Development Dynamics Flashcards
Development
> Means improving peoples lives.
It means different things to different people.
Economic, social and political.
How advanced a country is compared to others, can be measured using a variety of indicators.
Birth/death rate
> How many people are born/die each year per 1000 people.
Life expectancy
> How long you are expected to live to assuming trends continued.
Fertility rates
> Average number of births per woman.
Maternal mortality
> Measured per 100,000.
Infant mortality
> Measured per 1000
GDP
> Gross Domestic Product.
Total value of goods and services provided by a country in a year.
Per capita = GDP/population.
PPP
> Purchasing Power Parity.
How much you can by in each country.
Measure of GDP.
HDI
>Human Development Index. >Considers social and economic measures. >Introduced by UN in 1990. >Ranks countries. >1 is the best score.
Poorest Countries (Life Expectancy)
> Low life expectancy: Insufficient health care because of cost and low incomes: Poorly people can’t work: Population is very young not old.
Poorest Countries (Maternal Mortality)
> High maternal mortality: Bad health care: Women die and are unable to reproduce and participate in population growth.
Poorest Countries (Literacy Rates)
> Low literacy rates: Can’t afford an education: Can’t get high income jobs - cycle.
Poorest Countries (Free Election)
> Rarely have free elections: Government is corrupt: No political development as people don’t have a voice so won’t be interested.
Poorest Countries - Solution to problems
Money
Globalisation
> Globalisation describes the growth and spread of companies, ideas and cultures across the world.
Relies on connections and networks between people and regions.
Takes 3 forms - economic, political and cultural.
Factors which have made globalisation easier.
> Lower transport costs.
Cheaper labour.
Tourism.
Changes in shipping, containerization and aircraft technology.
TNC’s
> Trans-National Companies.
Firms which produce goods and/or services in 2 or more countries. They grow as part of the process of globalisation.
Link national economies of the world because they produce their goods for a global market.
Usually owned by MEDC’s.
$421 billion = total revenue of Walmart, 2013.
$75,760 million = total GDP of Ghana, 2013.
Richer and more powerful than countries.
Go global to sell inside trade barriers, be close to markets, take advantage of incentives, spread industrial risks and find cheap labour and land.
TNC Organisational Levels
- Headquaters.
- Research and development.
- Branch Plants.
Advantages of TNC’s for LEDC’s
> Improves levels of education + technical skills of people.
Get to experience western products eg. Coca Cola, McD’s.
Brings expensive machinery and modern technology to the country.
Local workforce receives a gauranteed wage.
Improvement in roads, airports and services of the country.
Brings work into the country and uses local labour.
Disadvantages of TNC’s for LEDC’s
> Jobs are unskilled and involve long hours.
Companies don’t often respect employee rights, bad treatment.
TNCs take all the profits and give little to countries making the stuff.
In some countries, children work in factories = miss education.
Workers paid very little.
Company may leave the area causing massive unemployment.
Case Study: Nike
> Started in 1978, now one of the biggest TNC’s.
Goods are made in LEDC countries, 700 factories in 52 countries.
75% of the workforce is based in Asia.
Organises the manufacture of it’s products by contracting out to South Korean and Taiwanese companies. These subcontracted companies then operate not only in their home countries but also in lower-wage Asian economies.
124 plants in China, 73 in Thailand, 35 in South Korea, 34 in Vietnam.
Nike - Product Manufacturing in Vietnam
> Companies image+ advertising may help undermine national culture,
Concerns about the political influence of Nike.
Investments could be transferred quickly from Vietnam to lower cost locations in other countries.
> Locates many factories in Asia because they have lower-wage economies and therefore can maximise its’ profits.
Outsourcing
> Occurs when a project is given to a company overseas that was formally done at home.
Form of ‘teleworking’ - doesn’t include manufacturing of goods.
Recent occurrence, increased dramatically over last 20 years due to improvement in technology.
A company may choose to outsource as it’s cheaper and easier to employ people.
Lots of countries tend to outsource to countries in the Common-Wealth.
Outsourcing - Costs to LEDCs
> Economy may get locked into ‘low-value’ activities.
Further relocation will occur as wage costs increase = unemployment.
Unsocial hours.
Westernisation and loss of cultural identity as a result of training and working with English speakers.
Outsourcing - Costs to MEDCs
> Job losses - by 2008, 200,000 jobs had been outsourced from the U.K.
Loss for female jobs in particular.
Many job losses have been from economically vulnerable areas which have suffered deindustrialisation such as north-east England.
Outsourcing - Benefits to LEDCs
> 2008, outsourcing brought in $24 billion to the Indian economy.
Outsourced jobs have higher starting salaries.
More jobs created in LEDCs than lost in MEDCs.
Gender inequalities reduced as call centre jobs split 50:50.
Young workers have higher than normal incomes.
Outsourcing - Benefits to MEDCs
> Many companies claim efficiency benefits when they outsource.
Companies make larger profits benefiting share holders.
40% cost saving rather than keeping operations in home country.
Labour costs in UK call-centre = £18-20,000.
Labour costs in Indian call-centre = £2500 per year.
Call Centres in India
> Since the 1990s, many companies have moved their call centres to developing countries like India where wages are lower.
India has a highly educated and computer literate workforce that speaks English.
Employ 5 million people earning $60 million a year.
Outsourcing to cheaper countries allows TNCs to keep high profits.
> Negative multiplier effect.
TNC Tertiary Case Study: BT
> BT is one of the largest telecommunications companies.
Operates in over 170 countries in the world.
Profits are based on sales, rather than manufactured goods. (Example of the new economy).
Offers many jobs in the tertiary and Quaternary sectors.
Outsourced by buying or merging with several companies in the USA, Italy, Germany, South America and South Africa.
Bangalore (India’s ‘silicon valley’) has experienced and IT boom making it a successful BT outsource.
In its high-tech buildings are found every major global technology company.
What has Bangalore gained and lost from BT outsource to them?
> GAINED: High-tech equipment, money, good for the economy, development of infrastructure,
LOST: Loses out on maintaining culture, over-population.
What has BT gained and lost from outsourcing to Bangalore?
> GAINED: Money, profit, advertising.
>LOST: Don’t stick to U.K roots, reputation.
Global Economy
> Globalisation has led to inter-dependence between countries.
FDI (Foreign Direct Investment) from MEDCs has resulted in a huge growth of industry in countries like China, which became the world’s 2nd largest trader in less than 20 years.
FDI = 1990s, American + European TNCs invested in new factories and transport infrastructure for Chinese cities this is known as FDI.
Global Institutions such as the IMF and WTO aim to ensure that the economies of countries are stable.
IMF
> International Monetary Fund:
- Gives bankrupt countries money.
- Stops existing crisis from developing and spreading.
- To spot potential crisis there are research team reports.
- Check investment and how banks operate.
- Reduce global poverty by helping world’s poorest countries.
WTO
> World Trade Organisation:
- Make’s sure no trading is unfair.
- Aims to get countries to agree that goods traded between them will be tariff free.
- Tariffs add to price of goods, peeps will buy more.
- However, can lead to countries own producers losing out to cheaper overseas competition.
- Cutting tariffs doesn’t help all - banana trade.
Greece - Times of ‘austerity’.
> 2012, Greece facing austerity (cuts in government funding).
Government spent more than earnt - mass redundencies in civil servants-negative multiplier effect - protests.
Received ‘bail out’ from the European Central Bank and IMF.
€109 billion ‘support package’ , €40 billion was ‘written off’.
In 2012, another €130 billion was given out as the first one wasn’t enough.
Types of Employment
> Primary
Secondary
Tertiary
Quarternary
Primary Employment
> Involves getting raw materials from the Earth, e.g. fisherman, farmer, miner, lumberjack.
Secondary Employment
> Process materials from primary sector. Any job which manufacture items, e.g. builder, car manufacturer.
Tertiary Employment
> Service sector.
>Any jobs which provide a service, e.g. bus driver, teacher, policeman, doctor, vet.
