Development
Why Are Some Countries Rich and Others Poor?
Objectives
After successful completion of this unit you will be able to:
Identify
and explain the factors shaping development.
Describe
how development is measured.
Define
and analyze the benefits and problems associated with models of
self-sufficiency and international trade.
Identify,
explain, and evaluate the various models of development.
Identify
the major international organizations involved in development, the
policies they advocate, and criticisms against them.
Explain
fair trade and how it could be an alternative model for
development.

What does it mean to be developed? What types of
indicators tell us how developed a country is?

Normative: “establishment of standards, or norms,
to help measure the quality of life and economic
prosperity of groups of people” (pg. 263).
What Is Development?

More Developed Countries (MDCs) – further along the
development continuum.

Less Developed Countries (LDCs) – at an earlier stage of the
development continuum.
Measuring Development
Economic Indicators:
Gross
Domestic Product (GDP) – an estimate of the total value of all
materials, foodstuffs, goods, and services produced by a country in a
year.
Gross
National Product – similar to GDP but includes value of
income abroad.

Purchasing Power Parity – exchange rate that lets us compare data for
countries with different currency systems.
Weaknesses?
Where People Live by
Economic Status
Measuring Development
Measuring Development
Sociodemographic Factors:
How well off is the population?
Selected indicators:

Disease Rates

Education Rates/Literacy

Nutrition

Infant Mortality Rates
Development Indicators
Environmental Indicators:
Concerned with sustainability of
development – grew out of the
1992 Earth Summit hosted by
the UN.

Biodiversity

Pollution

Access to clean water

Frequency of environmental
disasters
Indicators of Development
Old indicators:
Human
Development
Index (HDI)
1)
Economic – GDP (PPP)
per capita
2)
Social – Adult literacy
rate, gross enrollment
ratio

Created in 1990 and used by the
United Nations

Demographic – life
expectancy
Indices changed from what is
mentioned in the text

0 to 1 – high scores indicate a
country is further along in the
development process.
3)
Human Development
Index
Gender and Development

Text mentions the Gender Related Development
Index (GDI) & Gender Empowerment Measure
(GEM)

Replaced by the Gender Inequality Index

% loss to potential human development due to shortfalls
in dimensions included.

0-1 scale - high values indicate higher levels of
inequality between males and females.
Gender Inequality Index
Reproductive Health
1.
a)
b)
Adolescent fertility
Maternal mortality
Empowerment
2.
a)
b)
Educational attainment
Parliamentary representation
Prostitutes in Mumbai
International Labour Organization
Labor Market
3.
a)
Labor force participation
Link to UN Map Tool
Half the Sky Trailer
Income Inequality
Measuring Inequality

Income Distribution – the
way income is broken up
across different groups.

Income Inequality – ratio
of earnings of the richest to
the earnings of the poorest.

Richest 20% - 74% of
income; Poorest 20% 1.5%
Source: Credit Suisse Research Institute, Global Wealth Report, October 2010
Measuring and
Understanding Inequality

Gini coefficient – a
statistic that can be
used to measure
inequality

Range of 0 to 100,
zero meaning
complete income
equality, high values
indicating complete
inequality.
Understanding Income
Inequality

Personal factors

Social factors

Policy factors

Historical

Does globalization increase or decrease inequality?
Development Theories

Why are some countries more developed than
others?

What should a country do to become more
developed?
The Classical Model of Development

Created by Walt W. Rostow

Development is the result of investment

Need investment to diversify the economy

Five stages would transform the country from a
preindustrial society into a modernized serviceoriented economy
Stage 5: Age of Mass Consumption
Consumer oriented
Service sector dominated
Rostow’s Classical
Development
Model
Stage 4: Drive to Maturity
Diversification
Less Reliance on Imports
Stage 3: Take-Off
Industrialization
Growth in new
technologies
Stage 2: Pre-conditions for
Take-off
Specialization in key areas
Elites start innovation
Stage 1: Traditional Society
Subsistence/agricultural
The country transitions
from a primary to a
tertiary sector
dominated economy.
Discussion: Rostow’s
Development Model
Does Rostow’s Development Model work for
all countries? Why or Why Not?
?
Mr. Rostow
Dependency Theory

Forget about stages, development is a result of relational
processes.

International trade is the central piece of the relational
process.

Some states have more power in international trade and
are dominant states.

Other states do not have the resources or power and are
dependent states.

Dominant states develop at the expense of dependent
states.
World-System Theory

Developed by Immanuel Wallerstein.

The capitalist world economy causes underdevelopment.

Capitalism creates an international division of labor, or a
hierarchy of states.

Core, semi-peripheral, and peripheral regions.

System of unequal trade relationships that support the
growth of the core at the expense of the peripheral and
semi-peripheral states.

States can change their role in the international division
of labor.
Core and the
Periphery
Map of World According to World-System
Theory
Fig 9.15b from Greiner
Neoliberal Model of
Development

Based on the liberalist ideas of Rousseau, T. Jefferson, and Adam
Smith.

Suggests that capitalism can help countries develop as long as
markets were free and open.

Suggested underdevelopment was the result of government policies
that prevent economic growth.

So, countries should engage in structural adjustment programs that
involve strategies for market reform and deregulation.
United Nations
Development Program
The Millennium Development Goals: Eight Goals for 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, malaria and other diseases

Ensure environmental sustainability

Develop a global partnership for development
United Nations
Millennium
Declaration
A set of goals made
by 189 nations in
2000.
Human Development
Report Launch 2013
Structural Adjustment
Programs
Provide debt relief, but must commit to a structural
adjustment program.
How?
Criticisms?
International Connections
World Bank
International Monetary
Fund (IMF)
International Bank for
Reconstruction and
Development – loans for middle
income and creditworthy
countries
Provides loans to countries with
payment problems.
International Development
Association – for the poorest
countries
1.
Rebuild international reserves
2.
Stabilize currency exchange rates
3.
Pay for imports
Provide low-interest loans, interestfree credits and grants to
developing countries for
investments in multi-sector
projects.
Help to:
Not for specific projects
Both fund development projects to attract foreign direct investment.
International
Connections
World Trade Organization (WTO)

Promotes the free trade model

Works to reduce trade barriers
 How?

Criticisms?
International
Connections
Foreign Direct Investment
Examples of Failed
Development Projects

Lesotho Highlands Water Project, $3.5 billion

Project: Sell mountain water to South Africa and
divert some for creating electricity.

Problems:

Electricity was too costly for most people.

Environmental and economic problems evolved
downstream.
Info from MSNBC
http://www.icpdr.org/icpdr-pages/dw0902_p_10.htm
Examples of Failed
Projects

Lake Turkana Fish Processing Plant in
Kenya, $22 million


Purpose: Provide jobs to the Turkana through
fishing and fish processing for export.
Problems:
 Turkana are nomads with no fishing experience
or history of eating fish.
 Too expensive to operate freezers and had a
high demand for clean water…difficult in a
desert environment.
Lake Turkana World Heritage Site (Alison
M. Jones for www.nowater-nolife.org)
Info from MSNBC
Challenges with
Development Projects
Development Projects aren’t always successful:
1.
Faulty engineering – so project doesn’t function correctly
2.
Corruption or loan mismanagement within receiving countries
3.
Infrastructure doesn’t attract investment
4.
?
5.
?
Many receiving countries are unable to repay loans
Debt as % of GNI
Sustainable
Development
Fair Trade - Products made and traded according
to standards that protect workers and small
businesses in LDCs -- Video
Microfinancing - Microcredit programs extend
small loans to very poor people for selfemployment projects that generate income,
allowing them to care for themselves and their
families.
-started by Muhammad Yunus
-address gender-related inequalities
Why are Some Countries More
Developed Than Others?
Geographic Factors


Situational –
 Location of territory
 Presence of key resources
 Dependence on a single
resource
 Latitude
 Shape of Continents
Transport
 Markets
 Where are the people living?

Agroclimatic

Health / Disease

Prevalence of Disasters
Institutional/Historical

Colonialism and Imperialism

Technological power

Government Structures
Corruption

Discrimination
Geographic Path Dependence – in a
location, economic organization in
past may shape future.
Initial advantage makes it difficult for
other places to catch up.
Adapted from Guns, Germs, and Steel by Jared Diamond
Review!

Be able to provide examples (and define where appropriate) of economic,
sociodemographic indicators, environmental indicators.

Understand the difference between indicators and indices. What is the HDI?
And the gender related indices? Know how these have changed.

What types of factors influence development? Be able to identify and describe
them.

What does global inequality look like?

Be able to identify and explain the different development theories.

What are structural adjustment programs, what organizations have they been
associated with and what are some criticisms?

Terms: development, normative, dependency, GNI, GDP, neoliberalism,
poverty line