Chapter 8 Globalization, Inequality, and Development

Chapter Outline Introduction Globalization Global Inequality Theories of Development and Underdevelopment Neoliberal versus Democratic Globalization

Globalization In 1980 just 3.5% of the world’s population traveled internationally. By 2001 that figure had more than tripled to 11.3%. In 1980 about 14,000 international organizations existed in the world. By 1999, there were three-and-a-half times as many.

Indicators of Globalization, Early 1980s – Circa – – 2003 % Change Foreign direct investment as % of GDP International tourist arrivals as % of world population Air passengers (millions) 7481,

Indicators of Globalization, Early 1980s – Circa – – 2003 % Change Air freight and mail (billions of ton km) Internet hosts (millions)0165undefined Number of international organizations 14,273250,

Foreign Visitors per 100 Population

The Sources of Globalization Technology - commercial jets, telephone, fax, and Politics -countries that are politically isolated have less integration with the rest of the world. Economics- industrial capitalism is always seeking new markets, higher profits, and lower labor costs.

Transnational corporations Depend increasingly on foreign labor and foreign production. Emphasize skills and advances in design, technology, and management. Depend increasingly on world markets. Depend increasingly on massive advertising campaigns. Are increasingly autonomous from national governments.

McDonaldization The spread of the principles of fast-food restaurants, such as efficiency, predictability, and calculability, to all spheres of life. McDonald’s now does most of its business outside the United States. McDonaldization has come to stand for the global spread of values associated with the United States and its business culture.

Regionalization The division of the world into different and often competing economic, political, and cultural areas. World trade is not evenly distributed around the planet or dominated by just one country.

Regionalization Three main trading blocs exist—an Asian bloc dominated by Japan, a North American bloc dominated by the United States, and a Western European bloc dominated by Germany. Each bloc competes against the others for a larger share of world trade.

Levels and Trends in Global Inequality The total worth of the world’s 358 billionaires equals that of the world’s 2.3 billion poorest people. The 3 richest people in the world own more than the combined GDP of the 48 least- developed countries. The richest 1% of the world’s population earns as much as the bottom 57%.

Levels and Trends in Global Inequality According to the UN: 800 million people in the world are malnourished. 4 billion people lack the ability to obtain adequate food, clothing, shelter, and basic needs. 1/5 of the developing world’s population goes hungry every night.

Global Priorities: Annual Cost of Various Goods and Services Good/Service Annual Cost (U.S. billion) Education for everyone in the world6 Cosmetics in the U.S.8 Water and sanitation for everyone in the world 9 Ice cream in Europe11

Global Priorities: Annual Cost of Various Goods and Services Good/Service Annual Cost (U.S. $billion) Reproductive health for all women in the world 12 Perfumes in Europe and U.S.12 Health and nutrition for everyone in the world 13 Pet foods in Europe and U.S.17

Number Living on Less Than $1 a Day PercentMillions Region Sub-Saharan Africa East Asia (excluding China) South Asia

Number Living on Less Than $1 a Day PercentMillions Region Latin America East Europe and Central Asia Middle East and North Africa

Theories of Global Inequality Modernization theory –Global inequality results from dysfunctional characteristics of poor societies. Dependency Theory –Economic underdevelopment is the result of exploitative relations between rich and poor countries.

Core, Periphery, and Semiperiphery Immanuel Wallerstein argues that capitalist development resulted in a world system composed of three tiers: –core capitalist countries - major sources of capital and technology –peripheral countries - major sources of raw materials and cheap labor –semiperipheral countries - former colonies that are becoming prosperous

Characteristics of Countries That Emerged From Poverty Have a colonial past that left them with industrial infrastructures. Enjoy a favorable geopolitical position. Implement strong, growth-oriented economic policies and have socially cohesive populations.

Polling Question The citizens of poorer nations are more likely to be lazy when compared to the citizens of richer nations. A. Strongly agree B. Agree somewhat C. Unsure D. Disagree somewhat E. Strongly disagree

National Priorities, U. S (%) “We are faced with many problems in this country, none of which can be solved easily or inexpensively. I’m going to name some of these problems, and for each one tell me whether you think we’re spending too much money on it, too little money, or about the right amount. First, are we spending too much, too little, or about the right amount on...“

National Priorities, U. S (%) Priority % “Too Little” 1. Improving and protecting the nation’s health Improving the nation’s education system Assistance for child care Improving and protecting the environment Dealing with drug addiction.61.8

National Priorities, U. S (%) Priority % “Too Little” 6. Social Security Halting the rising crime rate Solving problems of the big cities Mass transportation Improving the conditions of blacks,37.9

National Priorities, U. S (%) Priority % “Too Little” 11. Parks and recreation Highways and bridges Military, armaments, and defense Welfare Space exploration program Foreign aid8.7

Polling Question Global environment problems can be solved without any international agreements to handle them. A.Strongly agree B.Agree somewhat C.Unsure D.Disagree somewhat E.Strongly disagree

Democratic Globalization Four reforms could change neoliberal globalization and turn it into “democratic globalization” –Stronger support for democracy in the developing world. –More and better foreign aid. –Forgiving debt owed by developing countries to rich countries. –Eliminating tariffs that restrict exports from developing countries.

Democratic Globalization Research shows democracy lowers inequality and promotes economic growth: –Makes it more difficult for elite groups to misuse their power. –Increases political stability and provides a better investment climate. –Encourages broad political participation.

Quick Quiz

1. Which of the following are indicators of globalization? a. the growth in tourism b. the increasing number of international organizations and agreements c. the increase in international trade and investment d. all of these choices e. the increasing number of international organizations and agreements, and the increase in international trade and investment

Answer: d The growth in tourism, the increasing number of international organizations and agreements, the increase in international trade and investment and, the increasing number of international organizations and agreements, and the increase in international trade and investment are indicators of globalization.

2. Transnational corporations: a. rely on domestic labor and domestic production b. sell to domestic markets c. are increasingly autonomous from national governments d. all of these choices e. rely on domestic labor and domestic production, and sell to domestic markets

Answer: c Transnational corporations are increasingly autonomous from national governments.

3. George Ritzer coined the term "McDonaldization" to describe: a. a worldwide network of labor and production processes whose end result is a finished commodity b. the economic domination of one country by another c. a form of rationalization involving efficiency, predictability, and calculability d. the homogenization of many aspects of life worldwide

Answer: c George Ritzer coined the term "McDonaldization" to describe a form of rationalization involving efficiency, predictability, and calculability.

4. Regionalization is: a. a worldwide network of labor and production processes whose end result is a finished commodity b. a form of rationalization involving efficiency, predictability, and calculability c. the division of the world into often competing economic, political, and cultural areas d. the homogenization of many aspects of life worldwide

Answer: c Regionalization is the division of the world into often competing economic, political, and cultural areas.

5. According to dependency theorists, rich nations now rely on which of the following to exercise domination and control over poor nations: a. military occupation b. support for authoritarian governments c. substantial foreign investment d. all of these choices e. military occupation and support for authoritarian governments

Answer: d According to dependency theorists, rich nations now rely on military occupation, support for authoritarian governments and substantial foreign investment to exercise domination and control over poor nations.

6. According to ______________, global inequality results from various dysfunctional characteristics of poor societies themselves.

Answer: modernization theory According to modernization theory, global inequality results from various dysfunctional characteristics of poor societies themselves.

7. Peripheral countries are: a. capitalist countries that are the major sources of capital and technology in the world b. former colonies that are major sources of raw materials and cheap labor c. former colonies that are making considerable headway in their attempts to industrialize d. colonies that have not yet gained independence and are therefore subject to exploitation

Answer: b Peripheral countries are former colonies that are major sources of raw materials and cheap labor.

8. In a survey conducted in 2000 in which Americans were asked to list spending priorities, foreign aid ranked: a. first on the list b. in the top half of the list c. in the bottom half of the list d. last on the list e. foreign aid did not make the list

Answer: d In a survey conducted in 2000 in which Americans were asked to list spending priorities, foreign aid ranked last on the list.

9. A large body of research shows that democracy lowers inequality and promotes economic growth. a. True b. False

correct: a A large body of research shows that democracy lowers inequality and promotes economic growth.

10. The United States supported Saddam Hussein during Iraq's war with Iran and funded Osama bin Laden when he was fighting the Soviet Union in Afghanistan. a. True b. False

Answer: a The United States supported Saddam Hussein during Iraq's war with Iran and funded Osama bin Laden when he was fighting the Soviet Union in Afghanistan.