Chapter 10 Flashcards
Development
the process of improving the material conditions of people through diffusion of knowledge and technology.
(MDC),
A developed country, also known as a more developed country (MDC), has progressed further along the development continuum
Identified as a very high developed country by the UN
LDC
A developing country, also frequently called a less developed country (LDC), has made some progress toward development, though less than the developed countries
Human Development Index
UN created the Human Development Index (HDI) as one measure of development
The highest HDI possible is 1.0
The HDI considers development to be a function of three factors: a decent standard of living, a long and healthy life, and access to knowledge
Computed every year since 1980
Development regions: rough approximation of the regional scores and the exceptions
Geographers divide the world into two developed and seven developing regions
Japan and South Korea are identified separately
UN classifies Russia as developed
Gross national income (G N I)
is the value of the output of goods and services produced in a country/year including money that enter and leaves the country
Purchasing power parity (P P P)
is an adjustment made to the GNI to account for differences among countries in the cost of goods
-Ex – resident of country A has same income as country B but they have to pay more for Starbucks resident of country B is better off
Gross domestic product (G D P)
also measures the value of the output of goods and services produced in a country/year, but it does not account for money that leaves and enters the country
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Dividing GNI by total population estimates the contribution made by an average individual contributing to a countries wealth
The higher the per capita GNI the greater the potential for ensuring all people have a comfortable life
Per capita GNI measures average wealth not distribution of wealth
Average per capita income is higher in more developed countries because people earn living in different ways
Primary sector
Directly extracting materials from Earth through agriculture or through mining, fishing, and forestry- share of GNI is relatively high in developing countries, low share in developed countries indicate a handful of farmers produce enough food for the rest of society
Secondary sector
Manufacturing raw materials into products- share of GNI has decreased in developed countries
Tertiary sector
Providing goods and services to people in exchange for payment- share of GI is large and increasing in both countries
Retail banking government law education
Productivity
is the value of a particular product compared to the amount of labor needed to make it
Productivity can be measured by the value added per capita
The value added in manufacturing is the gross value of a product minus the costs of raw materials and energy
In developed countries, workers produce more with less effort because they have access to more machines, tools and equipment
More developed countries workers are more productive
Wealth in developed countries is used to purchase goods and accessible to almost everyone
Health
From the many health and medical indicators, the UN has selected life expectancy at birth as the contributor to the HDI
Baby born now is expected to live on average to 71 worldwide
more developed- 80
Less developed- 57
Education; years of schooling for today’s adults vs expected years of schooling for today’s youth
The U N considers years of schooling to be the most critical measure of the ability of an individual to gain access to knowledge needed for development
Years of schooling for today’s adults (average school years for adults >25)
- More developed- 12 years
- Less developed-5 years
Expected Years of schooling for youth (time a 5 year old will spend in school)
- Half of 5 years old will graduate college
- 9 / 10 years in sub saharan africa
Pupil/teacher ratio
The fewer pupils a teacher has, the more likely that each student will receive effective instruction
More developed- less students per teacher
Education might receive higher % of GNI in developing countries but those countries GNI tends to be lower to begin with so they spend much less/ student
Literacy rate
The literacy rate is the percentage of a country’s people who can read and write
inequality-adjusted H D I (I H D I)
The IHDI modifies the HDI to account for inequality within a country
under perfect equality, the HDI and the IHDI are the same.
If the IHDI is lower than the HDI, the country has some inequality
the greater the difference in the two measures, the greater the inequality
Developed countries have a lower gap according to global standards
Sub Saharan Africa and eastern Asia have lowest
Widening Inequality within Developed Countries
Since the 1980s, inequality has increased in most developed countries, including the United States, United Kingdom, and Canada
Gini coefficient
calculates the extent to which the distribution deviates from exactly equal
A Gini coefficient of 0 represents exact equality- every person has same income
A Gini coefficient of 1 is total inequality
Canada score compared to peer countries
Canada is 12th place- C grade
Income inequality has increased in 20 years
In 1980 it was 0.3
The richest 1% of Canadians took 1/3
Brazil & Turkey example of inequality
The extent of inequality within these countries can be seen in two ways:
- The difference between the H D I and I H D I- 2 countries have similar HDI scores but Brazil has higher inequality that Turkey
2, Inequality can also be seen through differences in G D P per capita among states or provinces within the countries- the GDP per capita is 20 000 in rich areas and only 4000 In poor areas
They fall middle according to HDI, brazil 79 turkey is 71
Brazil’s wealthiest regions are in southeast coast- san paulo and rio de janerio
Gender-related Development Index (G D I)
The U.N. combines Human Development Index data on income, education, and life expectancy in a measure of the gender gap
If females and males had the same levels of income, education, and life expectancy, the GDI would be 1.000
GdI is 0.920
Level of achievement is 8% lower
In developing its 10% lower
Gender Inequality Index
The UN combines data on reproductive health, empowerment, and the labor market in a measure of the gender gap
A score of 0 would mean that men and women fare equally
The GII is higher in developing countries than in developed ones
Higher GII more inequality
Countries that have high HDI tend to have a low GII
maternal mortality rate
is the number of women who die giving birth per 100,000 births
Developing-171/ 100 000 live births
Developed- 16/100 000 births – most in sub Saharan Africa
adolescent fertility rate
is the number of births per 1,000 women ages 15–19
The teenage pregnancy rate is below 10 per 1,000 in most European countries (and Canada)
110,1000- in developing
Reproductive Health
The U.N. includes reproductive health as a contributor to G I because in countries where effective control of reproduction is universal, women have fewer children, and maternal and child health are improved
Empowerment
In the context of gender inequality, empowerment refers to the ability of women to achieve improvements in their own status—that is, to achieve economic and political power
The empowerment dimension of GII is measured by what two indicators?
1) Seats in the National Legislature: in every country of the world, more men than women hold position of political power
- More women than men vote
- Rwanda has national parliament with majority of women
- Highest % are in Europe, comprise a ¼ of nation parliament
- Lowest rates are in southwest Asia and Africa
2) Secondary School: worldwide, 54% of women have completed some secondary (high) school, compared to 64% of men
- For every 10 boys who attend high school in developing countries, only 6 girls attend
- Boys are ahead in Europe
Self-sufficiency
Countries encourage domestic production of goods, discourage foreign ownership of businesses and resources, and protect their businesses from international competition
More popular
International trade
Countries open themselves to foreign investment and international markets
Began more popular in 20th century
Self-sufficiency example: India
Balanced growth- investment is spread as equally as possible across all sectors are regions
Import barriers- setting tariffs on imported goods to makes them more expensive
Import licenses
Quotas on imports (even with license)- limiting quantities of imports
Taxes (heavy taxes on imports)- double or triple price for consumers
Export limits- discouraged from making products to sell outside the country
Currency restrictions- Indian money could not be converted
Permits (to sell a new product, modernize a factory, set prices, hire/fire workers, etc)
Subsidies & government ownership- government owned insurance companies and car makers
International Trade Path
calls for a country to identify its distinctive or unique economic assets.
What animal, vegetable, or mineral resources does the country have in abundance that other countries are willing to buy?
Canada- electricity lumber
The international trade path derives from a five step model proposed by W.W. Rostow in 1960.
Each country is thought to be in one of these five stages
International Trade Path: Stages
The traditional society - high percentage of people engaged in agriculture and a high percentage of national wealth allocated to “nonproductive” activities ( e.g the military and religion)
The preconditions for takeoff - an elite group of well-educated leaders initiates investment in technology and infrastructure
The takeoff - Rapid growth is generated in a limited number of economic activities
The drive to maturity - Modern technology
The age of mass consumption - The economy shifts from production of heavy industry to consumer goods(motor vehicles)
South korea singapore and taiwan
World Trade
During the late twentieth and early twenty-first centuries trade increased more rapidly than wealth (as measured by GDP), an indication of the growing importance of the international trade approach
What were
Shortcomings of the self-sufficiency approach
Inefficient industries- businesses could sell all the products they made at high government controlled prices to customers that called for long waiting lists
Lack of competitiveness- companies were protected from international competition
Corruption- a large beaurocay
Black market
Transition to International Trade
International trade attracted many developing countries during the late 20th century
Example: India dismantled many of its barriers to international trade: became liberal with permits (foreign companies could set up factories), reduced taxes and tariffs, and eliminated monopolies
After converting to international trade, India’s GDP per capita increased rapidly
World Trade Organization
Countries representing 97 percent of world trade established the World Trade Organization (WTO) in 1995
The WTO enforces agreements designed to reduce barriers to international trade
What have critics said about international trade?
Promotes the interests of large corporations
Compromises sovereignty of individual countries by transferring authority to other organizations
Foreign Direct Investment
Finance comes from 2 sources direct investment and loans
Investment made by a company based in one country in the economy of another country is known as foreign direct investment (FDI)
Foreign direct investment grew from $172 billion in 2002 to $646 billion in 2016
FDI does not flow equally around the world
Most FDI originates in developed countries
USA is leading source of FDI investment
China receives FDI
What are major sources of FDI and loans
The major sources of FDI are transnational corporations that invest and operate in countries other than the one in which the company headquarters are located
An alternative source of loans is microfinance, which is provision of small loans and other financial services to individuals and small businesses in developing countries
The Grameen Bank, Bangladesh
Microcredit program that focuses on improving the status of landless and poor people (particularly women)
Began as a research project (1976) and became a bank in 1983
Seeks to enhance the social and economic status of those in need
Average loan is about $300
Loan applicants form groups (collective responsibility) and meet with bank officials
Recovery rate is 98%
About 10,000 microfinance institutions around the world today
What are the two major lenders?
he World Bank and the International Monetary Fund (IMF)
Why do countries borrow money?
Developing countries borrow money to build new infrastructure, and in theory this will make conditions more favorable for domestic and foreign businesses
Half of the loans have gone to seventeen countries, including nine in Africa
Fair trade
international trade that provides greater equity to workers, small businesses, and consumers
Who does the each of the 2 standards that distinguish fair trade apply to?
Workers on farms and factories
producers
Female labor force participation rate
- percentage of women who have full time jobs. the numbers may vary around the world especially in developing countries such as south/southwest asia and north africa where there are large gaps, in east asia and sub-saharan africa there are small gaps.
Economic, social, environmental goals of fair trade
aising the incomes of small-scale farmers and artisans by eliminating some of the middlemen (Figure 10.10.1).
• Distributing the profits and risks associated with production and sale of goods more fairly among producers, distributors, retailers, and financiers.
• Increasing the entrepreneurial and management skills of the producers (Figure 10.10.2).
• Promoting safe and sustainable farming methods and working conditions, such as by prohibiting the use of dangerous pesticides and herbicides and promoting the production of certified crops
Sometimes the producers join cooperatives which offer advantages:
The cooperative can qualify for credit so that funds can be borrowed to buy equipment and invest in improving farms.
• Materials can be purchased at a lower cost.
• The people who grow or make the products democratically manage allocation of resources and assure safe and healthy working conditions.
• Profits are reinvested in the community instead of going to absentee corporate owners.
What are Fair trade standards?
Paid fair wages, at least enough to cover food, shelter, education, health care, and other basic needs (Figure 10.10.3).
• Permitted to organize a union and to have the right to collective bargaining.
• Protected by high environmental and safety standards.
