Development

1
Development

1. Why does development vary among countries?
2. Where are more and less developed countries
   located?
3. Why does developed countries face obstacles to
   develop?

2
Key Issue 1 Why does development vary among
countries?

• The three objectives of development
• increases in availability and improvements in the
  distribution of food, shelter, health,
  protection, etc.
• improvements in levels of living, including
  higher incomes, more jobs, better education, etc.
• expansions in the range of economic and social
  choices available to individuals and nations

3

• Development- the process of improving the
  material conditions of people through diffusion
  of knowledge and technology.
• More developed country- (MDC) a country that has
  progressed relatively far on the development
  continuum. Also relatively developed country
  developed country.
• Less developed country- (LDC) a country in an
  earlier stage of development. Also developing
  country.

4
Measuring Development

• United Nations Development Program Overview 2005
• Gross Domestic Product (GDP)
• Types of Work (Economic Sectors)
• Social Indicators
• Education and Literacy
• Health and Welfare
• Demographic Indicators
• Life Expectancy (37 - 80 years)
• Infant Mortality (lt10 - gt100 per thousand)
• Natural Increase (0 - 4.7 )

5

• Gross Domestic Product- (GDP) the value of the
  total output of goods and services produced in a
  country per year.
• Literacy rate- the percentage of a countrys
  people who can read and write.
• Human Development Index- (HDI) the official
  scorebook that the U.N. uses to classify
  countries development as distinguished by its
  economic, social, and demographic factors.
• The economic factor is a countrys GDP per
  capita the social factors are literacy rate and
  the amount of education the demographic factor
  is life expectancy.

6
Measuring Development

• Social Indicators
• Education and Literacy

7

• Any guesses on who Scored the highest?
• Norway at .944. Others have been Canada, Japan,
  U.S.A., and various W. Europe countries.
• How about the Lowest?
• The lowest ranking HDI was recorded in Sierra
  Leone with a .275. The other global lows are
  clustered in sub-Saharan Africa.

8
Rank   HDI Index Life Expectancy Adult Literacy GDP (US)
  Arab States   Arab States 0.679 67 64.1 2,611
  East Asia and the Pacific   East Asia and the Pacific 0.768 70.5 90.4 1,512
  Latin America / Caribbean   Latin America / Caribbean 0.797 71.9 89.6 3,275
  South Asia   South Asia 0.628 63.4 58.9 617
  Sub-Saharan Africa   Sub-Saharan Africa 0.515 46.1 60.5 633
OECD OECD 0.892 77.7 na 25,750
World World 0.741 67.1 na 5,801
High Human Development High Human Development High Human Development High Human Development    
1 Norway 0.963 79.4 99 48,412
10 United States 0.944 77.4 99 37,648
11 Japan 0.943 82 99 33,713
42 Slovakia 0.849 74 99.6 6,033
47 Costa Rica 0.838 78.2 95.8 4,352
53 Mexico 0.814 75.1 90.3 6,121
Medium Human Development Medium Human Development Medium Human Development Medium Human Development    
75 Venezuela 0.772 72.9 93 3,326
83 Armenia 0.759 71.5 99.4 918
84 Philippines 0.758 70.4 92.6 989
94 Turkey 0.75 68.7 88.3 3,399
108 Viet Nam 0.704 70.5 90.3 482
144 Uganda 0.508 47.3 68.9 249
Low Human Development Low Human Development Low Human Development Low Human Development    
159 Rwanda 0.45 43.9 64 195
166 Zambia 0.394 37.5 67.9 417
9

• The different types of jobs are classified into
  three major sectors, all of which will be
  discussed in greater detail in later chapters.
• Primary sector jobs are those that are involved
  in directly extracting materials from the Earth,
  i.e. ag, mining, fishing.
• Secondary sector jobs are manufacturing jobs.
• Tertiary sector jobs involve the provision of
  goods and services to people in exchange for
  payment.
• This sector is subdivided into quaternary
  (businesses like trade, insurance, banking) and
  quinary (health, research, govt.)
• Who do you think gets paid the most?

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New International Division of Labor
11

• In MDCs the number of primary and secondary
  sector jobs have decreased while the tertiary
  sector has increased enormously.
• In LDCs the number of primary sector workers may
  be exceed 75 in countries where individuals must
  actively engage in subsistence farming.
• Knowing that, what is one easy way to determine a
  LDC?

12

• Productivity- the value of a particular product
  compared to the amount of labor needed to make
  it.
• Value added- the gross value of the product minus
  the costs of raw materials and energy.
• Both productivity and value added are higher in
  MDCs where manufacturing is far more efficient.
• Generally, those countries that have had abundant
  resources stood a better chance to develop than
  those that have had few resources.
• However, some countries, like Japan or
  Switzerland have achieved superb development
  w/out many resources, primarily through world
  trade.

13

• Measuring wealth in countries
• A measure of the wealth of a country is the
  number of consumer goods, like telephones,
  computers, cars, and television.
• In LDCs, very few of these products are likely
  to be found, and those that do exist are normally
  shared among many neighbors who all share the
  cost.
• Contrasted with MDCs where the number of TVs to
  people is practically 11. In MDCs those with
  wealth typically reside in the suburbs and the
  lower classes reside in the inner cities
• LDCs show the exact opposite with the wealth
  clustered in the city and poor people living in
  the countryside.

14

• Literacy and Health
• The literacy rate exceeds 95 in MDCs compared
  to less than 30 in some LDCs.
• The student-teacher ratio is 15 or below in
  many MDCs and above 40 in some LDCs.
• People are healthier in MDCs because there are
  more physicians, hospitals, and nurses per person
  than in LDCs.
• The people in MDCs have a healthier, more
  complete diet, and receive more calories and
  proteins than the people in LDCs who barely
  receive the daily minimum

15

• Life expectancy is higher in MDCs than in LDCs.
  
• Infant mortality rate, Natural Increase Rate,
  and CBR are all higher in LDCs.
• CDR (crude death rate) is not indicative of
  development because it remains relatively
  constant betwixt MDCs and LDCs.
• The reasons for this are that medical technology
  has diffused to the LDCs and thus lowered their
  CDR,
• there is a higher number of old people in MDCs,
  therefore the CDR will equal that of LDCs.

16
Measuring Development

• Social Indicators
• Health and Welfare

17
Key Issue 2 Where are more and less developed
countries distributed?

• The world is categorized into nine major regions
  according to their level of development. The
  nine regions are
• Anglo-America Canada and the U.S.
• Latin America
• Western Europe
• Eastern Europe
• East Asia
• Japan is separate and is its own region.
• South Asia
• Southeast Asia
• Australia and New Zealand are treated separately
  and known as the S. Pacific.
• Middle East
• Sub-Saharan Africa

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Location of More and Less Developed Countries
Development generally reflects a North-South
split in the world.
19

• Three of the nine regions are classified as more
  developed.
• Anglo-America,
• W. Europe,
• E. Europe. (Japan and the S. Pacific as well)
• The other six are considered less developed

20

• Developed Regions
• ANGLO-AMERICA has an HDI of .94
• WESTERN EUROPE has an HDI of .92
• EASTERN EUROPE has an HDI of .78.
• It is the only region on Earth where the HDI has
  actually declined. This is due to production
  cutbacks, higher death rates, and various other
  hardships as a result of overcoming communism and
  having to rebuild their economies.
• The HDI is actually identical to that of Latin
  America. However, because of E. Europes history
  of economic development, it is listed as a more
  developed region.
• JAPAN has an HDI of .93
• SOUTH PACIFIC has an HDI of .93
• Polar Projection Map

21

• Developing Regions
• LATIN AMERICA has an HDI of .78. Development is
  high along coast, where MDCs have established
  manufacturing centers or tourist destinations,
  but the standard of living is lacking elsewhere
  in the region.
• Try leaving the resort-
• EAST ASIA has an HDI of .72. China is expected
  to overtake U.S. as the worlds largest economy
  w/in a few years.
• SOUTHEST ASIA has an HDI of .71
• MIDDLE EAST has an HDI of .66. Many of the
  wealthiest people in the world are clustered here
  because of oil.
• only a select few have access to this money, and
  it is poorly distributed to the general public.
• SOUTH ASIA has an HDI of .58
• SUB-SAHARAN AFRICA has an HDI of .47

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Where does level of development vary by gender?

• Gender-related development index- (GDI) compares
  the level of development of women with that of
  both sexes.
• Gender empowerment measure- (GEM) compares the
  ability of women and men to participate in
  economic and political decision making.
• The GDI uses the same indicators of development
  used in the HDI adjusted to reflect differences
  in the accomplishments and conditions of men and
  women.
• The GDI reflects improvements in the standard of
  living and well being of women, whereas the GEM
  measures the ability of women to participate in
  the process of achieving those improvements.

23
Gender-Related Development Index4 factors
similar to the HDI

• Economic
• average income
• 2. Social Indicators
• -literacy levels
• -education
• (school attendance)
• 3. Demographic
• Life expectancy

24
Gender-Related Development Index
25

• -The rank of the Netherlands remained the same.
  (0)
• -The rank of Belgium is 7 but the HDI rank is
  6. (-1)
• -The rank of Iceland is 6 but the HDI rank is
  7. (1)
• -The rank of Japan is 12 but the HDI rank is 9.
  (-3)
• Why would a country drop in rank from the HDI?

26
Nepal GDI

• 59.4 59.9 26.4 61.6 55
  67 891 1,776 -4
• What do can you tell about
• Women in Nepal?
• -Women and men have the
• same life expectancy. Why?
• -Only a small of women can
• read compared to their
• enrollment in school. Why?
• -Women make less money
• than men. Why?
• -What does the last figure mean?

27
China GDI

• 94 73.2 68.8 86.5 95.1
  64 69 3,571 5,435 5
• What can you tell about
• the women in China?
• -Life expectancy is more
• consistent with the global trend
• -Almost equal numbers of each
• sex attend school, although low
• -Literacy rate is high but lower
• for females compared to males
• -Males have a higher income
• compared to women, consistent
• with the global pattern

28

• The GEM is calculated by combining
• Two indicators of economic power
• -income
• -professional jobs
• Two indicators of political power
• -managerial jobs
• -elected positions
• The GDI and GEM are both substantially higher in
  MDCs than in LDCs.

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Gender Empowerment Measure
30
Nepal GEM

• No data
  .50
• 1951 1951 1952A
  14.8 6 5.9
• Due to lack of data on the GEM,
• Data was found on the Political
• Participation Index

31
China GEM

• 20.2
  .66
• 1949 1954E 5.1
  21 20.2
• Data for China can be combined from the GEM and
  the Political Participation index to discuss the
  political power of women compared to men in
  China.

32
GDI and GEM of an MDCSweden

• 2 0.946 82.5 77.5 100 100
  124 104 23,781 28,700 -
• 2 0.854 45.3
  31 50 0.83
• When comparing Nepal and China to Sweden, what
  differences can you detect?

33

• -Just like the HDI, the GDI and GEM divide
  countries into high, medium, and low areas of
  development.
• -Cultural norms can control the advancement or
  subjugation of women and their status in certain
  regions of the world.
• -Gender inequality in income, education, and
  political power is a global problem.

34

• Knowing that how we can predict the movement of
  LDCs and MDCs?

35
Key Issue 3 Why do less developed countries face
obstacles to development?
36
Institutions of International Development

• United Nations - formed in 1945 to promote peace.
  189 current members.
• World Bank - financial assistance and loans.
  Owned by 189 United Nations members.
• International Monetary Fund - arm of U.N. that
  surveys and oversees international money exchange
  to prevent monetary crises. Also provides loans
  and training to help countries with balance of
  payment problems.
• Non-Governmental Organizations (NGOs) - World
  Watch, Human Rights Watch, World Commission on
  Dams, Grameen Bank, Kiva.org, many others.

37
Strategies and Models for International
Development

• International Aid
• Important, but can foster dependency
• Loans, in particular, lead to loss of sovereignty
• Self-Sufficiency Model or Import Substitution
  (tariffs protect markets)
• Attempted in Mexico (economy stagnated)
• Attempted in India (industrial quality suffered)
• International Trade Model (Economic Growth)
• Rostows Model
• World Bank lending
• Basic Needs Model/Appropriate Technology Model
• Microlending (Grameen Bank, Kiva.org)
• Non-Governmental Organizations (NGOs)
• Revolutionary/Radical Reform Model
• Cuba, U.S.S.R

38

• There are two main models of development that an
  LDC can take.
• DEVELOPMENT THROUGH SELF-SUFFICIENCY
• a country should spread investment as equally as
  possible across all sectors of its economy and in
  all regions.
• The growth may take time, but will occur over a
  broader spectrum.
• The idea is accomplished by protecting internal
  businesses by setting barriers that limit the
  import of goods from other places using tariffs,
  quotas, etc and limiting the amount of goods
  that can be exported to other countries.
• India, which for years made effective use of
  barriers to promote internal growth.
• Problems with the self-sufficiency approach are
  that it is inefficient because internal
  businesses are assured of the market and do not
  have to compete by developing new products or
  lowering their prices.
• The self-sufficiency model also demands a large
  bureaucracy to administer the controls, and this
  opens the govt. up to corruption.
• Which do Americans Want?

39

• DEVELOPMENT THROUGH INTERNATIONAL TRADE This
  model was developed by W.W. Rostow in the 1950s.
  The model is divided into five stages
• The traditional society. This stage is before a
  country has started to develop. A large number
  of the population is engaged in subsistence ag.
• The preconditions for takeoff. At this stage, a
  group of elite businessmen begin to organize the
  economy and create infrastructure for future
  manufacturing and services.
• The takeoff. Rapid growth is experienced in few
  select businesses. These advances fuel the
  fire by providing capital for the other
  businesses to utilize.
• The drive to maturity. Modern technology,
  previously confined to the takeoff industries,
  diffuses to every facet of the economy which then
  realizes rapid growth.
• The age of mass consumption. The economy shifts
  from second sector to tertiary and consumer goods
  begin to grow in numbers.

40

• MDCs are in stages 4 or 5,
• LDCs are in one of the first three.
• Rostows model is often considered overly
  optimistic by assuming that every country will
  develop.
• The core-periphery model states that the LDCs
  (periphery) will remain so until they beat the
  system and become part of the core (MDCs).
• Examples of Rostows model can be seen in the
  oil-rich Middle East states or the Four Asian
  Dragons (S. Korea, Taiwan, Singapore, and Hong
  Kong) all of whom developed some internal
  advantage, i.e. oil or cheap labor, and sold it
  to the MDCs

41

• Problems with Rostows model are
• Resources are not distributed unevenly, causing
  some countries to be left with little internally
  to sell to MDCs
• The stagnation of the world market
• As alluded to in the core-periphery model, the
  LDCs will continue to become more indebted to
  the MDCs.
• Rostows model is seen as a more applicable
  approach to development than is the
  self-sufficiency model in the modern era.
• Countries like India that have recently switched
  to the international trade approach have seen far
  greater results. To further promote this model
  the World Trade Organization (WTO) was founded.

42
Other Problems in International Development

• High Debt Countries
• Hostility Regarding World Bank and IMF Structural
  Adjustment Programs
• IMF Free Market Requirements for Loans and
  Assistance
• Warfare and Instability Limit Foreign Investment
• Lack of Infrastructure (or Colonial
  Infrastructure) Limits Opportunity and Investment

43

• Regardless of the approach taken, nearly all
  LDCs face the challenge of financing their
  development.
• LDCs can borrow money from MDCs to build
  infrastructure in order to instigate growth,
• many are unable to even pay the interest on the
  loans, much less actually pay them off.
• Recently, MDCs have grown increasingly unwilling
  to lend money to LDCs because of their history
  of defaulting.
• Many MDCs force the LDCs that wish to borrow
  money to adopt
• structural adjustment programs- economic policies
  that create conditions encouraging international
  trade, such as raising taxes, reducing govt.
  spending, controlling inflation, selling publicly
  owned utilities to private corporations, and
  charging citizens more for services.
• Should we even ask for it back? Loan forgiveness

44
High Debt Poor Countries

• For the World
• In 1970, the worlds poorest countries (roughly
  60 countries classified as low-income by the
  World Bank), owed 25 billion in debt.
• By 2002, this was at least 523 billion
• For Africa,
• In 1970, it was just under 11 billion
• By 2002, that was over half, to 295 billion
• Interest payments consume some small economies,
  encouraging export earnings instead of internal
  improvements. Third World Debt kills.

45
Debt Forgiveness?
In 2005, The IMF, after pressure from NGOs,
announced debt forgiveness relief programs for 18
of the poorest countries. However, the Heavily
Indebted Poor Countries (HIPC) program continues
to demand austerity programs that damage social
welfare systems. After the Indian Ocean tsunami
in 2004, the G7 countries pledged to forgive debt
in the 12 affected countries. Sri Lanka and
Indonesia, however, still owe billions today.
46
Infrastructure
47
Warfare and Instability Limit Foreign Investment
48
(No Transcript)
49

• In recent years, U.S., Japanese, and European
  multinational corporations (MNC) have been
  created
• These companies take advantage of the cheap labor
  and relaxed regulations found in many of the
  LDCs to produce products cheaply and sell them
  back home for much higher
• The main problem with MNCs is that LDC
  governments concentrate only on creating the
  infrastructure to attract these large companies,
  therefore using crucial funds to draw big
  business instead of investing in the standard of
  living of its citizens.
• In addition, the govt. may overlook labor
  violations in order to keep the MNC from leaving.
• Is this a problem or a benefit for our economy?

50
Progress Towards Development
NIR Natural Increase Rate IMR Infant
Mortality Rate
51
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