© 2011 Pearson Education, Inc. Chapter 9: Development The Cultural Landscape: An Introduction to Human Geography

© 2011 Pearson Education, Inc.

Chapter 9: Development

The Cultural Landscape: An Introduction to Human Geography



Development• The process of improving the material conditions of

people through the diffusion of knowledge and technology– The development process is continuous, involving never-

ending actions to constantly improve the health and prosperity of the people.

• Countries can be classified in 2 groups of development– More developed countries (MDCs)

• AKA developed countries

– Lesser developed countries (LDCs)• AKA emerging or developing countries


Why Development Varies Between Countries?• Economic indicators of development

– The Human Development Index (HDI)• UN uses 4 factors used to assess a country’s level of development:

– Economic = (1) gross domestic product (GDP) per capita

– Social = (2) literacy and (3) amount of education

– Demographic = (4) life expectancy

• Highest possible HDI is 1.0, or 100%--UN has used this since 1990– Highest ranking HDI is Norway at 0.971 & lowest is Niger at 0.340.

– GDP per capita• The value of the total output of goods & services produced in a

country during a year divided by the total population.• This measures the average wealth, not its distribution. If only a few

people receive much of the GDP, then the standard of living for the majority will be lower than the figure implies. The higher the per capita GDP, the greater the potential for ensuring that all citizens enjoy a comfortable life.


HDI—UN updated HDI scores in October 2009 based on 2006 data. It will be several years for HDI scores to reflect the severe 2008 recession.


Per Capita GDP—In MDCs, measure typically exceeds $30,000 compared to less than $10,000 in most LDCs.


• In addition to per capita GDP, there are 3 other economic indicators that are useful in distinguishing MDCs & LDCs:– Types of jobs—Income varies b/c ppl earn their living by different

means in LDCs compared to MDCs. Jobs fall into 3 types:• Primary sector (agriculture)• Secondary sector (manufacturing)• Tertiary sector (services)

– Productivity• The value of a particular product compared to the amount of labor

needed to make it—Can be measured by the value added, which is the gross value of product minus the costs of raw materials & energy

• MDCs more productive than LDCs b/c they have better equipment

– Availability of consumer goods• Products that promote better transportation & communications are accessible

to virtually all residents in MDCs (cars, cell phones, computers)

Why Development Varies Between Countries?


Percent GDP contributed by type of job

Tertiary sector contributes a greater share to GDP in MDCs than in LDCs. In MDCs, the tertiary sector contributes an increasing share to GDP, whereas the secondary sector contributes a decreasing share.


MDCs have several hundred vehicles per 1,000 persons, compared w/ less than 100 in most LDCs.


• Social indicators of development– MDCs use part of their wealth to provide schools, hospitals,

& welfare services, which enables them to be more economically productive.

– Education and literacy• Two measures of education: Student/Teacher Ratio & Literacy Rate.• Literacy rate—% of people who can read and write—Exceeds 98% in

MDCs and is less than 60% in LDCs.

– Health and Welfare• People in MDCs receive more calories & proteins daily than they

need. But in some LDCs, people receive less than the daily minimum allowance.

• Access to health care—people in MDCs have more access to health care and their people typically pay a lower percentage for use of health care (gov’t in MDCs pays larger % of health care costs)



Primary school teachers must deal w/ much larger average class sizes in LDCs than in MDCs.


To maintain moderate physical activity, an average individual requires at least 2,350 calories a day. In LDCs, the typical person consumes almost precisely the number needed. B/c these figures are means, a substantial proportion of the population are receiving less than the needed minimum.


• Demographic indicators of development– Life expectancy

• Babies born today in MDCs have a life expectancy in the 70s; babies born in LDCs, in the 60s

– Other demographic indicators (discussed in Ch. 2):• Infant mortality—rate is greater in LDCs b/c of less adequate health

care, malnutrition, or lack of medicine to survive illnesses.• Natural increase—1.5% in LDCs compared to 0.2% in MDCs; Strains

LDCs to provide additional hospitals, schools, jobs, etc.• Crude birth rate—23 per 1,000 in LDCs, compared to 12 per 1,000 in

MDCs• Crude death rate—Lower in LDCs than MDCs (Surprising, huh)

– Diffusion of medical technology from MDCs to LDCs has eliminated or reduced several diseases in LDCs.

– MDCs have higher percentages of old people, who have high mortality rates, and lower percentages of children, who have low mortality rates.



Figure 9-10

2005—Health care is considered a public service in most MDCs, except for the US, where—like in most LDCs—private individuals must pay most health-care costs.


Even with higher GDPs, MDCs spend a higher percentage of their GDP on health care compared to LDCs.



Where are MDCs and LDCs Distributed?• Countries of the world can be divided into 9 major

regions according to their level of development (next slide).– N. America, Europe, Latin America, East Asia, SW Asia, SE

Asia, Central Asia, South Asia, & sub-Saharan Africa.

• More developed regions– 2 of the 9 major cultural regions—N. America & Europe—are

considered more developed. – The distribution of MDCs & LDCs reflects a clear global

pattern. Nearly all MDCs are situated north of 30 degree north latitude. This division is known as the north-south split.


In addition to the 9 major regions, three other distinctive areas can be identified—Japan, Oceania, & Russia. With the exception of Oceania, the MDCs are all located north of the red line (north-south split)


More Developed Regions•North America: HDI 0.95

– US ranked only 13th in HDI in 2009. • We were near the top in GDP per capita & literacy rate, but lower in

education and life expectancy. Education suffered b/c of higher high school dropout rates. Life expectancy was lower b/c many households have inadequate health-care coverage.

– US used to be world’s major manufacturer of steel & automobiles, but that market has become diluted in past three decades.

• We adopted to loss of manufacturing by holding the world’s highest percentage of tertiary-sector employment, especially health-care, leisure, & financial services.

– North America is world’s leading food exporter. – US financial institutions played leading role in recent

recession (loans made to people who couldn’t pay them)


• Europe: HDI 0.93– During Cold War, Europe was regarded as 2 regions

• West—closely linked to US, East—closely linked to Soviet Union

– Elimination of economic barriers w/in EU makes Europe the world’s largest and richest market.

• European countries hold 15 of 19 highest HDI rankings.

• Southern and Eastern European countries lag in level of development, resulting in a lower HDI than that of N. America.

• In United Kingdom, as in N. America, hundreds of billions of dollars have been spent of gov’t projects, loans, & grants to stimulate the economy. Many European governments fear gov’t spending b/c they fear high inflation once the economy recovers.


• Russia: HDI 0.73– Russia rapidly converted to a market economy after Cold War.

• UE soared as inefficient Communist-era businesses were closed.• HDI declined from more than 0.9 in 1980s to below 0.8 after 2000. • In 21st century, Russia experienced economic growth, but the severe

recession caused a sharp drop in demand for their oil.

• Japan– Japan, the 3rd area of high HDI, has a different cultural tradition

from that of N. America & Europe.

– Development here was especially remarkable• Japan has an extremely unfavorable ratio of population to resources.• Their gov’t took advantage of supply of ppl who were willing to work hard

for low wages. They gained a foothold in the economy by selling the products at lower prices than domestic competitors.

• Japan’s eminence was achieved b/c they concentrated resources in rigorous educational systems to create a skilled labor force.


• Oceania: HDI 0.90– It’s relatively marginal in global economy b/c of its small # of

people & peripheral location.– Although Australia & New Zealand are comparable to HDIs

of other MDCs, the people that are scattered among sparsely inhabited lands are less developed.

– Over 90% of Australia’s & New Zealand’s residents are descendants of 19th century British settlers.

– Australia is leader in mining important minerals (ore, lead, nickel, titanium, zinc).

– Increasingly, their economies are tied to Japan & other Asian countries.


Less Developed Regions• Latin America: HDI 0.82

– Highest HDI among LDCs– Latin Americans are more likely to live in urban areas than

other LDCs.– Neighborhoods w/ large cities enjoy a level of development

that’s comparable to MDCs. – Overall, development is hindered by inequitable income

distribution. In many countries, a handful of wealthy families control much of the land.

– Their economy is closely linked to the US, especially Mexico.


Wealth is high in region bordering US to north and in principal tourist region on the Yucatan Peninsula.


Wealth is highest along the Atlantic coast and lowest in the interior Amazon tropical rain forest.


Less Developed Regions• East Asia: HDI 0.77

– China, the world’s second largest economy (behind US), has become the world’s largest manufacturer.

– China—World’s most populous country throughout recorded history & was world’s wealthiest country in ancient times until 16th century. China fell far behind the level of development achieved by Europe and N. America in the 20th century.

– In 1949, Communist party won a civil war and forced Nationalist gov’t to Taiwan. After that, priority was given to rural areas, where 2/3 of Chinese people live. Before that, Chinese farmers were tenants who were forced to pay high rents & turn over their crops to property owners.

– Under Communism, the system assured the production and distribution of food was enough to support their large population.

– 21st century manufacturing increased dramatically b/c their factories pay much lower wages than MDCs.

– Weaknesses in economy include primitive banking, inadequate legal protection, & minimal quality control management.


As in Brazil, wealth is highest along the east coast and lowest in the remote and inhospitable mountain and desert environments of the interior.


Developing regions w/ higher HDI: Latin America & East Asia—Brazil (left) and China (right) are leading producers of motor vehicles.


Less Developed Countries

• Southwest Asia and North Africa: HDI 0.74– Middle East—Most of the land is desert that can sustain only sparse

concentrations of plant & animal life. Rely on importing most products but has one major asset: a large % of world’s petroleum reserves.

– Saudi Arabia, United Arab Emirates, & other oil-rich states in the region have used billions of dollars from oil sales to finance development. Egypt, Jordan, Syria, & other countries lacking vast petroleum reserves cannot invest as much in development. This has created a large gap in per capita income between these countries & causes tension.

– Islam, religion of more than 95% of region’s population, dominates the culture. This sometimes conflicts w/ business practices of MDCs. Also, women are excluded from holding most jobs and visiting public places.

– The challenge for Middle East is to promote development w/o abandoning the traditional cultural values of Islam.


Less Developed Regions

• Southeast Asia: HDI 0.73– Most populous countries: Indonesia, Vietnam, Thailand, & Philippines– Tropical climate limits intense cultivation of most grains.– Soils are generally poor b/c heat and humidity rapidly destroy nutrients

when land is cleared for cultivation.– Nearly 2/3 of population live on island of Java (which has one of the

highest population densities) mainly b/c its soil, derived from volcanic ash, is more fertile & b/c Dutch established headquarters there in past.

– Region has suffered from a half-century of nearly continuous warfare—Vietnam War—wars have also devastated Laos & Cambodia.

– Development has been rapid in Thailand, Malaysia, & Philippines. These regions have become major manufacturers of textiles and clothing, taking advantage of cheap labor.


Less Developed Regions• Central Asia: HDI 0.70

– Most countries in this region were once part of Soviet Union.– Iran & Afghanistan are included in this group, although they

are more closely tied to southwest Asia.– Development is relatively high in Kazakhstan and Iran, who

happen to be the region’s leading producers of petroleum.– Kazakhstan—Oil revenue used for development. Iran—Oil

revenue used to maintain low consumer prices or to sweep away elements of development and social customs influenced by Europe or N. America.

– Level of development is lower in other “stan” republics. Minerals and agricultural products are principle economic resources.


Developing regions w/ middle HDI—Central Asia (left): A bed of cotton is being weeded by hand in Uzbekistan. SW Asia (center): An oil valve is reopened at a refinery in Iraq. SE Asia (right): Packets are being checked at a herbal medicine factory in Indonesia.



• South Asia: HDI 0.61– Includes India, Pakistan, Bangladesh, Sri Lanka– Region has 2nd highest population & 2nd lowest per-capita

income– India has become world’s 4th largest economy (behind US,

China, Japan)– India is world’s leading producer of jute (used to make burlap

& twine), peanuts, sugarcane, tea, rice, & wheat.– India has become a major service provider. When you phone

an airline or a credit card company, chances are your call will be answered by someone actually located in India.



• Sub-Saharan Africa: HDI 0.51– Economic conditions have deteriorated in recent years:

• Highest % of people living in poverty• Average African consumes less today than 3 decades ago

– Some problems are legacy of colonial era• Mining companies & other businesses were established to supply

European businesses w/ raw materials rather than to promote overall economic development in the region.

– Political problems have plagued the region• As discussed earlier, European colonies were converted to states

w/o regard for distribution of ethnicities in the region.

– Main problem is the dramatic imbalance between # of people and capacity of land to feed the population.

• Nearly entire region is tropical or dry, but it has by far the highest NIR


Developing regions w/ low HDIs: South Asia and sub-Saharan Africa—South Asia (left): Sugarcane is transported to a wholesale market in India. Africa (right): Family in Kenya hoe a field to plant tomatoes.


Developing a Strong National Identity

• Explain how economic development and the relocation of a state’s capital have contributed to the development of national identity and the strengthening of a state.– Economic Development

• Examples of states—China, Japan, US, Mexico, South Africa• Strong economy creates jobs, supports a sense of well-being, and

supports confidence in leadership and loyalty to the state—all lead to unity.

• Economic prosperity tends to mask ethnic divisions.• National pride reinforces national identity.

– Relocation of political state’s capital• Examples of states—Brazil, Nigeria, Pakistan• May return to historically symbolic location, • May focus on poorly developed interior/resource frontier


Developing a Strong National Identity• Using contemporary examples, explain how ethnicity and

transportation infrastructure may detract from the development of national identity and weaken a state.– Ethnicity

• Examples of states—Belfium, Canada, Russia/USSR, Yugoslavia• Ethnic tension erodes loyalty to the state• Tension between ethnic groups can lead to balkanization• Placement of political boundaries w/o regard for ethnic territories can

lead to conflict between those ethnicities who lose or gain territory.

– Transportation infrastructure• Examples of states—Chile, India, Russia• Poor transportation structure contributes to isolation and a sense of

separation.• Size or shape of state may hinder development of transportation

infrastructure. Colonial legacy also affects transportation networks.


Where Does Development Vary by Gender?

• Gender-Related Development Index (GDI)– Compares the level of women’s development with that of

both sexes.• UN has not found a single country where women are treated equal

– GDI has 4 measures (similar to HDI):• Per capita female incomes as a % of male per capita incomes• # of females enrolled in school compared to the number of males• Percent of literate females to literate males• Life expectancy of females to males

– A country w/ complete gender equality would have GDI 1.0• No country has achieved that level. A high GDI means both men and

women have achieved a high level of development, though women may have a slightly lower level than men.


Gender-Related Development Index (GDI)

Figure 9-17


Life Expectancy—The inability of women to outlive men in LDCs derives primarily from the hazards of childbearing. Women in LDCs bear more children than in MDCs, often under poor medical conditions.


Average income of women is lower than that of men in every country. Women have 2/3 of income of men in MDCs. In LDCs the disparity between income is low in dollar terms but high on a percentage basis.


Percentage of females attending school is a key measure of gender disparity in sub-Saharan African and SW Asia. In Latin America & most of Asia, boys and girls are equally likely to attend school, but attendance is lower than in MDCs.


In MDCs, literacy is nearly universal for both sexes.

In Latin America & much of Asia, literacy is not universal, but rates are similar for men & women.

In sub-Saharan Africa and SW Asia, female literacy is low, substantially lower than males. Low female literacy is an important obstacle to development in these regions.


• Gender Empowerment Measure (GEM)– Compares the decision-making capabilities of men and

women in politics and economics.• In every country, fewer women than men hold positions of economic

& political power.

– Uses economic and political indicators:• Per capita female incomes as a % of male per capita incomes• % of technical and professional jobs held by women• % of administrative jobs held by women• % of women holding national office

– As with GDI, a country w/ complete equality of power between men and women would have score of 1.0.

Where Does Development Vary by Gender?


GEM—Information was not available to calculate the GEM for most LDCs.

A country w/ a much lower GEM than GDI offers women less power than economic resources.


UN regards these jobs as offering the greatest opportunities for advancement to positions of influence. Cultural barriers may restrict the ability of women to obtain these jobs in the first place or to secure promotions to top-level decision-making positions.


Professional jobs are key measure of economic power, whereas managerial jobs represent the ability to influence the process of decision making.


Although more women vote than men, no country has a national parliament or congress w/ a majority of women. The highest percentages are in Northern Europe, where women comprise 1/3 of national parliaments. In US, 15% of Senate & House seats are held by women.


What is the trend shown in this graph?


Female Enrollment in Secondary Schools• The trend is that there is an increase in girls attending

secondary schools. • Identify and explain an effect of this trend on population growth

in the developing world:– As more girls are educated

• Fertility rates decrease, population growth decreases, CBR drops, NIR slows, Developing countries may enter stage 4, Infant mortality decreases, Maternal mortality declines

– Explanations for the above occurrences • The opportunity cost of having children increases as women become

more educated.• More educated women are less focused on the home and have a

greater desire for a career.• More educated women will have better access to birth control


• Identify and explain an effect of this trend on economic development in the developing world:– As more girls are educated:

• Economy improves, Country’s wealth (GDP, GNP) increases, Literacy rates improve, More women enter the workforce

– Explanation of the above occurrences• Expanded skilled labor force and Better-paying jobs for women• More literate economy leads to more productive economy• Education enables women to use technology and financial skills

needed to run a business.• More jobs created in the secondary/tertiary sector allow women to

have more disposable income.

Female Enrollment in Secondary Schools


• Identify and explain an effect of this trend on gender roles in the developing world.– As more girls are educated

• Women have more freedom, choices, respect, opportunities• Women have enhanced socioeconomic status• Women have more social and political rights• Women assume more positions of power, their GEM increases

– Explanations of the above occurrences• Greater financial independence subverts the social norms• Women are hired without sexism or discrimination• Integration of women into previously male-dominated jobs• Women are forging careers outside the home

Female Enrollment in Secondary Schools


These 3 indicators show that the gap between MDCs and LDCs remains wide.


Why Do LDCs Face Obstacles to Development?

• To reduce disparities between rich & poor countries, LDCs must develop more rapidly. – This means increasing per capita GDP & using additional

funds to make improvements. LDCs face two obstacles in trying to encourage rapid development: 1) Adopting policies that promote development 2) Finding foods to pay for development.

• To promote development, LDCs choose one of two models:– One emphasizes int’l trade– The other advocates self-sufficiency.


• For most of 20th century, self-sufficiency was more popular of the development alternatives.

• Characteristics of Self Sufficiency Approach:– Spread investment equally across regions– Pace may be modest, but it’s fair b/c residents share benefits of

development.– Set limits on imports from other places to protect businesses– Restricts local businesses from exporting to other countries

• Example of using self-sufficiency: India– Businesses produced goods for consumption inside India only.– Gov’t imposed heavy taxes on the few imports it allowed to enter India,

which doubled or tripled the price to consumers.– If private companies couldn’t make a profit selling goods inside India, the

gov’t would provide subsidies or eliminate their debt.



• Problems w/ Self-Sufficiency Alternative– Protection of inefficient business

• Businesses could sell all they made at high gov’t controlled prices, so they had little incentive to improve quality or to reduce prices. These companies were not pressured to keep up w/ technological progress.

– Need for a large bureaucracy• Complex administration system needed to administer controls

encouraged abuse and corruption.• Potential entrepreneurs found that struggling to produce goods was

less rewarding financially than advising others how to get around the complex gov’t regulations. Other ppl earned more money by illegally importing goods & selling them at higher prices on black market.



• Development Through International Trade– According to approach, a country can develop economically by

concentrating on resources that it produces at lowest opportunity costs.

• Rostow’s Model of Development—Proposed 5 stage model:1. Traditional Society—Contains high % of people engaged in agriculture and high %

of wealth allocated to “nonproductive” activities such as military and religion. Per capita income remains low.

2. Preconditions for Takeoff—Elite group initiates innovative economic activities. Under their influence, the country starts to invest in technology and infrastructure, which will ultimately stimulate increases in productivity

3. Takeoff—Rapid growth is generated in a few economic activities. Foreign investment pours in, jumpstarting an economy that was already prepped for growth.

4. Drive to Maturity—Country develops a broad manufacturing and commercial base.

5. Age of Mass Consumption—Economy shifts from production of heavy industry, such as steel, to consumer goods, such as cars. High per capita incomes and high levels of mass consumption characterize this stage.



• This model has proven to be a useful tool for students of economic development b/c it seems to follow the path of European and American history and b/c we can readily identify countries that, right now, seem to be at each of Rostow’s stages.• Nepal would be 1st stage while Denmark would be 5th stage.

• Criticisms of Rostow’s model • Assumes economies will naturally pass through each of the

4 stages consecutively.• His model did not account for global politics, colonialism, physical

geography, war, culture, and ethnic conflict.• It defines the fifth stage, the most developed stage, as being

characterized by high mass consumption.• Critics claim that development doesn’t necessarily equal high

consumption. For some people, development may mean other things like increased social welfare or ecological sustainability.

• It does not account for deindustrialization

Rostow’s Model of Development




Rostow Model• Explain the usefulness of the model in understanding

contemporary social and economic change with reference to the following:– A country’s role in the world economy

• This model equates role to shift from resource export (early stages) to rise of industrial economy and mass consumption, which has held true for the US and Great Britain.

• Mexico would be an example of a labor exporting region (stage 2)• Rostow’s model does not account for a country’s involvement in

supranational organizations (UN, OPEC, NAFTA) in determining development. Mexico plays a large role in the world economy through its part in NAFTA. India and Brazil play a role in the UN but this is not addressed in the model. Also, country’s like Libya, Nigeria, Kuwait, and Algeria all are members of OPEC, and have great influences on the international trade of oil, but this is not addressed in the model.


• Explain the usefulness of the model in understanding contemporary social and economic change with reference to the following:– Colonial transportation networks

• This model limits the internal growth of transportation system and urbanization to nature of colonial transport network.

• This model does not accurately address the usefulness of colonial transportation networks b/c there is no reason for colonial power to develop a complete transportation network or to modernize it. Hence, neither economic diversity nor growth is encouraged.

Rostow Model


• Explain the usefulness of the model in understanding contemporary social and economic change with reference to the following:– Cultural differences

• Rostow’s model does not account for differences in religion, language, political beliefs, profit motive, colonial legacy, or gender.

• Religion—In India, Hindus may hinder development of middle class b/c of caste system preventing upward mobility.

• Political beliefs—governments may wish to isolate their population from westernization to exert greater control over their people.

• Colonial legacy—departed colonial rulers left behind an economic system that concentrates the majority of wealth in the hands of a few

• Gender—gender roles in cultures limit participation of entire population in economy thereby limiting growth potential.

Rostow Model


• Explain the usefulness of the model in understanding contemporary social and economic change with reference to the following:– Local social and class structures—Model did not account for:

• Class divisions—small elite group may control vast majority of wealth and have no incentive to invest in new forms of economic activity or may prevent training of majority of population.

• Lack of emergence of middle class—in countries with no middle class it is hard to have skilled labor and business people emerge who will carry economy to later stages

• Gender—gender roles w/in a state may create regional variations in economic participation or result in population growth that retards economic development.

• Ethnicity—inter-group hostility may create situations where infrastructure is destroyed, population lost, or some groups prevented from economic participation thereby preventing the country to move from one stage to another.

Rostow Model


• Examples of International Trade Approach– Four Asian Dragons

• South Korea, Singapore, Taiwan, and the then-British colony of Hong Kong. Areas were given nickname “four dragons.”

• Lacking many natural resources, the 4 dragons promoted development by concentrating on producing a handful of manufactured goods, especially clothes and electronics. Low labor costs enabled them to sell products inexpensively to MDCs.

– Petroleum-Rich Arabian Peninsula States• Once among the world’s least developed countries, they were

transformed overnight into some of the wealthiest due to escalating petroleum prices during the 1970s.

• They used petroleum revenues to finance large-scale projects and to import most of their other consumer and capital goods.



• Problems w/ International Trade Approach– Uneven Resource Distribution

• Some LDCs suffered b/c the price of the one product that they depended on did not rise as rapidly as the cost of production.

– Increased Dependence on MDCs• Building up on takeoff industries may force LDCs to cut back on

production of food, clothing, and other necessities for their own people. Rather than finance new development, funds generated from the sale of products to other countries may have to be used to buy these necessities.

– Market Decline• Countries that depend on selling low-cost manufactured goods find

that the world market for many products has declined sharply in recent years. Even before 2008 recession, MDCs had limited growth in population and market size.



International trade approach triumphs– The path most commonly selected by the end of the twentieth century– Longtime advocates of self-sufficiency converted to int’l trade during 1990s

(i.e. India). Countries convert because evidence indicates that international trade is the more effective path toward development.

•World Trade Organization (WTO)– To promote int’l trade, countries representing 97% of world trade established

the WTO, which works to reduce barriers to int’l trade.– Two ways WTO reduce barriers: 1) Through WTO, Countries negotiate

reduction or elimination of trade restrictions 2) WTO enforces agreements if a country accuses another of violating a trade agreement.

– Progressive critics of WTO—Charge that it’s antidemocratic, b/c decisions made behind closed doors promote interests of large corporations rather than the poor.

– Conservative critics of WTO—Charge that it compromises the sovereignty of individual countries b/c it can order changes in taxes and laws that it considers unfair trading practices.


Trade as a % of GDP—Trade has grown much more rapidly than GDP, especially in LDCs after 1990, a measure of the conversion of many LDC economies to int’l trade.

GDP change in India—After conversion from self-sufficiency to int’l trade around 1990, India’s GDP increased more rapidly.


Anti-WTO protest—Protesters oppose WTO meeting in Jakarta, Indonesia in 2009.


• Foreign Direct Investment– Int’l trade requires corporations based in a particular country to

invest in other countries.

– Investment made by a foreign company in the economy of another country is known as foreign direct investment (FDI)

– FDI does not flow equally around the world• Only ¼ went from MDC to LDC in 2007, whereas ¾ went from one

MDC to another MDC.• FDI is not evenly distributed among LDCs—more than 1/3 of all FDI

destined for LDCs went to China, 1/3 to all other Asian countries, 1/5 to all Latin American countries, and 1/10 to all African countries.

– The major sources of FDI are transnational corporations• These corporations invest and operate in countries other than the

one in which its headquarters are located. Of the 500 largest TNCs in 2008, 140 had headquarters in US and 163 in Europe.



Most transnational companies invest in the 3 core areas—North America, Europe, and Japan. Outside the core areas, the largest amount of investment by TNCs is in China.


• Financing development– LDCs lack money to fund development, so they obtain

financial support from MDCs. Comes from two primary sources: loans and direct investment.

– Loans—Two major lenders to LDCs:• The World Bank—Provides loans to countries to reform legal

institutions and public administration, develop & strengthen financial institutions, and implement transportation & social service projects.

• Int’t Monetary Fund (IMF)—Provides loans to countries experiencing balance-of-payments problems that threaten expansion of int’l trade.

– The World Bank has judged half of the projects it has funded in Africa to be failures.

• Many LDCs have been unable to repay the interest on their loans, let alone the principal.



To finance development, some LDCs have accumulated large foreign debts relative to their GDP. As a result, a large percentage of their national budgets must be used to repay loans. When LDCs cannot repay their debts, financial institutions in MDCs suffer b/c they were major source of the loans.


• Fair trade has been proposed as a variation of int’l trade model of development.– Fair trade means that products are made and traded in a way that protects

workers and small businesses in LDCs

• Two sets of standards distinguish fair trade:– Fair Trade Producer Standards

• Small scale farmers in LDCs are unable to borrow from banks needed to invest in their businesses. By banding together w/ other farmers (a cooperative), they can gain credit & maintain higher and fairer prices for the products.

– Fair Trade Worker Standards• Critics of int’l trade charge that only a tiny % of the price a consumer pays for a

good reaches the individual in the LDC that is responsible for growing it. • Fair trade requires employers to pay workers fair wages, permit union

organizing, and comply w/ minimum wage laws. • Because fair trade organizations bypass exploitative middlemen and work

directly w/ producers, they are able to cut costs and return a greater percentage of the retail price to the producers w/o necessarily raising the price to consumers.


Core-Periphery ModelCore-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


Core & Periphery Model—Viewed from this north polar projection, MDCs appear clustered in an inner core, whereas LDCs are generally relegated to a peripheral or outer-ring location.


Three Tier StructureThree Tier Structure

Core Processes that incorporate higher

levels of education, higher salaries, and more technology

* Generate more wealth in the 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

Periphery Processes that incorporate lower

levels of education, lower salaries, and less technology

* Generate less wealth in the world economy


The End.

Up next: Agriculture

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© 2011 Pearson Education, Inc. Chapter 9: Development The Cultural Landscape: An Introduction to Human Geography