Chapter 10

Development

Link in the chain• Commodity chain- links that connect

production and distribution of products– Each link can tell you about the importance

and wealth of a country

How do you define development?• Wealth dependent on what , where and how it

is produced

• Developed- means progress, higher tech, better lifestyles

• Developing- means progress is being made, but not complete

• Gross National Product- measures the total value of things produced by the US on and off US soil (Nike in Thailand)

• Gross domestic Product- measures only products made on US soil– Formal economy- taxed by gov– Informal economy- not taxed by gov. (illegal drugs)

• Sometimes hard to compare GNP because many countries appear poor but have a large informal economy

• Other types of measures:– Occupations– Productivity – Transportation and communication– Dependency ratio (number of people a worker

supports)

Development Models• All countries go through development, just at

different speed

• Many criticize that development is based on Western standards and values (all money based not on health, happiness…)

• • Bhutan• Gross National • Happiness

Rostow’s modernization model• Said development was

like a ladder with five stages that all countries must go through– Traditional (farming)– Preconditions to takeoff

(leadership)– Takeoff (industry and cities)– Drive to maturity (technology)– High mass consumption (high

level jobs)

• Neocolonialism- major powers of the world still control the poor countries EVEN THOUGH the poor countries are free

• Structuralist theory- idea that the world hierarchy can not be easily changed and that not all countries will become developed– Dollarization- when a country adopts a richer

countries currency

• Dependency theory- idea that countries are dependent on each other and there will always be the have and have nots for balance

• World systems theory (core-periphery)– Put countries in the three tier system: core,

semi periphery, periphery– Those who exploit survive– Theory can be used on many scales, national,

local, and global

Barriers to the Cost of Development• Periphery barriers: low education, high

death rates, socioeconomic difficulties– Half the country is 15 or younger– Male dominance– High illiteracy rate, no doctors, no education– Trafficking when adults are forced (or chose)

to sell themselves or their children to overcome poverty

• Most are girls who become servants

• Foreign debt adds up in poor countries that borrowed money but never “got on their feet”– World Bank of IMF (both

run by UN) require structural adjustment loans which require a detailed plan

– Most countries are too busy paying interest on debt than reinvesting in improving their country

• Distribution of wealth gap- where countries have rich and poor and no one in between

• Poor countries often have corrupt gov. and constant change

• Corrupt leaders tend to lead with fear and stay in power

World's Ten Most Corrupt Leaders1

Name Position

Funds embezz

led2

 1. Mohamed Suharto

President of Indonesia (1967–1998)

$15–35 billion

 2. Ferdinand Marcos

President of the Philippines (1972–1986)

5–10 billion

 3. Mobutu Sese Seko

President of Zaire (1965–1997)

5 billion

 4. Sani Abacha

President of Nigeria (1993–1998)

2–5 billion

 5. Slobodan Milosevic

President of Serbia/Yugoslavia (1989–2000)

1 billion

 6. Jean-Claude Duvalier

President of Haiti (1971–1986)

300–800 million

 7. Alberto Fujimori

President of Peru (1990–2000)

600 million

 8. Pavlo Lazarenko

Prime Minister of Ukraine (1996–1997)

114–200 million

 9. Arnoldo Alemán

President of Nicaragua (1997–2002)

100 million

10. Joseph Estrada

President of the Philippines (1998–2001)

78–80 million

1. Defined as former political leaders who have been accused of embezzling the most funds from their countries over the past two decades.2. All sums are estimates of alleged embezzlement and appear in U.S. dollars.Source: Transparency International Global Corruption Report 2004.

• EPZ- (export processing zones) special manufacturing zones in the semi-periphery that have tax breaks to encourage foreign investment– Maquiladoras-factories set up on the Northern Mexico

border by American companies (cheap labor, close to US, environmental laws)

– NAFTA- allows free trade between US, Mexico, and Canada

– SEZ-(special economic zones) in China near the ports for trade and foreign investment

• Agriculture- two types subsistence and cash crops in peripheral countries– Subsistence farming

usually root and grain crops

– Desertification-occurring in Africa in the grasslands near the desert from overgrazing & farming

• Tourism can bring wealth to poor countries but it mostly favors the richer countries that own the resorts– Countries that do make money (Thailand, Kenya, Fiji)

use the money to maintain tourism instead of investing in other economic prospects

– Tourist damage a country and consume water and food

– Employment in tourism sometimes is like servitude

• Even core countries have poor areas and rich areas and even rich regions and poor regions

• Tshirt travels (320-321) shows how a simple commodity can be a complicated process– Create quota market where countries can sell their

rights to produce

• Islands of development- corporations build up cities to create jobs in poor areas

Uneven Development

• Non Governmental Organizations (NGO)– Independent agencies who run for non profit/

charity

• Microcredit– Successful NGO program in South Asia and

South America that gives small loans to people (women) to have them start a small business