7.3 HGAP KBAR
The concept of economic development isn’t ancient, in fact it only emerged after the ending of WW2, probably due to the rise of new states that couldn’t economically develop because their economies were exploited by their metropoles.
One of the most famous theory, known as Rowstow’s stages explain that all countries go through five stages of economic development, eventually all ending up in wealthy and mass-consumption societies. The five stages are as follows:
Resting Stage (Traditional Society)-subsistence, bartering, agriculture
Leaving Gate Stage (Transitional Society)- specialization, ag surplus, infrastructure
Take Off Stage (Take Off)- Industrialization, Investment, Regional Growth, Political Change
Drive to Maturity Stage (Drive to Maturity) - Diversification, Technological Advances, Less reliance On Imports
Age of High Mass Consumption Stage (High Mass Consumption) - Mass Consumption Service Sector Expansion, High Standards of Living.
Rowstow essentially compared his process to an airplane taking off and ultimately flying high in the skies. He viewed the final fifth stage as the common residing stage of the United States and most Western European countries.
Of course like we learned, this model DOES face cririsicm such as: the model suggests that countries developed in isolation from one another (not true because of globalization) and also it assumes that countries develop without any obstacles (not true, ahem IMPERIALISM)
Another model alternative to the Rowstow’s stages is the Wallestein’s World Systems Theory. This model emphasizes the presence of socioeconomic systems. It uses the core, semi-periphery, periphery model. We learned about these systems before and Wallestein recognizes the importance of the semi-periphery countries, acting as economic and political meditators between the core and periphery.
Unlike Rowstow’s stages, regions have been incorporated into the world economy through imperialism and colonialism, creating unequal yet interdependent connections and systems between them. Wallestein believed that core regions purposely underdeveloped other regions in the process of maintaining their superior economic interests. This system has been criticized because it often creates a sweeping world explanation, glossing over the developments of regional states, often which are complex in nature. This critique highlights the necessity for a more nuanced understanding of development, considering local dynamics and historical contexts that shape each region’s trajectory.
Now let’s talk about the social and economic measure types:
GDP- the value of all goods and services produced in a country in a specific period of time, it is confined to a country’s boundaries.
GNP-the total value of all goods and services produced by the country’s residents, even in order places. If John owns a bakery in France but he lives in Canada, the funds will be counted in Canada’s GDP. Its often seen not seen as the best indicator of health.
GNI- The total income earned by the country’s bussinesses and workers INCLUDING investments, direct foreign investment, and aid. GNI is an even more accurate measure of an economy’s health because it accounts for the actual income, something that GDP misses.
For GDP, to account for population differences, it is common to divide GDP by the total amount of a country’s population, a measure known as GDP per capita or per head.
Another thing we need to consider is that the standards and cost of living differ in countries, a basket of goods can cost different things in different countries. This is known as PPP (purchasing power parity). It compares a set of purchased goods and uses currency exchange rates to compare the price of the basket in different locations.
Besides measures of economic development, you can also have something called social development.
GII- A statistical measure of gender inequality that combines data on reproductive health, empowerment, and labor market participation. Empowerment is measured by the percentage of women and men 25+ years with secondary education+ percentage of women in Parliment. Labour markets use percentages of 15+ year male and female labor participations.
Limits include: it measures only national parlimentary representations, it doesn’t measure the quality of jobs for women vs men. It also doesn’t recognize unpaid labor in caregiving and housekeeping, falling mostly on women.
Social development can also be assessed through indicators such as access to education, healthcare, and economic opportunities for marginalized groups, which can further illustrate disparities in quality of life. Enhancing social development requires targeted policies that address these inequalities and foster inclusive growth, ultimately leading to improved outcomes for all members of society.
Another social measure is HDI, or human development index.
Created by the World Bank, HDI is a measurement of human achievement that combines data of life expectancy, literacy rates, and GNI per capita. However, it doesn’t capture features like individual’s sense of security and personal empowerment. It also doesn’t speak of poverty and inequalities among genders, ethnicities, and religion adherents.
Finally, let’s look at a couple of other ways of measurement:
Formal and informal economies
Developing countries have a huge informal sector that sometimes rivals the formal sector, which is the part of the economy that is officially recorded with the government. For example, because gender discrimination can make it difficult for women to get an education and enter the formal work force, women often make up the largest portion of the informal-sector work force in developing countries. Because those economic activities are not recorded, they are not included in GDP, GNP, or GNI numbers. Therefore, a country’s economic activity may be significantly underestimated. In addition, while the informal sector may be a big part of the economy, it is not taxed. Therefore, the government has less revenue to build schools, health clinics, and other social institutions that contribute to development goals. Furthermore, the informal sector often lacks regulation, leading to issues such as poor working conditions and lack of job security for workers, which further hinders overall economic growth and social progress. This lack of oversight not only affects the individuals directly engaged in informal work but also perpetuates cycles of poverty and inequality within society.
Income:
Per capita measurement doesn’t often showcase how exactly the income is distributed among the people, it often isn’t equally distributed.
Healthcare:
Access to adequate health care is a widely recognized as a general measure of well-being. But how do we measure the availability of access to health care? The United Nations measures many aspects of it, including reproductive, maternal, newborn, and child health, and the rate of infectious and noninfectious diseases. Reproductive health measures include fertility rates. Newborn health measures include infant mortality rates. Access to health care is measured as both availability (for example, doctors per capita) and affordability (for example, portion of income spent on health care).
Fossil Fuels and Renewable Energy:
Developing countries today face different situations. If there is no domestic source of fossil fuels, then countries must divert hard-earned revenue to buy them on the international market. Developing countries with a domestic source of fuel are in a better economic position, though they often have to pay foreign companies to extract and refine the oil. In both cases, there are negative environmental effects from fossil fuel use, including higher global levels of global greenhouse gases (see Module 59).
There is evidence that the use of renewable energy sources, such as wind, water, and the sun, for industrialization can contribute to economic development. First, for countries without a domestic supply of fossil fuels, the use of renewable resources decreases the cost of importing fuels. Second, the establishment of a renewable energy industry can itself stimulate economic growth.
Additionally, investing in renewable energy can create jobs in manufacturing, installation, and maintenance, thus fostering a more resilient and sustainable economy. Moreover, transitioning to renewable energy systems can enhance energy security, reduce dependence on foreign oil, and lead to technological innovations that further support sustainable practices.