Chapter 9: Development
Terms in this set (133)
Human Development Index
created by the UN, looks at economic, social, and demographic factors to find a country's level of development
How many economic, social, and demographic factors are put into account?
1 economic, 2 social, and 1 demographic
What are the 5 economic indicators?
Gross Domestic product per capita, economic structure, worker productivity, access to raw materials, and availability of consumer goods
How much does a person in MDCS and LDCS make per hour?
MDCS- $15/hr LDCS- $2/hr
Gross domestic product
the value of the total output of goods and services produced in a country during a year
What are the 3 job categories?
Primary- agriculture, Secondary- manufacturers that assemble raw materials into useful products, Tertiary- provision of goods and services in exchange for $
the value of a particular product compared to the amount of labor needed to make it
How is productivity measured?
Value Added- the gross value of the product minus the costs of raw materials and energy
Why do workers in MDCS produce more with less effort?
They have machines, tools and equipment
What did Europe do when they started running out of raw materials?
Began to import them from other regions. Established colonies to ensure supply of these materials.
What countries lack resources, yet developed through world trade?
Japan, Singapore, South Korea, and Switzerland
In LDCS, where do the "haves" and "have-nots" concentrate?
Haves- urban areas Have-nots-countryside
What are the social indicators of development?
Education, Literacy, Health and Welfare
What does quantity of education measure?
number of school years attended
What does quality of education measure?
Student/teacher ratio and literacy rate
What is the literacy rate in MDCS and LDCS?
MDCS- exceeds 98%, LDCS- less than 60%
In Europe, what % does the gov and the residents pay for health care?
Gov- 70% and residents- less than 30%
How much do individuals in LDCS pay for their health care?
More than half the cost
In the U.S what % do residents pay for health care?
55% of the cost
What are the demographic indicators of development?
Life expectancy, infant mortality, natural increase rate, and crude birth rate
What is the life expectancy in LDCS and MDCS
LDCS- 60's MDCS- 70's
What language and religion are most Anglo-Americans?
English and adhere to Christianity
Problems in Anglo-America
discrimination against ethnic minorities, uncertain status of French speaking Quebecois
Anglo-America's imports and exports?
Leading consumers and world's largest market for many products, most important food exporter
What language and religion are most people from Western Europe?
Indo-European language and are Christians
How has the unity been in Western Europe since after WW2?
They've been very unified politically, economically, militarily, and culturally
What are immigrants most responsible for in Western Europe?
The region's population growth
Eastern Europe characteristics?
Declined in HDI because of communism. At first, communism helped their development, but with the fall of communism, their development declined
What did communist theories believe of MDCS?
Communism would triumph in MDCS because exploited factory workers would lead a revolution and overthrow the government
What was the 5 year plan the Gosplan made?
1. Heavy industry 2. Dispersed production facilities from the European to the Asian portion of the Soviet Union to promote equal development. 3. Located manufacturing facilities near sources of raw materials.
Problems with communism and development?
Scarce funds for new equipment, inefficient agricultural practices so had to import materials, orders weren't followed in factories, pollution MAJOR PROBLEM: communists neglected consumer products
How did Eastern European countries along the border of Western Europe develop?
Czech Republic, Hungary, Poland, Slovakia- converted rapidly to market economies.
How is Russia's HDI and why?
Lower than Libya and Malaysia- lower production, higher death rates, and other stresses from the end of communism
How does Moscow compare to the rest of Russia?
Moscow's incomes are 4 times higher than the rest of Russia's. Have more jobs and goods.
What breakup did the fall of communism lead to?
The break-up of Czechoslovakia, the Soviet Union, and Yugoslavia.
Why is Japan's level of development remarkable?
Unfavorable ratio of population to resources. Consume little meat and grain (other than rice) but still import these. Lacks many key raw materials for basic industry.
How did Japan get a foothold on the global economy?
Took advantage of the abundance of people willing to work for low wages and then once became wealthier they started focusing on high-quality things (cars, electronics)
South Pacific's info..
small number of inhabitants and peripheral location. Economies tied to Japan and other Asian countries
What do most Latin American people speak and what language?
Spanish or Portuguese, and Roman Catholics
Where are most Latin Americans likely to live?
Urban areas- Mexico City, Sao Paulo, and Buenos Aires
Where is Latin America's population concentrated and what does that area have?
Along Atlantic Coast. Has high agricultural productivity, one of world's leaders in production and export of wheat and corn.
Why is development hindered in Latin America?
Inequitable income distribution
2nd largest economy in the world, the world's most populous country
Why did china fall behind in development?
century of civil wars and foreign invasions
What event caused dramatic changes in China?
The old Nationalist government fled to Taiwan effecting China's economy.
What was agriculture like before and during communism in China?
Before- tenants forced to pay high rents and turn over most crops to the property owners. During- gov took control of agricultural land
What is the 21st century China economy like?
World's largest market for consumer products (shampoo, detergent)
What problems exist in China?
Region economic inequalities- East coast have higher GDP's per capita than in the interior. Rapid development is straining resources, and pollution
What does the Middle East have because of petroleum exports?
Where are petroleum reserves concentrated?
In countries that border the Persian (arabian) gulf
Why does tension grow in the Middle East?
There is a large gap in per capita income between the petroleum rich countries and the ones that lack resources
Ex of tension with Kuwait
Little sympathy for Kuwait when invaded by Iraq because they were accused of not sharing its petroleum-generated wealth
What is the biggest challenge for Middle Eastern people with development?
Promote development while respecting traditional Islamic values
What has the Alternative Human Development Index said about the Middle East
Reasons they are not successfully developing- lack of political freedom, low education and literacy rates, and lack of opportunities for women.
What countries are associated with Southeast Asia?
Indonesia (most populous)-with the island of Java, Vietnam, Thailand, and Philippines.
Why do people live on the island of Java
fertile soil derived from volcanic ash and the Dutch established their colonial headquarters here
What happens in Southeast Asia's climate that effects agriculture and what changes it?
Tropical climate limits cultivation- Western medicines and technology allow easier cultivation
What does the Southeast Asian area produce?
Palm oil, coconut oil, rubber, tin, petroleum, rice.
What countries have become manufacturers of textiles and clothing with cheap labor?
Thailand, Singapore, Malaysia, and the Philippines
What sometimes happens with Southeast Asia's funds for development?
invested unwisely or stolen by corrupt officials
What countries consist of South Asia?
India, Pakistan, Bangladesh, Sri Lanka, Nepal and Bhutan
What does India produce and how?
Rice and Wheat- Green Revolution (inventions increased agricultural productivity)
How does the climate affect agriculture in South Asia?
Monsoon season- usually produce a surplus of grain during dry years
Sub-Saharan Africa rankings:
Worlds highest percentage of people living in poverty and suffering from poor health and low education levels.
Where do many of Africa's problems come from?
The colonial era- raw materials were made for Europe rather than promoting Africa's economy.
What are the other problems Africa has
Landlocked states have difficulties shipping out raw materials, colonies were concerted to states without regard for ethnicities, and not enough land to feed the large population
The process of improvement in the material conditions of the people through diffusion of knowledge and technology
Gross National Income
Most Common today- what is made in the country plus income received from investments outside the country
A country should spread investment as equally as possible across all sectors of its economy and in all regions EX: China and India-moving people out of poverty is more important that obtaining wealth
Problems with Self-Sufficiency Approach and Success
Problems: Slow moving, inefficient, limits people's choices, gov has control, black markets develop Success: Will have huge growth in time
Walt Rostow's model- assumes all countries follow similar path to development (ladder of development)
5 Stages of Modernization Model:
1. Traditional Subsistence (have not started developing yet, inefficient, rigid hierarchy, little technology and little $) 2. Investment (small group initiates economic activities and country is now willing to invest in new technology and infrastructure) 3. "Take-Off" (start with textiles and food first, get profit, surplus) 4. Drive to maturity (more money, more skilled technology-assembly line) 5. Age of Mass Consumption (away from heavy industry into consumer goods, where wealth develops)
Where are places that have went through the ladder of development?
The four asian dragons (Singapore, South Korea, Taiwan, and Hong Kong), and the Arabian Peninsula (Saudi Arabia, Kuwait)
Problems with Ladder of Development
1. Countries need more than one raw material to develop quickly 2. Market Stagnation (LDC's need to capture sales from established competitors rather than share in an expanding market to increase sales) 3. Increased dependence on MDC's
Wallerstein-explains low development levels as result of LDC's continuing economic and political dependency on MDC's
Abandoning the local currency of a country and adopting the dollar as the local currency
Introduced in 1980's. School of development emphasizing free market approaches and globalization of trade, especially expansion into post-communist economies and newly industrializing states- fall of communism might trigger this
Real world strategies for LDC's for Neoliberalism
Privatization of industry, encourage foreign direct investment by MDC's, encourage free trade, currency devaluation (to encourage exports)
Ex of Neoliberalism..
China- Made special economic zones (free-trade zones/pockets individually made so it wouldn't grow too fast- would spread from city to city)
Introduced in 1990s by U.N. Development providing for the needs of the present generation without diminishing the options of future generations-includes economic improvement and environmental conservation (China-environment super bad)
Real World strategies for LDC's for sustainable development
Market mechanisms for environmental regulation, resource conservation;renewable resources, loans to women and very poor (microcredit), use of appropriate scale technology
Non-gov organization that gives loans to poor (mostly women) to develop small businesses- 98% return rate of loans
Series of links connecting the many places of production and distribution and resulting in a commodity that is then exchanged on the world market (pencil)
What actions do countries make with the Self-Sufficiency Approach?
-isolates fledgling businesses from competition from large international corporations
-Setting barriers that limit the import of goods from other places (tariffs, quotas to limit quantity, and requiring licenses to restrict the number of legal importers)
What actions did India use with the self-sufficiency model OUTSIDE of India in the PAST?
To import goods into India, needed to secure a license and have it approved by gov agencies. Then the gov severely restricted the quantity it could sell in India. Then the gov imposed heavy taxes
What actions did India use with the self-sufficiency model INSIDE India in the PAST?
Indian businesses were discouraged from producing goods for export and Indian money could not be converted to other currencies, business required gov permission to sell a new product, modernize factory, etc.
What happened if a private company in India couldn't make a profit only selling goods in India?
The gov would provide subsidies (financial helpers)- cheap electricity or wiped out debts.
What must takeoff industries do to remain competitive?
Constantly evaluate changes in international consumer preferences, marketing strategies, production engineering, and design technologies
What was Rostow's development model based on?
1. The developed countries of Western Europe and Anglo-America had been joined by others in Southern and Eastern Europe and Japan- if they could develop, why couldn't other countries?
2. Many LDC's contain an abundant supply of raw materials that could generate funds for LDC's to promote development
Who are a part of the four asian dragons and why?
Singapore and Hong Kong- both former British colonies have no resources. South Korea and Taiwan were influenced by Japan's success with international trade approach
Explain Zambia's uneven resource distribution...
Zambia has extensive copper reserves, but it has been unable to use this to promote development because of declining world prices for copper
How is India with its barriers now and what has it done for India?
Foreign companies are allowed to set up factories and sell in India, tariffs and restrictions on the import and export of goods has been reduced or eliminated. This has increased the quality of their products
Why did countries convert from self-sufficiency to international trade during the 1990s?
evidence that it was better for promoting development- increased the per capita GDP by more than 4% annually
World Trade Organization...why it was started?
To promote the international trade development model, countries established it.
What 2 things does the World Trade Organization do to promote international trade?
1. Through the WTO, countries negotiate reduction or elimination of international trade restrictions on manufactured goods 2. Enforces agreements, one country can bring to the WTO an accusation that another country has violated a WTO agreement.
What do liberal critics say about the WTO?
It is antidemocratic, because decisions made behind closed doors promote the interest of large corporations rather than the poor.
What do conservatives say about WTO?
That it compromises the power and sovereignty of individual countries because it can order changes in taxes and laws that it considers unfair trading practices
Foreign direct investment (FDI)
Investment made by a foreign company in the economy of another country
Why did FDI decline in the U.S?
In 2002, in the wake of 9/11, but it has increased steadily since then
How is FDI in LDC's?
It is not distributed equally- nearly one-half of all FDI destined for LDC's went to China
Is the major sources of FDI, invests and operates in countries other than the one in which its headquarters are located
Where do funds for LDC's come from?
Loans from banks and international organizations and direct investment by transnational corporations
Why do LDC's borrow money?
To build new infrastructure (hydro-electric dams, flood protection systems, etc)
What are the 2 major lenders of loans?
International Monetary Fund (IMF) and the World Bank
When were the IMF and the World Bank created and why?
Created to promote economic development and stability after the devastation of WW2 and to avoid a repetition of the disastrous economic policies contributing to the Great Depression
Where does the World Bank get the money it lends?
Money raised from sales of bonds to private investors and government contributions
What countries have the largest debts?
Brazil, Argentina, Mexico and several other Latin American countries.
What happens when the countries cannot repay their debts?
MDC's refuse to make further loans, so construction of infrastructure stops
What does MDC's, the World Bank and IMF do before granting debt relief?
Require a Policy Framework Paper outlining a structural adjustment program (economic goals, strategies)
What do critics say about structural adjustment programs?
That poverty worsens, they require cuts in health, education and social services that benefit the poor. Unemployment may rise.
What is fair trade?
products are made and traded according to standards that protect workers and small businesses in LDC's.
What products are sold through fair trade in North America?
Mostly craft products- Ten Thousand Villages store
What products are sold through fair trade in Europe?
Fair Trade to workers on farms suggests...
that small-scale farmers and artisans band together to get credit, reduce raw material costs, maintain higher and fairer prices for their products, learn leadership and organizational skills.
How much is returned to the producer and how much to the wholesaler with fair trade?
1/3 of price back to producer and the rest goes to the wholesaler who imports the item and for the retailer's rent, wages, and other expenses
What two indexes were created to measure the extent of each country's gender inequality?
The Gender-Related Development Index (GDI) and the Gender Empowerment Measure (GEM)
What does GDI do?
Combines the same indicators of development (income, literacy, education, and life expectancy) to compare levels of development between women and men.
What GDI would a country have with complete gender equality?
1.0 - no country has achieved this
What does a high GDI mean?
Both men and women have achieved a high level of development, though women have a slightly lower level than men
What does a low GDI mean?
Women have a low level of development, and the level is substantially below that of men
What country has the highest ranking GDI?
Where are the lowest GDIs located?
What fraction of the income do women have in MDCs?
What is the ratio of women to men in high school in MDCs and LDCs?
MDCs- 99/100 LDCs- 60/100
How do literacy rates compare to MDCs, Latin America, and Sub-Saharan Africa/Middle East?
MDCs- literacy nearly universal among both men and women Latin America and Asia- isn't universal, but rates are similar for men and women, Sub-Saharan Africa and Middle East- low, substantially lower than for males
What is the life expectancy gap between males and females in LDCs and why?
a gap of only a year or two because many women die from childbearing
What does the GEM do and what are the indicators?
Measures the ability of women to participate in the process of achieving improvements - 2 economic (income and professional jobs) and 2 political (managerial jobs and elected jobs)
Where are the highest % of women in professional and technical jobs?
Northern Europe- more than 1/2 of professional or technical workers there are women
What is a maquiladora?
factory in Latin America that imports materials and equipment on a duty-free and tariff-free basis for assembly or manufacturing and then re-exports the assembled product, usually back to the originating country
Costs of Industrialization?
Causes pollution, creates export processing zones (free trade zones), maquiladoras, and special economic zones (China)
Costs of Agriculture?
Subsistence and agricultural conglomerates (businesses), desertification (especially Africa), soil erosion (people don't understand crop rotation), pesticides and herbicides polluting water
Costs of Tourism?
Use of scarce commodities, foreign investors make the profit
Gross National Product
measure of the total value of the officially recorded goods and services produced inside and outside of territory PROBLEM: very broad