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Title: Development

What is Development?
  • Earths countries can be classified according to
    their level of development
  • Development is the process of improving the
    material conditions of people through the
    diffusion of knowledge and technology
  • The process of development is continuous
    involving actions to improve the health and
    prosperity of the people
  • More developed countries (MDC) also known as
    developed or relatively developed lie further
    along the development continuum than less
    developed countries (LDC) also known as
    developing (implies that further progress is

  • For MDCs the challenge is to maintain a high
    level of development at a global scale
  • For LDCs the challenge is to find connections in
    the global economy by taking advantage of local
    skills and resources

Why Does Development Vary Among Countries?
  • A countrys level of development can be
    determined according to 3 indicators
  • Economic
  • Social
  • Demographic
  • The UNs Human Development Index (HDI) recognizes
    that a countrys level of development is a
    function of all 3 indicators
  • GDP per capita
  • Literacy rate and amount of education
  • Life expectancy
  • The highest HDI possible is 1.0
  • Norway 0.963
  • Niger 0.281

Economic Indicators of Development
  • UN uses Gross Domestic Product per capita
  • 4 other indicators are sometimes used
  • Economic structure
  • Worker productivity
  • Access to raw materials
  • Availability of consumer goods
  • GDP p.c.
  • Value of all final goods and services produced in
    a country in a year divided by the total
    population (i.e. the average)
  • MDC gt20,000 p.a.
  • LDC 1,000 p.a.
  • Average income does not show distribution, not
    informal income
  • E.g. not everyone in the US is wealthy 1/8 is
    classified as poor
  • However, the higher the GDP, the greater the
    potential for a more comfortable life

Economic Sectors
  • Jobs fall into 3 sectors
  • Primary jobs involving the extraction of raw
    materials e.g. farming, mining, fishing,
    forestry and hunting
  • Secondary includes processing raw materials and
    manufacturing of products
  • Tertiary the provision of services e.g.
    banking, retailing, education, government

  • First priority is to secure food
  • A high of agricultural workers indicates people
    involved in food production for themselves
  • A low of agricultural workers indicates that a
    handful of farmers can produce all the food
  • Freed from producing food, the majority of
    workers can then contribute through the secondary
    and tertiary sectors to produce wealth

Productivity Raw Materials
  • Productivity is greater in MDCs because of access
    to machinery and energy sources
  • Productivity can be measured by the value added
    (gross value of the product minus the cost of raw
    materials and energy)
  • Development requires access to raw materials and
  • UK, 1st developed country (C18th) had abundant
    raw materials when they ran short, the imported
    from colonies this sustained development in
    Europe but retarded it in Africa and Asia
  • Rise fall in global prices for raw materials
    affects development
  • Raw materials determine development potential
    rather than actual development e.g. Japan,
    Singapore, Switzerland (MDCs few natural
    resources) DR Congo (LDC abundant resources,
    unstable government)

Consumer Goods
  • MDC wealth pays for needs (essential for life)
    and wants (luxury goods services)
  • 3 consumer goods (11 ratio in MDCs, 1100 in
    LDCs) are good indicators of development
  • Telephones
  • Motor vehicles
  • TVs
  • In LDCs these goods are not central to daily life
  • Results in different cultural characteristics

Social Indicators of Development
  • MDCs use their wealth to fund social services
    (schools, hospitals welfare programs)
  • Therefore people are better educated, healthier
    and protected form hardships hence they can be
    more productive
  • Countries with high levels of development have
    greater quality and quantity of education
  • Schooling
  • MDC (mean 10 years) LDC (mean 2 years)
  • Literacy rates (ability to read and write)
  • MDC (gt95) LDC (30)
  • Health Welfare
  • Ratios of people to doctors, hospitals nurses
    (MDC low LDC high)
  • Many MDCs health care is a public service (low or
    no cost)
  • Diet influences health (MDCs more proteins
  • MDCs welfare for sick, elderly, orphaned, vets,
  • Challenge of MDCs to maintain current levels of
    social services

Demographic Indicators of Development
  • Life expectancy at birth (LEB)
  • Others include
  • Infant mortality rate (IMR)
  • Natural increase rate (NIR)
  • Crude Birth Rate (CBR)

Demographic Indicator LDC MDC
LEB Early 40s Mid 70s
IMR 10 1
NIR gt2 lt1
CBR gt40/1000 lt15/1000
Where are MDCs LDCs?
  • Anglo-America (0.94)
  • Language religion patterns less diverse
  • Wealthy, industrial, consumer, high tech, food
  • Western Europe (0.92)
  • More heterogeneous culturally
  • industrial, former colonial power, wealthy,
    service-centred, united (EU)
  • Eastern Europe (0.78)
  • Former Communist bloc, declining HDI, neglected
    modernization of industry, restructuring to
    market economies
  • Japan (0.93)
  • Imports raw materials, skilled labour force, RD
    for new products manufacturing processes
  • South Pacific (0.93)
  • Former British colonies exporters of food, low
    populations in relation to resources

  • Latin America (0.78)
  • Culturally diverse urbanized, developed Atlantic
    coast, past political instability, uneven income
    distribution, landless peasants
  • East Asia (0.72)
  • China - Centrally planned, agrarian, large
    population, potential economic tiger, some
  • Southeast Asia (0.71)
  • Large population, C20th political instability,
    inhospitable environments, cash crop production,
  • Middle East (0.66)
  • Desert, large petroleum reserves in some states,
    tension between Islam development, low literacy
    among women, cultural disputes, hotbed of
  • South Asia (0.58)
  • High population densities growth, Monsoon
    climate, Green Revolution, low literacy amongst
  • Sub-Saharan Africa (0.47)
  • Rich in resources, poorest region on Earth,
    relatively low populations compared to size of
  • In the past, resources used to fuel Europes
    economies landlocked states trade difficulties,
    low world prices for resources, political
    instability, climatic restrictions on food
    supply, high NIR, corruption, tribal culture

Gender Inequality
  • In every country, gender inequalities exist to a
    greater or lesser extent
  • Gender-Related Development Index (GDI)
  • Compares level of development of women with that
    of both genders
  • Complete gender equality GDI1.0
  • Average incomes of women are less than men
  • Women have lower levels of literacy than men in
  • LEB women higher than men (7 in MDCs 1 in LDCs)
  • Gender Empowerment Measure (GEM)
  • Compares the ability of women and men to
    participate in economic and political decision
  • In MDCs and LDCs fewer women hold positions of
    political economic power
  • Fewer women in professional and technical

Literacy Rates
Obstacles to Development in LDCs
  • The gap between LDCs and MDCs continues to widen
  • 20 worlds population living in MDCs consumer
    5/6 of worlds goods 14 of worlds population
    in Africa consume 1 of worlds goods
  • 2 major obstacles to development
  • Adopting policies that successfully promote
  • Finding funds to pay for development
  • 2 models
  • International trade model
  • Self-sufficiency model

Development Through Self-Sufficiency
  • Balanced growth, spreading investment equally
    among sectors regions
  • Through trade barriers (duties, quotas, red tape)
  • Case Study India
  • Trade barriers protected domestic industries
  • However Indias production was also for the
    domestic market only no generation of foreign
  • Subsidies and govt run industries
  • Inefficient and outdated industries
  • Large bureaucracy prone to corruption black

Development Through International Trade
  • Use of absolute and comparative advantage to
    generate wealth and foreign currency
  • Rostows Development Model
  • Traditional society
  • Agrarian society, religious and military
  • Preconditions for take-off
  • Elite group initiates innovative activities
    investment in new technology infrastructure
  • The take-off
  • Rapid growth in limited activities where
    technology grows rapidly other sectors remain
  • The drive to maturity
  • Modern technology diffuses to all sectors
    specialization of workers
  • The age of mass consumption
  • Production shifts from heavy industry to consumer

International Trade Model
  • According to the model
  • Each country is in 1 of the 5 stages
  • LDCs (1,2,3) MDCs (4,5)
  • LDCs will achieve development by moving up
    through the stages
  • Country engaged in international trade benefits
    from a wider marketplace
  • Must keep abreast of changes in the market
  • Model based on the fact that
  • certain countries (e.g. Japan) had joined W.
    Europe Anglo-America surely others could too
  • many LDCs contain abundant raw materials

Examples of ITM
  • Petroleum-rich Persian Gulf States
  • Saudi Arabia, Kuwait, Bahrain, Oman, UAE
  • Used to be LDCs until 1970s oil boom
  • Petroleum revenues have financed large scale
    development housing, airports, universities,
    telecom networks
  • Diffusion of consumer goods has altered the
    landscape e.g. cars, TV, imported foods
  • Sometimes conflicts with Islamic religious
    principles sometimes adaptation occurs

Persian Gulf States
Examples of ITM (cont.)
  • The Four Asian Dragons
  • S. Korea, Singapore, Taiwan Hong Kong
  • Singapore HK have no natural resources
  • Taiwan S. Korea limited resources
  • Therefore they developed by concentrating on
  • Producing a handful of goods including electronic
    good and clothing
  • Lower labour costs enabling goods to be sold

Limitations of the ITM
  • 3 problems hinder countries from developing
    through the ITM approach
  • Uneven resource distribution e.g. Zambia has
    abundant copper reserves declining copper
    prices have hindered development
  • Market stagnation world market demand has slowed
    down (MDCs have limited pop growth)
  • Increased dependence on MDCs LDCs production for
    world markets may compromise production of
    necessities for the domestic market
  • Nevertheless the ITM has been the preferred
    alternative for LDCs
  • E.g. India has removed trade barriers
    monopolies dismantled quality of goods has
    improved attracted trans-national corporations
    (TNC) GDP has increased dramatically

World Trade Organization (WTO)
  • To promote the ITM, countries dominating world
    trade formed the WTO
  • Idea is to promote international trade
  • By reducing or eliminating barriers to trade
  • By enforcing WTO agreements protection of
    intellectual property rights
  • Critique of WTO
  • WTO is anti-democratic
  • Protects large corporations
  • Compromises sovereignty of states

Financing Development
  • LDCs lack money for development
  • Funds come from MDCs
  • Loans from banks and international organizations
  • Direct investment from transnational corp.
  • Loans
  • IMF and World Bank loans to finance
    infrastructure projects to attract business
    investment and development. Problems
  • Project failure
  • Inability of LDCs to repay loans
  • TNC (HQ in MDCs branches in LDCs). Problems
  • Profits return to MDCs
  • Employment opportunities extended to fortunate
  • Negative impact on local culture

Core-Periphery Model
Core-Periphery Model (cont.)
  • Core MDCs
  • W. Europe, Anglo-America, Australia New Zealand
  • Periphery LDCs
  • outer rings around the core
  • Africa, Asia, S. America, E. Europe
  • Semi-periphery Newly Industrialized Countries
  • e.g. Taiwan, Mexico, Brazil, India, S. Korea

The Role of NGOs IDAs in Development
  • Non-governmental organizations (NGOs)
  • Case Studies
  • World Vision
  • The Grameen Bank
  • Social Entrepreneurs
  • International Development Agencies (IDAs)
  • Case Studies
  • Canadian International Development Agency (CIDA)
  • Norwegian Aid