Who was the world’s richest person in 2012? – (a) Bill Gates, founder of Microsoft – (b) Warren Buffett, investor, CEO of Berkshire Hathaway – (c) Carlos Slim Helu, head of Grupo Carso, a global conglomerate based in Mexico

GLOBAL INEQUALITY

Learning Objectives Basic Concepts – Understand the systematic differences in wealth and power among countries Theories of Global Inequality – Recognize the impact of different economic standards of living on people throughout the world – Stratification around the World Research on Global Inequality Today – Analyze the success of newly industrializing economies

Concepts Globalization – The increased economic, political, and social interconnectedness of the world – “Nowhere to Everywhere” Global inequality – The systematic differences in wealth and power between countries  Industrial Revolution and increased agricultural productivity resulted in explosive economic growth

To understand global inequality… Countries divided by per-person gross national income (GNI) – 70 high-income countries – 54 upper-middle-income countries – 54 lower-middle-income countries – 36 low-income countries

 Like the individuals in a society, the countries of world as a whole can be seen economically

 How the lives of people differ depending on the income class of the country in which they live?

High-income countries – Highly industrialized – Industrialize earlier(exceptions) – 14.2 percent of the world’s population – 66 percent of the world’s total income

Middle-income countries – Diverse group – This group is often divided into upper- and lower-middle-income groups. – Varying levels of industrialization – 71.7 percent of the world’s population – 31 percent of the world’s total income – The standards of living are generally higher than

Low-income countries – Diverse group – Mostly agricultural, in early phase of industrialization – 12 percent of the world’s population – 7 percent of the world’s total income – High population growth – Widespread poverty

THEORIES OF GLOBAL INEQUALITY

Four Categories in General  Market-oriented,  Dependency,  World-systems, and  Global commodity chains theories.

Market-oriented theories – Argue that the best possible economic consequences will result if individuals are free to make their own economic decisions, uninhibited by governmental restraint – Governments should not dictate which goods to produce, what prices to charge, or how much to pay workers.

Market-oriented theories – W. W. Rostow’s modernization theory suggests that low-income societies develop economically only if they give up their traditional ways and adopt modern economic institutions, technologies, and cultural values that emphasize savings and productive investment.

Market-oriented theories – W. W. Rostow’s modernization theory Traditional stage Takeoff to economic growth Drive to technological maturity High mass consumption

Market-oriented theories Modernization – Process by which nations pass from traditional forms of social organization toward forms characteristic of post–Industrial Revolution societies  Concepts of modernization and development contain an ethnocentric bias!

Market-oriented theories – Neoliberalism – Today it is called neoliberalism! Free market forces, achieved by minimizing government restrictions on business, provide the only route to economic growth

Dependency theories – Marxist theories that argue that the poverty of low-income countries stems directly from their exploitation by wealthy countries and the multinational corporations that are based in wealthy countries – Reject the notion that a society’s values and norms are to blame for its economic status

– Colonialism – the root of economic exploitation – Although colonialism ended, the exploitation did not – Neocolonialism – Cheap labor, raw materials – Continuing dependence of former colonies on foreign countries

Dependency theories – Dependent development Poor countries can still develop economically but only in ways shaped by their reliance on the wealthier countries Brazilian sociologist Fernando Henrique Cordoso Still it has the potential to be exploitative

World-systems theory – Immanuel Wallerstein – Countries are connected by the expansion of a capitalist world economy made up of core, semiperiphery, and periphery countries – The economic success of the advanced industrial countries(core), is dependent upon the exploitation of the less advanced countries(semiperiphery and the periphery zones of the system).

World-systems theory – World market for goods and labor – Division of population into economic classes- say – capitalist and workers – system of formal and informal political relations designed to maintain – Division of world into three unequal economic zones – The wealthiest zones exploiting those in the poorer zones.

World-systems theory – Core Made up of the most advanced industrial countries that share most of the profits of the world economic system – Periphery Made up of countries that have a marginal role in the world economy and are thus dependent on the core producing societies for their trading relationships – Semiperiphery Made up of countries that supply sources of labor and raw materials to the core industrial countries and the world economy but are not themselves fully industrialized societies

Simple depiction (collected)

World-systems theory in action

Global commodity chains theory – Worldwide networks of labor and production processes yielding a finished product – Manufacturing is becoming increasingly globalized – According to Hopkins, a ‘Global Commodity Chain’ (GCC) is “a network of labor and production processes whose end result is a finished commodity”.

 Global commodity chains theory

From your text  It can be interesting to trace products like the Barbie doll from raw material to finished product. Barbie’s production story begins in a petroleum field in Saudi Arabia and ends in a toy factory in China before showing up on the shelves of your local retail store. So where is Barbie actually from? The cardboard and cellophane box containing the “My First Tea Party” Barbie is labeled “Made in China,” but almost none of the materials that go into making her originate there. For a $20 Barbie, China gets only about $0.70, mainly in wages paid to the 11,000 peasant women who assemble her in the two factories. Back in the United States, however, Mattel makes about $2 in profits

Note: Number of minutes it takes a worker with an average net wage to earn sufficient income to purchase a Big Mac. Source: Assinger and Kutz 2012.

Global Ineq. talk 

From The Newsroom 

Evaluating theories of global inequality – Market-oriented theories recommend adoption of modern capitalist institutions. – Dependency theories emphasize how wealthy nations have exploited poor ones. – World-systems theory analyzes the world economy as a whole, looking at the complex global web of political and economic relationships that influence development and inequality in poor and rich nations alike. – The theory of global commodity chains focuses on global businesses and their activities rather than relationships between countries.

 Income and Wealth  In at least 20 nations, most affluent 10% of the population receives at least 40% of all income  Top 10% of world’s population own 85% of global household wealth, and top 1% own over 45%  Women in developing countries face significant obstacles

Income status increases, its mortality rates increase and life expectancy decreases

Health – Differences in access to and quality of health care facilities – Differences in overall cleanliness (water, sanitation, soil, air) – Rates of infectious diseases vary

Hunger, Malnutrition, and Famine Many people around the world lack the diet that provides enough calories and nutrients to live an active, healthy lifestyle – Differences in access to and quality of food due to natural and social forces Droughts Conflict Economic problems

 Hunger is a global problem though disproportionate  870 million people worldwide undernourished, 850 million of which are in developing countries

Education and Literacy – Quality and years of education affect economic development High-wage industries need skilled workforce Educated people are more likely to escape poverty Educated people have fewer children So, a country’s economic development depends on the education and literacy of its population

Unsolved Questions Is Global Poverty Increasing or Decreasing? Debatable – Percentage of people living on less than $1.25 per day declined between 2005 and 2008 – But, the world population has grown during the past 30 years; thus, this figure relatively shows no progress.

What about Inequality Between Countries? – Widening global gap between rich and poor countries, more in last two decades – a typical high-income country earned nearly $36,000, which is almost 150 times greater than the $250 earned by his or her counterpart in Burundi that same year. – Average GNI increased nearly fourfold in high-income countries but barely doubled in low-income countries – Newly industrializing economies (NIEs) – emerging economies

Global Inequality 

What Does Rapid Globalization Mean for the Future of Global Inequality? – Technology innovators – Technology adopters – Technologically disconnected ( Jeffrey Sachs’s Categorization of world)

Documentary on Jamaica(DVD)

Question  Summarize the four types of theories that explain why there are gaps between nations’ economic development and resulting global inequality: market- oriented theories, dependency theories, world-systems theory, and state-centered theories. Briefly discuss the distinctive characteristics of each type of theory and how it differs from the others. Which theory do you feel best explains economic development gaps?