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  1. Unit 2 North-South

  2. Political Factions First World • Developed market economies Second World • Centrally planned economies Third World • Non-aligned countries

  3. The North-South Gap • The North/South Gap and Country Classifications • The most basic way of measuring the gap is through the GNP • Gross National Product measures economic position • A more telling measure is Physical Quality of Life Index – PQLI • PQLI includes: • Infant mortality • Life expectancy • literacy

  4. Effects of Population Growth • Populations in developing countries are growing • Populations in developed countries are declining • The greater the population, the greater the demands for services • Health • Housing • Education • Sanitation

  5. In developed countries, needs met by increased tax dollars • In developing countries, high joblessness and low wages means low taxes collected • Growing populations add pressure on forests, arable land and fresh water • Lack of financial means to import resources puts additional strain on natural resources • Exploitation of resources by First World Countries (MDCs) weakens LDCs and LLDCs

  6. Effects of Politics • LDCs and LLDCs often served as battlegrounds for super powers (North and South Korea; North and South Vietnam) • Populations and resources decimated • US and USSR supported conflicting sides in Latin America, Africa, Southeast Asia and the Middle East • The MDCs exported the arms; the LDCs and LLDCs imported them

  7. The History

  8. Colonialism • Began in 1500s • Europe founded colonies in the Americas, Africas and Asia • Introduced permanent changes • Developed relationships with “mother country” • “mother country” dominant/colony dependent

  9. Roles Colonies: • Supplied raw materials • Minerals, cotton, sugar, tea, coffee, rubber and cheap labour Mother Country • Direction, organization, capital investment, followed by technology and manufactured products

  10. Results • Colonies drawn into global market • Geared export crops and products to European markets • Eliminated or reduced production of traditional goods • Dealt in European currency • Small farms bought out by large corporations • Grew cash crops only • Women worked to produce food crops • Men worked away from home on plantations

  11. Problems • Countries now evaluated on how much money they could earn • However, unfair balance of trade existed • Raw materials worth less on the world market than finished product • Many countries produced one or two main crops so they were affected by the market price • Countries remained dependent on “mother countries” for infrastructure (roads, ports, schools, storage)

  12. Neocolonialism • Benefits of trade were one-sided • Few colonies had systems in place to take over the reins • Shifted into neocolonialism = control by Northern economic forces of newly independent countries in the south

  13. Multinational Corporations MNCs • Political control had been taken over by multinational corporations (MNCs) • MNCs’ interests were economic not social • Invested huge amounts of money into LDCs and LLDCs but only a small portion of the population benefitted

  14. Infrastructures improved but only in areas of industrialization • People had jobs, but wages were poor • Land was used for agriculture but single crops planted • Pesticides and fertilizers used excessively • Multinationals courted by developing countries • Offered tax free perks, free land, cheap labour • Faced with decline in prices for products, developing countries became more indebted to MNCs

  15. The Burden of Debt • Borrowing money became norm for developing countries • Economic changes can be disastrous i.e. recession • Interest rates rise, export earnings decline • Government forced to spend money on loan repayment while social spending declines

  16. Government and the Gap • Many governments military and elitist • Set policies to promote self interest • Corruption widespread • Rich get richer…poor suffer • Any attempts by people to oust governments thwarted by MNCs.

  17. Addressing the Gap • Often aid is tied to economic conditions • MDCs offer aid in exchange for purpose of goods and equipment from their country • Improves jobs and revenue in MDC but leave LDC and LLDC with goods they don’t want or need

  18. Often aid tied to military conditions • MDCs offer aid in exchange for permission to set up military bases and test sites

  19. Development Models • In 1950s and 60s, a country’s development was assessed on its GNP • Rich nations invested large amounts of money into poorer nations to boost GNP • World Bank and International Monetary Fund founded to provide multilateral loans • The capitalist model did not work for many LDCs and LLDCs.

  20. http://www.globalissues.org/issue/50/corporations • http://actrav.itcilo.org/actrav-english/telearn/global/ilo/multinat/multinat.htm • http://www2.econ.iastate.edu/classes/econ355/choi/mul.htm