1. The Global South

2. The Global South Who is the GS? Development Hurdles
IMS, II & IF, ITS, GN reliance
GS Economic Development Tactics

3. Who is the Global South?
5 categories Of
GS countries

4. IPE Categories of GS Countries
Emerging Markets
Greater % of people =middle class (>$10/day)
Frontier Markets
Investment category- just below EEs
Countries in Transition (CITs)
Former USSR, Eastern Bloc
Growth rates differ

5. IPE Categories of GS Countries
Least Developed Countries (LDCs)
GDP p/c ave.=$750; most in Africa
Highly Indebted Poor Countries (HIPCs)
Debt relief
36 get assistance; 3 applied (2016)
Only 5 non-African (4- LA; 1 Asia)

6. Development Hurdles

7. Poverty
Why did Morales back a law in Bolivia to lower the minimum age for child labor?
Reality of local situation
Need kids’ earnings
Kids working anyway- law mandates work permits, humane conditions, fair wages
Stay in school
Kids pushed for law
Keeps kids off streets

8. Poverty What are the criticisms of this policy? Lack of enforcement
Kids in adult-only hazardous industries
Lack awareness of law
Need sex ed. and birth control
Rural family sizes
But, under-population issue

9. Gender Inequality UN Gender-related Development Index (GDI)
Country
GDP p/c Women
GDP p/c Men
Dev. Level
Saudi Arabia
$16,197
$78,689
Very High
Norway
$56,994
$70,807
U.S.
$41,792
$63,163
China
$9,288
$13,512
High
Botswana
$11,491
$18,054
Medium
Pakistan
$1,707
$7,439
Low

10. Gender Inequality Gender inequality hinders development
Less literacy higher population
Less education more child labor
Lower GDP p/c for women v. men in every country

11. Income Inequality
2011

12. Income Inequality Gini index- measures inequality
Gap bt. rich/poor
Development income equality
More developed greater equality
Less developed lesser equality
Stark exception is US
Brazil: 10% control 51% of wealth
Mexico & Argentina: 10% control 42% of wealth

13. Income Inequality
More income equality = higher growth rates (IMF report)
Consequences of income inequality
Fewer people w/ resource access
Banking, formal sector credit
Social services
Income tied to political stability
Corruption
Limited tax base

14. Why China is GS

15. Sustainable Development (SD)
SD expectations
GS- AND- GN
Environmental issues
Human security issues
Need to diversify
Cash crops tax farmland; deforestation
Non-renewable resources
Nigeria- 75% of GDP  petroleum

16. Sustainable Development
Why is poaching such a huge problem in the GS?
Lack of local investment
Wildlife damage crops, livestock
Poverty
Lack of job opportunities
Corruption
Arable land as national parks
Need to address demand

17. Corruption Not limited to GS, but worse there
Corruption discourages FDI
Correlation bt. corruption and parking tickets
Transparency Int’l
TI Index
Mo Ibrahim Foundation
Est but only 4 winners

18. What similarities do the highlighted countries have that are tied to corruption?
Authoritarian rule
Surrounded by cronies
Regulate media
Fire challengers
Bribes
‘Merit-based’ reward
Everyone does it

19. What similarities do the highlighted countries have that are tied to corruption?
Claim to serve ‘their people’
Try to conceal corruption
Point fingers =image of addressing issue
Apathy, tacit consent of public
Especially during economic growth
Distractions
Economic growth, nationalism, public shows of humility

20. What factors contribute to the DRC’s corruption?
Corruption is endemic
History of not paying gov’t employees
New gov’t still corrupt
Wages skimmed or never received
Lack of banks
Accountants delivered cash
Ghost employees
Lack of infrastructure
Money transfer robbery

21. How has the DRC tried to eradicate corruption?
Encourage people to use banks
Got employees to open accts.
Direct payment to banks deliver to employees
↑ flow of cash
Want more dollar deposits, more borrowing, sales
Shifted payment responsibility to banks
Bank staff now deliver cash
↑ transparency
Why would banks open/take responsibility?

22. Political Stability
Political stability
Infrastructure & institutions

23. What are the benefits of remittances?
2x foreign aid
Bigger impact than aid
Bypass corrupt officials
Spur recipient economy
More kids go to school
Even better- improved system to remit

24. Filipino migrant workers in Hong Kong

25. What are the barriers to remitting money?
Expensive transfer services
Huge fees for transferring $
G7 wanted cuts; still not close to target %
Peer-to-peer transfers
Mobile money= no fee
Use other channels
Local networks

26. What are the barriers to remitting money? (cont.)
Regulations
Fear of money laundering, financing terrorism
Harsh penalties on MNCs
MNCs bound by procedures
Background checks, software, checking wire-transfer info, etc.
Define ‘risky’ transaction
Protect MNCs that follow procedures

27. What are the barriers to remitting money? (cont.)
Role of GS
GS need national ID systems
India’s new system easily tracks money
GS needs regulations on mobile money MNCs
Need competition
↑ costs in working country= ↓ remittances
Fewer jobs in working country
Tighter immigration laws

28. How does an economy suffer when remittances diminish?
Less regional growth
Less $ goes into recipient economy
Directly affects former recipients
Work longer hours
Tap into savings
↑ poverty
↑ gov’t debt

29. IMS Hurdles Currency instability
Import dependence = hard cash going out
Strains on public spending
Inadequate tax base
Corruption, poverty, infrastructure

30. ITS Hurdles Lack of market diversity
Dependence on primary goods
Market isolation; lack of market integration
Need more trade liberalization
Strains on public spending
Political instability
Discourages FDI
Lack infrastructure

31. II & IF Hurdles Jobs for remittances GN reliance
Conflicting interests with GN
Self-interested actors
Reliance on GN
Foreign Aid
Technology
FDI
Employment
Primary goods reliance
Jobs for remittances

32. GS Development Tactics
Internal & External Policy Strategies

33. GS Development Tactics
Internal Policy Strategies
Import substitution
Nationalization of industries
Establishing cartels
Protectionism

34. GS Development Tactics
External Policy Strategies
Use regional IGOs (ASEAN, Mercosur, SADC, etc.)
Form global IGOs (Group of 77 NAM, UNCTAD)
Collective int’l pressure

35. Good News? Fewer people in extreme poverty Healthier people Year
Year
Billion People
% Living on <$1.25/ day
1981
1.94 BP
52%
2011
1.1 BP
15%
2012
896 MP
12.7% on <$1.90/day
2015 (est.)
702 MP
9.6% on <$1.90/day
Year
Billion People
% Living on <$3.10/ day
1990
2.9 BP
66%
2012
3.1 BP
35%

36. Recap

37. Development Factors IPE Status
Infrastructure
Reliance on external assistance
Physical
Civil institutions
IGO, NGO aid
Corruption
FDI
Need for sustainable dev.
Remittances
Production
Tactics to overcome issues