Download Chapter 9.1: Why Does Development Vary Among Countries?

Chapter 9.1: Why Does Development
Vary Among Countries?
• Development is the division of the world into
relatively wealthy regions and relatively poor
ones.
• More Developed Countries (MDCs): also known
as developed nations
• Less Developed Countries (LDCs): also known
as developing nations
• A countries level of development is based on
economic, social, and demographic factors
Economic Indicators of Development
• There are five indicators
that are used to measure
economic development
• Gross Domestic Product
Per Capita
– Gross Domestic Productvalue of total output of
goods and services
produced in a year
– Divide GDP by total
population ($10 trillion/290
million= $34,000 in US)
– Annual GDP exceeds
$20,000 in MDCs while it is
about $1,000 in LDCs
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.
•
Types of Jobs
–
Jobs fall into three sectors:
1. Primary: directly extract
materials from earth (mining,
farming)
2. Secondary: manufacturing
materials into products
3. Tertiary: providing goods
and services for payment
–
In LDCs most workers fall
in the Primary sector, in
MDCs most fall in the
Tertiary
• Productivity
– The value of a product
compared to the amount
of labor needed to make
it
– Workers in MDCs are
much more productive
due to technology
• Raw Materials
– MDCs need a great deal
of raw materials, often
importing them from
LDCs
– LDCs with energy and
other resources have a
much better chance of
developing
• Consumer Goods
– Buying luxury goods
further improves a
nation’s wealth
– Cars, telephones and
TVs are major
indicators of
development (1:1 ratio
in MDCs)
– These items are not as
important in LDCs
(1:100 ratio)
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.
Social Indicators
• MDCs can afford better
education and health care
• Education
– In general, the higher the level of
development, the greater the
quality and quantity of education
– Teacher-pupil ratio and literacy
rate are used to measure
development
– 95% literacy in MDCs vs. 33% in
LDCs
– MDCs also produce more books,
magazines and newspapers
• Health and Welfare
– In MDCs health care is often
a public service at little or no
cost (except US)
– People in MDCs receive far
more calories and proteins
– MDCs also provide help to
those who are physically
unable to work
Demographic Indicators
•
Life Expectancy
– Better health and welfare makes
for greater life expectancy in
MDCs
– Mid 70’s in MDCs vs. Mid 40’s in
LDCs
•
Infant Mortality Rate
– About 90 percent of infants
survive in LDCs vs. 99 percent in
MDCs
– Poor medical practices, lack of
nutrition, lack of medicine
•
Natural Increase Rate
– More than 2 percent in LDCs vs.
less than 1 percent in MDCs
•
Crude Birth Rates
– About 40/1000 in LDCs vs.
15/1000 in MDCs
Chapter 9.2: Where are MDCs
and LDCs Distributed?
• The world can be split into 9 regions according
to level of development.
• Nearly all MDCs are north of 30N and almost all
LDCs are south of this line.
More Developed Regions
• Three of the nine regions are considered more
developed (Anglo America, Europe,
Japan/South Pacific)
• Anglo America
– Language and religion is less diverse in this region:
90 percent speak English and belong to Christianity
– Used to be the world leader in manufacturing, has
now shifted to technology, information, sports,
entertainment, etc.
– The world’s most important food exporter and has
plenty of room to expand
• Europe
– Western Europe
• Displays cultural unity, but
diversity of individual languages
and religion cause conflict
• The level of development is the
world’s highest in parts of
Germany, France, Italy,
Belgium, etc.
• Import food, energy and
minerals to keep pace
• Provide high valued goods and
services like insurance, banking,
luxury cars
• Elimination of economic barriers
makes them world’s largest and
richest market
– Eastern Europe
• In the early 1990’s they
were keeping pace with
Western Europe in HDI
• With fall of communism
it has dropped to the
level of Latin America
(LDC)
• Countries are slowly
adjusting and
anticipated to turn
things around
• Japan
– Success is surprising due
to ratio of population to raw
materials
– Gained a foothold by
providing very cheap but
hardworking labor
– Now specialize in high
quality and high value
products (electronics,
cameras, cars)
– South Pacific
• New Zealand and
Australia are MDCs as
well but are not central to
the global economy due to
small populations
Less Developed Regions
• Latin America
– Highest HDI among LDCs
– Primarily speak Spanish or
Portuguese and
predominantly Roman
Catholic
– Very dense urban
populations and
development along the
South Atlantic Coast is
relatively high
– Development is hindered
by distribution of income.
– A handful of wealthy
families control most of the
land and rent it to tenant
farmers
•
•
East Asia
– China is the largest country in
East Asia but ranks among
world’s poorest
– In a few years China will be the
world’s largest economy
– Communism limited growth, but
the government is loosening
some controls on property
– Agriculture in the country is still
mostly intensive subsistence
Southeast Asia
– Includes Indonesia, Philippines,
Vietnam
– Suffered from numerous wars
and colonialism
– Tropical climate limits the farming
of grains, focus on rice
– Economy has grown due to
cheap manufacturing, but slowed
when governments stopped
regulating business
• Middle East
– Largely desert and most
products must be imported
– Large petroleum supplies give
the Middle East a major source
of wealth (though not all nations)
– Increased wealth and economic
development have clashed with
traditional values causing major
problems
• South Asia
– Includes India, Pakistan,
Bangladesh
– World’s second highest
population and second lowest
per capita income
– India has resources and
agriculture, but is hindered by a
huge population
• Sub-Saharan Africa
– Countries north of the Sahara
are part of the Middle East
– SS Africa has the lowest
prospect for development
– Poor education, health, and
high poverty levels
– Many problems stem from the
colonization of Africa including
the stripping of natural
resources
– Political fights and wars have
further hindered development
– Population keeps increasing
while the land cannot support
more agriculture
Chapter 9.3: Why Does
Development Vary by Gender?
•
•
According to the United
Nations, no nation in the
world treats women as
complete equals
Two measures:
1. Gender-Related
Development Index
(GDI): compares the level
of development of women
to men
2. Gender Empowerment
Measure (GEM):
compares the ability of
women and men to
participate in economic
and political decision
making
Gender-Related Development Index
• Uses the same indicators as
the HDI, but compares
differences between men
and women for each
• Penalizes a country for
having a large disparity in
the well-being of women vs.
men
• A 1.0 indicates equality…
Norway is the highest at .94
(Most MDCs above .90)
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.
•
•
•
•
Economic differences
– Average income of men and women is
compared
– An income gap of more than $15,000 is
typical in MDCs
– In the US (2001), the difference was
$43,000 (men) vs. $26,000 (females)
– The gaps are similar in LDCs though the
numbers are far lower
Social Differences
– Women are much less likely to attend
schools in LDCs
– Ratio of high school enrollment: 99/100 in
MDC 60/100 LDC
Demographics
– In MDCs, women outlive men by a
significant number of years (4+)
– In LDCs, women only live a year or two
more or might not even live longer
The hazards of giving birth in LDCs plus high
birth rates account for this disparity
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 many LDCs.
Gender Empowerment
• In every country of the world,
women hold fewer positions
of economic and political
power
• GEM takes economic
indicators and political
indicators into consideration
• 1.0 would be total equality…
MDCs are the highest .70+
• Economic Indicators
– Percentage of women holding
professional jobs and
technical jobs
– More than half of the women
in Europe and N. America hold
these jobs
• Political Indicators
– Percentage of women holding
administrative and managerial
jobs
– North America and Europe
lead this category with over
1/3
– The other indicator is
percentage of women elected
to public office
Gender Empowerment
Measure (GEM)
Fig. 9-15: The GEM combines two measures of economic power and two of
political power by women. (Little data are available for LDCs.)
Chapter 9.4: Why Do LDCs Face
Obstacles to Development?
• LDCs are trying to improve their
way of life, but the gap between
LDCs and MDCs is widening.
• Americans spend more per year
on cosmetics ($8 billion) than the
cost of providing schools for the 2
billion people that need them ($6
billion)
• LDCs face two major obstacles
when trying to encourage
development
– Adopting policies that work
– Finding funds to pay for development
Development Through Self-sufficiency
• Also known as balanced
growth, has been adopted by
India and China
• A country should spread
investment as equally as
possible across all regions and
sectors of economy
• Incomes in the country keep
pace with urban incomes
• Set trade barriers to protect
local businesses and keep
MDCs from dominating them
•
•
India: Example of self-sufficiency
– Government severely limits licenses and amount of foreign production in
the nation
– Indian companies were discourage from exporting as well, all goods
should be kept in country
– Businesses need government permission to create new products,
hire/fire workers, set prices
– Government subsidized losses of private companies that did not
succeed
Problems
– Inefficiency: government control created very poorly run industries.
– No incentive to improve products, reduce costs, increase production
– Bureaucracy: created so many rules and regulations that everything is
slow and there is massive corruption
Development Though International Trade
• Calls for a country to
identify its unique
economic assets and
focus on them
• A country should
concentrate its scarce
resources on
expansion of those
industries to generate
wealth
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.
• Rostow’s Development Model:
1. Traditional Society: has not started the process of development, high
percentage of people in agriculture and large amount of wealth tied into
nonproductive activities like military and religion
2. Preconditions for Takeoff: An elite group initiates innovative
economic activities. Starts to invest in technology and infrastructure,
these projects stimulate an increase in productivity
3. Takeoff: Rapid growth takes place in a few industries such as textiles
or food. These takeoff industries become productive while other
sectors of the economy remain traditional
4. Drive to Maturity: Modern technology which was limited to takeoff
sectors now diffuses to other industries which now grow rapidly.
Workers become more skilled and specialized
5. Age of Mass Consumption: Economy shifts from heavy industry
(steel/energy) to consumer goods
• MDCs are in the last two stages and each MDC has been through
the first stages as well
• Countries that take part in international trade benefit from exposure
to other countries
• Gain technology and forced to be competitive
• Examples
– Oil-rich gulf states
•
•
•
•
Saudi Arabia, Kuwait, Bahrain, UAE
Use oil revenue to build airports, schools, etc
Import consumer goods from Western nations
These influences have created a great deal of friction with religion in these
nations
– Asia
• South Korea, Singapore, Taiwan, Hong Kong
• Focus on cheap manufacturing to achieve takeoff
•
•
•
•
Problems:
1. Uneven resource Distribution: if
the price of the items you focus on
drops you might be in trouble
2. Market Stagnation: MDCs grow
slowly, so sometimes demand may
level off (cheap clothing)
3. Dependence on MDCs: focusing
on selling to MDCs might slow
production of those things for your
own people.
• Then you are forced to spend
money to supply them (food,
clothes, etc.)
In spite of problems with international
trade, many countries believe this is
the best route towards development
India recently dismantled its barriers to
foreign trade believing that it will
create more wealth
The World Trade Organization (WTO)
was also formed in 1997 to eliminate
barriers to trade
Financing Development
•
•
•
Whichever way they try to develop,
LDCs need money from MDCs to do
so
Funds come from two sources: loans
from banks and direct investment by
transnational corporations
Loans
– Often provided by the World Bank
and the International Monetary
Fund (IMF)
– Borrow money to build
infrastructure and improve
businesses, this in turn provides
more tax money to the LDC
– Total value of all outstanding loans
in 1996: $2.1 trillion
– Due to many failures on expensive
projects, many MDCs are much
more cautious about loans to LDCs
today
• Transnational Corporations
– Operates in countries other than the one in which
its headquarters is located
– Countries invest in other countries by setting up
factories or providing goods/services in LDCs
– By 2001 the total amount of international
investments was roughly $735 billion
– Only ¼ of foreign investments were made to LDCs
however (the rest was MDC to MDC)