The Development Gap

The Development Gap

1. Causes of the development gap

   • Measuring the development gap
     • North and South
       • 1981 Brandt Commission's Report
         • Brandt Line = 'North-South divide'
       • World Bank
         • High, upper-middle, lower-middle and low income countries
     • Human development
       • UN
       • Social and demographic factors
         • Literacy rates
         • Life expectancy
         • Infant mortality
       • HDI
       • Development profiles
     • Gender
       • Inequalities between men and women
         • Life expectancy
         • Education levels
         • Income
       • One of five indicators used in the Human Development Report by the UN
       • Rank 1 (top) = Iceland (2007)
         • Rank 168 (bottom) = DRC (2007)
     • Continuum
       • Graduation of countries at different levels of development
     • Distribution
       • Unequal division of the world's wealth and population
   • Theories of development
     • Rostow
       • Stages of economic growth
         • 1 = Traditional society
           • 5 = High mass consumption
       • Aid transferred from developed to developing countries
       • Did not take into account non-economic factors
         • High rates of population growth
         • Political changes
     • Poverty cycle
       • Lack of capital and low incomes
       • Cannot account for emergence of RICs
         • China
         • India
         • South Korea
       • Assumes isolation
       • Does not take into account loans or foreign aid
     • Politics
       • Impact of different philosophies on equality and development
         • Capitalism
         • Communism
     • Dependency
       • Developed countries exploit developing countries
       • Relationship of 'dominance and dependency'
       • Colonialism
     • Core-periphery
       • Beneficial effects can spread from developed 'core' regions to less developed 'peripheral' regions
     • Globalisation
       • Increasingly connected and interdependent
       • Cheaper, faster and more-efficient
   • Global players
     • TNCs
       • Transnational Corporations
       • Need to maintain profitability
         • Locate in developing countries
           • Cheaper production
       • UN's TNI
         • Transnationality Index
         • Geographical Spread Index (GSI)
       • Economic development and poverty alleviation
         • Employment
           • Income
           • Skills and knowledge
         • Attracts FDI
       • Disadvantages
         • Environmental impact
         • Exploitation
         • Dependency
   • Trade and investment
     • Increasing exports = development
     • Manufacturing
     • Services
     • Unequal
       • Trade deficits
     • Trade blocs
       • 80% of trade (value of exported goods) comes from the EU, North America and east Asia
         • 2.5% from Africa
     • Terms of trade
       • Ratio between currencies earned from exports and prices of imports.
       • World prices for raw materials have fallen in relation to manufactured goods
       • Rises in commodity prices have improved terms of trade for some countries

2. Consequences of the development gap

   • Impact on people in poor countries
     • Castes
       • Differences between groups
         • Rural and urban
         • Male and female
           • Females have lower incomes or are unpaid
             • 64% of illiterate adults are women
         • Ethnicity
       • Affect access to services
   • Megacities
     • The fastest-growing economies show the highest rates of urbanisation
     • Growth of cities
       • Increased cost of housing
         • People cannot afford homes
           • Temporary settlements
             • No tenure security
             • Little sanitation
             • Overcrowded
     • Deprivation
       • Limited access
         • Employment
         • Healthcare
         • Education
         • Credit facilities
       • Violent environments
       • Little or no social protection
     • Environment
       • 'Brown Agenda'
         • Health issues
         • Rapid industrialisation
           • Air pollution
             • Shanghai (2000) - 15,000 cases of chronic bronchitis and 7,200 deaths associated with particulate matter in the air.
   • Social and political unrest
     • Sociocultural differences
     • Apartheid, South Africa
       • Three segregations
         • White
           • In control of economy
         • Black
           • Strong resentment
           • Unfairly treated
         • Coloured
       • Between 1948 and 1990
     • East Timor
       • A portuguese colony from 16th Century until 1975 - later invaded by Indonesia. 1999: After guerrilla war, Indonesia let East Timorese choose between independence and local autonomy. East Timor became independent in 2002. Exploration of oil and gas reserves is taking place.
   • The consequences of development
     • Positive
       • Higher wages
       • More services
       • Employment
     • Migration
       • International
         • Ecuador: 2 waves of emigration in 1980s & 1990s following oil price collapses. Children are either left behind or discriminated against. Peruvians and Colombians immigrate to Ecuador, attracted by the switch to USD$ in 2000. Most are illegal and some are criminals.
         • Immigration
         • Emigration
       • Internal
         • Rural - Urban
         • One-way
         • Periphery - Core
     • Environment
       • Greater ecological footprint
         • The amount of land and water required to provide a person (or society) with the energy, food and resources they consume and to absorb the waste they produce.
       • Economic development raises demands for resources
       • Increased pollution
         • China - Coal industry, expanding car ownership, indoor air pollution and waste dumping is leading to pollution issues. 300,000 people die each year in China from pollution. A further 100,000 from indoor air pollution.
   • Debt
     • Interest payments affect development
     • 'Strings attached'
       • Trade barriers
     • 1980's Western recession
       • increasing interest rates
         • Crop surpluses led to a decline in prices
           • Unable to repay debts
     • Corruption
       • Political Instability
   • Poverty is declining in all regions except Sub-Saharan Africa

3. Reducing the development gap

   • Approaches
     • Government
       • 'Top-down'
       • Large scale
     • 'Bottom-up'
       • NGOs
       • Local communities
       • More effective
     • Philosophies
       • Neo-liberalism
         • Market forces, privatisation, etc.
       • Marxism
         • Replaces existing class structures
       • Populism
         • Change to economic, social and political systems
       • Interdependence
   • Aid strategies
     • Humanitarian
       • Aims to alleviate suffering in the short-term. E.g. after a natural disaster.
     • Project aid
       • Tied to large scale schemes. E.g. Major dam construction.
     • Voluntary
       • Tends to come from NGOs and fund-raising.
     • Bilateral
       • Involves a one-to-one relationship between donor and recipient country.
     • Multilateral
       • Involves donor countries giving to organisations (e.g. the World Bank or the UN), which then distribute the aid where it is needed.
     • Official development aid
       • OECD countries are committed to providing a certain level of development assistance to developing countries.
   • Trade, investment and economic growth
     • Developing countries' share of world trade tripled from 12% in 1995 to 36% in 2006.
     • Managing trade
       • WTO - 148 member states
         • Committed to increasing free trade
       • Special Economic Zones (SEZs)
         • Incentives for TNCs to locate
     • Trade agreements
       • Mainly bilateral
       • Increase in free-trade and regional-trade
         • New regionalism
     • Fair trade
       • In 2006, sales were valued at US$23bn worldwide - a 40% increase not he previous year.
       • NGO
         • Seeks to obtain fair prices for small scale producers
     • Doha
       • 153 countries
       • Between 2001 and 2008
       • Allowed developing countries access to EU and US agricultural markets
   • Future actions
     • Debt cancellation
       • Make Poverty History campaign
         • In 2005, the campaign enabled 14 HIPCs to have their debt removed.
       • UK government
         • December 2000 - debt owed to the UK by 26 countries was cancelled by the govt.
     • Technology
       • Digital divide
         • The uneven use of technology between countries.
       • Africa is now the fastest growing mobile phone market
     • Tourism
       • Can enable development through employment, infrastructure and FDI, but can result in damage to the environment, local inflation and exploitation of workers.
       • Multiplier effect
         • A virtuous cycle of economic growth, whereby the creation of jobs and opportunities creates further growth.
       • Ecotourism
         • Small-scale ventures based in local communities with minimal impact on the environment.
     • Legal rights
       • Equality among men and women
       • Enables businesses to grow
     • South-South links
       • China in Africa: China buys about 1/3 of its oil from Africa and invests money into the infrastructure of Angola, Sudan and Nigeria.
       • Encourages recipient governments to spend aid more effectively.
     • Millennium Development Goals
       • A framework for monitoring the development gap and measuring any progress towards reducing it.