APHUG Ch.10 Development

Commodity Chain

Series of links connecting the many places of production and distribution and resulting in a commodity that is then exchanged on the world market.

Developing

With respect to a country, making progress in technology, production, and socioeconomic welfare.

Gross National Product (GNP)

The total value of all goods and services produced by a country's economy in a given year. It includes all goods and services produced by corporations and individuals of a country, whether or not they are located within the country.

Gross Domestic Product (GDP)

The total value of all goods and services produced within a country during a given year.

Gross National Income (GNI)

The sum of value added by all producers who are residents in a nation, plus any product taxes (minus subsidies) not included in output, plus income received from abroad such as employee compensation and property income.

GNI per capita

The dollar value of a country's final income in a year, divided by its population. It reflects the average income of a country's citizens.

Formal economy

The legal economy that is taxed and monitored by a government and is included in a government's Gross National Product (GNP); as opposed to an informal economy.

Informal economy

Economic activity that is neither taxed nor monitored by a government; and is not included in that government's Gross National Product (GNP); as opposed to a formal economy.

Modernization model

A model of economic development most closely associated with the work of economist Walter Rostow. maintains that all countries go through five interrelated stages of development, which culminate in an economic state of self‐sustained economic growth and high levels of mass consumption.

Context

A structuralist theory that offers a critique of the modernization model of development. Based on the idea that certain types of political and economic relations (especially colonialism) between countries and regions of the world have created arrangements that both control and limit the extent to which regions can develop.

Neo-colonialism

The use of economic, political, cultural, or other pressures to control or influence other countries, especially former dependencies.

Structuralist theory

A general term for a model of economic development that treats economic disparities among countries or regions as the result of historically derived power relations within the global economic system.

Dependency theory

Based on the idea that certain types of political and economic relations (especially colonialism) between countries and regions of the world have created arrangements that both control and limit the extent to which regions can develop.

Dollarization

When a poorer country ties the value of its currency to that of a wealthier country, or when it abandons its currency and adopts the wealthier country's currency as its own.

World-systems theory

Theory originated by Immanuel Wallerstein and illuminated by his three‐tier structure, proposing that social change in the developing world is inextricably linked to the economic activities of the developed world.

Three-tier structure

With reference to Immanuel Wallerstein's world‐systems theory, the division of the world into the core, the periphery, and the semi‐periphery as a means to help explain the interconnections between places in the global economy.

Millennium Development Goals

1. Eradicate extreme poverty and hunger.

2. Achieve universal primary education.

3. Promote gender equality and empower women.

4. Reduce child mortality.

5. Improve maternal health.

6. Combat HIV/AIDS, malaria, and other diseases.

7. Ensure environmental sustainability.

8. Develop a global partnership for development.

Trafficking

When a family sends a child or an adult to a labor recruiter in hopes that the labor recruiter will send money, and the family member will earn money to send home.

Structural adjustment loans

Loans granted by international financial institutions such as the World Bank and the International Monetary Fund to countries in the periphery and the semi‐periphery in exchange for certain economic and governmental reforms in that country (e.g. privatization of certain government entities and opening the country to foreign trade and investment).

Neoliberalism

The revival and application of the theory of liberalism, especially since the late 20th century.

Vectored diseases

A disease carried from one host to another by an intermediate host.

Malaria

Spread by mosquitoes that carry the malaria parasite in their saliva and which kills approximately 150,000 children in the global periphery each month.

Export processing zones

Zones established by many countries in the periphery and semi‐periphery where they offer favorable tax, regulatory, and trade arrangements to attract foreign trade and investment.

Maquiladoras

The term given to zones in northern Mexico with factories supplying manufactured goods to the U.S. market. The low‐wage workers in the primarily foreign‐owned factories assemble imported components and/or raw materials and then export finished goods.

North American Free Trade Agreement (NAFTA)

Agreement entered into by Canada, Mexico, and the United States in December, 1992 and which took effect on January 1, 1994, to eliminate the barriers to trade in, and facilitate the cross‐border movement of goods and services between the countries.

Desertification

The encroachment of desert conditions on moister zones along the desert margins, where plant cover and soils are threatened by desiccation—through overuse, in part by humans and their domestic animals, and, possibly, in part because of inexorable shifts in the Earth's environmental zones.

Islands of development

Place built up by a government or corporation to attract foreign investment and which has relatively high concentrations of paying jobs and infrastructure.

Nongovernmental organizations (NGOs)

International organizations that operate outside of the formal political arena but that are nevertheless influential in spearheading international initiatives on social, economic, and environmental issues.

Micro-credit programs

Program that provides small loans to poor people, especially women, to encourage development of small businesses.

Special economic zones

Specific area within a country in which tax incentives and less stringent environmental regulations are implemented to attract foreign business and investment.

Limitations of GNI per capita.

• Not very accurate
• Takes the average of many incomes (low and high)
• Only measures output (production)
• Only includes the formal economy

Alternative ways of measuring economic development (besides GNI per capita).

• Technology integration
• Mechanization in production
• Transportation/communication mediums (railway, television, etc.)
• Dependency ratio

Dependency ratio

A measure of the number of dependents, young and old, that each 100 employed people must support.

Rostow's Stages of Modernization (1960)

Assumes all countries follow similar path to development/modernization.

Stage 1 of Rostow's Modernization Model

-Traditional society. Dominant activity is subsistence farming. Landowners are the political leaders. Focused on tradition.
-ex. Afghanistan
-U.S. comparison: pre-independence

Barriers: lack of technology, Lack of development,
Demographics (population size, quality of life, etc.)
Impetus to change: external influence, external interest,
external markets

Stage 2 of Rostow's Modernization Model

-Preconditions of takeoff. New leadership moves country toward greater flexibility, openness, and diversification. Emergence of commercial classes. More trade.
-ex. India

• U.S. comparison: early-mid 1800s

Impetus for Change: Infrastructure, Emerging polit./social classes
Barriers to change: Lack of investment

Stage 3 of Rostow's Modernization Model

-Takeoff. The country experiences something akin to an
Industrial Revolution, and sustained growth takes hold. Commercial farming. Industrializing. Investment of capital for profit.
-ex. Thailand
-U.S. comparison: mid 1800s

Impetus for Change- Manufacturing > 10% national income, Emergence of modern social, economic & political institutions
Barriers to change- Lack of industrial diversity

Stage 4 of Rostow's Modernization Model

-Drive to maturity. Technologies diffuse, industrial
specialization occurs, and international trade expands. Urbanization. Industrial leaders = influential. Emphasis on new technologies.
-ex. South Korea
-U.S. comparison: late 1800s

Impetus for change: Exploiting advantage in international trade
Barriers to change: High unemployment

Stage 5 of Rostow's Modernization Model

• High mass consumption: high incomes and widespread production of many goods and services. Tertiary sector dominant. Emergence of middle class and suburbs.

Compare/contrast Rostow's model (of modernization) and Wallerstein's model (world-systems theory).

Similarities:

• Categorizes countries by production value
• Wallerstein: core, semi-periphery, periphery
• Rostow: modernization stages 1, 2, 3, 4, 5
• Stage 1 and periphery: low technology use and child education
• Stages 2-3 and semi-periphery: transitioning towards stage 5 and core… still using sage 1 and periphery trends
• Stage 5 and core: the use of technology, scientific developments, high GDP/c, high lit. rate, gender equality
  Differences:
• World-systems theory not as specific as modernization model
• World-systems theory is too broad-- doesn't account all details
  -Modernization model has 5 steps/stages
  -World-systems theory has 3 steps/stages

Core examples

Countries: US, UK, Belgium, Germany, France, Canada
Regions: North America, Western Europe

Semi-periphery examples

(BRIC) Brazil, Russia, India, China, Mexico, South Africa, Indonesia

Periphery examples

Countries: Peru, Democratic Republic of Congo, Yemen, North Korea, Afghanistan
Regions: Sub-Saharan Africa

Major problems faced by the World Bank and the International Monetary Fund (IMF) lending money to periphery countries.

-Helps for a little bit
-Sustainable development effects
-The major, global effect lasts for a very short time
-Good chance the money won't be returned
-Debt

Other than malaria, what are some other widespread diseases seen in periphery countries?

HIV/AIDS (mainly seen in sub-Saharan Africa)

Why won't Zimbabwe (periphery country) ever recover from its economical/political instability?

-Poor weather conditions for farming/housing
-Violent public
-Not enough resources for everyone to obtain

Neo-colonialism example

North America on South American commercial agriculture

Rostow's Modernization Method flaws

-It does not take geographical differences very seriously.
-The conceptualization of development has a Western bias.
-It does not consider the ability of some countries to influence
what happens in other countries.

Characteristics of maquiladoras

• Close to border (near major cities/points of entry, ease/cost of transportation); Originally within 35 miles of US/Mexico border
• Low-wage workers, Foreign-owned factories
• Import raw materials
  -Mutually beneficial
  -- Workers earn higher wages, Factories pay lower
  -Cheap for U.S.

What causes countries to change their capital cities?

-Overcrowded (Brazil: first it was Rio de Jeneiro, now its Brazillia)
-Underdeveloped areas being turned into developed
-A possible political, social, or economic benefit