1. DEVELOPMENT Chapter 10

2. How Do You Define and Measure Development? Gross National Product (GNP) Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year, both inside and outside a country’s territory Gross Domestic Product (GDP) Measure of the total value of the officially recorded goods and services produced with a country by the citizens and corporations in a given year Gross National Income (GNI) Most common measurement used today Measure of the monetary worth of what is produced within a country plus income received from investments outside the country

3. Issues with Measuring Economic Development Formal economy –The legal economy that governments tax and monitor –Counted in all measures of economy Informal economy –The illegal or uncounted economy that governments do not tax or monitor –Not included in measures of economy

4. Other Ways of Measuring Development Occupational structure of the labor force (employment in sectors of the economy) Productivity per worker (production divided by total labor force) Transportation and communications facilities per person (per capita index of transportation and communications per person) Dependency ratio (dependents, young and old, that each 100 workers must support)

5. Differences in Communications Connectivity Around the World

6. A measure of the number of people under the age of 15 and over the age of 65 who depend on each working-age adult Dependency Ratio, 2007

7. Models of Development How do countries develop? If we can understand how development occurs, strategies can be adopted to help countries to develop Number of approaches:

8. Rostow - Stages of Growth The work of American Walt W. Rostow Rostow is an economic historian Countries can be placed in one of five categories in terms of its stage of growth: A child in Sierra Leone making breakfast. Which stage would a country like Sierra Leone fit in? Copyright: Dave Dyett, http://www.sxc.hu/

9. Rostow - Stages of Growth 1.Traditional Society Characterised by –subsistence economy – output not traded or recorded –existence of barter –high levels of agriculture and labour intensive agriculture Village in Lesotho. 86% of the resident workforce in Lesotho is engaged in subsistence agriculture. Copyright: Tracy Wade, http://www.sxc.hu/

10. Rostow - Stages of Growth 2. Pre-conditions: –Development of mining industries –Increase in capital use in agriculture –Necessity of external funding –Some growth in savings and investment 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

11. Rostow - Stages of Growth 3. Take off: –Increasing industrialisation –Further growth in savings and investment –Some regional growth –Number employed in agriculture declines 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

12. Rostow - Stages of Growth 4. Drive to Maturity: –Growth becomes self- sustaining – wealth generation enables further investment in value adding industry and development –Industry more diversified –Increase in levels of technology utilised As the economy matures, technology plays an increasing role in developing high value added products. Copyright: Joao de Freitas, http://www.sxc.hu

13. 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

14. Rostow’s Ladder of Development

15. How Does Geographical Situation Affect Development? Importance of context: What happens at state, local, global scale Colonialism –Diffusion of idea of the state –Dependence of colonies on rulers –Wealth to ruling countries Neo-colonialism: Continuation of economic dependency despite political independence Structuralist theory: Difficult-to-change, large-scale economic arrangements

16. Dependency Theory Development possibilities limited by –Political and economic relations between regions and countries –Dependency of colonies on ruling countries –Reinforcement of dependency despite political independence Dollarization: Replacing local currency with currency of a wealthy country Little hope for development in countries dominated by wealthy powers

17. World-Systems Theory: 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

18. Three-Tier System

19. What Are the Barriers to and the Costs of Development? Millennium Development Goals 1.Eliminate extreme poverty and hunger 2.Achieve universal primary education 3.Promote gender equality and empower women 4.Reduce child mortality 5.Improve maternal health 6.Combat HIV/AIDS, malaria, and other diseases 7.Ensure environmental sustainability 8.Develop a global partnership for development

20. Human Development Index, 2005

21. Barriers to Development Social conditions Foreign debt and structural adjustment loans Political instability Widespread disease (e.g., malaria)

22. Foreign Debt Obligations

23. Malaria Transmission Risk

24. Costs of Economic Development Industrialization –Air and surface water pollution –Export Processing Zones (EPZs) –Maquiladoras –Special economic zones (SEZs) –Locations geared to export markets

25. Export Processing Zones

26. Costs of Development Agriculture –Pesticides –Desertification –Production for export rather than local markets Tourism –Pollution –Narrow benefits –Damage to local cultures

27. Areas Threatened by Desertification

28. How Do Political and Economic Institutions Influence Uneven Development Within States? Get involved in world markets Price commodities Affect whether core processes produce wealth Shape laws to affect production Enter international organizations that affect trade Focus foreign investment in certain places Support large-scale projects

29. Islands of Development Government islands: Capital cities Corporate islands Non-governmental organizations (NGOs) –Private, usually non-profit organizations –Microcredit programs