1. Road to Development

2. What does it mean for a country to be called industrialized? What does it mean to be developed? Can all countries achieve development? Do you think all countries will have a large number of factories?

3. Models of Development Liberal Modernization Models by definition –All countries are capable of development –Economic disparities are a result of short term inefficiencies in local or regional market forces –Focus on International trade

4. Rostow’s Modernization Model of Development Developed by W.W. Rostow (1950s) develop economically by concentrating scarce resources on expansion of its distinctive local resources – to trade internationally Origin of common use “industrialized” country All countries follow the same model of development –For countries that have developed in modern times – only China has followed THE model of development aka Ladder of Development

5. Rostow - Stages of Growth 1.Traditional Society Characterised by –subsistence economy –high levels of agriculture and labor intensive agriculture –Wealth allocated to nonproductive activities (religious, military) Village in Lesotho. 86% of the resident workforce in Lesotho is engaged in subsistence agriculture. Copyright: Tracy Wade, http://www.sxc.hu/

6. Rostow - Stages of Growth 2. Pre-conditions: –An elite group initiates development –Investments in technology and infrastructure –Commercialization of agriculture The use of some capital equipment can help increase productivity and generate small surpluses which can be traded. Copyright: Tim & Annette, http://www.sxc.hu

7. Rostow - Stages of Growth 3. Take off: –Increasing industrialization in limited areas (food or textiles) –Foreign investment increases –Infrastructure improvements –Some regional growth –Economy still dominated by traditional practices At this stage, industrial growth may be linked to primary industries. The level of technology required will be low. Copyright: Ramon Venne, http://www.sxc.hu

8. Rostow - Stages of Growth 4. Drive to Maturity: –Develops broad manufacturing and commercial base –Industry more diversified –Increase in levels of technology utilized As the economy matures, technology plays an increasing role in developing high value added products. Copyright: Joao de Freitas, http://www.sxc.hu

9. Rostow - Stages of Growth 5. High mass consumption –High output levels –Mass consumption of consumer durables –High proportion of employment in service sector Service industry dominates the economy – banking, insurance, finance, marketing, entertainment, leisure and so on. Copyright: Elliott Tompkins, http://www.sxc.hu

10. USA Path to Development Stage 5: early 20 th century Stage 4: late 19 th century Stage 3: middle of 19 th century Stage 2: first half of 19 th century Stage 1: prior to independence

11. Possible 6 th stage – Postindustrial –Service replaces industry –Information replaces energy as key resource

13. Criticisms Western bias that urban and industrial = a better life. Development does not necessarily lead to high consumption, can mean social welfare Assumes LDCs will achieve each level of development before advancing Uneven resource distribution (Zambia’s one commodity market of copper developed trouble when world copper price fell)

14. Criticisms Does not account for –Colonialism –Culture –Deindustrialization Increased dependence on MDCs – when concentrating resources in a “takeoff” industry, then buy necessities from MDCs

15. Balanced Growth through Self-Sufficiency A country should spread investment as equally as possible across all sectors of its economy and in all regions. –Incomes in rural areas keep pace with urban incomes –Businesses remain independent of foreign corporations –Limit imports through tariffs and quotas

16. India followed this policy –Made imports difficult –Discouraged Indian businesses from exporting –Could not convert Indian money into other currencies –Encouraged production of consumer goods for Indian citizens –Provided subsidies for struggling companies

17. Problems Inefficiency: without true competition, companies have little incentive to improve techniques, technology, products, etc Large Bureaucracy: needed to administer the controls – complex and corrupt

18. International Trade Approach Some countries have switched from self- sufficiency approach to international trade –according to the World Bank – international trade countries have seen 4% growth, self-sufficiency countries 1% LDCs are exporting more manufactured goods rather than agriculture or mining goods Dollarization: abandoning existing currency in favor of an industrialized countries (In 2001, El Salvador abandoned the colon and now uses American dollars)

19. International Trade Approach Foreign Direct Investment (FDI) – investment made by a foreign company in the economy of another country Only 1/3 of investments went from a MDC to a LDC (only 10% went to African nations) Transnational Corporations are major sources of FDI

20. Models of Development Structuralist Models –Dependency Theory –Regional disparities are a structural feature of the global economy Neo-Colonialism –Gabon – interior forest (plywood producing region) connected by rail with capital; 2 nd largest city and capital are not connected by road or rail (deBlij 247) –Old method of industrializing is no longer possible because other factors have changed

21. Dependency Theory Dependency helps sustain the prosperity of the dominant regions and the poverty of the lesser regions Based on generalizations that pay little attention to regional differences in culture, politics, and society

23. World-Systems Theory Immanuel Wallerstein A development theory that includes geography, scale, place and culture in addition to economics Divide world into –Core –Semi-periphery –Periphery

24. Three Tier Structure Core Processes that incorporate higher levels of education, higher salaries, and more technology * Generate more wealth in the world economy Semi-periphery Places where core and periphery processes are both occurring. Places that are exploited by the core but then exploit the periphery. * Serves as a buffer between core and periphery Periphery Processes that incorporate lower levels of education, lower salaries, and less technology * Generate less wealth in the world economy

25. Core Periphery Model Core Regions –High levels of socioeconomic prosperity –Dominant players in global economic game  Anglo America HDI.94  Japan and the South Pacific HDI.93  Western Europe HDI.92

26. Core Periphery Model Periphery –Poor regions –Dependent on the core –Do not have much control over their own affairs  Latin America HDI.78  East Asia HDI.72  Southeast Asia HDI.71  Middle East HDI.66  South Asia HDI.58  Sub Saharan Africa HDI.47

28. Core Periphery Model Semi Periphery –Regions that exert more power than periphery regions but are –Dominated to some degree by the core

29. Core/periphery Can be applied at the local scale –LA is the core of S. California region –Alaska is in the periphery of the US –Johannesburg is core of South Africa Can refer to the different level of processes in the same country –Most of the US operates with core processes, however the rural mountain regions of WVa operate with periphery processes

30. Development Indicators Economic: GNP, PPP (Purchasing Power Parity), per capita energy consumption Noneconomic: HDI, gender equity, calorie intake

31. Four Dragons Aka Four Tigers or Gang of Four S. Korea, Singapore, Taiwan, & Hong Kong Lacked natural resources Strongly influenced by Japan’s success Concentrated on handful of manufactured goods Low labor costs; Sell to MDCs Focusing on research & hi-tech industries

32. BRIC Brazil, Russia, India, and China aka “the big four” At a similar stage of advanced economic development There has been a shift away from the G7 economies (Fr, Ger, It, UK, US, Jap, Can) BRICs have begun meeting to coordinate global economies – similar to EU Some include South Africa for BRICS

33. GDP

34. 10 Largest Economies (measured in USD)

35. More fun … MIKT N – 11 – id by Goldman Sachs as high potential of becoming world’s largest economies – in addition to BRICs Mex, Indonesia, Korea, Turkey Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, S. Korea, Vietnam

36. Millennium Development Goals Adopted by world leaders during a United Nations summit in the year 2000 and set to be achieved by 2015, the Millennium Development Goals (MDGs) provide concrete, numerical benchmarks for tackling extreme poverty in its many dimensions. The MDGs also provide a framework for the entire international community to work together towards a common end – making sure that human development reaches everyone, everywhere. If these goals are achieved, world poverty will be cut by half, tens of millions of lives will be saved, and billions more people will have the opportunity to benefit from the global economy.

37. Millennium Development Goals The eight MDGs break down into 21 quantifiable targets that are measured by 60 indicators. Goal 1: Eradicate extreme poverty and hunger Goal 1: Eradicate extreme poverty and hunger Goal 2: Achieve universal primary education Goal 2: Achieve universal primary education Goal 3: Promote gender equality and empower women Goal 3: Promote gender equality and empower women Goal 4: Reduce child mortality Goal 4: Reduce child mortality Goal 5: Improve maternal health Goal 5: Improve maternal health Goal 6: Combat HIV/AIDS, malaria and other diseases Goal 6: Combat HIV/AIDS, malaria and other diseases Goal 7: Ensure environmental sustainability Goal 7: Ensure environmental sustainability Goal 8: Develop a Global Partnership for Development Goal 8: Develop a Global Partnership for Development http://www.undp.org/mdg/basics.shtml

38. Ghana & MDG In 2005, predicting will not accomplish goals for 2006-2009 period.

39. Ghana & MDG GoalMeasure ½ Poverty & Hunger Target 2015 – 14% Underweight children 1992 – 27%; 2003 – 23% Projected 2015 – 21 % Universal Education Target 2015 – 100% Primary School Enrollment 1999 - 58%; 2003 – 69% Projected 2015 – 83% Improve Maternal Health Target 2015 – 54/100,000 live births Reduce Maternal Mortality Levels 1993 – 280; 2003 – 230 Projected 2015 – will not be met

40. Ghana & MDG

41. Core Periphery Model