1. Development
Chapter 10

2. • Enormous gaps between Global Economics
the rich and poor
countries of the world
• Some states are still
subsistence based while
others have moved
beyond manufacturing to
tertiary economies.
• Even within the wealthy
or First World nations
there are often areas of
economic disparity within
regions

3. Measuring Development
Gross National Product (GNP) Measure of the total value of the
officially recorded goods and services produced by the citizens and
corporations of a country in a given year. Includes things produced
inside and outside a country’s territory.
Gross Domestic Product (GDP) Measure of the total value of the
officially recorded goods and services produced by the citizens and
corporations of a country in a given year.
Gross National Income (GNI) Measure of the monetary worth of
what is produced within a country plus income received from
investments outside the country. ** Most common measurement used
today.

4. Concepts & Approaches
• Gross National Product-all goods & services produced
by the economy per year both inside & outside the nation
• Gross Domestic Product-all goods & services produced
by the economy per year with in the nation
• GNP or GDP does not reflect regional variations-it also
doesn’t count the informal economy-black market, illegal
drug trade & underground economy
• Developed Countries-(DCs) have high levels of
industrialization, urbanization & standard of living
• Underdeveloped (UDCs) or Developing Countries are
moving toward developed status-not as highly
industrialized or urbanized with a lower standard of living

5. Measures of Development
• National Product per person-the total
income divided by total population-
Core (developed) about $25,000 while
Periphery (developing) as low as $100.
• Occupational Structure of the Labor
Force-% of workers in each section-
high number in agriculture signals low
development
• Consumption of Energy per Person-
the greater the use of electricity-the
higher the development
• Productivity per Worker-production
of all goods divided by the total labor
force

6. Measures of Development
• Transportation & Communication per
person-railroad, road miles and airline
connections per person as well as
telephone, radio, television or computers
per person.
• Consumption of Manufactured Metal
per Person-the greater the amount of
steel, iron, copper, aluminum etc. used per
person
• Other Rates-
– Literacy
– Caloric intake
– % of income spent on food
– Amount of savings per person

7. Issues with Measuring
Economic Development
• All measurements count the:
– Formal Economy – the legal economy that
governments tax and monitor.
• All measurements do not count the:
– Informal Economy – the illegal or uncounted
economy that governments do not tax or keep
track of.

8. Core-Periphery Model
• Immanuel Wallerstein proposed the World Systems
Theory with promoted the Core-Periphery concept.
• Unlike the term-developed and developing, the Core-
Periphery Model does not imply that change will occur.
• Core-Periphery regionalism got its start during the period
of colonialism was re-enforced by the Industrial Rev. and
continues in the age of globalization.

9. Core-Periphery Model
• New approach to developed or
underdeveloped idea
• Core-Periphery also used in a
political context
• Core-the nations with a high
level of prosperity with
dominant economies globally
• Periphery-poor nations that
are dependent on the core as
markets for raw materials and
sources of technology
• Semi-Periphery-better off
than periphery, but still
dominated by the core to some
degree

13. Global Economic Disparities
• Much of the disparity
existed as Colonialism was
established by European
nations.
• The Industrial Revolution
increased the need for raw
materials and markets for
finished goods.
• Neo-colonialism refers to
the economic dominance of
the core over the former
colonial nations-economic
rather than political control

14. Conditions in the Periphery
• High birth rates, moderate death rates and low life
expectancy
• High infant mortality rates-large population under age 15
yrs.
• Poor health care & shortage of doctors-disease is common
• Poor sanitation and lack of fresh, clean water
• Poor nutrition and protein deficiency
• Low per capita income with many women & children doing
hard manual labor
• High illiteracy rate with low levels of education
• Great disparity between rich & poor, small middle class
• Urban areas overcrowded, lack of services, rapid urban
migration
• Subsistence farming on small landholdings

15. Conditions That Hamper Development
• Political instability and
corruption
• Exploitation of natural
resources and workers
regardless of consequences
• Dependence of agricultural
products or primary
products such as mineral
resources
• Misuse of foreign
assistance
• Misguided priorities
• Cultural resistance to
modernization

16. Costs of Economic Development
• Industrialization
– Export Processing Zones (EPZs), maquiladoras,
and special economic zones (SEZs).
• Agriculture
– Subsistence and agricultural conglomerates
– Desertification-especially in Africa
– Soil erosion
• Tourism-may have serious negative
consequences
– Use of scarce commodities
– Foreign investors make the profit

17. Tourism: Boom or Bust
• Tourism contributes little to
a nation’s development &
may have serious negative
effects on the culture
• Hotels & other facilities are
often owned by transnational
corporations which take the
profits out of the country
• Tourism jobs can be
demeaning & dehumanizing
or even insulting
• Tourism jobs pay minimal
wages for menial tasks

18. Tourism: Boom or Bust
• Profits are reinvested in
airports, cruise ship ports &
other infrastructure to serve
tourists
• Tourists use up valuable
resources such as food & fresh
water
• Tourism can debase or change a
local culture
• An invasion by wealthy
foreigners can breed hostility
and resentment
• Harsh contrast between
gleaming modern tourist hotels
and poor workers housing

19. Levels of Industrialization
• Some countries like the
Soviet Union industrialized
quickly with central
planning-Stalin’s Five Year
Plans
• All decisions were made in
Moscow-no local control
• Focus on heavy industry-
steel, electrical, chemical,
military hardware
• Little emphasis on consumer
goods
• Little concern for worker
safety or environmental
problems

20. Models of Development
• There are two broad models of
economic development;
– Liberal Models based on
the assumption that all
countries pass through
the same stages of
economic development
and disparity is the result
of short term
inefficiencies
– The Liberal Model
assumes that all nations
are capable of the same
level of economic

21. Development Models
Modernization Model
Walt Rostow’s model assumes all countries follow a
similar path to development or modernization,
advancing through five stages of development,
climbing a ladder of development.
- traditional
- preconditions of takeoff
- takeoff
- drive to maturity
- high mass consumption

22. Models of Development
Walt Rostow created this liberal model of development in
the 1960s
1. First Stage-Traditional
1. Subsistence farms-limited technology
2. Rigid social structure
3. Resistance to change-transition triggered by external influence
2. Second Stage-Preconditions for Take-Off
1. Progressive Leadership-commercial exploitation of agriculture
& extractive industries
2. Greater flexibility-installation of infrastructure-roads, railways,
etc.
3. Greater openness to new technology
4. Greater Diversity of products produced

23. Models of Development
3. Third Stage-Take Off
1. Experiences industrial growth
2. Urbanization
3. Industrialization, technology & mass production
3. Drive to Maturity
1. Diffusion of technology
2. Industrial specialization
3. International trade
4. Modernization at the core
5. Population growth is reduced
3. Fifth Stage-Final Stage
1. Mass consumption-widespread production of goods & services
2. High incomes
3. Majority of workforce in service sector

24. Rostow’s Ladder of Development

25. Models of Development
• Structuralist Model this is
the alternate to the Liberal
Model that states
disparities are inevitable
due to structural features of
the global economy.
• These disparities can not be
easily changed-it is
misleading to assume that
all areas will go through
the same economic process
of development

26. Models of Development
• Dependency Theory is
another Structuralist Model
• Political & economic
relationships between
nations & regions limit the
development of the less
well off areas
• Colonial dependencies are
still in place from long ago.
• Dependency theory sees
little hope for economic
prosperity in some
traditional parts of the
world

27. Dependency Theory
The political and economic relationships between
countries and regions of the world control and limit
the economic development possibilities of poorer
areas.
-- Economic structures make poorer countries
dependent on wealthier countries.
-- Little hope for economic prosperity in
poorer countries.

28. Dependency Ratio by Country, 2005
A measure of the number of people under the age of 15 and
over the age of 65 that depends on each working-age adult.

29. A Changing World
• Until 1980s there were 3
Blocs
– First World-The Capitalist
West-the most advanced
nations-democratic &
capitalist
– Second World-The
Communist East of the
Soviet Union & its Eastern
European Satellites, Red
China, N. Korea & Vietnam
– Third World-non aligned
nations with mixed
economies and state control-
now an obsolete term

30. Three Tier Structure
Core Periphery
Processes that incorporate higher Processes that incorporate lower
levels of education, higher levels of education, lower
salaries, and more technology salaries, and less technology
* Generate more wealth in the * Generate less wealth in the
world economy world economy
Semi-periphery
Places where core and periphery processes
are both occurring. Places that are
exploited by the core but then exploit
the periphery.
* Serves as a buffer between core and
periphery

32. Differences in
Communications
Connectivity
Around the World

33. Dollarization –
Abandoning the local currency of a country and
adopting the dollar as the local currency.
El Salvador went through dollarization in 2001

34. 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.
Dolomite stone from Jerusalem covers a fireplace in
Beacon Hill, Boston, Massachusetts.

35. Barriers to Economic Development
• Low Levels of Social Welfare
– Trafficking-bullied into poor working conditions
– High birth rates, Low life expectancy, large number of
dependents
– Lack of proper health care
– Poor water supply & sanitation
– Widespread Disease vectored diseases-spread by a host
– Malaria-kills 150,000 children each month
• Political Instability-military dictatorships, corruption,
revolution
• Foreign Debt
– World Bank or International Monetary Fund
– Structural adjustment loans-economic reform required

36. Foreign Debt Obligations
Total interest payments compared to the export of
goods and services.

37. Foreign Debt Obligations
Foreign Debt and Economic Collapse
in Buenos Aires, Argentina, 2001

38. Widespread Disease
• Malaria kills 150,000 children in the global
periphery each month.
Tamolo, India
This baby sleeps
under a mosquito
net distributed to
villagers by
UNICEF workers.

39. Global Distribution of
Malaria Transmission Risk

40. Areas Threatened by Desertification

41. How Government Policies
Affect Development
• Governments
– get involved in world markets
– price commodities
– affect whether core processes produce wealth
– shape laws to affect production
– enter international organizations that affect trade
– focus foreign investment in certain places
– support large-scale projects

42. Export Processing Zones

43. Governments &
Corporations
can create
Islands of
Development
Places within a
region or
country where
foreign
investment,
jobs, and
infrastructure
are
concentrated.

44. Africa Map
• Be able to locate major countries: such
as-South Africa, Nigeria, Sudan,
Kenya, Ethiopia, Rwanda, Somalia and
so forth

45. Government-created Island of
Development
Malaysian government built a new, ultramodern capital at
Putrjaya to symbolize the country’s rapid economic
growth.

46. Corporate-created Island of Development
The global oil industry has created the entire city of Port
Gentile, Gabon to extract Gabon’s oil resources.

47. Nongovernmental
Organizations (NGOs)
entities that operate independent of state and local
governments, typically, NGOs are non-profit organizations.
Each NGO has its own focus/set of goals.
Microcredit
program:
loans given to
poor people,
particularly
women, to
encourage
development of
small businesses.

48. The End