Download Obstacles to Development

Peer Grading
• You will grade 2 FRQ’s
• Use a different color than the writer AND
the other grader!
• Write your name on the post-it note in the
color you are grading with.
• Underline/check or clearly label where you
find the points from the rubric.
• Give any constructive advice/ justification.
• Put the grade on the notebook paper.
Development & Gender
Ch 9.3
The Girl Effect
• Power of educating women (FRQ)
– On population growth
– On economic growth
– On balanced gender roles
• Terms:
– GDI: Gender Development Index
– GEM: Gender Empowerment Measure
Gender and Development
• Recognizing development impacts different genders
unequally, UNDP created GDI and GEM
• GDI – Gender-Related Development Index
– shows gender inequality among nations
– Male/Female income levels (not total GDP per
capita), plus everything in HDI
United States Women’s Earnings
Gender and Development
• GEM – Gender-Empowerment Measure shows how much women participate in
economic and political decision-making
– % of women working in technical,
professional, managerial, legal, jobs
– % of women holding positions in parliaments
New Delhi, India
Obstacles to
Development
Ch. 9.4
LDCs vs. MDCs
• GDP per capita has doubled in LDCs, but
tripled in MDCs
– $3,000 vs. $16,000
• Natural Increase has dropped by 5% in
LDCs, but 83% in MDCs
• Infant mortality has dropped by 1/2 in
LDCs, but 2/3 in MDCs
Comparison of Growth
Development in LDCs
• LDCs must develop quickly if they want to
raise their HDI
• LDCs must increase their GDP per capita
to make the social and demographic
changes necessary to change
• Two obstacles include:
– Adopting policies that successfully promote
development
– Finding funds to pay for development
Self-Sufficiency Approach
• AKA Balanced Growth Approach:
– Pace of development = modest
– Distribution of development = even
• Aim is to reduce poverty, not make people wealthy
– Barriers are established to protect local
business
• Three most common barriers = (1) tariffs,
(2) quotas, and (3) restricting the number
of importers by licenses
Self-Sufficiency: India
• India required foreign imports to have a license
– Huge bureaucracy
• Government imposed heavy taxes on consumer
(tariffs)
• Restricted export goods
• Made currency inconvertible
• Businesses in India required government
approval to open a new factory, make ∆s
– Doesn’t keep up with trends/technology (Maruti)
• Government would subsidize non-profitable
businesses
Problems with Self-Sufficiency
• Inefficiency:
– Businesses are often subsidized if they fail to
make a profit, so there is no motive to produce
high-quality, low-cost goods
– Companies are protected from international
competition
• Large Bureaucracy:
– Requires a large bureaucracy to administer
control
• Licenses, approve changes to industries
International Trade Approach
• Countries have to identify their unique
economic assets
– Petroleum, Diamonds, etc.
• Countries must focus on developing their
resource, and selling it in the world mkt
• A country can benefit from foreign
consumers
International Trade Approach
• Rostow’s Development Model
– As a basic assumption, Rostow believes that
countries want to modernize as he describes
modernization
– The society will rise to the materialistic norms of
economic growth.
– Emphasizes free trade
– Countries go through stages linearly
Rostow’s Model of Development
1. Traditional Society
• Pre-scientific understandings of gadgets
• Believe that gods or spirits facilitate the
procurement of goods, rather than man
and his own ingenuity
• The norms of economic growth are
completely absent from these societies.
• US prior to independence
2. Preconditions to Take-Off
• Society begins secular education
• Uses capital mobilization (banks and
currency)
• Entrepreneurial class forms
• Manufacturing develops slowly
• Leads to a take-off in 10-15 years
• US in early 1800s
3. Take-Off
• Growth becomes common
• Society is driven more by economic
processes than traditions
• Industrial Revolution/urbanization likely
• Takes 50-100 years to reach maturity
• US in mid-1800s
4. Drive to Maturity
• Economy begins to diversify
• Primary becomes less important, as other
sectors grow
• Leads to reduction in poverty and rising
standard of living
• Population growth slows
• US in late 1800s
5. Age of High Mass Consumption
• Consumers concentrate on durable goods
• A society can focus on three things
instead of subsistence:
– Military and Security
– Equality and Welfare
– Developing luxuries for upper class
– Less on education?
• US in early 1900s
Criticisms of the Model
1. Rostow created his model in hindsight
2. The underlying motive for change is not
identified, instead, his model is based on
historical data
3. His model is based on American history
4. His model reflects a “capitalist manifesto”
5. Biased towards the west
6. Assumes the country is large, with large
population, and abundant natural resources
Examples of International Trade
• Countries of SW Asia
– Was one of the least developed regions in the
world
– Petroleum prices rose, and transformed the
region’s GDP per capita income
– Development has been very rapid
• However, some Islamic religious principles
conflict with development
– Role of Women
– Prayer stopping business
Four Asian Dragons/Tigers
• S. Korea, Singapore, Taiwan, and Hong
Kong
– Some of 1st to try approach
– Followed Britain and Japan
• Very few natural resources
– Needed trade w/ others
– Concentrated on producing manufactured goods
• Low labor cost  sold to MDCs for lower
price
Problems with I.T. Approach
• Uneven resource distribution
– Most of the oil rich countries are doing well
– Some countries with natural resources cannot
afford to access them
• Market stagnation
– The world market is shrinking, especially in
tough economic times
• Increased dependence on MDCs
– LDCs are spending money to take-off, instead
of providing food, shelter, and schools
Success of IT Approach
• World wealth doubled
in last 25 yrs
• World trade has
tripled
• India: 4% growth/yr
under SS approach;
6% growth/yr under IT
approach
World Trade Organization
• Countries involved in 97% of world trade
established the WTO in 1995
• It removes trade barriers in two ways:
– Negotiates reduction or elimination of
international trade restrictions on manufactured
goods and money
– It enforces agreements between countries
• Criticisms:
– Antidemocratic, reduces sovereignty
Wallerstein’s World System Analysis
Core: High Income
High use of technology
High % of tertiary activities
High levels of edu. by the majority of
the pop.
OECD countries G8
Semi-Periphery: used to be
peripheral states
Increased econ. develop.
BRICS, 4 Dragons, Middle East
Eastern Europe
Periphery: Low Income
Low use of technology
High % of primary activities
Low levels of edu. by the majority of
the pop.
BRICS: Brazil, Russia, India, China, South Africa
Mexico recently admitted to “5” (semi-periphery)
G8 + 5: Top State economies
Canada, France, Germany, Italy, Japan, U.K.,
Russia*, U.S.(Core)
Financing Development
• LDCs must obtain $ from MDCs
– Loans from banks/ orgs. OR direct investment
– Need for infrastructure should help
development make $ pay back & improve
standard of living
• IMF and World Bank, also commercial banks
– $2.1 trillion in loans
• Many loans fail (1/2 in Africa)
– No more loans follow, banks face instability
Financing Development
• Structural Adjustment Programs
(SAPS):
– Policies LDCs adopt to estab. efficient
conditions for making loans work
– MDCs often enforce, some LDCs angry w/
lack of choice
• Transnational Corporations:
– Investment by private companies (FDI)
– $13 billion in 1970; $735 billion in 2001
FDI