Week 9 - Globalization and The Challenge of Development

Question 1

Gobal North vs. Global South

Answer 1

Global North (First World):

GDP Per Capita Income: High
Infant Mortality: Low
Literacy: High
Political System: Liberal Democracy
Economic Inequality: Low

Global South (Third World) is the complete opposite.

Question 2

Theories of Development: The Modernization Paradigm (1950-1960)

Answer 2

Dominant assumption: Less developed countries can follow a “Western” development model (No need for communism)

Government: “Traditional” forms to liberal democracy

Economy: Agriculture to Industrialized

Culture: “Tradition” to “Modernity”
* People identify with others beyond ethnic, tribal, religious affiliations (achievement-oriented culture)

“Non-rational” to “Rational”

Question 3

Agents of Change: The Modernization Paradigm

Answer 3

• Modern education
• Urbanization
• Mass-Media
• Transnational business
• Exposure to Western Countries

Barriers to development are internal

Question 4

The Dependancy Perspective

Answer 4

Key assumptions:

• Positions in the global economy is everything
• States are locked into an international division of labour

Core: First Industrializers; cutting-edge technology

Periphery: Countries integrated into the global economy in a subordinate position; supply raw materials and labour to the core; markets for finished goods

The periphery is forced to rely on cheap labour, making low living standards the basis of their economy

Question 5

The Dependancy Perspective: Solution

Answer 5

Break relationship of dependance with the core countries; “delink”

• Import Substitute Industrialization (ISI):
  A development strategy that seeks to reduce imports and promote domestic industrialization

ISI in practice:
- In 1970’s LDC’s are in debt; slowing growth rates

Profit Seeking Behaviour: How can I beat the compeition with a cheaper or better product?

Rent-Seeking Behaviour: How can I make money through market manipulation?

Question 6

Neoliberalism View

Answer 6

Assumption: Too much state intervention is detrimental to economic development. State is the problem, not the solution.

“Structural Adjustment” led to:
* Extensive adoption by LDC’s
* Generates new wealth but also vast increase in inequality

Question 7

What are the different ways of measuring development?

Answer 7

1) Gross Domestic Product (GDP): A well known measure of development, but it is limited in capturing human well-being. It measures the total value of goods and services produced within a country’s borders.

• It overlooks income inequality, environmental sustainability, and social well-being

2) Human Development Index:
Measures 3 key dimensions of human develpment:

• Life expectancy - Long, healthy life
• Education - Expected years of schooling
• Decent standard of living: Gross National income per capita

Question 8

What are the main differences between modernization theory, dependency theory, and neoliberalism? What policies does each advocate?

Answer 8

Modernization Theory:
Says that traditional societies can develop into modern societies through a process of industrialization, urbanization, and technological innovation (agents of change).
* Barriers to development are internal

Dependancy Theory:
Says that underdeveloped countries are kept poor and dependant on wealthy nations through economic and political exploitation
* Breaking relationships with these developed countries is the solution for underdeveloped countries

NeoLiberalism: Free Markets and minimal goverment intervention are the best ways to achieve economic growth and prosperity
* State Intervention = Detriment to economic growth

Question 9

What are structural adjustment programs (SAPs), and what types of policies or measures have typically been part of such programs? What is the core purpose of these programs?

Answer 9

Structural Adjustment Programs (SAPs) and their core purpose: Economic policies imposed on developing countries by international financial institutions to restructure the economies of these countries to make them more market-oriented and financially stable.
* Ex. of International Financial Institutions: International Monetary Fund (IMF) & the World Bank

Types of Policies or Measures:

• Reducing Government spending on social programs, and public services
• Monetary Policies to control inflation
• Reducing tariffs to encourage imports or exports
• Reducing government regulations on businesses to promote economic efficiency