Why are some places more developed than others?

1
Why are some places more developed than others?
2
On average, an American consumes 200 times more
resources than an Indian
24,000 die each day from hunger-related causes
1 in 5 people live on less than 1 a day
Europeans spend more on pet food than Africa
spends on food
112 new cities will be created each year for the
next 25 years
1 billion people live without fresh water
3
Civil Conflict and Governance
Examples Indonesia Colombia Uganda Democratic
Republic of Congo Kenya Burma Iraq Sudan
4
AIDS kills two million people in Africa a year,
ten times more than war. In MEDCs the HIV
infection rate amongst the adult population is
less than 1. In South Africa, it is 20, with
1,500 more people being infected every day.
5
Climate Change and Development

Up in Smoke? report (2005,
updates 2006)
"In my view, climate change is the most severe
problem that we are facing today, more serious
even than the threat of terrorism."
David King, Chief
Scientific Advisor to the UK Government
6
The digital divide
7
Adapted from UN Human Development Report 2001
(Chapter 2)
Advanced technology
Higher productivity and greater knowledge

• Improvements in productivity
• farming techniques
• factories
• health
• energy generation

Technology A virtuous circle of development

• A better quality of life
• Healthier
• More educated
• Improved food security

Higher income
8
Focus on Africa
Economic Unfair trade High transport costs (a colonial legacy?) Reliance on primary commodities Late entry into manufacturing sector Overseas debt High risks of overseas investment For every dollar received in sub-Saharan Africa in aid and debt relief between 1970-2000, the region lost 14 from trade barriers, debt servicing and poor investment policies Political Civil conflict Poor governance Environmental Low agricultural productivity Impact of climate change Social Poor health and education Pressures of popl growth and urbanisation The brain drain
www.commissionforafrica.org
9
The Millennium Development Goals
10
DATA Debt, AIDS, Trade, Africa www.data.org/
Make Poverty History www.makepovertyhistory.org/
11
International Financial Institutions.

• Western countries previously dominated the Globe
  through colonization (Early form of
  Globalization)
• After dependence, poorer countries still depend
  on financial aid, credits and support from
  ex-colonizers (Increased economic dependency).
• This has helped contribute towards the debt
  burden.

12
World Trade
13
Problems with trade

• Trade is the exchange of goods for sale e.g. raw
  materials like coal, cotton, tin and bananas.
• However, If there is a change in demand e.g.
  copper telephone wires were replaced by fibre
  optics then demand falls. Zambias national
  income was greatly affected by this.
• Bad advice is sometimes given by theWorld Bank.
  E.g. Coffee example-Tanzania case study-Basic
  economics of supply and demand

Task Watch the Red Nose video and answer the
questions on the worksheet in your booklets
14
Trade and Unequal Development

• Trade barriers (tariffs, subsidies, quotas)
• Surplus dumping
• The balance of power in the W.T.O.
• TNC control

15
The race to the bottom
The worlds 49 least developed countries account
for only 0.4 of world trade

World Development Movement
website
Dependence on primary commodities terms of
trade now at their lowest for 150 years Lack of
infrastructure, technology and a manufacturing
base Unsustainable exploitation of natural
resources Overseas debt
16
The case of coffee
1997-2002 Coffee prices fell by 70, costing
LEDC exporters 8 billion in lost foreign
exchange earnings Dominated by four TNCs 25
million coffee growers receive an average of
1/kg consumers pay 15/kg
17
The potential benefits of trade
The WTO estimates that the 1994 Uruguay Round
trade deal added 109 510 billion to world
income. Trade creates more and better paid jobs.
Poorer countries can exploit their comparative
advantage (do what you do best and trade for the
rest)
Task Find out what the Round table agreement is?
18
ICA (International Commodity Agreement)
The ICA tried to stabilize prices, but attempts
often collapsed e.g. International Coffee
Agreement in 1989 when coffee fell from US 1.4
to .70 per pound in just 4 months. Also Brazil
in 1974 had a fungi that affected crops in
Columbia and Mexico and there was a war in Angola
which also decreased supply and prices increased.
Then many countries switched to growing more
coffee (crop substitution) and supply increased
and prices decreased.
19
What else affects the price of commodities?

• Fashions in food etc often change which affect
  demand and prices which lead to fluctuations in
  price as well as the effect of weather and
  harvests e.g. Coffee, Tobacco sugar
• Also factories often close down during recessions
  in the North which affects demand from the
  imports from the South and creates further
  poverty.
• Commodity substitutes also affect commodities
  e.g. synthetic cocoa butter, vanilla flavouring
  and food sweeteners.

20
Case Studies and other examples

• Artificial sweetener production decreased demand
  for natural sugar and lead to one quarter of a
  million people unemployed in the Philippine
  island of Negros.
• Non-agricultural commodities can also be affected
  e.g. Tin from Bolivia which lead to more gold
  being mined. The impact was more people migrated
  to the cities (General problems of urbanisation)
  and more rainforest destruction.
• Problems with tropical storms e.g. Hurricanes
  affect the Caribbean which grows a lot of
  bananas.

21
Trading policies

• Tariffs in the west result in LEDCS selling raw,
  unprocessed commodities rather than exporting
  manufactured goods e.g. Pineapples have a 9
  duty, but canned pineapples are 32 and Juice is
  42.

22
Tasks

1. Answer questions 6,7,8 9 of page 137 of
   Population, resources and development.
2. Explain what Trading blocs are and give examples
   of political and economic collaboration (Page
   137)
3. Answer questions 1,2,5,7 8 from the Geoactive
   on trading blocs in your booklet
4. What is UBEP? What have they done to try and
   stabilize the prices of Bananas? (137)
5. Answer questions 10 and 11 on page 140.

23
Tasks

• Read the page on Reducing disparities 2
• What is the difference between Export processing
  zones and Free trade zones?
• How do Transnational's benefit from EPZs?
• Name 4 EPZs.

24
More tasks

• Read the section on Fair or ethical trade in your
  booklets
• Find out what fair trade is and research an
  example of fair trade and evaluate its successes
  and failures

Watch and take notes on the manufacture of
footballs in Pakistan.
25
Fair Trade-Is it always fair? Read the opinion
below, and summarise the arguments

• Goods produced under a 'fair trade' arrangement
  are sold under the brand name of the 'fair trade'
  organization and hence lose their local identity.
  The producers are forever dependent on the 'fair
  trade' intermediary who continues to determine
  unilaterally the size of the price premium.
  Producers who do not accept the conditions
  imposed by the 'fair trade' intermediary can be
  summarily dropped from the scheme.

26
Draw backs of fair trade continued

• The main concern of business firms who sell the
  same products as the 'fair trade' organizations
  is what makes the prices paid 'fair'. (a) In
  commerce, a 'fair' price is one that is based on
  the price consumers will pay for the goods minus
  all the costs and risks involved in the operation
  between the market-place and the producer. This
  is the 'market' price.     A 'fair trade' price
  is usually higher than the market price. But why
  is a price higher than the market price 'fair'?
  What determines how much higher the so-called
  'fair' price should be? Who decides? The answer
  to these questions depends on the way 'fair
  trade' goods are marketed.

27
(b) As a business model, the 'fair trade'
movement can be portrayed as selling 'absolution'
to consumers who feel guilty about how well off
they are compared to the producers who supply
them with certain goods, especially foods. When
these consumers pay the premium price, they feel
they are doing the 'right thing'. In other words,
the price premium they pay is a kind of
charitable contribution.     The 'fair trade'
intermediaries share the premium paid by
consumers with the producers in a proportion that
they decide. The part they keep for themselves is
used to finance their own organizations and
provide their employees with a first world life
style.
28
the preferred development mode

• Current 'best practice' to improve the livelihood
  of small producers involves some kind of
  co-operation between donors and business firms in
  which the producers receive business and
  technical training so that they meet market
  requirements for better quality goods and so
  increase their income and improve their life in
  whatever way they see fit.