Development
Poverty
• Huge, worldwide, inequality
gap
– The poorest 40% of the
world’s population accounts
for 5% of global income.
– The richest 20 percent
accounts for three-quarters of
world income.
– The top 20% consumes 86%
of the world’s goods and
services
– Poorest fifth consumes about
1% of world’s goods and
services
Global Inequality
• The three richest people in the world have
wealth that exceeds the combined economic
output of the 47 least-developed nations
• The world’s richest 200 people together have
more money than the combined income of
the lowest 40% (2.4 billion people)
• About half of the world’s people live on less
than $2 a day (the World Bank’s definition of
poverty
Global Inequality
• Girls and women are disproportionately
disadvantaged. Women represent 2/3 of the
world’s illiterate people and 3/5 of its poor.
• Stemming from cultural practices, food rations
are often given to fathers and sons before
daughters and mothers, resulting in greater
malnourishment and disease.
Why is there global
inequality?
• Geographic isolation, climate, and
natural resources
• Power
Gini Coefficient
• Used to measure income inequality
• Number between 0 and 1
• 0 means perfect equality (all resources
are evenly distributed)
• 1 means perfect inequality (one person
has control of all resources)
Gini Coefficient
Australia = .352
China =
.447
France = .327
Germany = .283
India =
.325
Japan =
.249
Mexico = .546
UK = .360
US = .408
Theories of Global Inequality
• How does the first world explain global inequality?
• Modernization theory
• Focuses on deficiencies in poor countries –
absence of democratic institutions, capital,
technology and initiative
• Speculate how to repair deficiencies
• Global wealth and poverty are linked to
industrialization
Modernization Theory
• Rostow’s stages of Economic Development
(1960)
1. Traditional society – no change
2. Preconditions for take-off – traditional society
challenged
3. Take-off – belief in individualism, capitalism
4. Drive to technological maturity
5. High Mass Consumption
Modernization Theory
• Polarizes “tradition” and “modernity”
• Looks at global economic integration
especially by the International Monetary
Find and the World Bank
Theories of Global Inequality
• How does the third world explain global
inequality?
• Dependency theory
• Third World countries are exploited by
first world countries
• Economic growth in advanced countries
created third world poverty in its wake
Dependency theory
• 16th Century capitalism developed as a
global system
• Workers produced raw material for
export to rich countries
• After independence, countries borrowed
money from the First World in the 50s
and 60s during the Cold War
Dependency theory
• Money was given to dictators that went
to the military or the dictator’s family
• Oil in OPEC countries went to Western
Banks and was loaned to Third World
countries
• Interest rates on the loans went
up/OPEC crisis made cost of oil go up
Dependency theory
• Countries went into debt to pay off loans and
used this money to pay for food for their
populations
• Success of capitalism depends on labor
earnings of third world staying low
• Third World does not have economic
independence; they give up more than they
get back
World Systems Theory
• Capitalism is truly a global system that
is held together with economic ties
• Three types of nations
– Core
– Semi-Peripheral
– Peripheral