Unequal Development: the Chicken or the Egg

Barriers to Economic Development Social Conditions –Demographic factors (CBR, Life Expectancy, Dependency Ratio, etc) –Inadequate Nutrition –Lack of Sanitation (sewage systems, clean water, health care) –Lack of access to Education –Lack of Gender Equality

Barriers to Economic Development Disease

Barriers to Economic Development Foreign Debt

International Trade

Trade Barriers the EU’s internal market is about removing barriers to free movement of goods, services, people and capital the flow of goods and services in the world economy is also important organizations have been set up to encourage the removal of barriers to free global trade

Why the stress on free world trade? The world economy went into a deep depression in the 1930s, as many countries closed their barriers to trade with other states. This led to: Mass unemployment Social upheaval Rise of fascism and World War II

How to prevent chaos happening again? Global powers set up bodies to support international trade –International Monetary Fund –World Bank All countries encouraged to join these organizations, or face exclusion from benefits of free world trade

What do the IMF and World Bank do? IMF: Lends to countries with balance of payments problems Pushes for economic reforms Reports on policies in member states

What do the IMF and World Bank do? World Bank: Aims to help development by advising and lending – with many conditions Countries encouraged to lift import and export barriers, cut subsidies and remove price controls

Criticisms of IMF IMF only lends money if countries agree to: Sell their resources cheaply Cut public spending Critics say this serves to increase the problems of poverty in poor member countries

Criticisms of World Bank Loans depend on countries agreeing a ‘Structural Adjustment Programme’ Leads to rapid increase in price of goods in country Increases poverty Lower investment and cut social spending Little evidence that these policies work

What about the World Trade Organization (WTO)? The WTO deals with the rules of trade between countries It developed from the General Agreement on Tariffs and Trade (GATT) WTO agreements set the ground rules for international commerce

Why so much outrage over globalization? Other than the criticisms raised earlier, opponents of globalization point to: Falling share of world trade taken by developing countries Subsidies and tariffs set by rich developed economies: USA steel tariffs, EU agricultural subsidies are two of the culprits

10 Benefits to the WTO 1.Keeps the peace 2.Disputes handled constructively 3.System based on rules rather than power 4.Freer trade cuts the cost of living 5.Gives consumers more choice

10 Benefits of the WTO 6.Trade raises incomes 7.Trade stimulates growth, inc. employment 8.Basic principles makes system more economically efficient 9.Shields governments from narrow interests 10.Encourages good government

Ten Arguments against the WTO 1.Only serves interests of multinational corporations 2.Is a stacked secretive court 3.Tramples over labor and human rights 4.Is destroying the environment 5.Is killing people

Ten Arguments against the WTO 6.US adoption of WTO was undemocratic 7.Undermines local development and penalizes poor countries 8.Is increasing inequality 9.Undermines national sovereignty 10.The tide is turning against free trade and the WTO