Studied by 10 people
What four different factors does the UN consider when determining a country’s level of development, its HDI (Human Development Index)?
Gross domestic product (GDP) per capita, literacy rate, amount of education, and life expectancy.
What is gross domestic product (GDP)?
The value of the total output of goods and services produced in a country, normally during a year.
How much does a typical worker in an MDC earn? in an LDC?
A typical worker in an MDC earns $10-15 per hour, and a typical worker in an LDC earns $2 per hour.
What is the annual per capita GDP in an MDC? in an LDC?
The annual per capita GDP in an MDC is over $30,000 and under $3,000 in an LDC.
What has been happening to the gap between MDCs and LDCs in terms of GDP?
Widening
Explain this statement: “Per capita GDP measure average (mean) wealth, not its distribution.”
This statement means that the per capita GDP is only an estimated average and that the money can be distributed to a few people or many people, causing the per capita GDP to be inaccurate for much of its population.
What types of jobs comprise the primary sector of an economy? secondary sector? tertiary sector? (list more than one)
Primary sector: material extracting mainly through agriculture, but in some instances mining, fishing, and forestry.
Secondary sector: manufacturing that process, transform, and assemble raw materials into useful products, or takes manufactured goods and finalizes them. This could be factory workers.
Tertiary sector: selling goods and services to people for payment. This includes bankers, lawyers, retail workers, teachers, and politicians.
How is the % of workers in agriculture different in LDCs and MDCs?
The % of workers in agriculture is higher in LDCs than MDCs.
Within MDCs, what is the trend (increasing or decreasing) for each of the sectors?
Primary – Remains low
Secondary – Plummeted
Tertiary – Large, and continuing to grow
Define productivity
The value of a particular product compared to the amount of labor needed to make it.
Define value added
The gross value of the product minus the costs of raw materials and energy.
What three “consumer goods” are considered to be particularly good indicators of development?
Motor vehicles, computers, and telephones.
What is the ratio of people to these types of goods in a typical MDC? in a typical LDC?
Motor vehicles- 1000:400 in MDC, 1000:20 in LDC
Telephones- 1000:800 in MDC, 1000:200 in LDC
Computers (internet use)- 1000:400 in MDC, 1000:100 in LDC
The people in LDCs who do have access to consumer goods are usually concentrated in what regions?
People in LDCs with access to consumer goods are usually concentrated in urban, expensive areas, typically elites.
How does gender separate MDCs and LDCs in terms of education?
There is a higher gender disparity in education in LDCs than MDCs.
What is the literacy rate in MDCs? in LDCs?
The literacy rate in MDCs is over 98% and less than 60% in LDCs.
What are three ways in which the level of health and welfare are measured in a country?
Caloric intake, health expenditure, and physicians per 1,000 people.
Indicate the statistics for life expectancy in LDCs and MDCs.
MDCs: 70s
LDCs: 60s
Indicate the statistics for infant mortality in LDCs and MDCs.
MDCs: 99.5% survival, less than 0.5% death
LDCS: 94% survival, 6% death
Indicate the statistics for natural increase rate in LDCs and MDCs.
MDCs: 0.2%
LDCs: 1.5%
Indicate the statistics for crude birth rate in LDCs and MDCs.
MDCs: 12 per 1,000
LDCs: 23 per 1,000
What is North America’s HDI? What are 3 comments?
0.95
North America is in the top two for literacy rate and GDP per capita, but lower in comparison to other countries for education and life expectancy.
Americans are the leading consumers and the world’s largest market. It was once the leading manufacturer of motor vehicles and other goods but was overtaken by Japan and Europe. North America is the leading food exporter.
North America has the highest tertiary sector, especially health care, leisure, and financial services.
What is Europe’s HDI? What are 3 comments?
0.93
Europe was once divided into West (allied with the United States) and Communist East (Soviet Union), but have since become closer and have been treated as a single region.
Europe is the largest and richest market without the economic borders of the European Union (which has been accused of bias towards home countries), with 15/19 European countries having the highest HDI rankings. However, Europe’s HDI is lower than North America's because of less developed Southern and Eastern European countries.
Europe is dependent on international trade. They have many imports, so they sell high-value goods to compensate (i.e., insurance, banking, and luxury cars).
What is Russia’s HDI? What are 3 comments?
0.73
When under communist control, Russia had a centrally planned economy with 5-year production goals for the entire country by sector/region.
After the fall of the Soviet Union, Russia converted to a market economy, which caused many complications. The elite few became wealthy, and the living standards declined.
Russia’s oil production has been a significant factor in economic growth.
What is Japan’s HDI? What are 3 comments?
0.96
Japan has an undesirable ratio of population to resources but still became an industrial power as the third area with a high HDI.
The abundance of people willing to work for low wages allowed Japan to sell its products for lower costs than other competitors, allowing them to specialize in high-quality goods like electronics, cars, and cameras later.
Japan allocated money towards rigorous education and training to have a skilled workforce.
What is Oceania’s HDI? What are 3 comments?
0.9
New Zealand and Australia have a higher HDI, but the scattered islands with smaller populations tend to be underdeveloped.
Australia and New Zealand are former British colonies, so they share many characteristics, as 90% of their population is British descendants.
Australia is a leader in important minerals like iron, manganese, nickel, titanium, and zinc. Australia and New Zealand are net exporters of food and are tied economically with primarily the UK, but also Japan and other Asian countries.
What is Latin America’s HDI? What are 3 comments?
0.82
Latin Americans are more likely to live in urban areas than other LDCs.
Level of development heavily fluctuates, with large cities having MDC-like development. The coastal areas tend to have a higher GDP per capita.
Development is hindered by uneven income distribution. In many countries, few wealthy families control the land, while lower-class citizens work on said land.
What is East Asia’s HDI? What are 3 comments?
0.77
China is the world’s second-largest economy, behind the United States. China is the world’s largest market and manufacturer.
China’s economy changed due to the communist takeover. The communist government took over most agricultural land, often assigning certain tasks to guarantee enough food production for China’s population.
Manufacturing has increased dramatically in China. They are the current leader in consumer products such as toothpaste, detergent, and shampoo, and ⅔ of the world’s DVD players, microwaves, photocopiers, and shoes.
What are Southwest Asia and North Africa’s HDI? What are 3 comments?
0.74
Most Southwest Asia and North Africa are deserts with minimal plant and animal life but contain a large portion of the world’s petroleum. The countries without petroleum have minimal development opportunities, causing a significant gap that creates tension.
Islam dominates over 95% of the region’s population, interfering with many business practices.
These countries are very wealthy, but the low literacy of women, gender inequality, and internal disputes have caused the HDI to be lower.
What is Southeast Asia’s HDI? What are 3 comments?
0.73
Southeast Asia’s tropical climate causes poor soil and, consequently, low crop production. Dangerous storms, volcanoes, and mountain range additionally characterize it. Because of these circumstances, Southeast Asia focuses on selective crops used in manufacturing (ex., oils).
Southeast Asia contains a large percentage of tin and petroleum reserves.
Southeast Asia has faced war for 50 years, stunting development. To have economic development, these countries are forced to reform in ways that lower the standard of living.
What is Central Asia’s HDI? What are 3 comments?
0.7
Most Central Asian countries were a part of the former Soviet Union, so they are typically grouped in a region.
The level of development is highest in Kazakhstan and Iran: the countries in Central Asia with the highest oil production.
In other “stan” countries, the development is not as high, relying on minerals and agriculture. One country in particular, Afghanistan, has one of the world’s lowest HDIs but hasn’t been measured recently because of the war.
What is South Asia’s HDI? What are 3 comments?
0.61
This region has the 2nd highest population but the 2nd lowest per capita income. Overpopulation is an issue, as is population density. The NIR is one of the world’s highest.
South Asia was very involved in the Green Revolution, so its agriculture is widespread. However, climate determines output.
India is South Asia’s largest country and has the 4th largest economy globally. It is the leading producer of jute, peanuts, sugarcane, and tea and a large producer of rice and wheat. It additionally has minerals such as uranium, bauxite (aluminum), coal, manganese, iron, and chromite. The country is gradually becoming a manufacturing country and has already become a major service provider.
What is Sub-Saharan Africa’s HDI? What are 3 comments?
0.51
South Africa is a major producer of minerals such as chromium, diamonds, manganese, and platinum, as are other countries like DRC (cobalt), Guinea (bauxite), Zambia (cobalt), Botswana (diamonds), Gabon (manganese), Congo (diamonds), Nigeria (petroleum), and Niger (uranium).
Sub-Saharan Africa has the highest percentage of people living in poverty without healthcare access and low education. In recent years, these conditions have worsened.
Sub-Saharan Africa has a major imbalance between population and land capacity. The climates (tropical and dry) and land cannot support the current number of people, as it is overworked. As a result, the agricultural output has decreased.
Explain the impact of Wal-Mart on the world in terms of geographic concepts. How is economic geography demonstrated in its relationship with China?
Walmart diffused from its hearth in a small town in Arkansas by gradually expanding after saturating towns with its stores. Walmart deliberately functioned its stores around a node: the distribution center. Walmart outsources its goods from China, which then uses containerization to transport goods.
The GDI considers what four areas as it compares the situation of women to that of men in various countries?
Per capita female income as a percentage of per capita male income, number of females enrolled in schools compared to males, percent of literate females compared to males, and life expectancy of females compared to males.
What regions have the highest GDIs?
North America and Europe
What regions have the lowest GDIs?
South Asia and Sub-Saharan Africa
Discuss the book’s comparison of Hungary and Saudi Arabia.
Hungary and Saudi Arabia have around the same GDP, but Saudi Arabia’s disparity between female and male income causes them to have different HDIs.
What would a score of 1.0 represent for GDI?
Complete gender equality
What does a high GDI mean?
Men and women have a high level of development, though there may be minor disparities between the two.
What is the average “income gap” between men and women in MDCs? (fraction and dollar amount)
Women make ⅔ the amount that men do, which is a gap of 12,000 dollars.
In LDCs, the disparity between male and female income is relatively __ in dollar terms, but __ on a percentage basis.
Low, high
True or False? Correct if false. In MDCs literacy is universal among both women and men.
True
True or False? Correct if false. In Latin America and Asia, literacy is universal among men, but rates are low for women.
False. Literacy is not universal for females or males.
True or False? Correct if false. In sub-Saharan Africa and the Middle East, female literacy is low, but it is
slightly higher than that of men.
False. Female literacy is lower than male literacy in sub-Saharan Africa and the Middle East
In what indicator is the “gender gap” actually greater in MDCs than in LDCs? Why is this not so in LDCs?
Life expectancy. Many women die of childbearing in LDCs.
What does the GEM (Gender Empowerment Measure) measure?
The ability of women to participate in the process of achieving improvements in their status or achieve economic and political power.
What things are measured in order to calculate the GEM?
Economic:
a) Per capita female income as a percentage of per capita male income
b) Percentage of professional and technical jobs held by women
Political:
a) Percentage of administrative jobs held by women
b) Percentage of women members of national parliament
What would a score of 1.0 represent for GEM?
A country with complete power equality between men and women
What types of barriers restrict women from obtaining professional and technical jobs?
Cultural barriers may restrict women from obtaining professional and technical jobs because they are often valued less than men in society.
List countries in which women comprise a majority in the national parliament or congress
No countries have a woman majority in the national parliament according to the textbook (though, contrary to what the textbook says, as of recently, Bolivia, Cuba, and Rwanda do)
In what country/region do women comprise a larger part of national government than anywhere else in the world? What percentage of legislators there are women?
Northern Europe. 33.3%
What is the percentage of female legislators in the United States?
15%
Take notes on the elements of the self-sufficiency model
A country should spread investment as equally as possible across all economic sectors and in all regions
Development may be modest, but the benefits are shared by residents and enterprises throughout the country
Income distribution is more equal between the countryside (rural) and urban cities.
Lowering poverty requires few wealthy consumers
Promotes development in underdeveloped businesses in an LDC by isolating them from large international corporations
Protection from possible adverse decisions by MDCs encourages fragile businesses to become more independent
A country may set barriers for the number of imports
Setting tariffs on imported goods to make them more expensive than domestic goods
Revising quotas to limit the number of imported goods
Requiring licenses to restrict the number of legal importers
Take notes on the problems and criticisms of the self-sufficiency model
Protection of inefficient businesses
Businesses have little incentive to improve quality, lower production costs, reduce prices, or increase production because of government-protected prices.
Companies insulated from the international competition were not pressured to keep up with rapid technological advancements
Need for large bureaucracy
Administrative system encouraged corruption and abuse
Struggling to produce goods or providing services was less rewarding financially than advising others how to get around the complex government regulations
Some entrepreneurs earned money through illegal importing goods and selling them at inflated prices on the black market
Take notes on India’s case study of the self-sufficiency model
To import goods into India, many foreign companies needed to have a license. Obtaining a license was a rigorous process as it needed to be approved by many government agencies.
Once a country received a license to import, they were still limited in the number they could sell.
The government imposed a tariff that made imported goods cost either double or triple their usual cost.
Indian businesses were discouraged from producing goods for export.
Indian money could not be converted into other currencies
Businesses needed government permission to sell a new product, modernize a factory, expand production, expand production, set prices, hire or fire workers, and change the job classification of existing employees.
The government supported private companies struggling to make a profit inside India, such as providing cheap electricity or eliminating debts.
Take notes on the elements of the international trade model (Rostow’s development model)
Five stages
Traditional society
Has not yet started development
High % of people in agriculture
High % of national wealth allocated to “nonproductive activities” like religion and military.
Preconditions for takeoff
Elite group initiates innovative economic activities
Under well-educated leaders, the country invests in new technology and infrastructure such as water supplies and transportation systems
Stimulates an increase in productivity
Takeoff
Rapid growth generated in a limited number of economic activities such as textiles or food products
The takeoff industries achieve technical advances and become productive, while other sectors of the economy stay dominated by traditional practices
Drive to maturity
Modern technology that was once exclusive to takeoff industries diffuses to a wide variety of industries, causing them to experience rapid growth as well.
Workers become more skilled and specialized
Age of mass consumption
Economy shifts from the production of heavy industry (i.e steel and energy) to consumer goods (i.e motor vehicles and refrigerators).
Each country is in one of these stages, whether LDCs in one of the first three stages or MDCs in the last two stages
A country concentrating on international trade benefits from exposure to consumers in other countries.
Takeoff industries must consistently evaluate changes in international consumer preferences, marketing strategies, production engineering, and design technologies to remain competitive
Rostow’s model was based on two factors
In the second half of the 20th century, MDCs in Europe and North America were joined by those in Southern and Eastern Europe and Japan.
Many LDCs contained an abundance of raw materials sought by manufacturers and producers in MDCs. In the past, colonial powers extracted these without compensation. In the global economy, the sale of these raw materials could generate profits for LDCs, which can be used for development.
Take notes on the problems and criticisms of the international trade model (Rostow’s development model)
Uneven resource distribution
Many countries found that the prices of their commodities did not increase and in some cases, actually decreased
LDCs that depended on one product suffered because its price did not rise as rapidly as those of the products they needed to buy
Increased dependence of MDCs
Building up few takeoff industries that sell to people in MDCs may force LDCs to cut back on the production of food, clothing, and other necessities for their people.
Profit from these products has been used to buy these necessities from MDCs instead of being used for development
Market decline
Countries depending on low-cost manufactured goods have found that the world’s market for many products has declined sharply in recent years.
Take notes on the 4 dragons case study of the international trade model (Rostow’s development model)
Consists of South Korea, Singapore, Taiwan, and Hong Kong
Singapore and Taiwan are former British colonies and have no natural resources.
The dragons adopted the international trade approach after Japan’s success. They focused on manufacturing goods, especially clothing and electronics.
Low labor costs allowed the countries to sell products inexpensively in MDCs
Take notes on the Arabian Peninsula case study of the international trade model (Rostow’s development model)
Arabian Peninsula includes Saudi Arabia, Oman, Bahrain, Kuwait, and UAE.
They were once considered less developed countries, but rising petroleum prices in the 1970s turned them into some of the wealthiest nations.
The profits from petroleum products have been used for housing, highways, airports, universities, and telecommunication networks.
Their steel, aluminum, and petrochemical factories compete with the world markets.
Which of the two models for development has shown the most success? Provide reasons and examples.
The international trade model has shown the most success. This is because trade has grown more rapidly than wealth. For example, India formerly practiced self-sufficiency but converted to international trade because of the overwhelming evidence that it was the better method. Between 1990 and 2005, GDP increased by more than 4% in international trade countries, compared to less than 1% in self-sufficient countries.
True or False? Correct if false. The WTO was formed by countries which conduct the majority of international trade
True
True or False? Correct if false. The WTO seeks to increase import quotas and reduce import and export tariffs.
False. The WTO seeks to decrease import quotas and reduce import and export tariffs.
True or False? Correct if false. Though it can hear accusations, the WTO cannot order remedies.
False. The WTO hears accusations and can order remedies
True or False? Correct if false. The WTO seeks to eliminate restrictions on the flow of money between countries.
True
Why have progessives been critical of the WTO?
Believe that the WTO is antidemocratic because decisions made behind closed doors cater to large corporations instead of the poor.
Why have conservatives been critical of the WTO?
Believe that the WTO compromises the power and sovereignty of individual countries because it can order changes in taxes and laws that it considers unfair trading practices.
What is a transnational corporation?
A company that invests and operates in countries other than the one in which its headquarters are located.
What is foreign direct investment?
Investment made by a foreign company in the economy of another country.
The flow of money in transnational corporations is not balanced. This is true in TWO ways. Explain.
1. Only ¼ of foreign investment in 2007 went from an MDC to and LDC. The other ¾ went from MDC to MDC.
2. Over ⅓ of all foreign investment intended for LDCs went to China in 2007, ⅓ to all other Asian countries, ⅕ to all Latin American countries, and only 1/10 to all African countries.
Of the 500 largest transnational countries in 2008, __ had headquarters in the US and __ in Europe.
140, 163
Who is making the primary investments in South America? In Asia?
Europe makes the primary investments in South America and the United States in Asia.
Write down the country with the largest public companies in the world
United States
What are the two principal ways in which LDCs obtain money to finance development?
a. Loans from banks and international organizations
b. Direct investment by transnational corporations
Identify the two main sources, both controlled by MDCs, of loans for LDCs.
a. The World Bank
b. International Monetary Fund
The two types of loans discussed are the IBRD and the IDA, what do each do? Which regions have received the majority if the funds and how much has been given?
IBRD: Provides loans to countries to reform public administration and legal institutions, develop and strengthen financial institutions, and implement transportation and social service projects. IBRD has loaned about 400 billion dollars since 1945, with Europe and Latin America receiving the majority.
IDA: Provides support to poor countries considered too risky to qualify for IBRD loans. IDA has loaned about 150 billion dollars since 1960, with most going to Africa and Asia.
What is the THEORY behind using loans for infrastructure projects in LDCs?
The theory behind using loans for infrastructure projects in LDCs is that it will make the conditions more favorable for domestic and foreign businesses to expand.
In PRACTICE (principle), what has usually happened when loans have been used for infrastructure projects in LDCs?
New or expanded businesses are attracted to an area because the improved infrastructure will contribute additional taxes that the LDC will use in part to repay the loans and to improve its citizens’ living conditions.
What are structural adjustment programs?
Economical reforms that a country must adhere in order to secure a loan.
Why do LDCs enact structural adjustment programs, even though they may be unpopular with the citizens of their countries?
Economic growth in the long run, even though the citizens will suffer at first.
Define Fair Trade.
Products are made and traded according to standards that protect workers and small businesses in LDCs
Take notes on fair trade producer standards.
Small-scale farmers and artisans in LDCs are unable to get the money that they need to invest in their businesses from banks, so fair trade advocates work with them. By banding together, they can get credit, reduce their raw material costs, and maintain higher and fairer prices for their products.
Cooperatives benefit local farmers and artisans as they learn leadership and organizational skills
Fair trade coffee costs more than grocery store brands, but equal to gourmet brands. Fairtrade coffee producers receive more per pound than traditional coffee producers because fair trade works directly with producers and not middlemen.
In some cases, fair trade products are higher quality.
Take notes on fair trade worker standards.
Critics of international trade argue that not enough of the profit goes to the person in an LDC who made or grew the product. Fair trade returns on average ⅓ of the price to the producer.
Protection of workers’ rights is not prioritized in international trade. There are often poor conditions for low pay, and may even include children or forced labor. Health problems may arise, and fired workers are not compensated.
Fair trade requires that workers are paid fair wages, permits union organizing, and comply with minimum environmental and safety standards.
In fair trade, workers are paid at least the country’s minimum wage.
60-70% of fair trade artisans who make hand-crafted products are women.
Since the minimum wage isn’t enough to sustain life for everyone, if possible, workers are paid enough to have food, shelter, education, health care, and other necessities.
Paying fair wages doesn’t mean higher costs for the consumer, just the elimination of exploitive middlemen.
Case Study Revisited: Describe Bangladesh’s Development problems (p. 274) and explain how entities like the Grameen Bank can help to solve the problems. Give examples. (p. 303)
Bangladesh faces problems with poverty, low wage, a high infant mortality rate, inadequate food, shelter, and water, and low women's literacy rate (less than 10% in rural villages). Women oftentimes being poor, illiterate, and overburdened with children has caused further development issues in Bangladesh. Grameen Bank is an organization that makes loans to women. This has solved problems as only 1% have failed to repay their loans and has had the potential to supply a living to these empowered women (i.e Rabea Rahman being able to purchase a cow and sell milk).
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