Haiti and Japan Earthquake Comparison
• Magnitude • Additional Effects
– Haiti-7.0
– Japan-9.0 which caused a
– Haiti-Cholera epidemic as a result 6,000 more died,
Tsunami
• Left Homeless
– Haiti- 1.5 million
– Japan- 1-2 million
• Death
– Haiti- 220,000
– Japan- 15,000
• Cost
– Haiti- $14 billion
– Japan- $230 Billion
216,000 were infected
– Japan-Much of their
Nuclear power is still damaged with many people evacuated from surrounding towns
– Hawk Hook 2/27
• Our next unit is on development, how do you think development played a role in these statistics?

:
Models of Economic
Growth, Diffusion, and
World Variations

Basic Development Info
• Definition of Development: process of improving the material conditions of people through diffusing knowledge and technology
• Continuous process of improvement
• MDC’s: developed countries
• LDC’s: developing countries

Human Development Index
• UN measure of Development: level of development is a based on 3 indicators: economic, social, and demographic

Overview of HDI:
• 1 Economic Factor:
• Gross Domestic Product (GDP): the total value of goods and services produced in a country
• 2 Social Factors:
• Literacy Rate and Amount of
Education (average # of school years attended)
• 1 Demographic Factor
• Life expectancy (average # of years a newborn can expect to live)
• Highest Possible HDI is 1.0 or
100%

Current World Trends
(Overview)
• What country do you believe has the highest
HDI?
– Norway at .938 in 2010
• What country do you believe has the lowest
HDI?
– Zimbabwe at .140
• Where do you believe the 2 dozen lowest ranking countries were located? Why?
– Sub-Saharan Africa

The US Situation
• Ranked 4 th
• What do you believe accounts for this rank?
• Near the top in GDP and Literacy
• Lower in Education and Life
Expectancy
• High School Drop-out Rates and
Inadequate Health Care for low-income people

5 Economic Indicators of
Development
1. GDP
2. Types of Jobs Available
3. Productivity of workers
4. Access of raw materials
5. Availability of consumer goods
• Goods purchased to satisfy immediate wants and needs
• What are some examples?

Gross Domestic Product
• Use per capita GDP
(how much each person’s portion of the GDP is)
• Figured by dividing
GDP by population
• EX: GDP = $100 and population = 10, then each person receives, on average, $10

Per Capita GDP MDC’s
• Average per capita GDP in MDC’s $27,000
– Has increased 55% since 1990 ($10,000)
– US: approx 40,000

Per Capita GDP LDC’s
• Average per capita GDP in LDC’s: $4,000
– Has increased 450% since 1990 (bit under $4,000)
– Not equal growth China huge changes, Africa few
– 18 countries (15 in Africa, 3 in Asia) below $1000

Critical Thinking Question
• Why is per capita GDP not an adequate measure of development on its own?
• Measures average wealth not distribution
• If few people hold all the wealth then standard of living for most lower than average would indicate

Types of Jobs Available
• What are the 3 sectors of the economy? Where is each most prevalent?

Productivity of Workers
• Productivity: value of a product compared to the amount of labor necessary to make it
• Higher in MDC’s
• Produce more with less effort
• Why?
• LDC’s rely more on human and animal labor

Access to Raw
Materials
• Includes access to minerals, trees, energy sources (oil, coal, natural gas, or uranium for nuclear power)
• Indicates potential for
Development not actual development

Critical Thinking Question
• Using real world examples how can the availability of natural resources not be a perfect indicator of level of development?
• Ex: Japan, Singapore, South Korea, and Switzerland have few natural resources but have become highly developed through trade
• Much of Africa is rich in natural resources but lacks the infrastructure to be considered developed states

Historical Relationship btwn
Resources and Development
• Industrial Revolution
• Occurred in countries rich in both natural resources and energy sources
(Ex. UK)
• Colonialism and Imperialism
• Occurred to create steady supply of resources in resource depleted Europe
• Sustained development in Europe, hindered it in Africa and Asia
• Why is this flow a problem for development in the LDC’s?

Consumer Goods
• Most important consumer goods to consider: transportation and communication technologies
• Examples?
• Why?
• Transportation: access to jobs and distribution of products
• Communication: telephones and computers enhance communication between suppliers, producers, and sellers

Consumer Goods and
MDC’s versus LDC’s
• How accessible are consumer goods to MDC’s?
• Virtually all citizens
• VITAL to business of tertiary and secondary jobs
• How accessible are consumer goods to LDC’s?
• Not as available
• Not as important for subsistence living
(creating just enough food to live with little extra)

Haves and Have-nots in the
LDC’s
• Access to consumer goods creates gap between the “haves” and
“have-nots” in LDC’s
– Typical Characteristics of Haves:
• Higher Economic Status: government officials, business owners, elite classes
• Live in urban areas (more variety of job opportunities requiring additional technology)
– Have- Nots?
• Usually rural areas engaging in primary sector work or simple services

Critical Thinking Question
• How can transportation and communication technologies increase educational opportunities and leisure activities?

Reciprocal Relationship Btwn
Economic and Social Development
• Economic Development = Great Wealth
• Spend portion of wealth on social services
(schools, hospitals, welfare services) = Smarter, healthier, and secure workforce = more economic productivity

Education and Literacy
• Measured by quantity and quality of education
• Quantity: Number of years of schooling
• Quality: student/teacher ratio and literacy rate
• Education number one way to improve economy
• Better education = highly qualified workforce = higher wages = better access to consumer goods = higher standard of living

MDC’s compared to LDC’s
• Quantity
• MDC’s = 10 years
• LDC’s = 2-3 years
• Student/Teacher Ratio
• Twice as high in LDC’s
• Literacy Rate
• MDC’s = > 98%
• LDC’s = < 60%

Health and Welfare, MDC’s
• MDC’s: > 8% of GDP spent on healthcare
– More doctors, hospitals, and nurses per capita
– Most of Europe: private individuals responsible for
30% of their healthcare costs
– Public assistance (unemployment compensation, welfare, etc) Greatest in North Western Europe
(Norway, Sweden, Denmark)

Health and
Welfare, LDC’s
• LDC’s: <6%
– Private individuals responsible for 50% of their healthcare
• US exception: private individuals responsible for
55% of their healthcare costs

Critical Thinking Question
• Why are MDC’s struggling to maintain their levels of public assistance? What choice are they facing?
• Growing Elderly Population: more people to assist
• Economic downturn cannot fund generous programs initially in place
• Choice between reducing benefits or increasing taxes

FRQ Practice 3/5
1. Complete Sentences: Resources and
Development
A. How do resources relate to the development of a country?
B. How did resources influence the following: i.
Industrial Revolution ii. Colonialism/Imperialism
C. How has the availability of resources and history affected the following economies: i.
Japan ii. Africa

Reflection of Health and Education

• LDC: 60’s
• MDC: 70’s
Life Expectancy
• What is the typical shape of the population pyramid for an LDC?
• What responsibilities do the governments of these countries have?
• What is the typical shape of the population pyramid for an MDC?
• What responsibilities do the governments of these countries have?

Infant Mortality Rate
• MDC’s: 99.5% survive
• LDC’s: 94% survive
– Result of: malnutrition after birth, lack of medicines and immunizations, lack of education of clean medical practices

Natural Increase Rates
• LDC’s: 1.5%
• Struggle to provide care for growing population
• MDC’s: .01%

Crude Birth Rate
• LDC’s: 24 per 1,000
• MDC’s: 11 per 1,000
– Why lower rates?
• Access to birth control and social reasons in LDCs

Critical Thinking
Question
• Why does the Crude Death Rate not indicate a society’s level of development?
• Diffusion of medical practices has reduced instances of diseases in
LDC’s
• MDC’s have a higher % of elderly

Regions of Development
• 11 Regions based on Development
• 5 Developed Regions
• 6 Developing Regions
• North-South Split: Almost all
MDC’s exist above 30* N Latitude and LDC’s below
• Exceptions: Australia in South, Part of Middle East and East Asia in
North

Regions Overview
• More Developed Regions
• Anglo-America
• Western Europe
• Eastern Europe
• Japan
• South Pacific
• Less Developed Regions
• Latin America
• East Asia
• Middle East
• South East Asia
• South Asia
• Sub-Saharan Africa

More Developed Regions

Anglo-America
• HDI: .94
• Cultural Patters
– Homogenous
• 90% speak English and adhere to
Christianity
• No large minorities to be discriminated from economy
– Exceptions
• French speaking Québécois
• Some intolerance against ethnic minorities

Anglo-America Cont’
• Access to Resources
• Major producer of steel, automobiles, etc.
• Leading consumers of world market

Adaptation to Global
Economy
• Loss of Manufacturing
• Leading provider of: financial services, hightech jobs, entertainment, and recreational services (media, sports, etc)
• Most important food exporter

Western Europe
• HDI: .93
• Cultural Patters
• Strong Nation-States
(historical conflict WWI and
II)
• Currently more unified politically, militarily, economically, and culturally
• What are the two main treaty organizations in Europe?

Western Europe Cont’
• NIR: at or below 0
– Population Growth from
Muslim and Hindi migration resulting in cultural diversity
• HDI lower than Anglo
America bc of periphery
– Spain, Portugal, Southern
Italy, and Greece
– Other nations at or above
Anglo American level

Adaptation to Global
Economy
• Must import much of its raw materials
• Compensates by producing luxury items: insurance, banking, BMW , Mercedes
• Sacrifice economic growth for social services

Eastern Europe
• HDI: .80
– Only region where HDI has declined near LDC levels now
– Legacy of the “Iron Curtain” of
Communism
• Didn’t invest in long-term economic improvements
(modernizing)
• Inefficient agriculture (import food)
• Pollution
• Centered on basic industry not consumer goods

Eastern Europe Cont’
• Border Countries (Czech
Republic, Poland, Hungary,
Slovakia, Slovenia) better transition from Communism
• May become part of Western
Europe or new region of Central
Europe

Eastern Europe Cont’
• Declining HDI in other
Eastern European Nations result of:
• Closing inefficient businesses: rising unemployment
• Inflation: no government subsidies
• Larger gap between rich and poor

Eastern Europe Cont’
• Ethnic Disputes
• Ethnic identities suppressed during Communism
• End of Communism unleashed issues
• Breakup of Soviet Union,
Czechoslovakia, and
Yugoslavia

Japan
• HDI .94
• Resources
– VERY few natural resources compared to population
– HIGH physiological density
– Leading steel producer but most import iron ore and coal

Japan Cont’
• Greatest Resource
– Large population working for low wages
• Could sell products in other countries at prices lower than domestic competitors
• Now foothold in high-end electronics and automotives
– High investment in education and training, research and development

South Pacific
• HDI: .87
• Why does the South Pacific have little influence on the Global Economy?
(Think Situational problem)
– Lies on the periphery of other MDC’s
– Few inhabitants
• Large Exporter of Food
• Culture shared with Colonial Powers of
Western Europe (some indigenous cultures)

Latin America
• HDI .80
• Cultural Patterns
• Speak Spanish or Portuguese
• Roman Catholic
• Mix of Spanish, Portuguese,
Indigenous Cultures, and
African peoples

Latin America Cont’
• More urbanized than other
LDC’s
• 3 of the 10 largest cites: Mexico
City, Sao Paulo, Brazil, and
Buenos Aires
• Especially along Atlantic coast
• Good agricultural development
• Large gap between rich and poor
• Control much of land, rent to small tenant farmers

East Asia
• HDI: .76
• Economy Driven by China:
• largest per capita GDP growth in the world
• Lower wages than MDC’s: industrial explosion
• Driving down prices of consumer goods and worldwide wages

East Asia Cont’
• Regional Economic Inequalities
• Coastal region much higher development than interior
• Rising consumption of natural resources
• Increased pollution

Middle East
• HDI: .68
• Site Problems: much is desert with little natural resources
• Must rely on imports
• Ideal Site: OIL!
• Creates trade surplus
• Gap between petroleum exporting countries and those without this resource

Middle East
• Goal: promote development respectful of traditional
Islamic traditions
• Hindrance to higher HDI
• Lack of Political Freedom
• Low education and literacy rates
(especially for women)
• No interest banking
• Disputes: Shiites and Sunnis,
Israel, Terrorism

Southeast Asia
• HDI: .58
• Highest concentration of population: Island of
Java in Indonesia
• Site Perks: fertile soil from volcanic activity, former first Dutch colony
• Constant War:
Vietnam, Cambodia,
Japanese and
European occupations

Southeast Asia Cont’
• Overall Site Problems:
– Tropical Climate (little grain production)
– Poor Soil
– Mountainous, volcanoes, typhoons, tsunamis
• Population Explosion after influx of Western medicines

Southeast Asia Cont’
• Main products:
– harvesting products used for manufacturing
(fibers for ropes, clothing, oils, etc)
• Manufacturing:
– Cheap labor: textile industry

South Asia
• HDI: .58
• Second Highest Pop
• Second Lowest per capita income
• High NIR
• High population densities

South Asia Cont’
• High in resources but still population too high for sustainability
• Agricultural Productivity dependent upon Monsoon rains
(good when they come BAD when they do not)
• India 4 th largest economy
– The growth of their economy has been a result in an expansion of what sector of the economy?
• Tertiary: service jobs

Sub-Saharan Africa
• HDI: .51
• Low population densities
• Major source of minerals and natural resources
• Least prospect for development: high poverty, poor health, low education (deteriorating)

Sub-Saharan Africa Cont’
• How has the legacy of
Colonialism Affect
Sub-Saharan
Africa?
• Resources only for
European factories
• Superimposed
Political
Boundaries

Sub-Saharan Africa Cont’
• Situational Problems:
• Landlocked states incapable of easy exportation
• Site Problems
• Climate: Tropical or Dry
• What does this mean for its physiological densities and their capacity to feed their people?
• How does Sub-Saharan
Africa’s NIR affect this problem?

Hawk Hook 3/8
1. Why are literacy rates a good measure of development?
2. What does education mean for increasing
GDP?
3. Looking at the areas of development in the
MDCs, how does cultural homogony relate to development? (Provide 2 examples to support your theory).

Measures of Gender
Inequality
• Gender-Related Development Index (GDI): compares level of development of women to that of men
– Measures standard of living and well-being
– Uses same measures as HDI
• Adjusted to reflect gender differences
• Penalized for gender disparity
– How do you think GDI compares to HDI worldwide?
• Similar: Top Norway and other top HDI countries,
Lowest in Sub-Saharan Africa

Measures of Gender
Inequality
• Gender Empowerment Measure
(GEM): compares ability of women and men to participate in economic and political decision making
– Measures ability of women to participate in developmental improvements
– Less women in these roles in
EVERY country

Gender-Related
Development Index

Economic Indicator of GDI
• Incomes of women lower in EVERY country
• MDC’s: women 2/3 income of men
• LDC’s: varies but considerably lower than
MDC levels

Social Indicators of GDI
• Number of School Years Attended:
– Secondary Ed: nearly even in MDC’s (99/100 men); in LDC’s (60/100 men)
– Middle East and Sub-Saharan Africa: < 33% of girls attend school
• Literacy
– MDC’s near universal for all men and women
– Sub-Saharan Africa and Middle East: substantially low

Demographic Indicators of
GDI
• Life Expectancy: Who usually outlives who?
• 6 year gap in MDC’s
• 1-2 year gap in LDC’s

Worldwide GDI Trends
• Gap lessoning everywhere
– ¼ in MDC’s
– 2/3 in LDC’s

Economic Indicators of
GEM
• Percentage of women occupying professional and technical jobs
– Why not primary sector jobs?
• Northern Europe: > 50% to women
• LDC’s < 50%
– Also look at GDP per capita

Political Indicators of GEM
• % of managerial and administrative positions
– Why do these show political influence?
– North America, Northern Europe, and South Pacific: 1/3
– LDC’s: ¼
• % of women elected to public office
– Highest Northern Europe: 1/3 hold national offices
– 1/5 in MDC’s
– 1/10 in LDC’s
• Every Country Lower GEM than
GDI: Meaning?

2 Obstacles to
Development:
• Adopting policies that cause development
• Paying for the development

2 Policy Approaches
• Center on Self-Sufficiency
• Focus on International Trade

Self-Sufficiency: 3
Features of the
Balanced Growth
Approach

Modest Growth
• Spread growth over all economic sectors and all over the country
– Modest growth for all not large growth for some

Nationalize Business
• Reduce number of international corporations
– Isolates local businesses from international competition and MDC business and government policies

Reduce Imports
• 3 Decisions
– Tariffs (high taxes on imported goods)
• Makes domestic products the cheapest
– Quotas (fixed number of imports allowed)
– Licenses
• Buy ability to import goods or export goods

Critical Thinking
• What country do you believe used this model and was successful?
– China (sort of)
• What country do you believe used this model and was unsuccessful?
– India

Problem: Inefficiency
• Reduces competition
– No incentive to modernize or improve quality because Governments subsidize and bail out failing industries and no other options for people to purchase
• Ex: Indian Auto Industry

Problem: Large Bureaucracy
• Complex Government Controls inhibit entrepreneurship
• Financially easier to buy and sell on the black market

International Trade Model;
Rostow’s Development
Model: Exploiting your assests

Overview
• W.W. Rostow’s 5-stage model of development
– Based on Following beliefs:
• All countries have gone through these stages
• International competition encourages companies to continue improving
• Abundance of resources in LDC’s could be used to fund development

Stage 1: The Traditional
Society
• Society has not begun development
• High percentage of agricultural work
• National wealth towards “nonproductive” activities
• Religion and Military
• Why are these “nonproductive”?

Stage 2: Preconditions for
Takeoff
• Well-educated leaders invest in infrastructure
– Build water supplies, transportation, invest in new technologies

Stage 3: The Takeoff
• Rapid growth and improvement in a few industries, 1-2 industries advanced and productive
– Others still traditional

Stage 4: Drive to Maturity
• Diffusion of Technology into a variety of industries
• Workers become skilled and specialized

Stage 5: Age of Mass
Consumption
• Shift in economy from heavy industry: steel and energy to consumer goods

Critical Thinking
• Throughout the history of the US, at what point were we in each of Rostow’s stages?
– Stage One:
• Colonial Times
– Stage Two:
• Antebellum Period (Pre Civil War)
– Stage Three:
• Mid 19 th Century
– Stage Four:
• Late 19 th Century
– Stage Five:
• Early 20 th Century
• What country, we have recently talked about, used this model?
– Japan
– Others include South Korea, Singapore, Taiwan, and Hong Kong

Critical Thinking
•
• Critical Thinking
• According to Rostow, development requires substantial investment in capital such as infrastructure like transportation systems, water, etc. However, for the economies of LDCs to grow, the right conditions for such investments would have to be created.
• Question: Investments of aid from other countries will only help LDCs develop if they have reached which stage of
Rostow’s model? Why?

Problem: Uneven
Resource Distribution
• Not all resource prices rose higher than necessary commodities (Africa)
– Few people at the top rich, others remain poor

Problem: Market Stagnation
• Markets not growing (population and economic downturn)
– No new markets to sell products
– Competing for already established markets

Problem: Increase
Dependence on MDCs
• Rely on MDC’s for food, clothing, etc. bc only producing takeoff industries

Positive International Trade
Model: Truth in Numbers
• Proven better method of development
• GDP growth faster in LDCs using this model
• India, China, etc switch to this model
• WTO: World Trade Organization developed to reduce barriers to trade

Financing Development

2 Methods for Funding
Development
• Loans
• Investments by Transnational Corporations (article)
– What were some of the positives and negatives we discussed regarding Transnational Corporations?

Loans
• 2 Major Loan Institutions:
• UN Financial Institutions
• World Bank
• Money for governments and financial institutions to implement transportation and social services
• To risky nations too poor to qualify for other loans
• International Monetary Fund
• Helps build international reserves
• Stabilize currency exchange rates
• Help them pay for imports

Critical Thinking Question
• Why loan money for infrastructure in a small underdeveloped foreign country?
• What do you think could be some of the problems with investing in these areas?
– Money stolen
– Spent on other things (arms, etc)
– Can’t repay debt

Overview
• Alternative to international trade model
• Creates standards that protect workers and small businesses in the LDC’s

Producer Standards
• Small worker owned businesses form cooperatives to better afford loans to build their businesses
• Fair Trade Organizations work straight with producers
– Cuts out middle man fees
– Higher wages to cooperatives
(producers)
– Not always higher price for consumers

Worker Standards
• Fair Trade requires:
– Fair wages
– Unionization
– Minimum environmental and safety standards
– Encouraged to invest profits in the community