The Global South

THE GLOBAL SOUTH

The Global South

Who is the GS?Global Institutions & the GSDevelopment HurdlesGS Economic Development Tactics¤

5 CATEGORIES OF

GS COUNTRIES

Who is the Global South?

5 Categories of GS Countries

1. Emerging Markets Who are they? Growth Greater % of people =middle class

(>$10/day) Investment

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http://qz.com/172953/whose-fault-is-the-emerging-market-sell-off/

5 Categories of GS Countries

2. Countries in Transition (CITs) Central and Eastern European (East bloc

Soviet satellites) Former Soviet Republics (FSRs) Growth rates differ

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5 Categories of GS Countries

3. Frontier markets Investment category

Coined 1992 Below EEs More risk

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http://blogs.reuters.com/globalinvesting/2013/06/03/cheer-up-morocco-frontier-markets-are-hot/

5 Categories of GS Countries

4. Least Developed Countries (LLDCs) US (GDP per capita=ranks 10th) at

~$51,700 Average GDP per capita of LLDCs at $750

Burundi , Congo, Somalia at $200 GDP per capital

• http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29_per_capita

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5 Categories of GS Countries

5. Heavily Indebted Poor Countries (HIPCs) 2012 IMF-WB identified HIPCs 39 countries

29 in sub-Saharan Africa Debt relief- HIPCs qualify

36 accepted full or partial relief ~$72 B 4 in process

Reliance on single cash crops Cotton accounts for 46% of Mali’s exports

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Global Institutions & the GS

Global Institutions & the GS

MNCsIGOs

IMF WB GATT WTO OECD G7, then G8, now G7 again now G20

NGOs Representation by GS Representation on behalf of GS

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INTERNAL & EXTERNAL POLICY STRATEGIES

GS Development Tactics

GS Development Tactics

Internal Policy StrategiesImport substitutionNationalization of industriesEstablishing cartelsProtectionism¤

GS Development Tactics

External Policy StrategiesRegional IGOs

ASEAN, Mercosur, SADC, SAARC, etc.International IGOs

Group of 77 (132), NAM, UNCTAD, etc.International pressure

Monetary reforms Trade reforms Development Economic sovereignty Economic aid

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Development Hurdles

Historical Disadvantages

Colonization; Neocolonialism Primary v. manufactured goods

Cash crops Natural resources

Price volatility Lack of national unity

Institutions favor GN Accrued debts in 1960s and 1970s

Lack autonomy over debt management¤

Debt Creation

Oil-rich countries

Western banks

Developing

countries

Development Hurdles

Political stability Institutions Infrastructure

Market isolationConflicting interests with GN

Self-interested actorsSustainable development expectationsCorruption ¤

Development Hurdles

How does corruption affect China? Politics

Accusations Vote-buying

Who controls what Land, licensing, title-selling Passing/ enforcing laws

FDI¤

Development Hurdles

http://theactivistwriter.com/tag/corruption-statistics/ Based on 2011 statistics from Transparency Int’l2011

Development Hurdles (cont.)

Currency instability Lack banking / credit access

41% in GS- mostly EEs- have bank accountsSub-Saharan Africa- 27% men; 22 %

women 7 % in GS have credit cards

http://www.economist.com/blogs/feastandfamine/2012/04/banking-developing-world

Gender equity¤

Women’s Development

http://www.glpinc.org/Web_pages/Illiteracy_Globally.html

Development Hurdles (cont.)

Income inequality Development income equality

More developed greater equality Less developed lesser equality Map on next slide

Income Inequality

http://en.wikipedia.org/wiki/File:Gini_Coefficient_World_CIA_Report_2009.png

Development HurdlesIncome inequality (cont.)

Stark exception is US 1% control 36% of wealth Top 10% control 75%

China: 5% control 23% of wealth Bottom 5% control .1%

Brazil: 10% control 51% of wealth Mexico & Argentina: 10% control 42% of

wealth Data from http://www.nytimes.com/2013/07/20/world/asia/survey-in-china-shows-wide-income-gap.html?_r=0 http

://en.mercopress.com/2010/03/27/gap-between-rich-and-poor-in-latinamerica-is-largest-in-the-world-says-un http://money.howstuffworks.com/one-percent-control-third-of-wealth.htm

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Development HurdlesIncome inequality (cont.)

Lower income inequality = higher growth rates http://www.imf.org/external/pubs/ft/sdn/2011/sdn1108.pdf

Consequences of income inequality Fewer people with resource access Economic opportunities tied to political

stability More susceptible to corruption Limited tax base to support government

http://www.worldbank.org/depweb/english/beyond/global/chapter5.html

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Development Hurdles (cont.)

Reliance on GN Foreign Aid Technology FDI

EmploymentFormal v. informal sectorRemittances

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Remittances

What are remittances? Who uses them?>½ to AsiaTransfers are expensive

40% of money transferred goes to rural areas Lower fees- potentially better than both aid ,

FDI Bank concerns Rely on informal systems

G8 pushed to lower fees =$30 B for migrants

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Recap

Good News?Fewer people in extreme poverty

Healthier people¤

Year Billion People % Living on <$1.25/ day1981 1.94 BP 52%2008 1.29 BP 22%2011 1.1 BP 15%http://economy.money.cnn.com/2012/03/01/650-million-escape-extreme-poverty-thanks-china/ ; http://www.un.org/News/Press/docs/2011/gaef3313.doc.htm ; http://www.worldbank.org/en/topic/poverty/overview

The Global South

Who is the GS?Global Institutions & the GSDevelopment HurdlesGS Economic Development Tactics