Global Inequalities (continued)

1
Global Inequalities (continued)
A lecture by Dr Christopher Kollmeyer
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The Champagne Glass of Inequality Share of
Global Income by Quintiles
3
Forms of Globalization and Social Stability
Level of Interconnectedness
High
Low
Low
Level of Global Inequality
High
4
Explaining Global Inequality Competing
Theories, Emphasizing Different Problems

• Modernization and Neoliberal Theories
• World-System and Dependency Theories

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Modernity Starts in Western Europe and Spreads
Unequally Around the World
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Modernization Theories Stages of Economic Growth
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Modernization TheoriesExplaining Poverty

• Argues that low-income countries are poor
  because
• Traditional values
• Low rates of savings and investment
• Corrupt / inefficient institutions
• Too much government control of economy

8
Neoliberalism Key Ideas

• Free markets are efficient, government is not.
  IMF and World Bank help facilitate structural
  adjustments.
• Privatize government-owned industries
• Promote free trade
• Reduce economic regulation (labor, environment)
• Cut government spending on social services

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North-South Trade as a Percentage of GDP, 1962
and 1992
1962 1992
North    
             
North  
2.3 (460)
3.15 (156)
.5
2.0
South   (LDCs)
 
South   (LDCs)
Note Percentage increase in trade occurring
between 1962 to 1992 stated in brackets.
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World-System Theory and the Legacy of Colonialism

• Imperialism A situation in which powerful
  nations maintain control or influence over weaker
  nations for economic gain.
• Colonialism A form of imperialism in which
  powerful countries directly rule another country
  to facilitate economic exploitation
• Spain in Latin America
• Britain in Africa, India, and elsewhere
• France in Africa and elsewhere
• Results Distorts and retards socioeconomic
• development (cash cow).

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Countries Gaining Independence after WWII
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International Comparison of Average Labour Costs
in Manufacturing Figures for17 Select Countries
in 2003 US Dollars.
Dependency Theory and Unequal Exchange
Average Labour Costs in Manufacturing for 17
Select Countries (2003 US )
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Global Commodity Chains
Definition A dynamic network of labor and
production processes that results in a finished
product. Key Point Global North retains
high-value added activities, while leaving the
low-value added activities to the Global
South. ?reproduces global income inequality
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What is a Commodity Chain?

• A dynamic network of individual business
  processes whose end result is a finished product.
• Executive management
• Finance and accounting
• Product development
• Sales and Marketing
• Customer Service
• Factory production and supervisor
• Raw materials procurement

15
A 100 Dress Who gets What?
Customer Pays 100

• Retailer 50.00

• Manufacturer 50.00
• textiles 22.50
• contractor 15.00
• workers 6.00