Chapter 11: Development

1. Chapter 11: Development • By: Abdul Abdo and Dustin Wang 1

2. Development • Definition: The process of improving the material condition of people through growth and diffusion of technology and knowledge. • In every place in the world, regardless of size, exists some sort of level of development. 2

3. There are many ways of measuring Development • Gross Domestic Product (GDP): Value of total outputs of goods and services produced in country, usually over one year. • Gross National Product (GNP): Includes all goods and services owned and produced by country overseas. • Purchasing Power Parity: Measurement tool for each currency to buy an equal amount of goods. • Informal sector: Includes all business transactions that were not reported by the government. And is not included in the GDP. 3

4. Human Development Index • Definition: Formula used to measure a country’s development level and compare it to other regions and countries on the rank-ordered list of countries. • HDI is development by the United Nation and has three factors that distinguish the country being measured; Economic, Social, and Demographic. • Its created by selecting one economic factor (GDP), two social factors (literacy, and education), and one demographic factor (life expectancy) • Highest HDI is a 1.000, or 100%, and the lowest HDI is 0.000, or 0%. No country in the world has either 100% or 0% HDI scores. 4

5. Economic Indicator: GDP • Definition: value of the total output of goods and services produced in a country, normally during a year. • Divide GDP by total population to get the average contribution from individuals. MDC’s GDP per captia exceeds $30,000 and LDC’s GDP per captia is less than $3,000. • The higher the per capita GDP, the greater the potential for ensuring that all citizens enjoy comfortable life. • GDP does not perfectly measure country’s development; GDP measures average (or mean) wealth, not its distribution. 5

6. Three other Economic Indicators • The other economic indicators useful in distinguishing between MDCs and LDCs are: Types of Jobs, Worker Productivity, and Availability of consumer goods. 6

7. Types of Jobs • Primary: Directly extract resources from earth. • Secondary: Manufacturing. • Tertiary: Provision of goods and services. • Quaternary: Creation and transfer of information. • Quinary: Highest level decision making • Distribution of jobs differ greatly from MDC’s and LDC’s. % of primary jobs in LDCs is 60%, MDCs is less than 5% • High agricultural % means people producing food for mainly survival, and not for sale. 7

8. Social and Demographic Indicators • Social Indicators: MDCs use part of their wealth to provide schools, hospitals, and welfare services. In turn, well-educated, healthy, and secure population can be more economically productive. Social indicators may include Education/literacy, and Health/Welfare. HDI uses literacy/education, and the Quality of literacy/education is measured in two ways: Student/teacher ratio and Literacy rate (Percentage of a country’s people who can read and write). • Demographic Indicator: HDI uses Life expectancy. But other demographic factors are Infant Mortality Rate, Natural Increase Rate, and Crude Birth Rate. 8

9. Productivity • Definition: Value of a particular product compared to the amount of labor needed to make it. • Productivity can be measured by the value added per capita. Value added: gross value of the product minus the costs of raw materials and energy. • In MDC’s workers produce more with less effort due to technology (machines, tools, equipment), but LDCs rely solely on human labor and animal power thus producing less. • Larger per capita GDP in MDCs in part pays for the manufacture and purchase of machinery. Which in turn makes workers more productive and generate more wealth. 9

10. The Development Gaphttp://progressivepupil.wordpress.com/2013/03/06/vision-of-true-independence/ • Definition: Widening difference between development levels in MDCs and LDCs. • MDCs are improving in their development levels faster than are LDCs. • North-South Gap: Refers to the pattern that MDCs are primarily located in the Northern Hemisphere and LDCs are mainly located in the Southern Hemisphere. 10

11. Gender-Related Development Index (GDI) • Constructed similar to the HDI. • Economic indicators; Per capita female income as a % of per capita male income. Social indicators; # of females enrolled in schools compared to # of males, % of literate females compare to males. Demographic indicators; Live expectancy of females compared to males. • The GDI penalizes a country for having a large disparity between the well-being men and women. • A country with complete gender equality would have a GDI of 1.0. • A high GDI means that both men and women have achieved a high level of development. • A low GDI means that women have a low level of development compared to men. 11

12. Gender Empowerment Measure (GEM) • GEM measures the ability of women to participate in the process of achieving improvements in their status through Political and Economic power. • GEM is calculated using: Economic (Per capita female income as a % of per capita male income, and % of professional and technical jobs held by women). Political (% of administrative jobs held by women, and % of members of the national parliament who are women). • Highest score= 1.0 and that regions with highest GEMs are North America, Northern Europe, and Oceania. • Regions with the lowest GEMs are Africa and Asia. 12

13. Challenges to Developmenthttp://www.economicsonline.co.uk/Global_economics/Dependency_theory.html • Dependency theory became popular in the 1960’s as a response to research by Raul Prebisch. Prebisch found that increases in the wealth of the richer nations appeared to be at the expense of the poorer ones. • Dependence Theory: Argues that LDCs are locked into a cycle of underdevelopment by the global economic system that supports and unequal structure. • LDCs are dependent on MDCs for financial and economic support. • MDCs are dependent on LDCs to remain on top of the world economy. • According to theory many countries are poor today because of their colonization by Europeans. • Dependency theory views the world’s countries as existing in a system of interlocking parts. 13

14. Core-Periphery Modelhttp://people.hofstra.edu/geotrans/eng/ch2en/conc2en/coreperipheryurban.html • Core-periphery model states that the world’s countries are divided into three groups. • Core: Consists of industrialized countries with the highest per-capita incomes and standard of living. An example is the USA. • Semi-periphery: Consists of countries that are newly industrialized and have not caught up to core countries in level of development. An example is Brazil. • Periphery: Consists of LDCs with low levels of industrialization, infrastructure, per capita income, and standards of living. An example is Angola. 14

15. Wallerstein’s world systemshttp://cassian.memphis.edu/history/jmblythe/GlobalF12/GlobalF12.html • Wallerstein argued that colonization by western European countries led to economic and political interactions among different regions (or systems) in the world and the inequalities that resulted from domination and exploitation by core countries of the semi-peripheral and peripheral regions. • Argues unequal positions of countries grew out of early exploration and colonization that began to create a network, or system, of interrelated economies in the world. 15

16. To promote development, LDCs choose one of two models: • The self-sufficiency approach pushes under-developed countries to provide for their own people, independent of foreign economies. • International trade approach pushes under-developed countries to identify what it can offer the world then direct investment towards building on that industry. This model is built upon the comparative advantage concept. Eventually a country will develop an advantage over the rest of the world in producing a good or service. More successful then the self-sufficiency approach. World Trade organization (WTO), works to reduce barriers to international trade. • When most countries were following the self-sufficiency approach two groups of countries choose the international trade approach during the mid-20th century: The Four Dragons (Tigers) and the Arabian Peninsula. The Four Asian tigers are South Korea, Singapore, Taiwan, and Hong Kong. 16

17. Rostow’s Development Model • Rostow’s model consists of five stages through which all countries move as they improve their economic development. • Stage One- Traditional Society: Economic activity is mainly subsistence farming with little investment in innovation. Called “non-productive” activities. • Stage Two- Preconditions for Takeoff: As a region begins to develop, a small (elite) group of people initiates innovative “takeoff” economic. • Stage Three- Takeoff: The small # of new industries that begin to emerge in Stage Two begin to show rapid economic growth. • Stage Four- Drive to Maturity: At this stage, more advanced technology and development begins to spread to a wider region and other industries (not just “take-off”) begin to experience rapid growth and workers become more skilled and educated. • Stage Five- High Mass Consumption: The economy shifts from the dominance of secondary factory jobs to the dominance of service-oriented jobs that require higher levels of education. • According to Rostow, once a country starts investing in capital, it will begin to develop. 17

18. International trade: Foreign Direct Investment and Structural Adjustment Programs • Foreign Direct Investment: Investment made by a foreign company in the economy of another country. • As a result special economic zones are created to attract foreign investment in the country itself. These regions offer special tax breaks, eased environmental restrictions, and other incentives to attract foreign business and investment. • International Monetary Fund: Provides loans to countries experiencing balance-of-payment problems that threaten expansion of international trade. • Structural adjustments are requirements attached to a loan from a lending agency like the IMF that force the country receiving the loan to make economic changes in order to use the loan. 18

19. NGO’s and Fair trade • Non-governmental organizations: Organizations run by charities and private organizations, rather than a government agency. Provides supplies, resources, and money to local businesses and causes that advance economic and human development. • Fair Trade: Means that products are made and traded according to standards that protect workers and small businesses in LDCs. • Two sets of standards make up fair trade: Producer standards (Advocates work with small businesses and democratically run cooperatives, and Consumers pay higher prices for fair trade products) and Worker standards (Requires employers to pay workers fair wages, permit union organizing, and comply with minimum environmental and safety standards). 19

20. Globalization • Globalization is the term used to describe the increasing sense of interconnectedness and spatial interaction among governments, cultures, and economies. • New International Division of Labor • The NIDOL breaks up the manufacturing process by having various pieces of a product made in various countries and then assembling the pieces in another country 20

21. Environmental Impacts • Sustainable development: a rate of growth and resource-consumption that can maintained from one generation to another. • Ecotourism: tourist operations that aim to do little harm to the environment. • Green House effect: Geographers are concerned with the rising average global temperature caused in part by spread of industrialization and the related increase in consumption and pollution. • Global warming: The global warming theory argues that Earth’s rise in temperature is causing negative consequences, such as premature melting of the polar ice caps, which could cause a rise in sea levels and an interruption of oceanic patterns. 21

22. GAME TIME! • Rules • Have one person be the “Runner” • Must write LEGIBLY, the correct answer on a sheet of paper. • First runner from any group to bring their paper up with the correct answer wins! 22

23. QUESTION 1 • What is the definition of Development? 23

24. ANSWER • The process of improving the material condition of people through growth and diffusion of technology and knowledge. 24

25. QUESTION 2 • What is the Difference between GDP and GNP? 25

26. ANSWER • GDP only encompasses Domestic production, whereas GNP encompasses goods and services produced Overseas. 26

27. QUESTION 3 • Name an Example of a Core, Semi-Periphery, and Periphery country 27

28. ANSWER • Core: Consists of industrialized countries with the highest per-capita incomes and standard of living. An example is the USA. • Semi-periphery: Consists of countries that are newly industrialized and have not caught up to core countries in level of development. An example is Brazil. • Periphery: Consists of LDCs with low levels of industrialization, infrastructure, per capita income, and standards of living. An example is Angola. 28

29. QUESTION 4 • Name a Quaternary Activity 29

30. ANSWER • Quaternary - Creation and transfer of information. 30

31. LAST QUESTION! • List the 5 stages of Rostow’s Model (Correct names!) 31

32. ANSWER • Stage One- Traditional Society • Stage Two- Preconditions for Takeoff • Stage Three- Takeoff • Stage Four- Drive to Maturity • Stage Five- High Mass Consumption. 32