Chap 9 Development But first a review question CRITICAL THINKING: Consider Demko’s definitions of Nation and State and the concept of Nation-State and Multinational-State. Based on the video you watched about the history of Syria explain what it currently is, that is explain whether it is a Nation, State, Nation-State, Multinational-State. Begin by defining what Demko would expect (the conditions for a Nation and State) and then relate them to Syria today. We’ll take a few minutes for you to talk with your neighbor and answer this on a sheet of paper. Definition Michael Todaro's definition -- development should be perceived as a multidimensional process involving the reorganization and reorientation of entire economic and social systems • Multidimensional • Reorientate & Reogranize • Economic & Social system Breakdown • multidimensional process – not just economic • reorganization and reorientation -- implies that development is a dynamic process that is continuous • entire economic and social systems -- this means that increased Women's rights in the United States can be a form of development. What about minority rights or gay rights? What about democracy in a Third World nation? Creative Destruction In Capitalism, Socialism and Democracy, Schumpeter popularized and used the term to describe the process of transformation that accompanies radical innovation.[2] In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies and laborers that enjoyed some degree of monopoly power derived from previous technological, organizational, regulatory, and economic paradigms. http://www.answers.com/topic/creative-destruction In a Nutschell: http://bigthink.com/videos/creative-destruction-fromgenesis-to-picasso-to-apple-computers-2 • http://www.youtube.com/watch?v=IaIek5MQ6Hs Creative Destruction? http://www.youtube.com/watch?v=siJF_jvcmN0 Capitalism or Corporate Welfare??? http://www.scpowerteam.com/advantages.aspx Jury Still out. http://edq.sagepub.com/content/15/1/90.short Development Rubenstein’s Definition: A process of improvement in the material conditions of people through diffusion of knowledge and technology. Note this only deals with economic development – material goods Development Indirectly Rubenstien implies development includes Economic, Social, and Demographic Characteristics As will be seen throughout this Chapter 9.1 & 9.5 Index City – Many ways to divide the world into “North” (developed) and “South” (developing) Human Development Index: Ordinal Combination of 1. Economics -- Measure of GDP (Gross Domestic Product) 2. Education -- Literacy Rate and Amount of Education 3. Demographics – Life Expectancy (Health) Human Development Index (HDI) Human Development Index (HDI) Calculation Example Go to example U:/Lecture 1/HDI Index.xls Recent HDI Results Variation on HDI • Difference: Subtract from the HDI Ranking the Per Capita GDP Ranking – basically how well are you doing (HDI) versus your economic potential (per capita income) • Note how Africa Shows a different pattern then simply HDI, also notice the North American Variation Red represents poor use of Economic Potential Green above average use Beige as neutral Difference in Africa HDI Measure HDI Rank minus Wealth Rank Algeria & Madagascar Reverse Patterns – Appears Madagascar uses its limited wealth more wisely HDI Note the USA Position in 2013 Note How much lower the US is on the IHDI Criticism (Blah Blah Blah – for those who want to know) HDI for a sample of 150 countries shows a very high correlation with logarithm of GDP per capita. The Human Development Index has been criticised on a number of grounds, including failure to include any ecological considerations, focusing exclusively on national performance and ranking, not paying much attention to development from a global perspective and based on grounds of measurement error of the underlying statistics and formula changes by the UNDP which can lead to severe misclassifications of countries in the categories of being a 'low', 'medium', 'high' or 'very high' human development country. [22] The index has also been criticized as "redundant" and a "reinvention of the wheel", measuring aspects of development that have already been exhaustively studied.[23][24] The index has further been criticised for having an inappropriate treatment of income, lacking year-to-year comparability, and assessing development differently in different groups of countries.[25] Economists Hendrik Wolff, Howard Chong and Maximilian Auffhammer discuss the HDI from the perspective of data error in the underlying health, education and income statistics used to construct the HDI. [22] They identify three sources of data error which are due to (i) data updating, (ii) formula revisions and (iii) thresholds to classify a country’s development status and find that 11%, 21% and 34% of all countries can be interpreted as currently misclassified in the development bins due to the three sources of data error, respectively. The authors suggest that the United Nations should discontinue the practice of classifying countries into development bins because the cut-off values seem arbitrary, can provide incentives for strategic behavior in reporting official statistics, and have the potential to misguide politicians, investors, charity donators and the public at large which use the HDI. In 2010 the UNDP reacted to the criticism and updated the thresholds to classify nations as low, medium, and high human development countries. In a comment to The Economist in early January 2011, the Human Development Report Office responded[26] to a January 6, 2011 article in the magazine[27] which discusses the Wolff et al. paper. The Human Development Report Office states that they undertook a systematic revision of the methods used for the calculation of the HDI and that the new methodology directly addresses the critique by Wolff et al. in that it generates a system for continuous updating of the human development categories whenever formula or data revisions take place. Each year, UN member states are listed and ranked according to the computed HDI. If high, the rank in the list can be easily used as a means of national aggrandizement; alternatively, if low, it can be used to highlight national insufficiencies. Using the HDI as an absolute index of social welfare, some authors have used panel HDI data to measure the impact of economic policies on quality of life.[28] Ratan Lal Basu criticises the HDI concept from a completely different angle. According to him the Amartya SenMahbub ul Haq concept of HDI considers that provision of material amenities alone would bring about Human Development, but Basu opines that Human Development in the true sense should embrace both material and moral development. According to him human development based on HDI alone, is similar to dairy farm economics Another index http://www.transparency.org/files/content/pressrelease/CPI2013_map-and-countryresults_english_embargoed.pdf 9.2 Standard of Living: Economic Indicators Gross Domestic Product per captia • Gross Domestic Product (GDP) = all goods and services produced in a country in one year measured usually in US $ • GDP per capita = GDP/ total population • All kinds of problems with these measures not the least being every fluctuating exchange rates between foreign currencies and US $ GDP Percapita for 2012 Adjusted for purchasing power Economic Structure: Development and Job Type • Less Developed more primary employment – Agriculture, logging, primary resource extraction • More Developed more secondary employment – Manufacturing – think China today • Most Developed more tertiary & quarternary – More Tertiary Service jobs (as well as Quarternary Information based jobs – also referred to as IT or Information Technology As development occurs employment type migrates from primary to secondary to tertiary (and today to quarternary jobs) Productivity • How much input (labor, capital, raw materials) • Vs output • Example labor productivity in China is lower than in the US to make a car, but labor costs in China are much lower • Developed countries can only continue to compete by increasing productivity So is this good or bad? These type of cars could compete directly with S. Carolina BMWs Secondary – Manufacturing Value added per worker: note huge productivity difference of developed countries 9.3 Education % Enrolled in School Percent of Adults that are Literate Maps to check out Note which continent is lowest & where are China and India • Years of schooling • Expected years of schooling • Pupil/Teacher ratio • Literacy Rates 9.3 Health % Undernourished Health Care Expenditures But who is healthier – show of hands Diagnosis: Healthier in Europe : By most standards, Western Europeans are in better medical shape than Americans. And costs are sharply lower. But bureaucracies and under-the-table payments mar the system. http://articles.latimes.com/1992-12-30/news/mn-2582_1_health-care-system/2 9.4 Unequal and Uneven Development • Inequality adjusted HDI (IHDI) – Basically how well are things shared inside a country – For USA and world USA – review earlier slides • Widening Inequality in Developed World – Watch the presidential debates Core and Periphery Results in part from Imperial Age Gender Specific Measures 9.5 Gender Based Measures • Gender Inequality Index (GII) – Compares reproductive health, empowerment, education, employment… across genders Not in your book • Gender Empowerment Measurement (GEM) • Definition and calculation: The GEM was designed to measure "whether women and men are able to actively participate in economic and political life and take part in decision-making" (UNDP, 1995, p. 73)(Klasen 257). Look over all of the maps • Are there any surprises here? • For example look at how High School Graduation and Labor Force Participation has a strong cultural feature -- Hint compare Libya to India or China • Again look at Africa, China and India across all maps Literacy Rate female to males Incomes relationship Percent of seats in national legislature How many women are seen here in the EU Parliament? GOP Wave Yields More Racially Diverse Congress, But No Gains for Women By HUMA KHAN and DEVIN DWYER Nov. 5, 2010 Come January, the halls of Congress will be filled with dozens of new Republican members, many of whom will help make the chamber more diverse than it was before. By numbers alone, the Congress that will meet in 2011 will be slightly more racially and ethnically mixed than the current one, according to an ABC News analysis of the election results. But the vast majority of representatives in Washington will continue to be white, straight men…. while women candidates faced mixed results, leaving their overall representation in Congress flat or declining http://abcnews.go.com/Politics/vote-2010-election-results-racially-diverse-congress-gains/story?id=12060145 9.6 Two Paths of Development For a more complete discussion of this area see the additional Power Point we used in class Chap 9 -Development -- How to & Rostow's 5 Stages Key Concepts • Self-sufficiency erects barriers to trade – all equally well-off/poorly-off – equality by design • International trade path allocates scarce resources to few activities – some get rich before others – division of wealth by design http://www.theatlantic.com/china/archive/2013/09/ mapping-chinas-income-inequality/279637/ Bolivia And Trade • The economy of Bolivia is the 95th largest in the world • Lower Middle Income country. • Human Development Index 0.663 ranked 108th (medium human development). • The Bolivian economy has had a historic pattern of a single-commodity focus. From silver to tin to coca Tin Mining As Development Goes Up Population Growth Slows 9.7 World Trade Foreign Direct Investment (FDI) 9.8 Financing Development Debt Service By LDCs New Kid on the Block China’s investment in Africa & elsewhere 9.9 Fair Trade • Social movement • Helps 3rd world producers • Creates better trade (income/employment) conditions • Higher payment directly to producers • Promotes sustainability • Environmental • Economic • Cultural Vikings for Fair Trade is a club to promote Fair Trade and inform people about the issues surrounding it. Organization Contact The mission of Vikings of Fair Trade is: To promote Fair Trade as a movement and a product on Western's campus… http://asclubs.wwu.edu/show_profile/48177-vikings-for-fair-trade 9.10 Millenial Goals Many times referred to as the North-South divide – almost all developed countries are in the Northern Hemisphere 9.10 Millennium Goals Slowly but surely the Goals appear to be obtainable. Study Question • Be sure to review all study question for this chapter and the powerpoint on Development – How to and Rostow’s 5 Stages