Global Inequalities (continued) Dr Christopher Kollmeyer

Suggested Readings and Web Site Readings: World-systems theory: An introduction by Emmanuel Wallerstein (chapter 2) The stages of economic growth: A non-communist manifesto by W.W. Rostow (Chapter 1 & 2) Web site: UC Atlas of Global Inequality ( ) Especially debate on whether global inequality is increasing or decreasing (

Conceptualizing the problem Whats the correct analogy for understanding the distribution of wealth between countries? 1.Global class system (mobility is possible) 2.Global caste system (mobility is very unlikely)

Modernization and Neoliberal Theories Focuses on individual countries and problems with their socio-economic structures Dependency and World-System Theories Focuses on dynamics of interdependencies between rich and poor countries Explaining Global Inequality: Competing Theories, Emphasizing Different Problems

Modernization Theory: Stages of Economic Growth

Modernization Theory: U neven spread of modern economic systems Source: Rostow, W.W Stages of Economic Growth: A Non-Communist Manifesto. Cambridge Press.

Modernization Theory: Further Explanations for Poverty Argues that low-income countries are poor because: –Traditional values –Low rates of savings and investment –Corrupt / inefficient institutions –Too much government control of economy

IMF and World Bank oversee structural adjustments –Privatize government-owned industries –Promote free trade –Reduce economic regulation (labor, environment) –Cut government spending on social services Neoliberalism: Updated version of modernization theory

Key Concepts International division of labour 1.Classic International Division of Labor »1500s to 1960s 2.New International Division of Labor »1970s to the Present Core vs peripheral countries Core vs peripheral economic processes Imperialism Dependency and World-Systems Theories

Dependency and World-System Theory highlight the legacy of colonialism

Rapid industrialization in the South does not produce income convergence with the North Source: Arrighi, Giovanni, et al Industrial Convergence, Globalization, and the Persistence of the North-South Divide. Studies in Comparative International Development 38(1): 3-31.

If Southern countries are increasingly becoming integrated into the global economy, why arent they becoming wealthier? Answers: To some degree they are becoming wealthier. Product cycle Global commodity chains

Product Cycle: Core vs Peripheral in Products and Countries Year Peripheral product Core product Core Countries Peripheral countries

Global Commodity Chains Definition: A dynamic network of business functions and production processes that results in a finished product. Key Point: Global North retains high-value added activities, while leaving the low-value added activities to the Global South. reproduces global income inequality

A £100 Dress: Who gets what? Retailer : £50.00 Designer: £35.00 (pays £22.50 for fabric) Subcontractor: £15.00 (pays £6 to workers) Customer Pays: £100 This money stays in the UK This money goes overseas