Development & Underdevelopment Chapter Eight Pearson Publishing 2011

Development & Underdevelopment Differences in per capita incomes among countries have enormous consequences for people’s lives. Being born in Sweden versus in the Democratic Republic of Congo. These differences raise one of the biggest questions in the social sciences: Why are some countries much more developed than others? Pearson Publishing 2011

Economic Development & Human Development Economic Development The process of increasing a country’s wealth by diversifying the goods and services it produces and making production more efficient. As countries develop economically, agriculture begins to make up a smaller part of the economy and manufactured goods become more important. Simple manufacturing to more sophisticated manufacturing. Then manufacturing decreases losing ground to service, professional and managerial activities. Post-industrial economies. Most developed countries began this process in the mid to late 1800s. Independent versus colonial Exception, Latin America By 1980s several newly industrialized countries (NICs) emerged. South Korea, Taiwan and Brazil Second and third categories of less developed countries that have not had equivalent success Botswana, Mexico, Thailand Negligible development: Sub-Saharan African area, Haiti, Laos, Cambodia, Burma (Myanmar) Pearson Publishing 2011

The Good Society in Depth: S. Korea- From Least Likely to Succeed to Most Successful in its Class Pearson Publishing 2011

The Good Society in Depth: S. Korea- From Least Likely to Succeed to Most Successful in its Class S. Korea in 1950s: depressing place, privation and degradation Infrastructure had been destroyed during the Korean War. By 2005, the country had become one of the World Bank’s high income countries & one of the U.N.’s high human development countries. No other country has done that so quickly. Military regime assumed power in 1961: set out to make S. Korea an industrialized country rapidly & succeeded. They funded the development of privately-owned industrial conglomerates and helped them become competitive. Puzzle: little inefficiency or theft of state funds; how did they manage to succeed? Pearson Publishing 2011

The Good Society in Depth: S. Korea- From Least Likely to Succeed to Most Successful in its Class Several factors came into play: 1.Threatened by two hostile neighbors, North Korea and China – question of survival. 2.The military needed capitalist support to achieve its goal. 3.The government inherited a relatively competent state bureaucracy and a good infrastructure of roads and electricity from South Korea’s years as a Japanese colony. 4.It received considerable economic aid from the United States. Success developing both industrialization and capabilities. Expansion of education and health care, although there was also repression by the military regime of civil and political rights and workers’ rights. Regime fell in 1987 and democracy emerged and these rights expanded. In 2008 South Korea had lower infant mortality rates, longer life expectancies, and higher graduation rates than the U.S. Pearson Publishing 2011

Economic Development & Human Development Human Development Defined as “the process of expanding the choices people have to lead lives that they value. ” Being well fed and healthy, safe from violence, literate and numerate, enjoying political participation. Human Development Index (HDI)- three components: 1.How healthy people are in a country as measured by life expectancy at birth; 2.How knowledgeable they are, as measured by adult literacy rates and school enrollments; 3.Whether they have a decent standard of living, as measured by their purchasing power. Norway highest; Niger lowest; U.S. ranks thirteenth (.956) Pearson Publishing 2011

Economic Development & Human Development Economic and human development generally reinforce each other: Economic development generates more choices for people; resources for public goods. In turn, better educated, healthier people can perform better, which promotes more economic development. Positive correlation, but not always perfect India, for example, has division between urban and rural. Pearson Publishing 2011

Table 8.1 Pearson Publishing 2011

In Brief: Economic Development and Human Development Economic development is the process of increasing a country’s wealth by diversifying the goods and services it produces and increasing the efficiency with which it produces them. The progress of economic development is measured in two ways: 1.Changes in the predominant economic structure, from agricultural to manufacturing to the service sector and 2.Increasing per capita income Pearson Publishing 2011

In Brief: Economic Development and Human Development Human development is the process of expanding the choices people have to lead lives that they value. These choices depend on whether the society in which they live gives them the opportunity to be well fed and healthy, safe from violence, literate and numerate, and able to participate in politics. Pearson Publishing 2011

Lower and Less Secure Capabilities How do developed and less developed countries differ? How do you determine which is which? Categories of development: 1.Highly developed 2.Developed 3.Moderately developed 4.Least developed Pearson Publishing 2011

Table 8.2 Pearson Publishing 2011

Citizen’s Capabilities Difference in capabilities is stark between the most and least developed countries. Most of the least developed countries are located in sub- Saharan Africa. Niger: 176 of every 1,000 children died before their fifth birthday in 2007; the adult literacy rate was 29%. Has the highest percentages of citizens with the lowest capability. The region with the largest numbers of persons with low capability is South Asia, which includes India, Pakistan, and Bangladesh. Pearson Publishing 2011

Table 8.3 Pearson Publishing 2011

Poorer & More Vulnerable Economies Low capability is directly linked to absolute poverty (that individuals and families have a difficult time buying food to keep them nourished or medicine to fight disease). Compared to relative poverty – not so severe to threaten life. Poor in relation to other people. World Bank: people suffer from absolute poverty when their income is less than $1.25 a day, adjusted for purchasing power. Number of people living in absolute poverty has been declining since the 1980s But there are substantial regional differences. Pearson Publishing 2011

Poorer & More Vulnerable Economies Less developed countries: lower incomes per capita than wealthier countries, they also tend to be more vulnerable to sudden shocks created by changes in the world economy. Rapid changes in prices for crops and minerals in the world market are another source of economic woes for less developed countries. Most recent crisis was the deep recession of Meltdown of financial sector in the U.S. Many developed and moderately developed countries rode out the recession better than the U.S. China and Brazil Those countries that depend heavily on exports to the U.S. did less well. Pearson Publishing 2011

Weaker & Less Democratic States Typically states in the least developed countries are weak. Unable to translate that power into action and implement policies effectively. Clean drinking water Often they cannot do the bare minimum of what defines a state: law and order. Limited control beyond capital Weak bureaucracy; highest bidder – corruption Corruption Perceptions Index New Zealand – least Somalia – most Typically states in the least developed countries are weak. Unable to translate that power into action and implement policies effectively. Clean drinking water Often they cannot do the bare minimum of what defines a state: law and order. Limited control beyond capital Weak bureaucracy; highest bidder – corruption Corruption Perceptions Index New Zealand – least Somalia – most Economic development can coexist with corruption South Korea- key was keeping corruption out of government agencies responsible for managing the economy. When corruption is pervasive in weak states, achieving sustained economic development is very difficult. So weak, extremely corrupt states cannot effectively promote either economic development or citizens’ capability. Trend toward democratization in less developed countries Mostly a façade Economic development can coexist with corruption South Korea- key was keeping corruption out of government agencies responsible for managing the economy. When corruption is pervasive in weak states, achieving sustained economic development is very difficult. So weak, extremely corrupt states cannot effectively promote either economic development or citizens’ capability. Trend toward democratization in less developed countries Mostly a façade Pearson Publishing 2011

Table 8.4 Pearson Publishing 2011

Why did some countries become more developed than others? Imperialism Geography Culture Institutions Leadership Many countries started off at the same point, but some developed while others did not. Mexico and Haiti compared to the U.S. in the 1790s…. What explains this? Pearson Publishing 2011

Why did some countries become more developed than others? Imperialism Economic or political domination of one region or country by another. Related to a less inclusive concept – colonialism (more formal rule of one country over another) Some argue that these allowed European powers to fund their own economic development while stripping others of their wealth and blocking their potential. Intense debate over this theory. Geography Geography is an important factor. It explains a great deal in terms of advantages and disadvantages. Obstacles to development Lack of natural resources Desert Bad neighbors Disease due to climate But geography alone cannot work as an all purpose explanation. Pearson Publishing 2011

Why did some countries become more developed than others? Culture Argue that the progress of different societies is determined by what is in people’s heads – character traits. Weber on Protestant work ethic helps explain economic development in Europe. Landes: new man – rational, ordered, diligent, productive Japanese version of the work ethic Social capital and trust Not an all-purpose explanation Institutions Economic institutions: market creating, market stabilizing, and market legitimizing Puzzle: why do some countries manage to establish these institutions while others do not? Answer: distribution of political power Geography matters, too. Pearson Publishing 2011

Why did some countries become more developed than others? Leadership Important: Leaders’ will and skill in choosing successful policies, constructing coalitions of supporters for these policies, and establishing effective and political institutions. Pearson Publishing 2011

In Brief: Five Explanations for Different Levels of Development among Countries Imperialism increased the wealth of European countries and impoverished their colonies. created numerous obstacles for newly independent countries including dependence on a single crop for export earnings, extreme ethnic diversity, and racial cleavages. Geography favored countries in Eurasia over countries in Africa & Latin America by providing native plant and animal species that were suitable for domestication and adaptable to different environments. Still inhibits trade and development in poor landlocked countries with bad neighbors. Pearson Publishing 2011

In Brief: Five Explanations for Different Levels of Development among Countries Cultures that emphasized disciplined work and investment over self-gratification contribute to economic development. Social capital and trust matter, too. Institutions matter because: They can either create incentives for productive investment or destroy them. Western European countries first to establish economic institutions that support sustained growth and political institutions that complemented them. Leadership matters: Because of the policies leaders choose, the kinds of coalitions of supporters they create. Pearson Publishing 2011

Comparative Political Analysis: Institutions as the Main Cause of Development & Underdevelopment Problem Why are some countries rich while others are poor? Acemoglu & Johnson and Robinson believe the answer lies in differences in economic and political institutions. Hypothesis and Method Authors hypothesize that economic institutions protecting property rights and relying on market economics are most likely to sustain economic growth. Use comparative case studies method. – compare the development of North and South Korea. Pearson Publishing 2011

Comparative Political Analysis: Does Globalization Help or Hurt Workers in the Developing World? Operationalizing Concepts The independent variable is the presence or absence of private property rights and market incentives. The dependent variable is economic growth defined as GDP growth per capita. Results Results confirm the hypothesis. There is only one plausible explanation for the radically different economic experiences on the two Koreas after 1950: their very different institutions led to divergent economic outcomes. Pearson Publishing 2011

Development, Underdevelopment, & the Good Society Is higher income per capita associated with higher capabilities? Physical well-being Higher income countries do tend to have lower infant mortality rates than low income countries. But it is possible to achieve low levels of infant mortality even in the absence of extremely high per capita incomes. Informed Decision-making Higher income countries do have higher adult literacy rates. But countries at very different levels of income can achieve nearly 100 percent literacy. Pearson Publishing 2011

Figure 8.1 Pearson Publishing 2011

Figure 8.2 Pearson Publishing 2011

Figure 8.2 Pearson Publishing 2011

Development, Underdevelopment, & the Good Society Is higher income per capita associated with higher capabilities? Safety Homicide rates are lower in higher income countries, but there are discrepancies from the overall pattern. Poor countries vary widely in outcomes. Democracy Strong relationship between higher levels of per capita income in a country and democracy, but not a perfect one. Other variables: internal conditions such as high government revenues and regional factors. Pearson Publishing 2011

Conclusion Some countries have much more success in promoting human development than might be expected from their level of economic development, while in others, human development lags well behind. Three main ways they differ. Five explanations for differences in development among countries. Pearson Publishing 2011

Critical Thinking Questions What is the difference between economic development and human development? Why are there sometimes discrepancies between a country’s level of economic development and its level of human development? Why do differences in state strength between developed and less developed countries make a difference for citizen’s capabilities? Pearson Publishing 2011

Critical Thinking Questions How would supporters of imperialist, geography, cultural, and institutional explanations, respectively, explain why Haiti changed from being one of the richest societies in the world in 1790 to one of the poorest today? What variables might account for the big differences in infant mortality rates among very poor countries in Figure 8.1? Pearson Publishing 2011