Development Case Study: Jamaica

Development Case Study: Jamaica
Caribbean island - resorts, etc. beyond paradise is another world permanent residents in poverty / earn less money in a year than a night’s hotel bill this is shielded from tourists what would you think if a very expensive and exclusive resort were built in your neighborhood and you and your family, who were economically disadvantaged were expected to work there to serve the needs of vacationers? welcome the money? resent the wealthy tourists world is divided between relatively rich and relatively poor geographers try to understand the reasons for this division and what can be done about it

Development Case Study: Bangladesh
p. 292 Rubenstein Rabea Rahman - village of Bathoimuri, Bangladesh 3 kids - son 18, two daughters 10, 7 2 other children died in infancy husband died of tuberculosis husband was tenant farmer / sharecropper after he died, Rahman went to work as domestic servant and water carrier (7am-4 pm, 6pm-11pm seven days a week). Son sells bread and prepares a midday meal for 2 sisters. Toatal household income $16 per month (around $4,000 in US) house - dirt floor, leaky roof, rent 2$ month plus 3$ month for fuel grams of rice per day but little else for food diet supplemented by leftover food from employer barefoot gastric ulcer - no treatment underlying impoverished condition - role of women in predominantly Muslim country rural villages: < 10% of women can read and write women marry as teenagers / bear 6 babies in lifetime (⅙ does not survive) limited to working as servant or farm laborer condition of women is one of most important factors holding back economic development in South Asian countries such as Bangladesh organization trying to do something about legacy of gender inequality in South Asia - Grameen Bank specializes in making loans to women founder of bank awarded Nobel Peace Prize in 2006 (Muhammad Yunus) Rabea Rahman borrowed $90 from Grameen Bank - bought a cow - earnings from selling cow’s milk enabled her to buy son an $85 rickshaw so he could make a living. Smallest loan the bank has made - $1 to a women who wanted to sell plastic bangles door to door other women have borrowed money to make perfume, bind books, sell matches, mirrors, bandanas avg loan $60

What is development? development: The extent to which a society is making effective use of its human and natural resources. developing: progress is being made in technology, production, and socioeconomic welfare Continuum with huge global disparities.

MDCs and LDCs MDC = More Developed Country (“developed”) has progressed further along continuum economic challenge: maintain high level of development at the new global scale of economy LDC = Less Developed Country (“developing”) economic challenge: find connections to the global economy by taking advantage of local diversity in skills and resources

Manufacturing gravel in Trivandrum, India
What is development? What does this photograph represent in terms of lesser-developed economies? Manufacturing gravel in Trivandrum, India

Measuring Development
Economic Indicators: GNP = Gross National Product created by economists to compare countries total value of officially recorded goods and services produced in a year (inside and outside state territory)

Economic Indicators: GDP = Gross Domestic Product goods and services produced within a country during a given year GDP per capita = GDP divided by population number Can mask variation / distribution of wealth US GDP = $12 trillion GDP per capita - economic indicator used in HDI (in U.S. - $40,000) used because per capita income is difficult to obtain annual per capita GDP in 2005 avg. $27,000 in all MDCs, avg $4,000 in LDCs $60,000+ in Luxembourg $30,000+ in 9 other European countries and Canada and Japan 18 countries per capital GDP below $1,000 (15 - Africa, 3 - Asia) GDP per capita can be misleading - doesn’t reflect variation within a country / doesn’t reflect distribution of wealth

Are there areas within the US or Canada that have an average income of a developing country?

Economic Indicators: GNI = Gross National Income monetary worth of what is produced within a country plus income received from investments outside the country GNI per capita = GNI divided by population limitations: What about informal economy? Masks uneven distribution of wealth Does not account for production costs

Economic Indicators: GNI clearly shows contrast between rich and poor countries: 2008 Japan $31,410 USA $41,950 Luxembourg $65,340 Nigeria $ 1,040 Indonesia $ 3,720

Economic Indicators: technology and production types of jobs (primary, secondary, tertiary) productivity per worker (level of mechanization) transportation and communication services per person development in technology and production (part of economic indicators of development) measure Occupational Structure of the Workforce - percentage of workers employed in various sectors (many in production of food staples = low development; many in high-tech industries and services = high development) types of jobs: primary - directly extract materials from Earth (agriculture, mining, fishing, forestry) secondary - manufacturers that process, transform, and assemble raw materials into useful products tertiary - provision of goods and services to people in exchange for payment (retailing, banking, law, education, government). Also includes former categories of quarternary-sector and quinary-sector. measure Productivity per Worker - sum of production divided by total number of people in labor force. More productive = higher mechanization measured by value added per worker (gross value of product minus costs of raw materials and energy) (around $80,000 in US, $70,000 in Japan, $1,000 China, $500 India) MDC workers produce more with less effort - more machines, tools, equipment LDCs - rely on human and animal power requires access to raw materials and energy 20th C - US and Russia - became powerful industrial states b/c wide variety of raw materials and energy resources UK - abundant coal and iron colonialism - to ensure abundant supply of raw materials for European economic development. Result: sustained econ. dev. in Europe; stunted econ. dev. in Africa and Asia. Even after independent, former colonized states still export raw materials to MDCs and import finished goods and services petroleum - value has grown and financed development cotton and copper - prices have fallen (excessive supply, declining demand) - LDCs with these have had difficulty achieving development some countries develop without abundant resources through trade (Japan, Singapore, South Korea, Switzerland) measure Transportation and Communications Facilities per Person - reflects infrastructure that facilitates economic activity (motor vehicles, telephones, computers) land line telephones: per 1,000 inhabitants in MDCs (fewer than 100 in LDCs) motor vehicles: per 1,000 inhabitants in MDCs (fewer than 100 in LDCs) internet users: per 1,000 inhabitants in MDCs (fewer than 100 in LDCs) LDCs - gap between haves (usually urban) and have nots (usually rural)--can result in political unrest contribute to social and cultural elements of development - leisure activities, new ideas, exposure to cultural diversity cell phones - less costly / available to more - starting to close gap

How does an increasingly less agricultural workforce reflect development?

Demographic Indicators life expectancy at birth (60+ in LDC, 70+ in MDC) result for MDC?? infant mortality rate (94% LDC, 99.5% MDC) natural increase rate (1.5% LDC, 0.1% MDC) result for LDC?? crude birth rate (24/1,000 LDC, 11/1,000 MDC) life expectancy at birth = avg number of years a newborn infant can expect to live at current mortality levels 60+ in LDCs, 70+ in MDCs; gap is greater for females result for MDCs - higher percentage of older people (retired, receive public support), lower percentage of children under 15 (also must be supported) (about same number of older and younger people) LDCs - number of young people 6x higher than number of older people infant mortality rate LDCs - 94% of infants survive, MDCs %+ of infants survive reason - malnutrition, illness w/ lack of medicine, dehydration from diarrhea, poor medical practices b/c lack of education (fatal tetanus - India - unsterilized knives to cut umbilical cord) natural increase rate 1.5% annually in LDCs, les than .1% in MDCs greater rate = strain on hospitals, schools, jobs, services -- results in expansion, not improvement crude birth rate LDCs - 24/1,000; MDCs - 11/1,000 crude death rate does not indicate development - b/c diffusion of medical technology from MDCs, MDCs have higher percentage of older people

Can you imagine living in a country where 1 in 10 infants do not survive to celebrate their first birthday? What are the leading causes of infant mortality in today’s world? (malnutrition, illness w/ lack of medicine, dehydration from diarrhea, poor medical practices b/c lack of education - ex: fatal tetanus in India because unsterilized knives used to cut umbilical cords)

Social Indicators dependency ratio - number of dependents (young and old) that each 100 employed people must support)

Social Indicators education and literacy avg. # of school years attended (10 MDC, 2 LDC) student/teacher ratio (twice as high in LDC) literacy rate (98%+ in MDC, <60% LDC)

Why is female literacy rate so important in terms of development?

Social Indicators health and welfare expenditures on health care influenced by diet (calories, protein) health care as government service health and welfare expenditures on health care influenced by diet (calories, protein) many MDCs - health care is a public service Europe - gov’t pays 70%+ of health care costs USA exception - closer to LDC in this measure (private individuals pay 55% of health care) protection of those who can’t work (sick, elderly, disabled, veterans, widows, single parents) - Norway, Denmark, Sweden give highest level

United Nations Human Development Index (HDI) Combination of factors: per capita GDP (economic) literacy rates (social) school enrollment rates (social) life expectancy at birth (demographic) Range: 0 - 1 Average: .65

United Nations Human Development Index (HDI)

United Nations Human Development Index (HDI) 2000 United Nations Millenium Declaration Goals by 2015: eradicate extreme poverty and hunger achieve universal primary education promote gender equality and empower women reduce child mortality improve maternal health combat HIV/AIDS ensure environmental sustainability develop a global partnership for development

How can LDCs develop? Models of Development
What is the developed world? 40 years ago - places populated with people of European ancestry; Japan Today - Distinctions between MDC and LDC is blurred: oil-rich Middle East collapse of Soviet Union newly industrializing East Asia General North/South pattern still exists

History of ideas: Modernization (Rostow) Dependency (includes World Systems Theory) Neoliberal Counter-revolution Sustainable Development

Rostow’s Modernization Model / Stages of Development 1940s-1960s (post WWII, decolonization) classic “developed - developing - underdeveloped” ladder of development assumes that all countries follow a similar path (European) and learn from each other Identified 5 stages

Rostow’s Modernization Model / Stages of Development
Models of Development Rostow’s Modernization Model / Stages of Development Stage 1: Traditional Village in Lesotho. 86% of the resident workforce in Lesotho is engaged in subsistence agriculture.

Models of Development Rostow’s Modernization Model / Stages of Development Stage 1: Traditional Economy subsistence: output not traded or recorded barter system limited production >75% in primary sector Society hierarchical Political Power regionally based in the hands of landowners Values resistant to change; focus on old traditions subsistence farming, rigid social structure, technology slow to change (U.S. before independence)

Models of Development Rostow’s Modernization Model / Stages of Development Stage 2 - Preconditions for Takeoff The use of some capital equipment can help increase productivity and generate small surpluses which can be traded.

Models of Development Rostow’s Modernization Model / Stages of Development Stage 2: Preconditions of takeoff Economy -- surplus of agriculture and capital -- expansion of trade and manufacturing -- necessity of external funding -- some growth in savings and investment Society beginnings of a commercial class with some urbanization Political Power centralized national government Values rising spirit of progress and openness (U.S. - early 1800s)

Models of Development Rostow’s Modernization Model / Stages of Development Stage 3: Takeoff At this stage, industrial growth may be linked to primary industries. The level of technology required will be low. (image: diamond mine in Lesotho)

Models of Development Rostow’s Modernization Model / Stages of Development Stage 3: Takeoff Economy -- rapid expansion of industry --surge of technology --commercial agriculture --number employed in agriculture declines Society --increasingly dominant entrepreneurial class --some regional growth Political Power powerful groups encourage modernization Values increased investment of capital for profit country experiences something similar to industrial revolution - sustained growth takes hold urbanization increases (U.S s)

Models of Development Rostow’s Modernization Model / Stages of Development Stage 4: Drive to maturity As the economy matures, technology plays an increasing role in developing high value added products. (Image: Automotive plant using industrial robotics technology.)

Models of Development Rostow’s Modernization Model / Stages of Development Stage 4: Drive to maturity Economy -- technology extends to all sectors --labor-saving devices are made --growth becomes self-sustaining / wealth generation enables further investment Society --urbanization --increased in skilled and professional workers Political Power industrial leaders are highly influential Values --emphasis on technology --expectation of progress industrial specialization occurs international trade expands population growth slows (U.S. - late 1800s)

Models of Development Rostow’s Modernization Model / Stages of Development Stage 5: Age of Mass Consumption Service industry dominates the economy -- banking, insurance, finance, marketing, entertainment, leisure and so on.

Models of Development Rostow’s Modernization Model / Stages of Development Stage 5: Age of Mass Consumption Economy --high output levels --more use and production of durable goods --service sector dominates (>50%) Society --new middle class --shift to the suburbs --population growth stabilizes Political Power --social welfare -more resources for military and security Values --increased acquisition of consumer goods some countries reach this stage - high incomes and widespread production of many goods and services (U.S. early 1900s - present)

Rostow’s Modernization Model / Stages of Development based on economic structural change: investment substitution of capital for labor technology transfer large-scale industrialization projects (LDCs should follow model of economically powerful countries / European countries in order to develop.) World Bank, International Monetary Fund, US Agency for International Development created to facilitate investment and technology transfer and investment large-scale industrialization projects (Western-style power plants, factories, roads and port facilities expected to jump-start industrial economy and benefits would “trickle down” to masses

Models of Development Rostow’s Modernization Model / Stages of Development Example: Four Asian Dragons (South Korea, Singapore, Taiwan, Hong Kong) former colonies or occupied territories development by producing manufactured goods with low labor costs Four Asian Dragons: South Korea, Singapore, Taiwan, Hong Kong Singapore and Hong Kong British colonies (until 1965 and 1997) virtually no natural resources large cities surrounded by small amount of rural land South Korea and Taiwan occupied by Japan until post -WWII influenced by Japan’s success with international trade approach all promoted development by concentrating on producing a handful of manufactured goods, esp. clothing and electronics / low labor costs made possible to sell them inexpensively

Models of Development Rostow’s Modernization Model / Stages of Development Example: Petroleum-rich Arabian peninsula (Saudi Arabia, Kuwait, Bahrain, Oman, UAE) 1970s - petroleum prices high overnight transformation used to be least developed - escalating petroleum prices in 1970s - now are some of the wealthiest large scale project - housing, highways, etc. / diffusion fo consumer goods Islamic practices still dominate images - Dubai - first pic is 1990, second is same street in 2007 Petroleum-Rich Arabian Peninsula States Arabian Peninsula: Saudi Arabia, Kuwait, Bahrain, Oman, UAE escalating petroleum prices in 1970s transformed “overnight” large-scale projects factories diffusion of consumer goods some Islamic religious principles conflict with business practices of MDCs (exclusion of women, womens’ clothing, prayers)

Models of Development Rostow’s Modernization Model / Stages of Development Criticisms: does not consider geographic differences Western bias / assumptions of “progress” requires infrastructure does not consider global scale / effects of other countries (global market, competition for resources) increased dependence on MDCs

Models of Development Dependency School of Thought EXPLANATION: 1970s: reality - few LDC’s progressing linearly from stage to stage as Rostow predicted concerns with human welfare LDCs are limited by economic and political relationships with MDCs. International “division of labor” inevitable result of capitalist drive?

Models of Development Dependency School of Thought EXPLANATION: global economy creates structural circumstances difficult for poorer regions to overcome ex: concentration of wealth in certain areas, unequal relations between places Poor countries face different obstacles than Western states of Rostow’s model, will not “modernize” in same way

Dependency School of Thought
Models of Development Dependency School of Thought Strategies to achieve development: small-scale and rural enterprises import substitution (manufacture own products) nationalization DISCUSSION: * Why was import substitution generally less successful than anticipated? * What parts of the economy frequently get "nationalized" in an effort to develop a country's economy?

Models of Development Dependency School of Thought colonial origins

Models of Development Dependency School of Thought Core-Periphery / World Systems Theory (Wallerstein) core periphery semi-periphery Immanuel Wallerstein, a leading advocate of the approach, uses the same terminology. He characterizes the world system as a set of mechanisms which redistributes resources from the periphery to the core. In his terminology, the core is the developed, industrialized, democratic part of the world, and the periphery is the underdeveloped, raw materials-exporting, poor part of the world; the market being the means by which the core exploits the periphery. The core nations primarily own and control the major means of production in the world and perform the higher-level production tasks. The periphery nations own very little of the world’s means of production (even when they are located in periphery nations) and provide less-skilled labor. Like a class system with a nation, class positions in the world economy result in an unequal distribution of rewards or resources. The core nations receive the greatest share of surplus production, and periphery nations receive the least. Furthermore, core nations are usually able to purchase raw materials and other goods from noncore nations at low prices, while demanding higher prices for their exports to noncore nations. 1. World economy has one market and a global division of labor. 2. Almost everything takes place in context of world economy. 3. World economy has a three tier structure three-tier structure - explains interconnections between places in the global economy; spatial framework for how economies develop over time and space core and periphery describe both processes and regions semi-periphery - places where core and periphery processes are both occurring

Models of Development Dependency School of Thought Core-Periphery / World Systems Theory (Wallerstein) core processes generate wealth in a place for people within that place require higher levels of education sophisticated technology higher wages, benefits core regions high socioeconomic prosperity dominate world economy

Models of Development Dependency School of Thought Core-Periphery / World Systems Theory (Wallerstein) peripheral processes generate little wealth for people within that place lower levels of education lower salaries less technology peripheral regions poor dependent on core Banana farmers in Ecuador

Models of Development Dependency School of Thought Core-Periphery / World Systems Theory (Wallerstein) role of the semiperiphery region which practices both core and peripheral processes buffer zone: exploited by core, exploits periphery more power than periphery heavily influenced by the core

Models of Development Dependency School of Thought Core-Periphery / World Systems Theory (Wallerstein) Applicable at scales beyond the state (country) within a region within a state (country) in a local area Los Angeles - core of S. California region Johannesburg - core of South African state

Models of Development Dependency School of Thought Neocolonialism Economy of LDCs controlled by MDCs. Global economy - this is difficult to overcome unequal distribution of resources unequal relations between places

Models of Development Dependency School of Thought Core-Periphery / World Systems Theory (Wallerstein) Major differences from Modernization Model: sensitive to geographic context; does not assume that socioeconomic change will occur the same way in all places equal wealth not possible in capitalist global economy makes power relations between places explicit

Models of Development Dependency School of Thought Criticisms: Offers causes but no solutions Little hope for prosperity in LDCs Little attention to geographic differences

REVIEW What is development? How is it measured? How did Rostow explain development? How do Dependency Theorists explain development? How did Wallerstein explain development? What are the key differences between the Modernization and Dependency schools of thought?

Neoliberalism Models of Development Origin
post WWII - Decolonization wave → International bank loans to new countries Formation of International Monetary Fund (IMF) and World Bank 1980s - End of Cold War → international community used loans to discourage state-owned industries, encourage free trade Reaction to bottom up strategy of dependency theorists - major goal is to improve human welfare by directing resources towards traditionally poor sectors of society to meet basic needs Goal - more even distribution of wealth, grow middle class to buy import substitution goods

Neoliberalism Models of Development Theory
Government intervention into markets is inefficient and undesirable. Protectionism* and state-owned industries perpetuate dependency. *protectionism imposing high tariffs on foreign goods to protect home grown industries protectionism - imposing high tariffs on foreign goods to protect home grown industries protected, state-owned industries not forced by markets to be competitive in price and quality - keeps states dependent on MDC’s Championed by free market capitalists with end of Cold War: Reagan, Margaret Thatcher

Neoliberalism Models of Development Strategies to achieve development
Loans → better infrastructure → more businesses → more taxes to repay loan Structural adjustment loans have conditions attached to guide how the money should be used. Origin: 1980’s - end of Cold War? Reaction to bottom up strategy of dependency theorists - major goal is to improve human welfare by directing resources towards traditionally poor sectors of society to meet basic needs Goal - more even distribution of wealth, grow middle class to buy import substitution goods

Two major lenders for international loans: International Monetary Fund (IMF) World Bank International Bank for Reconstruction and Development (IBRD) International Development Association (IDA) both conceived at 1944 UN conference in New Hampshire - to promote economic development and stability after WWII, avoid Great Depression again World Bank: IBRD - loans to countries to reform institutions (legal, financial) and implement projects (transportation, social service) IDA - support to poor countries considered too risky to qualify for IBRD IBRD - $400 billion loaned since mostly Europe, Latin America IDA - $150 billion loaned since mostly Asia, Africa IBRD: In 1991, the IBRD declared that it will not fund commercial logging projects in tropical rainforests. IMF: loans to countries with problems that threaten expansion of trade loans are to help rebuilt reserves, stabilize currency exchange rates, pay for imports does not lend for specific project

Structural Adjustment Loan Examples: (“strings” / conditions attached to loans) sell government-owned industries to the private sector free trade allow own currency to devalue to make exports attractive health and education investment government reforms require better fiscal management the type of projects allowed In 1991, the IBRD declared that it will not fund commercial logging projects in tropical rainforests.

Neoliberalism Models of Development Results -
Private ownership of services and businesses Economic globalization Corporations control regions and states

“Great Leap Forward” (1958) agricultural communes
Models of Development Neoliberalism Example: China Mao Zedong leader of 1949 Communist Revolution “Great Leap Forward” (1958) agricultural communes state owned factories (“backyard” industry) Result: 20 million starve by 1962 Result of Great Leap Forward: 9 million starve in 1959 alone - 20 million by 1962 poor quality industrial goods due to “backyard industry” - production of steel and manufacturing farming equipment within communes

Result: 2nd highest GDP in world after US, GDP per capita = $5,400
Models of Development Neoliberalism Example: China Mao’s successor: Deng Xiaoping Capitalist reforms: farmers can sell surplus encourages foreign investment competition between state-owned factories Result: 2nd highest GDP in world after US, GDP per capita = $5,400 China joined IMF and World Bank under Deng - accepted loans from World Bank

Neoliberalism Criticisms: Models of Development
Infrastructure projects that are expensive failures. Large debts that can’t be repaid. Mali example - French-sponsored project to pump water from Niger River using solar energy functioned for only a month. Cost more than $1 million when it did work, produced no more water than could two diesel pumps that together cost $6,000 World Bank estimates that ½ projects funded in Africa are failures

Sustainable Development
Models of Development Sustainable Development Theory: Progress should not come at the expense of future generations. Concerned with: climate biodiversity forests pollution resources How to address these concerns / policies in line with sustainable development? efficient renewable fuels ecotourism drugs from rainforest plants China - economic development at cost of environmental pollution

Models of Development Sustainable Development Requires New Indicators?? Ideas? potential ideas: air and water quality percentage of land in nature preserves deforestation rate energy efficiency number of threatened species

Models of Development Sustainable Development Strategies to achieve development Appropriate Technology looms efficient stoves clay-pot water filters composting systems bicycle rickshaws paper strips for disease testing Not Appropriate oil-fired power plants infant formula chain saws combine harvesters What characterizes appropriate technology? small-scale simple inexpensive respectful of environment preserve human dignity

Models of Development Sustainable Development Strategies to achieve development Fair Trade protect workers - rights, safety, wages protect producers - cooperatives for loans international standards largest organization in North America: Ten Thousand Villages What characterizes appropriate technology? small-scale simple inexpensive respectful of environment preserve human dignity

Development Case Study: Jamaica

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