Global Inequalities, Development Theories, and Political Economy

Defining Global Inequalities and Economic Measurements

• Global Inequality Overview: Global inequality is defined as the unequal distribution of resources, opportunities, and wealth among individuals, countries, and regions. It is identified through various disparities in the quality of life, including access to:

  • Incomes and economic wealth.

  • Education levels and years of schooling.

  • Healthcare provision and access.

  • Clean water and sanitation systems.

  • Adequate and nutritious food.

• Gross Domestic Product ($GDP$): A traditional material measure of development and income.

  • Definition: It measures the value of all goods and services produced within the borders of a country during a given year.

  • Inclusions: Production by foreign-owned companies, locally owned companies, the government, the private sector, and joint ventures are all counted if they occur within the national territory.

  • Service Examples: Banking, insurance, and airlines.

  • Economic Rewards: The value of production is theoretically returned to individuals as incomes, such as:

    • Wages: Paid to workers and laborers who help produce goods and services.

    • Supply Payments: Paid for raw materials.

    • Rent: Paid to those whose land is used for production.

    • Profit: The rewards for entrepreneurs and business owners, often the largest component of value distribution.

• GDP per Capita: To compare the relative prosperity of countries with different population sizes, economists divide the total $GDP$ by the total population.

  • Example Comparison: China has a population of over a billion, while Canada has a population of approximately $40 \text{ million}$.

  • Limitations: It is an average figure and does not reflect intra-economic income disparities between low-earning laborers and high-earning CEOs.

  • Standardization: Purchasing power parity is used to standardize figures by accounting for inflation and exchange rate issues.

• Human Development Index ($HDI$): Established as $GDP$ was recognized as an inadequate sole measure of prosperity. It captures development more broadly via:

  • Health: Measured by life expectancy.

  • Education: Measured by the number of years of schooling for individuals.

  • Income: Using gross national income, which is similar to $GDP$.

• Comparative National Economies: Real-world figures (in US dollar terms) highlighting extreme global disparities:

  • Rich National Economies: United States (over $27 \text{ trillion}$), China (approximately $17 \text{ trillion}$), and Germany ($4.5 \text{ trillion}$).

  • Poorer/Smaller Economies: Afghanistan ($15 \text{ billion}$), Burundi ($3.5 \text{ billion}$), Suriname ($3.6 \text{ billion}$), and Lesotho ($2 \text{ billion}$).

Historical Foundations: Colonialism, Slavery, and Finance

• Impact of Colonialism and Slavery: Historical power hierarchies created foundations for contemporary wealth disparities. Colonizers set up industries and plantations in colonies to supply raw materials for European-owned industries.

  • Plantation Examples: Rubber in Malaysia, sugarcane in the Caribbean and Suriname, and tea, coconut, and coffee plantations across Southern Asia and Africa.

  • Milton Friedman Reference: British businesses and the government established rubber plantations in Malaysia where none previously existed.

  • Persistence: Post-colonial states continue to be shaped by these extractive, low-value agricultural structures established during the Age of Empire.

• Triangular Trade and Industrial Revolution: The trade in slavery and finished goods enriched European industries while impoverishing colonies. This wealth helped finance the scale of the Industrial Revolution.

• Financial Centers: The modern financial services sector in Europe has roots in the colonial era.

  • London: Became a global banking and insurance hub by financing plantations and the slave trade.

  • Lloyds of London: A massive shipping insurance agent that established itself through income from insuring slave ships.

  • Financial Instruments: Modern tools such as derivatives, which separate material value from risk for secondary market sales, originated during this period.

The Cold War and the Global Development Gap

• Bipolar Polarization: Global development was divided between two economic models during the Cold War:

  • Western Bloc: Capitalist models favored by the United States and its allies. Countries gained access to financial resources through the World Bank and the IMF.

  • Eastern Bloc: Socialist practices aligned with the Soviet Union and Eastern Europe. The Soviet Union often lacked the material power to provide financial assistance equivalent to the West.

• Economic and Military Aid: Aid was frequently a strategic foreign policy tool rather than a humanitarian one.

  • Ideological Alignment: Recipient countries were expected to adopt the strategic and ideological positions of the donor, impacting their voting at the UN and territory use.

  • Compromised Sovereignty: Governments prioritized the interests of donors over their own populations, leading to inefficient local governance.

• Proxy Wars and Resource Diversion: Superpower rivalry led to numerous conflicts in Africa, Asia, and Latin America, impacting social and economic development.

  • Mismanagement and Corruption: Significant aid was spent on military hardware or lost to corruption under leaders like Nazar and satath Alanor in Egypt, Suharto in Indonesia ($billions$ lost), and Mobutu's CSSECO in the Democratic Republic of the Congo (then known as ZA/Zaire).

  • National Debt: These funds were usually loans, not grants, increasing national debts that all citizens must pay via taxation while infrastructure, education, and healthcare were neglected.

• Technological Disparities: Massive funding for research and development (R&D) during the Arms Race and the Space Race stimulated growth in developed nations.

  • Military to Civilian Transition: Advancements like the Internet began in the US military environment. Biotechnology developments similarly transitioned from military research to civilian industries.

  • Developed World Monopoly: Modern IT giants and high-tech industries remain concentrated in the US and Europe because of these historical military-driven governmental investments.

Impacts of Contemporary Conflicts and Displaced Populations

• Resource Diversion and Security: Massive expenditures are diverted toward military development and surveillance (e.g., the US Defense Department recently asking Congress for $75 \text{ billion}$ for military purposes regarding Iran/Iraq), which reduces aid budgets available for global poverty and healthcare.

• Conflict and Infrastructure Damage: Invasions and conflicts (e.g., Korea, Vietnam, Afghanistan, the 2003 US invasion of Iraq, and subsequent destabilization in Syria) cause significant disruption to daily economic life and destroy essential infrastructure.

• Humanitarian and Refugee Crises: Conflicts generate massive displacement, the economic burden of which often falls on other poorer developing nations.

  • Turkey: Hosted $3.6 \text{ million}$ Syrian refugees.

  • Pakistan: Hosted $1.4 \text{ million}$ Afghan refugees.

  • Iran: Hosted $1 \text{ million}$ Afghan refugees at one point.

  • Germany: One of the few rich countries hosting a significant portion of refugees.

  • Individual Impact: Displacement causes wide disparities as families flee with nothing, losing stable income and education, with women being disproportionately affected.

Theoretical Frameworks of Development: Modernization vs. Dependency

• Modernization Theory: Predominant in the mid-20th century, notably through the work of Walt Rostow (also referred to as world Trusto).

  • Stages of Development: Rostow proposed all societies evolve linearly through specifically defined stages:

    1. Traditional society (Agrarian-based).

    2. Preconditions for takeoff (Economy building).

    3. The Takeoff (Rapid industrial transition).

    4. Drive to maturity (Technological advancement).

    5. Age of mass high consumption.

  • Mechanisms: Industrialization leads to urbanization, which improves infrastructure and standard of living. Cultural transformation from traditional norms to secular, rational values is deemed essential for innovation.

  • Innovation Diffusion: Modernization is thought to diffuse through trade, foreign investment, and cultural exchange from advanced to developing countries.

  • Critiques: Eurocentric (Western model as the only path), deterministic (ignores diverse paths), and neglects external factors like imperialism and power dynamics.

• Dependency Theory: Developed in the 1950s and 1960s to challenge modernization theory. Key figures include Andre Gunda Frank, Raul, Prebish, Samir Amin, and Emmanuel Wallestein.

  • Core and Periphery: The world is divided into Core countries (exploiters) and Peripheral countries (exploited). Core countries dominate through economic, political, and cultural means.

  • Cycle of Dependency: Core countries extract raw materials and cheap labor from the periphery, process them, and sell them back for high profits.

  • The Development of Underdevelopment: Development in one part of the world (Core) causes underdevelopment in another (Periphery).

  • Unequal Terms of Trade: A developed country might trade a vehicle costing $100 \text{ hours}$ of labor for products produced by $1,000 \text{ hours}$ of cheap peripheral labor.

  • Critiques: Overemphasizes external colonialism at the expense of ignoring domestic bribery, corruption, and agency. It is viewed as pessimistic, offering no clear path to exit the cycle.

Gendered and Feminist Perspectives on Global Economy

• Global Gender Gap: Women globally earn less than men, are less likely to be employed in the formal sector, and more frequently occupy precarious, part-time jobs.

• Double Burden: Women perform paid labor in the workplace and reproductive labor (unpaid care work) in the domestic sphere. Parental leave and affordable childcare are essential to addressing this gap.

• Migrant Female Labor: Women from developing nations frequently migrate to wealthier countries (Middle East, Singapore, Europe, Canada) to work as domestic helpers or au pairs.

  • Vulnerabilities: These workers often face isolation, human rights violations, and a lack of legal recourse due to working within employers' homes.

• Sex Work and Militarization: Economic survival often drives women, particularly from poor households, into the sex trade.

  • Military Connections: Historically, Large-scale sex industries in Southeast and East Asia grew during Japanese imperialism and the Vietnam War. Modern military bases often see surges in sex work due to the presence of soldiers.

  • Critical Feminist View: This trade often involves trafficking, coercion, and the dehumanization of women through masculine notions of heterosexuality, as discussed by scholars like Cynthia Enloe.

Global Poverty and the Marxist Critique of Capital

• Poverty Statistics:

  • International Poverty Line: Defined by the World Bank as individuals living on less than $2.15 \text{ per day}$.

  • Global Prevalence: approximately $9.2\%$ of the world\u2019s population (over $750 \text{ million}$ people).

  • Regional Reductions: Significant decline in East Asia and the Pacific. Slower reduction in sub-Saharan Africa, where over $40\%$ live below the line.

• Intrastate Poverty: Even wealthy nations like the US and Canada have significant poverty and homelessness. Conversely, developing nations often have a small, hyper-wealthy elite while the majority live in abject conditions.

• Marxist Perspective on Disparity:

  • Means of Production: Disparities are based on the ownership of capital (factories, land, investments) versus the ownership of labor.

  • Profit Maximization: The primary driver of business. Cost-cutting measures to maximize profits involve reducing wages and benefits, perpetuating employee poverty even as owners gain wealth.

  • Supply Chains: Production of clothing (Vietnam, Bangladesh, China) at low prices is enabled by workers who work for extremely low wages to maintain attractive corporate profit margins.

Case Study: South Korea\u2019s Path from Reconstruction to Global Leader

• Colonial and War History: South Korea was a colony of Imperial Japan ($1910-1945$) and was left in ruins after the Korean War ($1950-1953$).

• Rebuilding and Aid: Received significant aid from the US under the Mutual Security Act to prevent socialist infiltration from North Korea.

• Economic Strategy:

  • Import Substitution: Initially built local industrial capacity by imposing high tariffs on foreign goods.

  • First Five-Year Plan ($1962-1966$): Enacted under President Park Chun-hee, shifting toward export-led growth.

  • Chaebols: Development of family-owned conglomerates like Samsung and Hyundai.

  • Heavy Industry ($1970s$): Focus on chemicals, steel (iron and steel companies), shipbuilding, and petrochemicals.

  • Liberalization ($1980s$): Deregulation and opening the economy to foreign investment following global oil shocks.

  • Asian Financial Crisis ($1997$): Resulted in a sharp downturn and a stringent International Monetary Fund (IMF) bailout package.

• Political Authoritarianism: South Korea was not a democracy from $1953$ to $1987$. Presidents Syngman Rhee and military general Park Chun-hee used authoritarian methods to prioritize owners of capital over labor.

  • Guangzhou Uprising ($1980$): A student-led pro-democracy uprising that was brutally suppressed.

  • Democratization ($1987$): Widespread protests led to the first direct presidential elections.

  • Recent Robustness: The impeachment of a president in $2017$ for overstepping authority illustrates the contemporary strength of South Korean democracy.

Case Study: China\u2019s Economic Transformation and Global Integration

• Early Socialist Era: People's Republic of China founded in $1949$ under Mao Zedong.

  • Five-Year Plans: Initial focus on heavy industry with Soviet assistance.

  • Great Leap Forward: Attempt to transform from agriculture to industry, resulting in famine and $millions$ of deaths.

  • Cultural Revolution ($1966-1976$): Social and political upheaval following the Great Leap Forward.

• Economic Reform Period: Started under Deng Xiaoping in $1978$.

  • Special Economic Zones ($SEZs$): Areas like Zheng Zheng (Shenzhen) established to test market-oriented policies and attract foreign investment.

  • Agricultural Reform: Farmers were allowed to sell surplus produce in the market after meeting state quotas.

  • WTO Accession ($2001$): Deeply integrated China into the global economy, leading to annual economic growth averaging over $10\%$.

• Contemporary Strategic Projects:

  • High-Tech Focus: Shift toward innovation and domestic consumption.

  • Belt and Road Initiative ($2013$): A global project to build trade and infrastructure networks to support strategic interests.

• Political Centralization: Xi Jianping's leadership has increased the centralization of power, implemented anti-corruption campaigns, and promoted national rejuvenation and nationalism.

Consumption and Global Food Systems

• Stuffed and Starved: Concepts from Raj Patel\u2019s work on the corporate-controlled food system.

• Interconnectedness: Global hunger and obesity are not separate issues but consequences of the same system. The world produces more food than ever, yet $hundreds of millions$ remain hungry while others are overweight.

• Corporate Control: Corporations, trade rules, marketing, and geography determine what is produced and distributed. Abundance in supermarkets can disguise restricted choices.

• Coffee Market Example: Companies like Nestle and Starbucks make massive profits, while coffee growers live in poverty and debt. This illustrates how the wealth of producers is directly linked to the poverty of growers.

Questions & Discussion

• Question: In upper-year Political Science classes, do students focus on one major idea or deep-dive into multiple topics?

• Response: First-year courses provide a broad overview. Second-year courses go deeper but remain somewhat wide. Third and fourth-year courses narrow down significantly, allowing students to specialize in fields like Canadian politics, public policy, globalization, or international relations based on their individual interests and career goals.

• Course Logistics: There are no classes on the upcoming Monday. Information regarding the final exam logistics (similar to the midterm) and the question paper will be released over the weekend or early in the next week.