Development

Key Issue 1

Why Does Development Vary

among Countries?

Human Development Index

▪ Level of Development (MDC or LDC)

determined by 3 factors

▪ Decent Standard of Living

▪ A Long and Healthy Life

▪ Access to Knowledge

▪ 1.0 is the highest or 100%

▪ .963 (Norway) is the highest in 2005

Human Development Index, 2005

Fig. 9-1: Developed by the United Nations, the HDI combines several measures of

development: life expectancy at birth, adjusted GDP per capita, and

knowledge (schooling and literacy).

▪ Income

▪ GNI= Gross National Income

▪ total goods and services produced a country plus

money that leaves and enters the country

▪ GNI/Total Population = Average individual

contribution towards country’s wealth

▪ PPP= Purchasing Power Parity

▪ Adjustments made to GNI to account for different

prices among countries

Fig. 9-2: Annual gross domestic product (GDP) per capita averages over $20,000 in most

developed countries but under $5000 in most less developed countries.

Economic Structure▪ Primary- extracts a raw material

▪ Mining, Fishing, Forestry

▪ Secondary- process raw material into goods

▪ Factories, processors

▪ Tertiary-provides good or services to people

▪ Retailing, banking, education, gov’t

▪ Primary sector is low in developed countries

Productivity

▪ Productivity- value of a product

compared to amount of labor to make it

▪ Value added- gross value of a product

minus the cost of raw material and energy

▪ $80,000 U.S. $70,000 Japan

▪ $1,000 China $500 India

▪ MDC are more productive than LDC, why?

Consumer Goods

▪ Especially important to development are

goods related to transportation and

communication. Why? What are these goods?

▪ Motor vehicles provide access to jobs and

services, permit businesses to distribute goods

▪ Telephone/Internet provides communications and

opportunities to explore

Telephone Land Lines per

Population

Fig. 9-4: Telephone land lines per 1000 persons, 2005. MDCs have several

hundred phone lines per 1000 persons, while the poorer developing

countries may have less than 100.

Cellular Phones per Population

Fig. 9-5: Cellular telephone lines per 1000 persons, 2005. Cell phones are now more

common than land lines in much of Europe and Africa, but they are less

common than land lines in North America.

▪ Education/Literacy

▪ Quantity- average number of school yrs. Attended

▪ MDC= 10 years LDC= about 2 years

▪ Quality- student/teacher ratio and literacy rate

▪ Literacy rate- % of a country’s people who can read/write

▪ MDC twice as high

▪ MDC print more newspapers, texts etc.

Primary Student-Teacher

Ratios

Fig. 9-6: Students per teacher, primary school level. Primary school teachers have

much larger class sizes in LDCs than in MDCs, partly because of the large

numbers of young people in the population.

▪ Life expectancy- longer is better

▪ Infant Mortality rate-94% in LDCs 99.5 MDCs

▪ Natural Increase rate-1.5 in LDCs .01MDCs

▪ Health/Welfare

▪ MDCs provide schools, hospitals and welfare

(not just that kind of welfare) services.

▪ These make society healthier and more

protected from hardship

▪ This leads to more economic productivity

Health and Welfare

▪ People are healthier in MDC than LDCs,

Why?

Health and Welfare

▪ People are healthier in MDC than LDCs,

Why?

▪ Money

▪ Can pay for health care

▪ Diet

▪ Calories and Proteins

▪ Government involvement

▪ Pay 70% of health care in most European

countries

▪ LDC individuals pay more than 55

▪ U.S. individuals pay 55% (LDC numbers)

Health Care Expenditures per

GDP

Fig. 9-7: Expenditures on health care as percent of GDP, 2005. MDCs have much higher

GDP and spend a greater proportion of GDP on health care than do LDCs.

Physicians per Population

Fig. 9-8: Physicians per 1000 people, 2005. MDCs have three or more physicians

per 1000 people compared to less than one in most LDCs.

Calories per capita

Fig. 9-9: Daily available calories per capita as percent of requirements, 2005. In MDCs, the

average person consumes one-third or more over the required average minimum,

while in LDCs, the average person gets only the minimum requirement or less.

Private Health Care

Expenditures

Fig. 9-10: Private expenditure on health care as percent of total health care expenditure,

2005. Except for the US, health care is considered a public service in most

MDCs. In most LDCs and in the US, most health care costs are paid by

individuals.

Inequality-Adjusted HDI

▪ IHDI

▪ HDI-Human Development index

▪ Modified HDI that accounts for inequalities

▪ Equality means HDI = IHDI

▪ Few college degrees and everyone else poor

▪ Lower IHDI than HDI= inequality

Key Issue 2

Why Does Development Vary by

Gender?

▪ GII- Gender Inequality Index

▪ Includes multiple measures to account for a country’s

inequality b/n males and females

▪ Higher GII means the greater the inequality

▪ 0 means equal

▪ 1.0 women fare as poorly as possible in all measures

▪ 3 Measures used

▪ Empowerment

▪ Labor

▪ Reproductive Health

Empowerment

▪ Ability of women to achieve improvements in

their own status

▪ Measured by TWO indicators

▪ % of women holding seats in the national legislature

▪ Every country fewer women than men hold political power

▪ Europe ¼ are women

▪ United States 1/6 are women

▪ % of women completing high school

▪ North America- girls more likely than boys to graduate

Labor Force

▪ Female Labor Force Participation Rate

▪ % of women holding full-time jobs outside of home

▪ 100 men = 75 women in labor force (MDC)

▪ 100 men = 65 women in labor force (LDC)

Reproductive Health▪ Maternal mortality ratio

▪ Number of women who die giving birth per

100,000 births

▪ 15/100,000 in more developed countries

▪ 140/100,000 in less developed countries

▪ Adolescent fertility rate

▪ Number of births per 1,000 women ages 15-19

▪ 20/1,000 in MDC’s

▪ 60/1,000 in LDC’s

▪ According to UN, GII has declined in nearly

every country since 1990

▪ United States has increased

▪ U.S. ranks 47th in GII (4th in HDI)

▪ Two Factors

▪ Reproductive rights much lower in the U.S.

▪ 24/100,000 maternal mortality rate

▪ % of women in national legislature much lower in U.S.

Key Issue 3

Why Are Energy Resources

Important for Development?

▪ Supply- quantity that producers have available for sale

▪ Demand- quantity that consumers are willing and able

to purchase

▪ 5/6 of world’s energy supply comes from 3 of

Earth’s substances▪ Coal, Petroleum, Natural gas….

▪ Fossil Fuels- an energy source formed from residue of

plants and animals buried millions of years ago

▪ Two observations by geographers▪ Demand is highest is MDC’s

▪ LDC’s have abundant reserves

Demand for Energy

▪ Demand for energy in the United States

comes from 3 principal consumption

▪ Businesses

▪ Burn coal in plants and electricity

▪ Homes

▪ Heating homes and heating water (natural gas)

▪ Transportation

▪ Petroleum products

▪ LDC’s demand has surpassed MDC’s and is

still rising

Energy Supply▪ Coal- found mid-latitude regions

▪ China supplies ½ of world’s coal, LDC’s ¼ and US ¼

▪ Petroleum- formed from residue on the sea floor

▪ Russia and Saudi Arabia supply ¼ of world’s petroleum

and other LDC’s combined ½ and U.S. ¼

▪ Natural Gas- formed from the sea floor as well

▪ Russia and Southwest Asia supply 1/3 of world’s gas

and 1/3 by LDC’s and United States 1/3

▪ Earth’s energy is divided in two categories

▪ Renewable- unlimited supply, not depleted by

people

▪ Hydroelectric, geothermal, fusion, wind, biomass, solar

▪ NONrenewable- forms so slowly that it cannot be

renewed

▪ Fossil fuels

Energy Reserves

▪ How much fossil fuel remains?

▪ Proven Reserves- can be measured w/ accuracy

▪ Coal- 131 years worth, 50/50 LDC’S and MDC’s

▪ Natural Gas- 49 years, Russia, Iran, Qatar hold 60%

▪ Petroleum- 43 years, LDC’s 85%

▪ Potential Reserves- undiscovered but thought to

exist somewhere, converted to proven by…

▪ Undiscovered fields- smaller and remote

▪ Enhanced recovery from already discovered fields-

water used to pump out remaining resources

▪ Unconventional sources- predicting new technology

Controlling Petroleum Reserves▪ OPEC- Organization of the Petroleum

Exporting Countries▪ SW Asia, North Africa, scattered LDC’s

▪ Changing U.S. Petroleum Sources▪ U.S. started importing more in 1950’s

▪ Cheaper to import than to extract

▪ Will Earth “run out” of petroleum?

▪ No, not any time soon. It will get way too

expensive before then and we will use alternative

energy sources

▪ Two main sources outside of fossil fuels

▪ Nuclear power

▪ Hydroelectric energy

Nuclear Energy▪ Fission- electricity produced from splitting

uranium atoms in a controlled environment

▪ Not renewable But takes a very small amount to

produce energy

▪ 1 kilogram of nuclear fuel is 2 millions times the energy

of 1 kilogram of coal

▪ Power plants costs billions to build

▪ Very elaborate safety precautions must be met

▪ Potential Problems

▪ Radioactive waste- a product of all nuclear

reactions, can be lethal to humans

▪ Waste remains radioactive for several thousand years

▪ 2002 US Department of Energy approved plan to build

a storage unit in Yucca Mountains, Nevada

▪ 2009 Obama administration halted construction

▪ Nuclear plants can NOT explode like a bomb

▪ Runaway reaction- possible steam explosions,

releasing radioactive waste into atmosphere

▪ Limited Uranium Reserves

▪ About 124 years worth of Uranium at current rate

▪ Breeder reactor- turns Uranium into Plutonium-

renewable resource but more lethal than uranium

Renewable energy▪ Hydroelectric Power

▪ Generating electricity from moving water

▪ Second most popular source of electricity (coal 1)

▪ Biomass Fuel

▪ Derived from plant material and animal waste

▪ Burning biomass fuel produces equal to or less energy

than used to make it

▪ Materials already serve purpose other than energy

(food and clothes)

▪ Wood burned for fuel equals less forests

▪ Wind Power

▪ Moving air turns a turbine to create energy

▪ Environmental community complains of turbines being

noisy and dangerous for birds and bats.

▪ Most potential b/c only small portions of capabilities

have been reached

▪ Geothermal Energy

▪ Energy from steam cause by natural nuclear

reactions in Earth’s interior

▪ Nuclear Fusion

▪ Fusing hydrogen atoms to form helium

▪ Creates high energy but requires high temperatures

(millions of degrees)

Solar Energy▪ Energy supplied by the sun

▪ Passive Solar Energy

▪ Captures energy w/o special devices

▪ Use south-facing windows and dark surfaces

▪ Active Solar Energy

▪ Collect solar energy and convert it to heat energy or

electricity, happened directly or indirectly

▪ Photovoltaic cells- direct electric conversion

▪ Indirect- turn the heat into electricity

▪ Rays reflected onto pipe w/ oil, oil creates steam, steam

moves turbine

▪ Store energy for night and cloudy days

Key Issue 4

Why Do Countries Face

Obstacles to Development?

▪ Two Obstacles LDC’s face in development

▪ Adopting policies that promote successful

development (not all plans work= set back)

▪ Finding funds

▪ Two paths to development

▪ Self-sufficiency

▪ Encourage domestic production, discourage foreign trade

▪ International Trade

▪ Open to foreign investments and international markets

Self-Sufficiency Path▪ Sets barriers that limit trade

▪ Tariffs (high taxes)

▪ Quotas (limits quantity of imports)

▪ Licensing requirement (restrict number of legal importers)

▪ Failing businesses are isolated from competition

▪ Investments spread equally across all sectors of

economy

▪ Incomes in rural and urban areas kept equal

International Trade Path▪ Sale a concentrated resource and use foreign

money to develop other areas▪ What do we have to offer other places?

▪ What can we produce in mass at low cost?

▪ Rostow Model

▪ W.W. Rostow’s proposed five-stage model (1950’s)

▪ 1. Traditional Society

▪ No development in progress

▪ High % of people in agriculture

▪ “nonproductive activities”- religion and military

▪ 2. Preconditions for Takeoff

▪ Educated elite group initiate economic activity

▪ Invest in water supplies and transportation systems

▪ Stimulates an increase in productivity

▪ 3. Takeoff

▪ Textiles, food production expand- limited to these

areas

▪ Other sectors remain dominated by traditional

practices

▪ 4. Drive to Maturity

▪ Modern technology diffuses to wide variety of

industries

▪ All industries mimic takeoff stage

▪ Workers become more skilled and specialized

▪ 5. Age of Mass Consumption

▪ Economy shifts from production/industry to

consumer goods

▪ From steel/energy to motorcycles/refrigerators

International Trade Examples▪ Four Dragons

▪ South Korea, Singapore, Taiwan, Hong Kong

▪ First to adopt Rostow Model

▪ Lacking resources they concentrated on producing

manufactured goods (clothing and electronics)

▪ Arabian Peninsula- Petroleum rich▪ Use petroleum revenues to finance large scale

projects

Shortcomings of the Two

Development Paths▪ Problems with self-sufficiency

▪ Inefficiency

▪ Isolates businesses

▪ Eliminates competition

▪ Reduces the need to improve quality

▪ Large Bureaucracy

▪ Prone to abuse and corruption

▪ Often creates a “black market”

▪ Easier to get around gov’t regulations

▪ International Trade Challenges

▪ Uneven resource distribution▪ The price of what they are selling may not rise in price

as much as what they need to buy

▪ Market stagnation▪ The world market for goods is slowing compared to

past rates (technology drives prices down)

▪ Increased dependence on MDCs▪ Producing for export may force countries to cut back

on domestic spending, making them more reliant on imports

International Trade

▪ World Trade Organization (WTO)▪ Created in 1995 to help ease trade

▪ Some say it is elitist and helps only the rich

▪ Some say it leads to loss of sovereignty (supranationalism)

▪ Transnational corporations▪ Foreign direct investment

▪ Not equal most actually goes from MDC to MDC

Wal-Mart

in China

Wal-Mart, which imports many

goods to the US that are

manufactured in China, opened

its first super-store in Shanghai,

China in 2005.

Anti-Globalization

DemonstratorsSeattle, 1999

▪ Foreign Direct Investment (FDI)-

▪ Investment by a country in the economy of a foreign country

▪ Loans

▪ World Bank

▪ International Bank for Reconstruction and Development

▪ International Development Association

▪ Loan money to LDCs to build infrastructure

▪ This is often expensive and programs fail

▪ Many LDCs can’t pay the debt

Poor Infrastructure in Ghana

Many roads in Africa and other developing nations are not paved. This and other

problems of infrastructure are obstacles to economic development.

Debt as Percent of Income, 2005

Fig. 9-24: Many developing countries have accumulated large debts relative to their GDPs.

Much of their budgets now must be used to finance their debt.

Financing Challenges in LDC’s▪ Policy Framework Paper (PFP)-

▪ requires LDC’s to have a structural adjustment

program

▪ Economic goals, strategies for improvement

▪ PFP requirements on LDC’s

▪ Benefits for the poor, not just the elite

▪ Cut military spending expand education and health

▪ Reforming the government structure

Financing Challenges in MDC’s▪ Widening Inequality

▪ Since 1980 gap b/n rich and poor has increased

▪ Richest 1% of Americans hold 20% of wealth

▪ 421 billionaires (.0001%) hold 10% of wealth

▪ Large banks were assisted by gov’t starting 2008

▪ They profit and Americans still owe money

▪ Stimulus (spend)

▪ Invest in business that will eventually pay taxes

▪ Austerity (save)

▪ Reduce taxes and spend nothing, avoid debt

Fair trade▪ Fair Trade

▪ products are made and traded according to

standards that protect workers and small

businesses

▪ Fair trade producer standards

▪ Work with small businesses/worker-owned

▪ Fair trade worker standards

▪ 33% of profit paid to workers vs. 1%

▪ Hire women

▪ Profits are invested back into community

▪ Health clinics, child care, training

Fair Trade Coffee

Because the role of middlemen is reduced and because consumers generally pay

higher prices, producers of fair trade coffee can earn more than traditional coffee

growers.

Core-Periphery Model▪ Uneven development

▪ countries in the core benefit and the periphery

countries are left out

▪ Wealthiest countries are the core

▪ Less developed countries are on the

periphery

▪ Semi-peripheral- countries that don’t fit the

model▪ Chile

▪ Brazil

▪ China