Causes of Poverty Flashcards
North-South Divide
Gained prominence via Brandt (1980). Differences:
- Industrialisation and manufacturing creatied sustained wealth for the North. However, the lack of ind. and reliance on agricultural exports didn’t generate wealth for the South.
- North was a leading player in shaping global free-trade agreements and its export industries were making the most of them.
- No level playing field as many G.S countries weren’t part of free-trade agreements (WTO). Likewise, North states created the Bretton Woods Insitute for their own benefit which they dominate the decision-making.
- G. North’s MNCs exploited G. South states for natural resources and cheap labour which benefited the North by not sharing profits with the South.
- South became dependent on the North for foreign direct investment, manufactured goods, skill and tech.
Does the Global-North South divide still exist today?
Yes
- When MDGs concluded in 2015, Sub-Saharan Africa lagged significantly behind the world on most measures of development.
- Most of the largest MNCS are based in the G.N.
- G.S that appear to be rapidly industrialised and had economic growth still suffer from poverty (India).
- WTO failed to finalise another free-trade agreement that widens F-T to developing states and reduce protectionist measures, like agricultural subsidies.
Does the North-South divide still exist today?
No
- Many G.S have successfuly industrialised - includes the NICS, particularly those in the Pacific Rim such as Brazil, Malaysia and the Philippines.
- China had dramatic economic growth (2nd largest) = now an investor in the South, extracting resources to cater for its expanding industry and population.
- Sustainable development is a huge challenge, with WB estimating the N emitted 2/3 of CO2 since 1850. However, China was the largest emitter in 2005.
- Evidence of inclusion = G20 includes several NICs from the G.S.
Theory ONE
World Systems Theory
- Also dependency theory - developed by Wallerstein.
- Global capitalism maintains the developing world in a state of neo-colonial dependency.
- It is because the North Core states exploit the South for raw materials and resources, keeping them in a peripheral state and dependent on the North.
The different types of states in the WST
- Core = wealthy states mirror many of the features of those in the Global North - highly industrialised, educated and mobile workforce.
- Periphery = poor and underdeveloped - mirrors the Global South. Usually has surplus natural resources but they don’t have the capacity to use it themselves.
- Semi-Peripheral = fall in between the two (e.g China and India).
Two examples of Periphery States
DRC and Angola
- Democratic Republic Of Congo = one of the poorest countries. It exports coltan to poor countries to be used in smartphones. It relies on poorly paid workers and remains ‘stuck’ as a poor country.
- Angola = oil producing country (97%). When global oil prices fall, this has a huge effect on the country’s income - trapped by its main export and dependent on other countries’ oil usage.
Impact of globalisation
- Economic = goods and services moved across borders more easily and extensively than before. But - increasingly vulnerable to economic downturns that occur outside their borders.
- Political = Since the Bretton Woods Conference in 1944 - extensive efforts made to bring order via IGOs (IMF and the World Bank).
How does globalisation reduce poverty?
- Increased foreign direct investment in developing states, which, if taxed efficently, can create tax revenue to spend on development.
- MNCs bring experience, skills, modernisation and better wages to poorer countries.
- Economic freedom promotes other freedoms and human development. The emergence of an empowered middle class is linked to democratisation - a powerful lever to breaking down inequality and widening equality of opportunity.
How does globalisation doesn’t reduce poverty?
- Developing countries are exploited for natural resources and minerals.
- Skills that will enable industrialisation are not developed in developing countries. MNCs use too many of their skilled employees from developed countries and do little to develop skills and capacity within these countries.
- Wealthy states pay low wages, keeping the poor locked in a low-wage economy.
The Impact of Colonialism
Context
- Earliest demonstration came with European empire-building in the 18th and 19th centuries, using military powers to occupy territories and installing govts and infrastructures of their own to gain control economically.
- Decolonalisation post-WWII period = most colonalies gained independence (e.g India and Pakistan). Not always peaceful with, e.g British and French guilty of war crimes in Kenya and Algeria respectively as they fought back against uprisings.
How colonialism contribute to global poverty?
- In the colonial period, the capacity of local pop wasn’t fully development. Upon independence, states had few experience of self-government and struggled to develop.
- During decolonialisation, borders were drawn w/o any regard for ethnic unity but rather political expediency - resulted in several conflicts, e.g India-Pakistan over Kashmir.
- Most deliberate attempt by core countries to maximise their own economic growth and keep the peripheral states dependent and poor.
Arguments against how colonialism contributes to modern global poverty
- Infrastructure was built that continues to be used in the modern era, e.g roads, railways and bridges.
- Newly independent statess till use the industry infrastructure that was developed during the colonial period.
- Rule of Law was introduced in some colonial states, which remains in the place today and it provides the basis for a stable society and one which is attractive to foreign investment.
THEORY TWO
What is the modernisation theory?
Orthodox model of development of states - created by Rostow (1960). The stages of development are:
1) Traditional society = reliant on farming and little technology; little organised economic activity (currency)
2) Preconditions for take off = wealth and savings exist - can be invested into economic sectors. Entrepreneurs exist.
3) Take-off = society is focused on economic growth and it develops strategies.
4) Drive to maturity = economic diversity + poverty decreasing.
5) Age of mass consumption = society has a strong middle-class which drives consumerism.
Criticism of the MT
- Purely ‘Western’ focused interpretations of how states both develop and reduce poverty - based on the West’s development during the Industrial Revolution in the 19th century.
- Designed when the West wanted developing countries to pursue capitalism rather than communist models. Soft power of capitalism was more attractive than communism (Washington Consensus).
- Contradicts the World Systems Theory - assumes that all countries can progress through the developing stages.
- Doesn’t take into account that developing states are competing in a global market in which wealthier states hold them back.
