VOCABULARY Chapter 9: DEVELOPMENT Task: Write the terms below with their definitions in the table below. Then add any key takeaways or examples. ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ Key Issue 1 Why does Development Vary Among Countries? Big Three consumer goods Development Five demographic indicators of development GDP per capita globalization Gross Domestic Product (GDP) Gross National Income (GNI) Gross National Product (GNP) Human Development Index (HDI) informal economy Less Developed Country (LDC) literacy rate Term ○ More Developed Country (MDC) ○ primary sector ○ productivity ○ quaternary sector ○ secondary sector ○ tertiary sector ○ Three health/welfare indicators of development Key Issues 2 AND 3: ○ Brandt Line (aka North-South split) ○ Gender Related Development Index (GDI) ○ Gender Empowerment Measure (GEM) COVER UP TERM WHEN STUDYING! Definition ○ ○ ○ ○ ○ ○ ○ ○ Key Issue 4: Why Do LDCs Face Obstacles to Development? Self Sufficiency Approach import substitution International Trade Approach Four Asian Dragons/Tigers Rostow's Modernization Model of Development (aka Rostow's Ladder to Development) Wallertstein's World Systems Theory Traditional Society (Rostow stage 1) Foreign direct investment (FDI) ○ Structural Adjustment Program ○ Fair Trade ○ U.N. Millennium Development Goals ○ stucturalist theory / neocolonialism / Dependency Theory ○ sustainable development ○ obstacles to development ○ micro-credit programs ○ maquiladoras ○ commodity chain Key Takeaway/Examples/Notes Key Issue 1: Why does Development Vary Among Countries? Development is a narrow way of indicating human progress. Why? (Doesn't necessarily bring happiness, social stability, or environmental sustainability.) Development is a relatively new idea (took hold after IR) Start with EF Schumacher: Why Germany developed in ten years after WWII from nothing. 1. Development The process of improving the material conditions of people through the diffusion of knowledge and technology. 2. More Developed Country (MDC) A country that has moved further along the continuum of development. 3. Less Developed Country (LDC) A country at the lower (earlier?) end of the development continuum. (aka: "developing" or "emerging" country) The only reason MDC/LDC labels makes sense or are used is the sad fact that countries tend to cluster at the high and low ends of the development continuum. BUT: saying a country is at an "earlier" point of development or is "developing" or "emerging" assumes…what? 4. globalization The expansion of economic, political, and cultural processes to the point that they become global in scale and impact. 5. Human Development A United Nations indicator of level of development based on income, literacy, education, and life expectancy. Index (HDI) Note that the HDI recognizes that development is not based on economic factors alone. GDP per capita is rising in both MDC's and LDC's but the gap between MDC's and LDC's is rising (GDP per capita is faster in MDCs than in LDCs.) Limitations of all these measures: Doesn't show variations of wealth within countries or among individuals (a few wealthy people can skew country statistics, and Only counts formal economy (much economic activity in LDC's doesn't show up in these measures of wealth. (that's why countries with GDPs per capita of $1000 don't mean people are surviving on such a low income) Doesn't account for how far a dollar goes in different countries. Measures only economic outputs. Therefore even negative economic activity (cleaning up an oil spill, creating nuclear missiles or other weapons, sale of cigarettes AND health care costs those sales create) all show up as positive wealth. Energy efficient devices LOWER GDP and these other measures. But in general the higher GDP per capita, the greater potential for citizens in that country to enjoy a comfortable life. 6. Gross National Product (GNP) The total value of officially recorded goods and services produced by citizens of a country both inside and outside a country's territory. 7. Gross Domestic Product (GDP) The total value of officially recorded goods and services produced within a country, usually measured over the course of a year. 8. GDP per capita The value of the total value of goods and services produced in a country divided by the population. This shows the average contribution made by individuals to a country's wealth in a year. 9. Gross National Income (GNI) The value of everything produced in a country plus income received from other countries minus payments to other countries. 10. informal economy The uncounted or illegal economy that governments do not tax and keep track of. 11. primary sector The portion of an economy concerned with the direct extraction of materials from earth's surface, including agriculture, mining, fishing, and forestry. 12. secondary sector The portion of the economy concerned with manufacturing useful products through processing, transforming, and assembling raw materials. 13. tertiary sector The portion of the economy concerned with providing goods and services for payment. This includes retail sales, banking, education, law, etc. 14. quaternary sector Service sector industries concerned with the collection, processing, and manipulation of information and capital. Examples include finance, administration, insurance, and legal services. 15. productivity The value of a particular product compared to the amount of labor needed to make it. Often measured by value added (the value of a product minus costs of raw materials and energy that went into it.) Examples: home gardens, illegal drug trade, black markets for various goods, barter in rural areas. This is a BIG part of LDC economies (also in former USSR). The relative share of GDP accounted for by these various sectors of an economy varies between MDCs and LDCs and helps to explain the gap in GDP and development between them: Primary sector share of GDP has decreased for LDCs but remains higher than in MDCs. Secondary sector (manufacturing) share has declined sharply in MDCs and is now less than in LDCs. Tertiary sector share of GDP larger in MDC and growing; declining or flat in LDCs. Note overlap with tertiary sector definition. Value added per capita: Japan: $7,000 per capita, US: $5,000, China: $500, India; $100) What improves productivity in top GDP countries? (Investments in TECHNOLOGY and EDUCATION, which less productive countries can’t afford!) 16. Big Three consumer goods Cars, telephones computers are NOT ONLY signs of development, they are DRIVERS of development because they increase the productivity and efficiency of an economy. 17. literacy rate The percentage of a nation's population that can read and write. 18. Three health/welfare indicators of development 19. Five demographic indicators of development There is a large gap in consumer good ownership in LDCs. Who has them? Government officials, urbanites, wealthy elites. Creates "have" vs. "have nots" tensions. Cell phones as an example of skipping a stage of technology. MDCs spend lower % of GDP on education but LDCs spend less overall on education. Show maps have kids mark low and high regions. Daily calorie and protein consumption, % of GDP spent on health care, public assistance programs (to protect those unable to work or care for themselves. Life expectancy, Dependency Ratio, Infant Mortality Rate, Natural Increase Rate, and Crude Birth Rate LE: MDCs 70/LDCs 60 DR: 1:1 in stage 2 DTM countries vs. 1:2 in stage 4 NIR: 1.5% in LDCs vs. .2% in MDCs CBR: 23 in LDC (per 1,000) vs. 12 in MDCs. NOTE: Death rate higher in MDCs. Why? (Diffusion of medical technologies to LDCs AND more old people in MDCs.) Show maps have kids mark low and high regions. Key Issue 2: Where are MDCs and LDCs located? 20. Brandt Line (aka North-South split) An imaginary line circling the globe about at 30° N latitude which divide most MDCs (north of the line) from most LDCs (south of the line). Key Issue 3: Where Does Level of Development Vary by Gender? 21. Gender Related Development Index (GDI) A U.N. indicator of the level of women's development in a country based on the HDI factors as compared to that of both sexes. Hungary and Saudi Arabia similar GDPs but Hungary higher GDI because of less disparity of income between women and men. Show maps have kids mark low and high regions. 22. Gender Empowerment Measure (GEM) A U.N. indicator of the measuring the ability of women to participate in economic and political decision making in a country. Based on four factors: women's income as percentage of men's, professional or technical jobs held by women, percentage of women in administrative jobs, and percentage of women in a nations' parliament. Show maps have kids mark low and high regions. Key Issue 4: Why Do LDCs Face Obstacles to Development? 23. Four Asian Dragons/Tigers A term used to refer to four Asian countries (South Korea, Singapore, Taiwan, and Hong Kong) who achieved rapid development despite a relative lack of natural resources by concentrating on producing only a few manufactured goods (mostly clothing and electronics). As such they were early adopters of the International Trade Approach. Economic policies imposed on less developed countries by international agencies to create conditions encouraging international 24. Structural trade, such as raising taxes, reducing government spending, controlling inflation, selling publicly owned utilities to private Adjustment Program corporations, and charging citizens more for services. 25. Foreign direct investment (FDI) Investment made by a foreign company in the economy of another country. 26. Self Sufficiency Approach When? (From end of WWII to late 20th c. because of anti-neocolonialist sentiments (those MDCs were, still are vampires!) Who (Examples): India (best example) and China (up to 1990’s), Africa, Eastern Europe An approach to development that promotes development in a Positives: country by spreading investment Promoted balanced, diversified economy. throughout all areas of a country Promoted independence from MDC economy. and all sectors of an economy Promoted slow, even growth with #1 priority being fighting poverty. and by shielding domestic (inside Negatives: the country) industries from Protected inefficient domestic industries by shielding them from foreign competition. foreign competition. (Domestic industries didn’t have to compete on price or quality of goods). Increased price of consumer goods (no cheaper foreign products allowed in). BIGGEST PROBLEM: Created huge government bureaucracies and CORRUPTION. 27. import substitution The government policy, typically part of a Self Sufficiency Approach to development, of encouraging local manufacturers to produce goods to replace imports. When? Late 20th century to today (ongoing). Who (Examples): India (after 1990’s), ASIAN TIGERS/DRAGONS: S. Korea, Singapore, Hong Kong, Taiwan (textiles/electronics), and Arabian Peninsula (oil) Positives: Domestic (local) industries benefitted from international competition which forced them to innovate and match prices. Negatives: NEOCOLONIALIST! (Countries still dependent on MDC markets to buy necessities (can’t live off copper, oil, textiles!) Economies did not diversify (oil in SW Asia, minerals in Africa), therefore left countries vulnerable to market fluctuations. BIGGEST PROBLEM: RESOURCE CURSE (profits from favored industry not equally distributions (CORRUPTION) or used to raise standards of living (health, education, etc.) 28. International Trade Approach An approach to development that promotes development in a country by developing only one or a few local industries in which the country may have a competitive advantage and then selling the resulting products on the world market. Money from these sales can then be used to fund further development. 29. Fair Trade An alternative to international trade that emphasizes small businesses and worker-owned and democratically run cooperatives and requires employers to pay workers fair wages, permit unionization, and comply with minimum environmental and safety standards. 30. U.N. Millennium Development Goals A set of eight goals set by the U.N. to reduce the disparity of wealth and development between MDCs and LDCs. They focus on poverty, primary education, gender equality, child mortality, maternal health, HIV/AIDS, environmental sustainability, and aide from MDCs to LDCs. 31. micro-credit programs Programs which offer small loans to poor people, especially women, to encourage the development of small businesses. 32. maquiladoras An example of an Export Processing Zone (EPZ) on Mexico's northern border with the United States. These are special zones within a country which offer favorable tax or trade to foreign companies. Criticisms: 1. No context. Black box. Sees country's development is isolation of global forces. 2. No place for cultural or political decision making within a country. 3. Need of sixth stage: deindustrialization in MDCs. 4. No place for idea that rapid industrialization may have high costs (social disruptions, loss of culture, environmental degradation, pollution.) 33. Rostow's Modernization Model of Development (aka Rostow's Ladder to Development) A model of development that maintains that all countries go through the same five stages of development which lead to self-sustaining economic growth and high levels of mass consumption. The five stages are: 1. Traditional Society (subsistence farming (live off land with little or no surplus), low technology), 2. Preconditions for Takeoff (an elite group innovates and diversifies the economy), 3. Takeoff (a few areas of economy receive technical advances and grow rapidly), 4. Drive to Maturity (technology diffuses throughout economy, incomes rise, and 5. Mass Consumption (production shifts from heavy industry (steel, energy) to consumer goods and service industries. 34. Traditional Society (Rostow Stage 1) A society in which the dominant activity is subsistence farming and technology is slow to change. 35. Wallertstein's World Systems Theory A theory created by Immanuel Wallerstein that views the world economy as one interconnected capitalist market with a three tier structure: 1. Core: higher levels of education, higher salaries, higher levels of technology. The core gains power by exploiting the semi-periphery and periphery. 2. Periphery: lover levels of education, lower salaries, less technologies. The Periphery is exploited by the core. 3. Semi-periphery: places were both core and periphery processes are taking place simultaneously. The periphery is exploited by the core but exploits the periphery. Unlike Rostow, Wallerstein does not assume all countries can develop at the same time. Since core countries depend on exploitation of the periphery, SOMEONE has to be the exploited periphery. Not all places can be equally wealthy at same time. Core/Periphery analysis works on local level too Tadpole analogy: all in same pond (world capitalism), only some tadpoles can survive to become toads. Basic idea: Exploitation is a function of the basic drive for profit in the global system of capitalism. 36. stucturalist theory / neocolonialism / Dependency Theory A group of theories that maintain that MDCs continue to control LDCs even though the poorer LDCs have officially gained their independence and that the concentration of wealth in MDCs make it difficult for LDCs to improve their economic situation. Is a response and criticism of Rostow: Rostow does not see countries in global context. LDCs are facing very different challenges to development than countries that developed during Industrial Revolution. 37. commodity chain A series of links connecting the many places involved in the production and distribution of a product for sale in the global marketplace. Commodity Chain is a key concept in understanding uneven development because different links in the commodity chain add more value to the product and therefore more wealth for those involved at that link. 38. obstacles to development Exploitation by MDCs, malnutrition, natural disasters (without preparedness), desertification, climate change, high population Many of these challenges mean that for the people in the periphery of the periphery (the poorest citizens of growth, lack of education, foreign debt, corrupt governments, political instability, disease (i.e. AIDS, malaria (150,000 children dead per month!). 39. sustainable development Additional Notes: the poorest countries), the goal of development takes a back seat to daily survival. A pattern of resource use that aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but also for generations to come.