lower in HDI EX: Qatar first in world income but 32nd in HDI
World Bank
-includes the International Bank for Reconstruction and Development (IBRD) -includes the International Development Association (IDA)
The World Bank and IMF
-made to promote economic development and stability after the devastation of WWII and to avoid disastrous economic policies contributing to the Great Depression in the 1930s
Gaps that still exist between man and women (even in developed countries)
-men often receive a higher salary than women- even when they are completing the same job (in the US a man would typically make a salary of 17.5% higher than a woman) -Women rarely receive upper-level jobs in companies (especially in developing countries)
International Monetary Fund (IMF)
-provides loans to countries experiencing balance-of-payments probs that threaten expansion of international trade -designed to help a country rebuild international reserves, stabilize currency exchange rates, and pay for imports w/o the imposition of harsh trade restrictions or capital controls that could hamper the growth of world trade -does not lend for specific projects -funding is based on each member country's relative size in the world economy
International Bank for Reconstruction and Development (IBRD)
-provides loans to countries to reform public administration and legal institutions, develop and strengthen financial institutions, and implement transport and social service projects -has loaned 400 billion since 1945 to Europe and Latin America -lends money raised from sales bonds to private investors
International Development Association (IDA)
-provides support to poor countries considered too risky to qualify for IBRD loans -has loaned 150 billion since 1960 to Asia and Africa -lends money from government contributions
Productivity
-the value of a particular product compared to the amount of labor needed to make it -Productivity is measured by value added: the gross value of a product minus the cost of raw materials and energy -Workers in MDCs produce more with less effort due to technology (capital-intensive) LDCs rely more on human and animal power (labor-intensive)
Petroleum-rich Persian Gulf States
Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates One of world's least developed until 1970s Escalation of petroleum prices transformed countries overnight = some of wealthiest per capita. Used petroleum revenues to finance large-scale projects. Some Islamic religious principles, (which dominate the culture of Middle East), conflict with business practices in more developed countries.
Why was the life expectancy in the 19th century below the age of 40?
Because although most adults lived 50 years and up, child/infant mortality brought the number down (Although, over past 50 years average age has been raised up to over 80 years old/ some countries still low life expectancy due to child deaths)
Demographic Transition Model vs Rostow's model
Both: based upon how the US and western Europe developed DTM: population model Rostow: economic model
Examples of NGOS
Brac: Headquarters: Bangladesh Mission: Promote economic development Skoll Foundation Headquarters: US Mission: Promote economic development Ashoka Headquarters: US Mission: Promote economic development Acumen Headquarters: US Mission: Promote economic development Medicins Sans Frontiers (Doctors w/o Borders) Headquarters: Switzerland Mission: Provide health care and respond to emergencies Danish Refugee Council Headquarters: Denmark Mission: Protect human rights Mercy Corps Headquarters: US Mission: Distribute humanitarian aid Oxfam Headquarters: United Kingdom Mission: Overcome global poverty Handicap International Headquarters: US Mission: Support for pp with disabilities Landesa Headquarters: US Mission: Promote rural development
Example of the Self-Sufficiency Approach
Businesses were supposed to produce goods for consumption inside India. If private companies were unable to make a profit selling goods only inside India, the government provided subsidies The government owned not just communications, transportation, power companies, insurance companies, and automakers.
Using Wallerstein's model on a smaller scale
Can use it for a country EX: New York/Chicago= Core Manufacturing Belt in Midwest and South= Semi Rural areas of Great Plains and West= Periphery
Literacy rate and develoment
Literacy rates usually above 99% in developed countries According to UNESCO 90% of world was literate in 2015 (730 million pp not literate- mostly female)
Self-sufficiency Approach
Characteristics: Pace of dev. = modest Distribution of dev. = even Barriers established to protect local business Most common barriers = (1) tariffs, (2) quotas, and (3) restricting the number of importers (licenses)
Other than measuring economic development by sectoral distribution, what is another way this can be measured as well?
Comparing either the annual incomes of pp or the total acumulated weath of pp who live in various areas
Example of a country that uses ecotourism
Costa Rica
Does Wallerstein's model suggest that all countries can reach the highest level of development?
No, although indicates that countries can change categories EX: US in 1750 (British colonies) were part of the periphery. By 1850m at least one former colony was in the core EX: In 1900, Argentina was a core country. By 2000, it was in the semiperiphery EX:In the past decades, BRICS (Brazil, Russia, India, China, and South Africa) have challenged dominance of core countries with new virtual and just-in-time bus. models transforming the world economy
Increased educational opportunities for women during the past 2 decades...?
Prepared women to work outside of their homes -Globally, more than 250million additional women joined the paid workforce between 2006 and 2015= began to make more money because they were working in manufacturing
GINI Coefficient (index)
Sometimes called the GINI index Measures the distribution of income within a population The higher the number, the higher degree of income inequality Developing countries have the highest degree of inequality, generally speaking
technology transfer
The communication of specific plans, designs, or educational programs necessary for the use of new technologies from one society or class to another.
Value Added
The gross value of the product minus the costs of raw materials and energy.
Measures of social or human development indicate...? Common measurments of this include...?
The quality of life that pp experience in a country and the level of equity that exists Common measurements: -birth rate -death rate -fertility rate -infant mortality -child mortality rate -life expectancy -literacy rate -caloric intake -gender inequality -school enrollment -access to health care
Comparing names for levels of development
Economic Level (based on GDP): Low Income Middle Income High Income Economic Development (focuses on economics): Less Economically Developed Country (LEDC) Emerging/developing economies More economically developed country (MEDC) Level of Industrialization (based on amount of industry) Non-industrialized Newly Industrialized Country (NIC) Post Industrial Economy Human Development Index (combines economic and social factors) Low HDI Medium HDI High and Very Hgh HDI World Systems Theory (developed by Immanuel Wallerstein) Periphery country Semiperiphery country Core country Stages of Economic Growth (developed by W. W. Rostow) Stages 1+2 Stage 3 Stage 4+5
Common measures to meaure wealth in a country
GNP, GDP, GNI sectoral structure of the job force consumption per capita income distribution energy use per capita
Problems with International Trade Approach
Three problems have hindered countries outside the Persian Gulf and the four Asian dragons from developing through the international trade approach: 1. Uneven resource distribution (wealth & income unevenly distributed throughout country Ex: China's uneven development, most wealth is along the east coast where the EEZs and factories are located) 2. Market stagnation (If demand for a product drops, such as oil (or whatever the traded commodity is) then development slows or stops altogether If the country took out loans to build up their industry, then debt may increase) 3. Increased dependence on MDCs (Most developing countries are depending on MDCs to buy their commodities, which gives MDCs tremendous power & leverage)
Two major lenders to developing countries are...?
World bank and International Monetary Fund (IMF)
Sustainable development
any economic development that serves the current needs of pp w/o making it harder for pp in the future to live as well
Noneconomic statistics that reflect a country's development status typically focus on...
conditions in which pp live
In order to make the numbers of economic development comparable, the income and output figures are usually...
converted to US dollars and stated as a certain money per capita
American economist Walt W. Rostow
developed a modernization model, one that focuses on the shift of modern traditional society (Stages of Economic Growth Model) -he assumed all countries could, wanted, and would, modernize, just at different speeds -saw development like a linear progression -suggested different ingredients were needed for a country to move from one stage to the next
Since developing countries lack money to fund development, they obtain financial support from...? The finances come from...?
developed countries Direct investment by transnational corp. loans from banks and international organizations
gender gap
differences in privileges afforded to male and females -the gap between education and health care has lessened -political empowerment and economic participation remains large
Meaures of economic devleopment focuses on...
different types of jobs, income, and economic output
ancillary activities
economic activities that surround and support large-scale industries such as shipping and food service
Import substitution
effort to produce internally what they had previously imported from a foreign country
smelting
extract (metal) from its ore by a process involving heating and melting.
structural adjustment program
includes economic goals, strategies for achieving the objectives, and external financing requirements -This is required for when the IMF, World Bank, and developed countries cancel debt so it does not form bad habits -critics say that poverty worsens under this by placing priority on reducing gov spending and inflation and punishing the poorest pp in the world (unemployment, cuts in health/education/services/support)
Inequality adjusted HDI
modification of an HDI to account for inequality
per capita
per person
Gender Inequality Index (GII)
summarizes the different opportunities granted to males vs females -considers reproductive health (maternal mortality/adolescent mortality rates) -considers empowerment (share of gov. seats held by each sex and proportion of adult females and males with secondary education -considers labor market participation (indicated by the labor force participation rate of female and male populations aged 15 years and older
fracking
the process of injecting water at high temp. to break apart rocks in order to release natural gas
natural capital
the world's stocks of natural assets which include geology, soil, air, water and all living things. It is from this natural capital that humans derive a wide range of services, often called ecosystem services, which make human life possible.
ecotourism
tourism that attempts to protect local ecosystems and to educate visitors about them
Capital
wealth in the form of money or property owned by a person or business and human resources of economic value
Criticisims of Rostow's Model
-Model was based on US and Europe so it did not fit countries of nonwestern or noncapitalist countries -Model encouraged exploitation of LDCs, and these countries could get trapped in a state of dependency with the MDCs -Model suggested a linear change, always progressing. Although, some countries need money, technology, and assistance in order to develop. Also, some countries can fall back stages as well. -Model suggests all countries have a chance to develop, but many countries face barriers such as physical size, pop, natural resources, relative location, political systems, and climate -Model assumed everyone could live lives of high mass consumption but failed to consider sustainable development or the carrying capacity of the earth -Model did not recognize that most countries developed by exploiting the resources of LDCs, but LDCs would have a hard time finding other countries to exploit -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 places or productive activities?) Rostow argued economies would learn from one another and reduce the time taken to develop. (Is there evidence today that this happened?)
microcredit or microfinance programs
-NGOs such as Grameen Bank have initiated these -provide small loans to pp ho would not usually qualify for credit from traditional sources -The vast majority of entrepreneurs who take advantage of these loans are women, especially in South Asia and South America -repayment rate is usually above 98% Success of these programs has... -increased women's influence in their homes and communities - allowed women to have a voice in child-bearing decisions -they have more money to pay for contraceptives -they have less time to raise children -birth rates have decreased -less need for additional children -increased wealth has allowed children to be better nourished= reducing child mortality
Periphery
-Part of Core-Periphery Model -Includes the LDCs -Has a high % of low-skill, labor-intensive jobs along with raw material extraction -Provides the core and semiperiphery with inexpensive raw materials, labor, ag production -Receives jobs but few profits from manufacturing -Often have weak laws protecting workers and the environment EX: Afghanistan EX: Zimbabwe EX: Peru EX: Kenya
Semiperiphery
-Part of Core-Periphery Model -Includes the middle-income countries -Sometimes known as the emerging economies -Provides the core with manufactured goods and services that the core once provided for itself, but no longer does EX: India EX: Mexico EX: South Africa EX: Brazil EX: China
Core
-Part of Core-Periphery Model -economically advantaged area of the world and the center of world bus.s and finances /headquarters of most large multinational companies are located in core countries -Focuses on higher skill, capital-intensive production -Promotes capital accumulation -Dominates periphery and semiperiphery economically and politically, and by paying low wages and exploiting weak laws -Benefits greatly from international trade EX: US EX: United Kingdom EX: Japan EX: Austrailia EX: Germany
Labor trends and Wallerstein's model
-Peripheral Countries: primary sector workers/extraction of raw materials -Semiperipheral Countries: home to many workers in the secondary sector and in the tertiary sector (such as call center staff) -Core: quinary/quaternary sector workers (senior staffs of transnational corp.)
Why has the World Bank considered half of the projects it has funded in Africa to be failures?
-Projects do not function as intended b/c of faulty engineering -Recipient nations squander or spend aid on armaments (military weapons), or the aid is stolen -New infrastructure does not attract other investment
Dependency Theory
-Refers to the continued dependency of LDCs on MDCs -Arguing that the political and economic relations among countries limit the ability of LDCs to modernize and develop -The elite in a LDC will control the vast majority of the wealth and resources of that country. -Countries are interdependent, not independent Dependency Theory sees little hope for LDCs because the dominance of MDCs is highly linked to the continued economic and political inferiority of LDCs. Neocolonialism - previously colonized countries become politically independent but remain economically dependent
UN Millennium Development Goals/Progress
1. Eradicate extreme poverty and hunger -The number of pp in extreme poverty fell from 1.7 billion to .8 billion 2. Achieve universal primary education -The number of children not in school fell from 100 million in 2000 to 57 million in 2015 3. Promote gender equality and empower women -Gender disparity in education was eliminated in developing regions overall 4. Reduce child mortality -The global mortality rate for children under the age of five dropped from 90 per 1000 to 43 per 1000 between 1990 and 2015 5. Improve Maternal Health -Maternal mortality was reduced by 45 percent since 1945 6. Combat HIV/AIDS, malaria, and other diseases -The number of projected new HIV cases was cut by 1.4 million between 2000 and 2013 7. Ensure environmental sustainability -Ozone-depleting chemicals have been almost eliminated since 1990 8. Develop a global partnership for development -Developed countries increased their development assistance by 66%, up to $135.2 billion since 2000
The common measures to describe the total output of a country
1. gross national product (GNP): the total value of goods produced and services provided by a country during one year, equal to the gross domestic product plus the net income from foreign investments. (Broader value than GDP) 2. gross domestic product (GDP): the total value of goods produced and services provided in a country during one year. 3. gross national income (GNI): the total domestic and foreign output claimed by residents of a country, consisting of gross domestic product (GDP), plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents (the market value of all the goods and services produced in one year by labor and property supplied by the citizens of a country.) GDP (Gross Domestic Product) is a measure of (national income = national output = national expenditure) produced in a particular country. GNP = GDP + net property income from abroad. This net income from abroad includes dividends, interest and profit. GNP includes the value of all goods and services produced by nationals - whether in the country or not.
Success of International Trade Approach
Despite problems, it has been embraced by most countries as the preferred alternative for stimulating development. India, for example, dismantled its collection of barriers to international trade during the 1990s. Countries converted from self-sufficiency to international trade during the 1990s for one simple reason: overwhelming evidence After adopting the international trade alternative in the early 1990s, India's GDP grew 7 percent per year during the 1990s
Problems with Self-Sufficiency Approach
Two major problems: Inefficiency: Companies protected from international competition do not feel pressure to keep abreast of rapid technological changes. Large bureaucracy (a system of government in which most of the important decisions are made by state officials rather than by elected representatives.): needed to administer the controls. A complex administrative system encouraged abuse and corruption.