International
Development
Continuing our discussion of
Global Poverty….
• In the last Power Point (The North-South Gap) we examined
the dependency theory argument for why we see such
tremendous economic inequality between a small group of
rich countries and the rest of the world.
• In this Power Point Presentation on “International
Development” we look toward ways in which poor countries
might be able to rise out of poverty.
The Concept of Development
• It is important to keep in mind that the idea of development
is a subjective one.
• We need to be very careful to avoid ethnocentric thinking on
development. That is, we need to be careful in assuming that
what we consider ‘developed’ is the same as what another
society or culture considers ‘developed’.
• Mahatma Gandhi was once asked: “What do you think of
Western Civilization?” and he responded “I think it would be a
very good idea.”
Economic Development
• While we need to keep in mind that what constitutes
“development” is complex and subjective, one simple measure of
economic development is per capital GDP
• Your Textbook’s Definition of Economic Development:
• “The combined processes of capital accumulation, rising per capita
incomes (with consequent falling birthrates) increasing skills of the
population, adoption of new technological styles, and other related
social and economic changes” (Goldstein and Pevehouse 2014, 461).
• .
Economic Growth in the Global
South
• Economic growth rose in the Global South during the 1970s,
declined in the 1980s, and rose again in the 1990s.
• This growth is not evenly distributed across the Global South .
• Rather, it has been concentrated in China and South Asia.
• Africa has not seen the same growth trends as China, India, or even
Latin America.
• The growth achieved in China, South Asia, and in some Latin
American countries ,demonstrates that it is possible to rise out
poverty. (This growth has posed a challenge to the Dependency
Theory assumption that former colonies are forever trapped in a
vicious cycle of poverty.)
NICs
• Newly Industrialized Countries (NICs)- a handful of countries that
were able to rise out of poverty to achieve impressive economic
growth and capital accumulation.
•
• The NIC growth strategy combines strategic government
investments, controlled trade liberalization, and opening the
economy to foreign investment.
• The “Four Tigers” or “Four Dragons” were the most successful NICs
•
•
•
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Taiwan
Singapore
South Korea
Hong Kong
• Scholars debate whether or not the growth strategy that these four
tigers followed is replicable in Africa, Latin America, and other parts
of Asia.
China
• China successfully adopted the NIC growth strategy
• The population of China is 1.3 BILLION (compare to the
approximately 300 million people in the U.S). China’s ability to
achieve economic development is significant for improving global
prosperity and reducing global poverty.
• China’s economy has been growing at an incredible 10% a year (the
U.S. and other ‘developed countries” have annual growth rates
closer to 2%)
• China has achieved this economic growth under an authoritarian
government. Is China moving toward democracy? Will greater
economic prosperity in China build a middle class that will demand
political reform?
India
• For decades, India’s economy was based on a modified version of
socialism. The state controlled large industries.
• Beginning in the 1990s India began implementing market reforms
and achieving very high growth rates.
• Despite high annual growth rates, extreme poverty remains an
entrenched and grinding reality for many, many Indians.
• India has been able to achieve remarkable success in developing it
service and information sectors.
• India is a democratic country. Can it continue to sustain growth and
strengthen its democratic institutions?
North-South Debt
• One way for poor countries to attain the necessary capital to spur
economic growth is to borrow money from countries in the Global
North or from international financial institutions, such as the IMF
and World Bank (both of which are controlled and financed by
countries in the Global North).
• Unfortunately, what has happened is that poor countries in the
Global South end up paying huge portions of their GDP in interest
payments. Debt can weigh heavily on a poor economy. 23% percent
of the GDP in the Global South goes to debt repayment.
• Dependency scholars argue that foreign debt has been another
(though perhaps unintended) neocolonial pattern that locks poor
countries into a vicious cycle of poverty.
Drop the Debt Campaign
• Non-governmental organizations, such as Jubilee 2000, have put
pressure on governments in the Global North to “drop the debt”.
That is, the Drop the Debt Campaign wants rich countries to forgive
the debt of poor countries. See “Why drop the Debt”:
http://www.jubileeusa.org/truth-about-debt/truth-about-debt.html
• The Drop the Debt Campaign (whose spokesperson is Bono) has
actually been very effective in getting rich countries to forgive the
debt of many poor countries.
http://abcnews.go.com/Entertainment/story?id=105847
• The Drop the Debt Campaign now has a sister campaign- the ONE
Campaign, whose goal is to end extreme poverty. See www.One.org
Debt Renegotiation
• Aided by the work of international social movements and NGOs (such as the “Drop the
Debt Campaign”) the Issue of Debt Renegotiation has been propelled into prominent
international discussions
• Debt renegotiation has developed around he idea that very poor countries should have
debt relief.
• The idea that countries in the Global North should forgive debt or renegotiate the debt of
the Global South has become an emerging international norm.
• In debt renegotiations states in the Global North and states in the Global South seek to
figure out how to restructure the debt of poor countries so that debt payments do not
inhibit the ability of very poor countries to meet the basic needs of their populations.
• There are now regular international conferences to deal with the North-South debt issue
(See your textbook’s discussion of the Paris Club and the London Club p.479).
• Despite transnational social movement and NGO efforts to improve global justice through
putting normative pressure on rich countries to drop the North-South Debt- “The Global
South owes 4 trillion in foreign debt and pays 1 trillion a year to service it” (Goldstein and
Pevehouse 2014, p. 479).
Micro-Credit
• Micro-credit developed as an alternative to the large international
loans which, as we have been discussing, can be difficult for poor
countries to repay, and which can trap a poor country under
crushing interest rates.
• Instead, micro-credit (or micro-finance) involves giving small loans
directly to individuals in poor countries (As opposed to giving large
loans to the government of poor countries).
• Many international aid agencies have gravitated toward providing
small loans (micro-credit) directly to poor people, with the
assumption that by providing a small ‘start-up’ loan to a very poor
person you can effectively unleash the entrepreneurship of
individuals who have been trapped in extreme poverty. The microloan goes directly to the individual rather than through a large, and
possibly corrupt, government bureaucracy.
Micro-Credit Continued….
• Micro-credit was pioneered by Muhammed Ynus in Bangldesh.
• His Grameen Bank lends small loans to poor individuals (many
of whom are women) to invest in the creation of a small
business (such as basket weaving).
• Ynus received the Nobel Peace Prize for pioneering this
innovative way to approach poverty relief in very poor
countries.
• http://www.grameen-info.org/
• The repayment rates on micro-credit have been relatively
high.