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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
Big Three consumer goods
Five demographic indicators of
GDP per capita
Gross Domestic Product (GDP)
Gross National Income (GNI)
Gross National Product (GNP)
Human Development Index
informal economy
Less Developed Country (LDC)
literacy rate
○ More Developed Country
○ 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
○ Gender Related Development
Index (GDI)
○ Gender Empowerment
Measure (GEM)
Key Issue 4: Why Do LDCs
Face Obstacles to
Self Sufficiency Approach
import substitution
International Trade Approach
Four Asian Dragons/Tigers
Rostow's Modernization
Model of Development (aka
Rostow's Ladder to
Wallertstein's World Systems
Traditional Society (Rostow
stage 1)
Foreign direct investment
○ Structural Adjustment
○ Fair Trade
○ U.N. Millennium Development
○ stucturalist theory /
neocolonialism / Dependency
○ 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
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
19. Five demographic
indicators of
 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
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
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
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
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)
 Domestic (local) industries benefitted from international competition which forced them
to innovate and match prices.
 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
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
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.
 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
Model of
Development (aka
Rostow's Ladder to
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
A theory created by Immanuel Wallerstein that views the world
economy as one interconnected capitalist market with a three tier
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
 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
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
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.