Download Economics, Class,and Globalization

Economic Class, Development, and Globalization
I. Learning Objectives
The three overarching goals of this chapter are for students to:
 understand key concepts related to the broad concepts of Class, Economic Development,
and Economic Globalization
 apply these concepts to the TIC cases to appreciate the meaning and significance of each
concept, as well as to understand similarities and differences among these countries
 employ these concepts and examples from the TIC cases in (in-class) critical thinking
exercises related to the issues at hand
Related to the three goals above are several more specific objectives, which are grouped below
according to their place in the chapter.
Regarding the objectives in each group, students should be able apply the concepts at hand to
the TIC cases, as well as complete critical thinking exercises that require mastery of these
concepts and understanding of illustrations from the TIC cases.
Class and Class Structure
 understand the terms class, class structure and class consciousness
 understand Karl Marx’s model of class conflict and related terms
 understand concepts used to measure class and poverty
Economic Development
 understand concepts related to economic growth and prosperity, such as the difference
between GDP and GNP, and between ‘GDP per capita’ and purchasing power parity
 understand labels for countries regarding their level of economic development
 understand the concept ‘resource curse’ and the impact of this on economic development
 understand the basic concepts and arguments involved in modernization theory and
dependency theory
Economic Globalization
 understand indicators of economic globalization, such as trade, foreign direct investment
and other measures found in A.T. Kearney/Foreign Policy Globalization rankings.
 understand weak state theories and strong state theories with regard to economic
globalization
Comparative Exercise
 use properly the key terms introduced in this chapter
 understand the methodological concepts involved in testing the relationship between
increasing economic globalization and levels of government spending
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Critical Thinking
 Critique the following theories, especially with regard to evidence and illustrations drawn
from the TIC cases: Marxism, strong state theories, weak state theories, modernization
theory and dependency theory
 participate effectively in the class discussion/team projects specified below
II. Chapter Outline
1. Introduction
 Chapter objectives
 Introduction: Political Economy and Economic Structure
o This chapter opens with a brief profile of an impoverished Nigerian mother who
lives near an oil facility.
o The term political economy is introduced and defined as the interplay between
economics and politics.
2. Class and Class Structure
-The concept of class is introduced and defined as a large group of individuals with comparable
social and economic attributes and, as a result, broadly similar current lifestyles and future life
chances.
-The social theory of Karl Marx is introduced, including its attention to the two main classes he
identifies in capitalist society, namely the bourgeoisie and proletariat.
 Measuring Class and Poverty
o This section highlights the use of ‘median income’ as way to measure and
compare levels of poverty across countries. Median income is the level that half
of the population of a country falls below and over.
 Class Structure
o This is defined as the arrangement of population in different classes.
 Class Consciousness and Its Decline
o Class consciousness refers to the awareness of people of their ‘location’ in a
particular class. The awareness has declined. One reason for this is a blurring of
the lines between the working class and the middle class.
 TIC Sections
o The UK: Visible class differences; more identify as working class than in the
United States
o Germany: Large middle class; less inequality than in the UK
o France: Low levels of inequality, even by European standards
o
o Russia: Small middle class; small but visible upper class (“new Russians”) since
1990s
o China: Noticeable economic inequality; urban areas much wealthier than rural;
small but growing middle class
o India: Large lower class underclass; significant inequality; middle class small
compared to those of EDCs but continuing to grow
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o Mexico: Visible middle class; sharp divisions between wealthiest and poorest
o Brazil: Emerging middle class, but severe economic inequality
o Nigeria: Vast majority of population lives in extreme poverty; very small middle
class
o Iran: Middle class, particularly in urban areas; large and class-conscious working
class and underclass
3. Economic Development
-This involves changes in the economic system and increases in prosperity due to these changes.
An example of this is a country’s movement from an agrarian to an industrial economy and a
resulting improvement in that country’s GDP.
 Economic Growth and Prosperity
o Discusses the use of ‘constant dollars’ to examine GDP over time. ‘Prosperity’ is
defined as the overall wealth and standard of living in a county. GDP per capita is
introduced as a useful measure of prosperity.
o A box in this section distinguishes between GDP and GNP. Another box
describes the term ‘informal economy,’ which includes income from transactions
(legal or illegal) that are not reported to the government (for tax purposes).
 Types of Countries Based on Economic Development
o In descending order of prosperity, countries can be classified as ‘economically
developed countries,’ ‘lesser developed countries,’ ‘least developed countries,’ or
‘newly developed countries.’ Some states may be ‘countries in transition’ and
display economic traits over two or more classifications simultaneously. This
section utilizes the appropriate acronym for each term and includes a box that
explains alternative terms for labeling countries in this regard.
 The “Resource Curse”
o This is described as the failure of a country to develop a middle class when it
emphasizes economic development from one kind of natural resource without
investing the wealth generated from this in other economic sectors. This section
notes a Deepening Your Understanding feature on the companion website about
the case of Equatorial Guinea since its discovery of oil in the 1990s.
 TIC Sections
o The UK: Highly developed economically; most prosperous TIC case
o Germany: Comparatively late and rapid industrialization; impressive post-WWII
growth
o France: GDP per capita similar to Germany and UK
o Russia: Economic collapse in late Soviet and early post-Soviet periods,
dependent on high price of oil for GDP growth
o China: Significant growth since 1970s; per capita statistics well behind those of
EDCs
o India: Variable growth since independent, but recent growth rates are impressive
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A box introduces modernization theory (and applies it to China)
Modernization Theory
Modernization theory contends that economic development follows stages,
LDCs can use EDCs as a model, and economic development has social
and political consequences.
Theory is supported by development in the NICs in recent decades
Theory predicts future consequences, including democratization, for
China
Mexico: Emerging market; success tied to oil prices; north more
prosperous than south
 Brazil: Rapid growth post-WWII, then downturn; debt crisis in the 1980s
 Nigeria: Per capita, one of the poorest countries in the world; vulnerable
to oil price fluctuations
 Iran: High birthrate not matched by economic development; struggles due
to Iran-Iraq War in 1980s
Nigeria and Dependency Theory
o Dependency theory is a challenge to modernization theory
o It contends that LDCs are kept poor by EDCs through LDCs’ dependence on
EDCs
o Predicts continuation of poverty, corruption, and fragile democracy (at best) in
LDCs
Appears to Work Well in Explaining the Case of Nigeria
Nigeria and Dependency Theory
o Dependency theory is a challenge to modernization theory
o It contends that LDCs are kept poor by EDCs through LDCs’ dependence on
EDCs
o Predicts continuation of poverty, corruption, and fragile democracy (at best) in
LDCs
Appears to Work Well in Explaining the Case of Nigeria
4. Economic Globalization
-There are no sub-sections in this part of the chapter, aside from the TIC sections. Trade as a
share of GDP and foreign direct investment are introduced as key measures of economic
globalization. The findings of the 2007 A.T. Kearney/Foreign Policy Globalization Index are
introduced for all of the TIC cases. This index provides a measure of a country’s level of
globalization in several sub-categories and overall.
 TIC Sections
o The UK: Less economically globalized (esp. less global trade) than one would
think
o Germany: Like UK, trade is limited and concentrated with other European Union
states
o France: Similar patterns to UK and Germany; state working to encourage (and
manage) globalization and its effects on France
o Russia: Limited globalization; hindered by corruption and weak “rule of law”
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o China: Relatively high levels of economic globalization; has yet to encourage
“political globalization”
o India: Low levels of economic globalization, but command of English among
many in the population makes increased globalization likely
o Mexico: Generally low levels of globalization; north more economically
integrated with U.S. than south
o Brazil: Significant trade barriers limit economic globalization
o Nigeria: Economically globalized because of oil-related FDI
o Iran: Scored lowest in globalization of the 72 countries ranked by A.T. Kearney
o
The “Race to the Bottom”
o Weak state theories contend that globalization limits states’ abilities to tax, spend,
and regulate
o Result is a “race to the bottom” to attract multinational corporations
Mixed results in the case of Mexico and its adoption of NAFTA in 1994
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