Development

Página 1

1.1. What is development and the development gap?

What is development?

Reaching an acceptable standard of living for all people.

The way in which a country seeks to improve economically and raise the standard of living for its inhabitants.

Perception of developments differ between countries.

Roscow - stages of growth

1960 - American Economic Historian, WW Roscow suggested that countries passed through 5 stages of economic development.

STAGES:

Traditional society - subsistent agriculture based economy, intensive labour and low levels of trading, population doesn't have scientific perspective on the world and technology.

Transitional stage - develop manufacturing, more national/international opposed to regional outlook.

Take off - short period of intensive growth, industrialisation occurs, workers and instituitions begin to occur, concentration around industry.

Drive to maturity - takes place over a long period of time, standards of living rise, use of technology increases, national economy grows and diversifies.

High mass consumption - economy flourishes in a capitalist system, characterised by mass production and consumerism.

Criticisms of Roscow model

Biased towards 'western' model as the only path towards development.

Not all countries develop in such a linear fashion - skip steps or different paths.

Assumes all countries have a desire to develop the same way - high mass consumption.

Assumes all countries have an equal chance to develop, without considering population, natural resources or location.

What is the development gap?

Refers to the widening difference in levels of development between the worlds richest and poorest countries. This development gap can occur in countries and cities.

Classifications of countries

In the late 1960s countries were classified under first, second and third worlds.

First world - included the developed capitalist countries, e.g. USA and western European countries.

Second world - included communist countries, e.g. former USSR and eastern European countries.

Third world - included every other country.

In the 1980s countries were classified into 2 categories

MEDCs - rich countries, found in the north, except New Zealand and Australia

LEDCs - poor countries, found in the south

This is the Brandt line. But this classification doesn't say which countries are developing quickly and those that aren't. Now countries are put under more categories and are shown on the development continuum.

These categories include:

Rich industrial countries - most developed countries. UK, Norway, Canada, France.

Former communist countries - neither rich or poor. They're developing quickly BUT not as quick as RICs/NICs. Czech Republic, Bulgaria, Poland.

Newly/recently industrialising countries (RICs/NICs) - rapidly getting richer as their economy is moving from the primary industry to secondary industry. China, India, Brazil, Mexico, South Africa.

Oil exporting countries - has high GNI, however, wealth isn't distributed fairly and concentrated upon few people = most people are poorer. Qatar, Kuwait, Saudi Arabia.

Least developed countries (LDCs) - poorest, least developed. Ethiopia, Chad, Angola.

Brandt line

Brandt line separates the LEDCs from the MEDCs. Also referred to as the north-south divide. It is now considered outdated as many countries in the 'poor south' are developing - RICs/NICs such as China and India.

RICs/NICs have experienced rapid growth of development in recent years e.g. China, Brazil and Mexico. These countries have developed strong manufacturing and terry industries. Are they following the Roscow model? Yes.

Development Continuum

Some believe this a better reflection of reality than the Brandt line. There is distinct graduation between countries at different levels, rather than a cluster in distinct groups.

POSITIVES:

Perceiving it as a continual process and recognising that development occurs in different ways.

Ranks countries by HCI, shows a scale from most to least developed with intermediates - RICs/NICs - opposed to two or three categories.

Highlights changing roles e.g. originally LEDCs who attracted TNCs + accelerated development.

NICs/RICs roles in the global economy and changes show their shifts in development.

More reflective of reality.

Página 2

1.2 How can development be measured and how useful are these measures?

Development measurement dictionary:

GDP - total value of goods and services a country produces in a year.

GNI - total value of foods and services people of that nationality produce in a year, GDP + money from people living abroad.

IMR - number of babies who die under 1 year old, per thousand babies being born

HDI is a number that's calculated using life expectancy, literacy rate, education level and income per capita. As a country develops its HDI gets higher.

As a country develop many things change within that country, and these changes have to measured to see how developed that country is.

Types of development indicators

Simple indicators - only measure one aspect of development.

Composite indicators - more than 1 aspect of development e.g. HDI.

Qualitative indicators - considers 'human element' and hard to quantity measures e.g. freedom.

Economic changes - the wealth of a country increases as it develops. Gross Domestic Product (GDP) and Gross National Income (GNI) are two measurements of wealth.

Social changes - affects peoples quality of life. Social change can be measured by infant mortality rate (IMR) and the number of people per doctor. These both decrease with development. An increase in access to safe water and literacy rates show an increase in development

Demographic changes - birth rate and death rate shows an increase in development. Development can also be shown by an increase in life expectancy.

Political changes - changes to a countries political system. E.g. a country is developing if it changes from a dictatorship to a democracy.

Cultural changes - as a country develops societes behaviour and beliefs change. E.g. in some cultures women are not treated equal to men, not allowed to be educated or their only job is domestic work. As a country develops the role of women change. This can be shown through an increase in female literacy rates, shows education, and a decrease of birth rate, shows women are in careers as they have less time to raise children.

Gender Development Index

Economic indicators of development:

TRANSPORT - km railways per unit area, tonnes of freight per population per year, km of roads per unit area.

ENERGY - kph of electricity per hour, kph of energy consumed per capita, kph of energy reserves, % HEP developed

COMMUNICATIONS - newspaper circulation per population unit, telephones per population unit, domestic mail flow per capita.

TRADE - exports per capita, imports per capita, value of foreign trade turnover.

Social indicators of development:

HEALTH - infant mortality rate, life expectancy, % of GNI spent on health, doctors per 1000 people, hospital beds per 1000 people.

EDUCATION - % of GNI spent on education, average number of years in full time education, literacy rates, full time teachers per 1000 people.

HOUSING - floor space, running water, electricity, bathroom/toilet, owner occupied, % GNI spent on housing.

Qualitative indicators attempt to measure subtle aspects of development such as democracy, freedom of speech, environmental sensitivity and sustainability.

Development diamonds

World Bank use these diamonds to portray the socioeconomic indicators through countries average income, life expectancy at birth, gross primary enrolment, access to safe water and GNI per capita. Points outside the diamond show a value better than the average, points inside the diamond show below average.

Development measurements have limitations...

If used on there own they can be misleading if used on their own because they're averages - they don't show groups or regional differences within the country. They shouldn't be used on their own because when a country develops, some aspects develop before others, there could be an illusion that a country's more developed than it actually is.

Using the Human Development Index (HDI) it avoids these problems - Norway is the most developed nation with a score of 0.938 ad Zimbabwe is the least developed with an HDI of 0.140.

Problems with economic indicators of development

Can be outdated quickly e.g. internet, no-one single indicator can be reliable

Problems with social indicators of development

Social development often lags behind economic development and some inappropriate indicators for LEDCs

Problems with GNI as an indicator

Hides inequalities within a country e.g. Saudi Arabia may have a high GNI per capita but there is a large gap between the rich and poor within a country.

The $ has different purchasing power in different countries. The Purchasing Power Parity (PPP) is a method used to measure the purchasing power of different countries currencies over the same types of goods and services. As goods and services may cost more in one country than another. PPP allows us to make accurate comparisons of standards of living across countries.

Conclusion

We need quantitative and qualitative indicators because it shows social and economic factors in depth. Also, by having both it would try and divide any anomalous results e.g. all literacy rates in MEDCs are high, but expected years of schooling shows how strong the education system.

High GNI countries don't always mean people are better off - Saudi Arabia.

World Bank uses development diamonds to show socioeconomic progress. They have averages for country's income group, life expectancy at birth, gross primary enrolment and access to safe water.

Página 3

1.3 What factors have led to contemporary differences in development?

Factors that affect the rate of development:

Physical, economic, social, political and cultural.

Case study which relates to factors above - Malaysia (previously part of British Empire, gained independence in 1957, Malaysia has developed as a 'successful' second generation, newly industrialised country')

PHYSICAL

Found oil in the South China Sea which gave country revenue to invest.

POLITICAL

Government planned carefully, encouraging foreign investment, but aware not to give away too much resources and ensure workers rights.

Controlling foreign direct investment (FDI).

Encouraged Malaysia's industry to develop and export goods. Ports were built and industry were helped with finance.

Economic

Controlling FDI.

Diversifying into tourism and alternative energy.

Low labour costs.

Zones were established so TNCs could set up and pay little/no tax on goods exported - Economic Priority Zones (EPZs), Free Investment Zones (FIZs) and Free Trade Zones (FTZs).

Social

High investment in education - high educated work force and skilled workforce would drive economy.

Aid Malaysian students to study in higher education abroad e.g. Japan, UK and USA - minimises cost for higher education yet gains skills.

Women treated equally.

SARAWAK, MALAYSIA

Timber industry

- One of the largest exporters of tropical hardwood, which important to the Malaysian economy.

- But by the 1990s the rate of logging was economically and environmentally unsustainable.

- Forest management plans by the government to control logging.

Commercial agriculture

- Palm oil is the main commercial crop, which is used to make processed food and biodiesel.

- Due to the rising demands of palm oil it has the potential to grow its economy, but must consider the environment.

Other industries

- Increased investment in manufacturing, construction and high tech industries e.g. aluminium and steel industries, shipbuilding and marine engineering.

- These industries require power, in 2011 the Bakun hydroelectric dam was constructed and a number of coal power stations are being built.

Why is global development uneven?

History of empires/colonialism - Europeans claimed land that had value = development. Areas that haven't been owned by an empire hasn't been exploited and developed. Shown through independence being successful e.g. Malaysia. However challenges as capital previously returned to the home nation.

Raw materials (how to extract them) - if an area of land has no raw materials then development is difficult. E.g. British industrialisation occurred because of coal industry.

Corrupt governments and dictatorships e.g. USSR, Stalin.

War/civil war/civil unrest e.g. Syria, Sudan.

Physical geography of a country - climate, landscape e.g. Sub-Sahara.

Natural disasters

Gender equality - religion e.g. role of women is a social issue within Saudi Arabia which prevents it defined as a developed country.

Trade - unfair trade, trade blocs.

Problems with development

Many oil rich countries have issues with human rights and are in conflict with western world countries. Supply will not last forever.

Many LEDCs are experiencing TNCs outsourcing = exploitation (socially, economically and environmentally e.g. Ariva in Niger).

Trade blocs exploit weakest countries.

Trade blocs do not allow free trade with other countries which prevents LEDCs exports.

Economic growth means fragile environments are being exploited e.g. Amazon rainforest with Brazil and tundra with Russia and USA.

Least Developed Countries

Many least developed countries are in Sub-Saharan Africa e.g. Ethiopia, Gambia, Rwanda, Uganda and Zambia. There is a large gap between the LEDCs and MEDCs in terms of global economy, richest fifth of the global population have 80% of the worlds income and poorest fifth has 1%.

Characteristics of LEDCs:

ECONOMIC

low incomes - in LEDCs the GNI per person is less than $745.

Poor trade links - little involvement with work trade, poorest 49 countries make 10% of world population but account for 0.4% of world trade.

High levels of debt - borrow money from MEDCs for development projects e.g. building dams and roads. Loans are large and have high interest rates therefore priority turns on paying off loan rather than developing.

Trade in low profit goods - more money is spent importing goods than money received through exports. E.g. selling primary industry goods.

Economic instability - unstable as their economy is based on agriculture, so if crops fail, so does the economy. Especially if a country relies on a certain good e.g. Ghana relies on Cocoa.

SOCIAL

Limited health care - thousands of patients per doctor e.g. Ethiopia has 30 000 heads per doctor compared to UKs 360 patients per doctor.

High Infant mortality rates - Ethiopia in 2010 was 75 deaths per 1000 births, UK was 5 deaths per 1000 births.

High levels of malnutrition

High numbers of people infected by disease.

Low levels of education = low literacy rates.

Lack of access to clean water and sanitation.

DEMOGRAPHIC

Low life expectancy

Higher birth rate than death rate

POLITICAL

Many do not have democratic governments.

Political corruption.

Many are affected by war or conflict e.g. Syria and Sudan.

All of which cause a low score in HDI which means a poorer quality of life.

The globalisation of economic activity and RICs/NICs

Economic activity - TNC Case study - Wal Mart

Impact on development in the countries it is located:

ECONOMIC

Creates jobs in construction, manufacturing and in retail services e.g. Mexico, Wal-Mart employs 209 000 people.

Local farmers and companies supply goods to Walk-Mart = possibility to expand local businesses.

Local companies suffer in competing with Wal-Mart which causes local independent stores to close - cannot compete with low prices and range of products.

Most of the profits return to USA which prevents development in host country.

SOCIAL

Offers skilled jobs in LEDCs.

Working conditions may be poor - long working hours in poor working environment.

Donates money to improve health and environment in countries it operates. E.g. in Argentina it donated $77 000 to local projects in reducing hunger.

ENVIRONMENTAL

Invests in environmental friendly technologies and sustainable development e.g. Puerto Rico 23 Wal-Mart stores have solar panels.

Uses large amount of storage space.

RICs and NICs

Seen substantial growth in their manufacturing outputs and exports.

Examples, South Korea, Singapore and Taiwan.

Country invests in industries so they can produce their own goods and put taxes on imported goods to make them uncompetitive with their own goods.

Replicate existing products on the global market and make improvements to them with a focus on high-tech industries.

Economies of these countries grow between 6-8% on average.

CASE STUDY: North Korea

Took advantage of links with USA.

Received aid from MEDCs (USA and Japan).

Invested in iron, steel, shipbuilding, textiles and chemicals so they didn't have to rely on imports.

Invested revenue into industries that could provide export products - processing their own raw materials rather than relying on TNCs and MEDCs.

There will be more on RICs and NICs on the following section (1.4).

Página 4

1.4 How and why are development patterns changing?

GNI

The World Bank classifies countries economies by Gross National Income (GNI). 209 economies are classified with the following:

Low income - Niger, Ethiopia, Uganda, Burkino Faso, Chad

Lower middle income - Kenya, Bangladesh, Kiribati, Nigeria, Egypt

Upper middle income - Malaysia, Brazil, Costa Rica, Mexico, Thailand

High income - UK, Austria, Norway, USA, Germany

There is also Heavily Indebted Countries (HIDC), Malawi, Sierre Leonne, Cameroon, Mali

GNI is regarded as the most up to date measure of development.

Distribution of wealth (globally)

High income countries are mainly in western Europe, Scandinavia and North America, as well as Australia and New Zealand in Australasia.

Upper middle incomes are generally RICs which appear in central and South America and South East Asia.

Lower middle income countries are concentrated near north and central Africa, as well as some countries in South America and Asia which haven't become RICs.

Low income countries and HIDC are concentrated in sub-Sahara Africa

Sustainability

'Development which meets the needs of the present without compromising the ability of future generations to meet their own needs'

How is it measured?

Assessing performance of social, environmental and economic principles - use of natural gas, fissionable material, metals, phosphorus, peak water and renewable sources. But...

It is difficult to measure sustainability, for example, how can we predict the needs of future generations? Many factors may change, population, lower demand in resources.

For a country to be termed as 'developed' it needs to be concerned about its environment, proven with long term sustainable plans. The USA cannot be termed developed in sustainable terms as it is responsible for 25% of the worlds emissions.

Most sustainable - Iceland and Switzerland

Least sustainable - USA and China

Gender equality

Often a barrier to development. If only half of the countries population develops, then half of the potential GNI is earned and society is unfair.

EDUCATION - some countries do not allow females to have an education. E.g. Pakistan - a female named Malala was shot in the head by a taliban when she demanded females to get educated (Taliban - evidence of unstable/corrupt governments).

HEALTHCARE - standard/availability of care reduced for women in some countries.

EMPLOYMENT - women have to be 'traditional' housewife/mother and not allowed to work.

Most gender equal - Finland and Iceland

Least gender equal - Yemen and Pakistan

Human rights

How is it measured? - having an Human Rights Law and access to fair media.

2 worst - North Korea and Saudi Arabia

2 best - USA and Finland

Economic change

Has affected world patterns of development and made significant alterations to older theories, like the Brandt line and the three world model.

Some countries have stagnated or even declined in development. For example, Tajikistan after the fall of the Soviet Union.

Other countries have managed to develop beyond expectations and against models, Malaysia. See page before.

Globalisation

World economies, political systems and cultures connecting. This has increased rapidly in the 1980s.

Marketing is becoming more global. Globalisation has had positive and negative affects on the rate of development.

COUNTRY OF ORIGIN

Economic development:

+ Profits from shareholders return home with taxes

+ Increase employment - skilled employment.

- Manufacturing moves abroad - unemployment to manual workforce which has negative multiplier effect as indirect jobs are also lost.

- Increased unemployment means people have smaller disposable income, which stagnates economic activity.

Environmental development

- manufacturing industry reduces pollution.

HOST COUNTRIES

+ Increased employment = more disposable income which gives prosperity in economy.

+ Increase in purchasing goods generates more economic activity (positive multiplier effect)

- Lots of profits are returned to country of origin.

SOCIAL DEVELOPMENT

+ TNCs may invest in social development e.g. education.

+ Increase in technologies = skilled workforce, which is higher paid which gives greater disposable income BUT has to be educated first.

- Exploitation , low wages and poor conditions.

- Managerial jobs are filled in from country of origin = no drive to work harder or get promotion, stagnates production.

+ Urbanisation occurs = development and moving away from primary industry.

Economic development

EXAMPLE is TNC Walmart page before and Nike.

RICs and NICs

Economies are changing from primary industries to secondary industries and in some cases tertiary. For example, Hong Kong, Singapore, South Korea and Taiwan were first generation RICs which began to rapidly industrialise in the 1960s and were nicknamed the Asian Tiger economies. These countries are no longer considered RICs/NICs as they're now considered developed. Modern RICs include Mexico, Brazil, South Africa, Turkey, India, Malaysia, the Philippines and Thailand.

ASIAN TIGER ECONOMIES

Caused by investment from TNCs, which set up manufacturing in the Asian Tigers because of:

Cheap workforce

Low cost and availability of raw materials and land

Reasonable infrastructure

Favourable government policies e.g. subsidies or grants to attract investment

Reduced trade tariffs, which makes exports and imports cheap.

Lenient environmental, labour and planning laws

Firstly, it was low skilled employment which was labour intensive e.g. manufacturing toys. As manufacturing was successful the TNCs started to produce high valued goods that were expensive to make but profitable when sold e.g. phones. The Asian Tigers specialised in these industries, which made the workforce highly educated and skilled. This caused rapid economic growth and development. Wealth and living standards have improved BUT...

In some places working conditions are still poor and rapid industrialisation has caused environmental damage. AND...

As economies got wealthier, wages became higher, but for TNCs to maintain a large profit margin they moved production other less developed countries. This has created a second wave of RICs.

CHINA - second wave of RICs

Since the 1970s there has been rapid economic growth. Until 1978 the government controlled China's productive assets (Communism). After 1978 the government followed capitalist policies:

Encouraging imports and exports by reducing tariffs and taxes

Encouraging growth of private business - agricultural was half-privatised allowing farmers to receive profits from their goods.

Foreign investment was encouraged - special economic zones were set up and foreign companies received tax breaks if they invested in manufacturing.

Greater investment in education to create a workforce, as it attracts TNCs

Greater investment in infrastructure which enabled manufacturers to operate.

2001 China joined the World Trade Organisation - opened China's market for foreign investors and allowed Chinese businesses to export easily.

Manufacturing industries boomed which brought and still continuing economic growth for the country. Growth has increased living standards, but, there have also been negative consequences...

Widened gap between rich and poor - differences in class system and geography. 1. Gap between working class and upper class as wages are extremely low. 2. Development has mainly occurred along China's coastal cities, leaving agricultural interior poor.

Environment problems - air pollution and acid rain in industrial areas and increased emissions.

Working conditions are poor.

INDIA - development because of service centres.

Rapid growth in India. in the 1990s India made economic reforms to reduce barriers to trade and encourage Foreign Direct Investment. The growth in the service industries was successful in India because...

High educated and technically skilled workforce - previous investment in education.

English is widely spoken and understood (previously part of British Empire).

Low labour costs.

Extensive communication network.

Two reasons why service industry has continued to grow:

1. Local companies in the service industries grew as they supplied foreign TNCs

1980s and 1990s, Indian IT professionals migrated to the UK and US to work for western companies. When they returned they understood the IT needs of more developed countries and established their own businesses.

Low labour costs meant they could compete with same services in other countries.

As it was successful it became more attractive for more TNCs to outsource.

2. TNCs relocated service areas of their business to India

Availability of skilled, English speaking workforce attracted TNCs.

TNCs saved money as salaries were lower for Indians than minimum wage in UK.

The service industry has become an important part of India's economy - in 2011 it accounted for 56% of GDP. Is India too reliable on this industry? For example, if TNCs relocate, as wages rise, or customers demand services from home country the economy would collapse. This growth has increased wealth and improved living standards. BUT...

Large proportion of growth is from TNCs = profits leave country.

Benefits and employment are mainly only available to educated middle class - as lower class may not speak English, have customer service skills and not have skilled labour - which increases the poverty gap.

Growth in 21st century

New or emerging markets are countries which are opening up to international trade and investment, for example, removing barriers to trade like tariffs. Examples of new markets include NICs, wealthy oil producing countries like Saudi Arabia and ex-communist states moving from a closed market to an open market, like Russia. The increase in wealth creates a growing demand to purchase material goods e.g. luxury goods and services. New markets play an important part in the global economy (China, since 2000 has been responsible for 20% of global economic growth. The future patterns for development would spread from North America and western Europe to new markets.

Página 5

1.5 What hinders the closing of the development gap?

What hinders the closing of the development gap?

Burden of third world debt.

Social constraints and cultural barriers.

Trade blocs.

Burden of third world debt

Previously countries could borrow money from the World Bank and International Monetary Fund. They had to pay back interest before paying back the loan, re-investment into the economy was impossible. It was a poverty trap. These countries became known as Heavily Indebted Poor Countries (HIPC). Since then the Multilateral Debt Relief Initiative (MDRI) has been developed by richer countries to help.

Debt has crippled many developing countries, which has been because of loans taken out by previous corrupt or dictatorship governments, this trap in poverty has decreased living standards as precious resources are diverted to pay debt.

Total debt continues to rise. With the increasing payment and aid falling (because of 2007/08 financial crash). E,g, developing world spends $13 on debt repayments per every $1 it receives in grants.

For the poorest countries (approximately 60%) $550 billion has been paid in both principal and interest over the last 3 decades.

Debt kills. 11 million children die each year around the world due to the conditions of poverty - caused by third world debt.

HIDCs

Launched in 1996 by World Bank and International Monetary Fund, which gave some debt relief and low interest loans to countries that met certain criteria. They had to show what they would do with savings e.g. spend it on health and schools, not on weapons and on wealthy.

In 2004 the MDRI was established. Led by the 8 richest countries after huge pressures from charities (NGOs) and individuals. Led by Gordon Brown. It promised to cut debt sometimes 100% if countries could prove that they were committed to the change. Some would argue that this meant following western ideology and changing traditions.

CASE STUDIES

Afghanistan

Location and background

Southern/central Asia.

Depends on foreign businesses (American money).

Crime and conflict causes unstable economy now and historical - Soviet Union in 1979.

How has the strategy helped reduce debt? - ECONOMIC GROWTH OF ONLY 1.3% (2014), LOWER THAN 2013.

Continuing war causes loss of trust from external investment.

Low agricultural output.

Increase in security costs prevent educational, health and welfare expenditure.

Wants development partnership with US, however, they're untrusted of Afghanistan situation.

Rwanda

Location and background

Central/eastern Africa.

1994 genocide - unstable, dictatorship with no democracy.

landlocked country with poor resources.

How has this strategy helped relieve debt? - ECONOMIC GROWTH 7% (2014), 2.3% HIGHER THAN 2013

Support of IMF and World Bank Rwanda has been able to make important economic and structural reforms.

Sustain economic growth better than previous decades (is that difficult though?)

Economic transformation, decreased poverty, rural development, productivity and youth employment.

Reduced inequalities.

Gender equality

Gender equality is a barrier to development. If only half the population receive income then the economic activity is diluted. There is a link between low GDRI and a low HDI.

Trade blocs

Nations group together because it benefits all their economies.

Groups can agree to reduce barriers to trade (e.g. import or export taxes, known as tariffs) between member states, this increases trade between members. For example, the North American Free Trade Agreement (NAFTA), which include Canada, USA and Mexico, have agreed to abolish many tariffs which has increased trade and benefited all three economies.

A group that has free trade also means there is a larger market for businesses, which allows them to increase trade.

Comparative advantage - countries can specialise in producing the things they're good at making and import (from countries within the trade bloc) goods that they do not specialise in. The less restricted trade means that the country can have a variety of goods and services. production will increase in member countries because they concentrate in what they specialise in.

Nations group together because it promotes development - countries within the group work together to tackle development issues, e.g. disease epidemics, poverty, education issues etc. This can benefit members of a group, or the groups can work together to solve global concerns. For example, the UN set out Millennium Development Goals in 2000.

Nations group together to increase security and promote peace - countries that are working in a group are less likely to go to war as it will negatively affect their economies and development. For example, if African countries were in a trade bloc it would decrease the amount of wars.

Positive impacts:

Increased economic development for the nations in a group - increased trade.

Increased economic development leads to increased quality of life for members.

Groups can provide support for declining regions or industries, for example, Ringland, Newport is a deprived area, the EU has funded the construction of flats. Should be protecting British Steel Industry!

Free movement of people means employment opportunities for plenty of people.

Gives greater global representations for smaller member e.g. Luxembourg.

reduced risk of conflict.

Improve global security e,g, NATO.

Negative impacts:

Sometimes decisions are made centrally so member states may lose national governmental control.

Individual countries may lose out when sharing resources with member states - particularly in LEDCs.

Sometimes damages a countries economy - richer member states may have to support poorer member states financially. For example, in the EU western Europe may have to finance ex-communist states in eastern Europe.

CASE STUDY - European Union (EU)

Group has grown from 6 members in 1957 to 28 members in 2015. It is a closely integrated economic and political group:

Goods, services, people and money can move freely between states.

17/28 states have adopted the same currency - Euro.

Member states have agreed to common laws and policies.

POSITIVES

Trade has increased between European countries.

Euro has made trade easier between some countries as there is no need to exchange money. Prices are consistent and no uncertainty with exchange rate.

EU supports some industries - Common Agricultural Policy (CAP) which subsidies Eu farmers and adds import tariffs and quotas on agricultural products outside the EU. This has given farmers a reasonable standard of living, secures food supplies and ensures good prices for consumers.

Increased security from external threats. E.g. counter-terrorist policies protect member states such as biometric passports to increase border security.

Most EU residents are free to move around.

NEGATIVES

Joining the EU can be expensive. States applying must reach certain criteria e.g. high standards environmental protection, meeting the demands means a lot of investment. So, to develop and increase economic activity, the countries must have to be developed already (means having a strong economy) to meet requirements ? :/

Countries have to share common resources with other member states.

Policies like CAP can have a negative impact on economies outside the EU. EU country will generally only trade with member states as its cheaper, impacting non-member states.

Increased immigration has resulted in the lack of skilled workers in some Eastern European countries because they have migrated to Western Europe with higher wages.

Joining the EU can reduce independence - have to obey EU policies even if it conflicts with their national policies.

Impact of world trade:

Countries outside the trade bloc faces quotas and tariffs, which means its impossible to sell their goods.

Growth in world trade has been unevenly spread. Some developing countries (often Asia) have increased growth by producing more manufacturing goods, where others have fallen further behind (African countries).

Worlds poorest countries (49 least developed) have not shared in the growth of world trade. 645 million people in the top exporting countries (US, Germany, Japan, France and UK) have 100x more trade than their poor counterparts.

many countries depend on single primary exports, like wood, cotton and coffee. But prices have been declining. Prices of manufactured goods have in contrast, risen in relative terms.

Página 6

1.6 What types of strategies exist for reducing development gap and how effective are these strategies?

Strategies

Different types of aid, bilateral, multilateral, emergency and structural

Free trade and fair trade

Foreign direct investment and role of TNCs

Debt rescheduling, debt abolition and debt for conservation swaps

Millennium development goals

Millennium Development Goals (MDGs)

What are MDGs?

In 2000, 189 world leaders went to UN headquarters in New York to discuss how they could work together to eradicate extreme poverty.

1. Poverty and hunger

TARGET 1.A: Halve between 1990 and 2015, the proportion of people whose incomes is less than $1.25 a day.

TARGET 1.B: Halve between 1990 and 2015, the proportion of people who suffer from hunger.

2. Education

TARGET 2A: Achieve universal primary education. Every child (both sexes) complete a full course of primary education.

3. Gender equality

TARGET 3A: Eliminate gender disparity in primary and secondary education, preferably by 2005 and in all levels of education no later than 2015.

4. Child mortality

TARGET 4A: Reduce by 2/3 between 1990 and 2015 (under 5s).

5. Maternal health

TARGET 5A: Reduce mortality rate by 3/4 between 1990 and 2015.

6. Combat diseases

TARGET 6A: Halt by 2015 and begin reverse the spread of HIV/AIDS.

TARGET 6B: By 2010 achieve universal access to treatment for HIV/AIDS.

TARGET 6C: By 2015, halt and begin reverse the incidence of malaria and other major diseases.

7. Environment

TARGET 7A: Integrate the principles of sustainable development into countries policies and reverse the loss of environmental resources.

TARGET 7B: Reduce biodiversity loss, achieving by 2010 a significant reduction in the rate of loss.

TARGET 7C: By 2015 halve the proportion of population without sustainable access to safe drinking water and basic sanitation.

TARGET 7D: By 2020, achieve a significant improvement in the lives of at least 100 million slum dwellers.

8. Global partnership

TARGET 8A: Develop an open, rule based, predictable, non-discriminating trading and financial system.

TARGET 8B: Address special needs of least developed countries.

TARGET 8C: Special need for landlocked developing countries and small island developing states.

TARGET 8D: Sort debt issues.

TARGET 8E: Co-operate with pharmaceutical companies to provide affordable essential drugs.

TARGET 8F: Make available benefits of new technologies, especially information and communication.

Where are we now - Sustainable Development Goals (SDGs)

The SDGs build on the success of the MDGs. The MDGs showed that structural targets can work to reduce poverty and the SDGs will cover a wider platform of development issues - through a sustainable approach. 17 new goals were created.

Positives of MDGs

Brings into public eye and allows people to visualise development agenda and progress rather than aid programmes as financial blackholes.

By having set goals it accelerates progress.

Considers numbers of factors, environmental sustainability, economic development and social development.

Negatives of MDGs

Sloppy statistics - lack of reliable data undermine MDG monitoring.

Progress is discussed as 'global regions' - there is diversity within global regions, so discussing progress in terms of regions is not a significant indicator. Need to be considered nationally to set a real idea.

Misleading statistics - baseline in 1990 rather than 2000 when they were implemented.

Vague - doesn't state how they're going to be achieved.

not advertised on world scale.

No consequences if the targets are made.

Successful? Good for identifying issues but limited success in goal achievement

Do you think goals are better suited in certain countries?

Each country combats different factors that hinder development progress. E.g. if they do not have political stability, like a corrupt government, development will not progress. Also, how can developing economically work without causing environmental impact?

Aid

Types of aid:

VOLUNTARY AID/ CHARITY AID - money collected through agencies like Oxfam, which is spent on a variety of schemes, governments can contribute. Most of this aid goes to ling term development, like training famers to farm efficiently.

BILATERAL AID - from one country to another. E.g. Britain giving money and sending exports to help the construction of a dam in Turkey (most common type).

TIED AID - donor country benefits economically. more below

EMERGENCY AID - used after natural disasters, like earthquakes or floods, help is needed straight away. Include food, water, shelter, medicines and staff. Not useful for long term aid - can damage local economy because food becomes freebees and stagnates economic growth. But prevents secondary effects of natural disasters.

Aid can help developing countries improve peoples quality of life.

There are two main sources of aid - governments (paid by taxes) and NGOs - paid by voluntary donations. Government can give the aid directly to the recipient country (bilateral aid) or indirectly through an international organisation that distributes the aid (multilateral).

Short-term aid - money or resources to help recipient countries cope with emergencies e.g. earthquakes.

Long-term aid - money or resources to help recipient countries become more developed e.g. to improve health care.

'Top-down' aid - when an organisation or government receives the aid and decides where it should be spent. This is usually large infrastructure projects like dams for HEP.

'Bottom-up' aid - when money is given directly to local people e.g. to build a wall - often used by NGOs.

Aid is important for development because it allows recipient countries to invest in things that improve peoples quality of life and health, e.g. improving access to drinking water. There are problems with aid as a route to development...

Some recipients do not use it effectively because they have corrupt governments, the money doesn't reach the people who need it - not helping development.

Delivering aid isn't easy, particularly if countries have poor infrastructure e.g. establishing education projects in rural areas with poor roads. If the distribution is patchy, only some areas may get developed.

Bilateral aid can be tied- this means it is given with a condition, e.g. the recipient has to by goods and services from the donor country.

Countries can become dependent on aid to a point that they can't function without it.

SELF HELP - schemes where local people take part in small-scale activities which help the local area. As the local people are involved they are projects that are needed. They do not usually need high technology or lots of money.

Examples:

Planting trees, building lines of stones to reduce soil erosion.

Training local health workers, who know how to prevent and treat diseases and health problems.

Making bio-gas plants which takes manure and produces gas for cooking and natural fertiliser.

Trade

Trade can stimulate economic growth and development. It promotes development by:

Increasing economic growth - increased trade creates employment and generates wealth, which can lead to a rise of GDP and the living standards.

increasing the amount of money a country has to spend on social development e.g. health and education.

Increasing the amount of money a country has to spend on development projects e.g. transport and infrastructure.

Problems:

LEDCs cannot compete in the global market.

LEDCs may have difficulties with trading as there may be other difficulties like HIV/AIDs or conflict.

Trade can have negative social effects - to keep prices low, wages and working conditions may be poor. This means that increased trade doesn't necessarily increase quality of life.

LEDCs export primary products, which are unreliable, as they rely on the weather and are also low profits.

If the LEDC only has industry in one industry and the demand falls the entire economy struggles, nothing to fall back on.

Fair Trade - campaigns promote fair trade which encourages safe, non-exploitative working conditions and avoids the use of child labour.

CASE STUDY - SUDAN

One of the poorest countries in Africa, which has experienced civil war. The economy has been growing rapidly recently, but there has been no increase in living standards. Poverty is widespread - 46% live below poverty line.

Sudan receives a large amount of aid:

2007 it received over $2 billion of aid. 70% was humanitarian, to help cope food shortages caused by conflict and drought.

Aid has come from different sources - governments, international organisations and NGOs.

Receives a lot of food aid. Only helps short term, not sustainable.

Some aid is used to promote development by attempting to prevent conflicts, rebuild infrastructure and invest in education and health services.

Problems with sending aid due to conflict and corruption.

Growth of oil industry is boosting trade and economic growth:

In 1990s a lot of its exports was low profit agricultural goods. Sudan had a trade deficit (spent more importing goods than earned exports). Production and trade of these goods have decreased due to drought and conflicts.

1999 Sudan started exporting oil, which gave its first trade surplus. Over the last decade oil has been its main export.

The oil industry has improved economic growth and international relations - trade agreements with US, EU, Egypt and Libya).

But profits of this industry isn't funding development because of corruption.

Agriculture is still important to its economy - 40% of GDP, and 80% are employed through agriculture, meaning it is difficult to generate development and escape poverty.

Foreign Direct Investment and role of TNCs)

Development has occurred extensively when manufacturing industry is introduced or opportunities to exploit valuable resources are taken.

Governments of LEDCs often work hard to encourage overseas-based companies to set up assembly or manufacturing plants or mine resources (NIGER AND ARIVA). This may be arranged between governments or through TNCs being attracted and establishes a large plant or services. Transport and communications are also attracted and this often promotes rapid development (positive multiplier effect).

Botswana - TNC diamond mining activity has been positive, the countries GNP has risen from.

- TNC can move out before the multiplier effect has taken place, environment is damaged, traditional values can be strained.

Debt rescheduling, debt abolitions and debt for conservation swaps.

Rescheduling can make repayments easier BUT there is a strong lobby for cancelation.

HIPC Initiative identifies 41 countries eligible for debt relief - most in sub-Sahara

Debt for conservation (governments and NGOs): Debt or portions of debt are written off and money that would have been paid in interest is used to pay for conservation measures (Brazil), Debt purchased to allow conservation.

Needs to be agreed and structured.