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?

IPE Categories of GS Countries

1. Emerging Markets2. Frontier Markets3. CITs4. LLDCs5. HIPCs

5 Categories of GS Countries

1. Emerging Markets Where? 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://www.investmentfrontier.com/2014/06/11/change-good-msci-fixes-frontier-market-indexes/

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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Map based on info from www.un.org/en/development/desa/policy/.../ldc_list.pdf

5 Categories of GS Countries

5. Heavily Indebted Poor Countries (HIPCs) Status initiated 1996 by IMF & WB 39 countries (2014 IMF identified HIPCs)

29 in sub-Saharan Africa 35 accepted relief

~$74 B Reliance on cash crops

Cotton accounts for 46% of Mali’sexport earnings

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Let’s Play Pit

Let’s Play Pit

8 different commodities 8 players per deckEach player starts with 9 cardsGoal is to “corner” market on one

commodityTrade cardsNeed 9 cards of same commodity to winRing bell

Let’s Play Pit

Rules:Trade 1 to 4 cards at a timeAll cards must be of the same commodityCall out the number you wish to trade Trade with someone who wants to exchange

the same # of cardsAll cards traded must be of the same

commodityDon’t tell others what commodity you’re

trading- only the #

Let’s Play Pit: Round 2

Rules:Trade 1 to 4 cards at a timeCards can be of any mix of commoditiesCall out the number you wish to trade May attempt to exchange an unequal # of

cards Must finish with 9 cards

Don’t tell others what commodity you’re trading- only the #

Let’s Play Pit: Round 3

Pre-Round divisionDivide group of 8 into two groups: ‘A’ and

‘B’Deal cards

Let’s Play Pit: Round 3

Rules for As:Trade 1 to 4 cards at a timeDon’t tell others what commodity you’re

trading- only the #Trade any mix of commodities

Rules for Bs:Turn all cards face up for everyone to seeTrade 1 to 4 cards at a timeMay reject trade with AIf choose to trade with A, As can pick what

they want; give Bs unknown cards in retur

Pit Debriefing Which of the 3 versions of Pit most resembles how the international

trading system works? Why do you think that is so? 

Which of the 3 versions of Pit do you think is the fairest way to trade? Why? 

How could you design a version of the game that would be fair? Is it possible to change the world trading system even if you want tot and regardless of what it looks like in reality? 

What would have happened if all of the Bs in game #3 decided to form a collective and trade only among each other and not with the As? 

If you’re a B country, what options do you have? How possible is it to break the global structure, or in the case of the game, challenge the rules? 

Does playing the game give you a better sense of How trade in the world works What affects trade relations The difficulties of being a former colony GS development hurdles

Development Hurdles

Development Hurdles: IMS

Currency instabilityDependence on primary goodsMarket isolation; lack of market integration

Need more trade liberalizationStrains on public spending¤

Development Hurdles: IMS

Taxes in AfricaWhy has Burundi’s tax take almost doubled since 2101? Get businesses to pay taxes

Less corruption ended inflated tax bills Reduce department corruption

Recruited new staff based on entrance exam Transparency Autonomous agency

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Development Hurdles: IMS

Taxes in Africa (cont.) Gov’t policies

Gov’t lowered taxes Added VAT to broaden tax base Tax office focuses audits for highest yield

potential Keeps gov’ts honest

Accountability to citizens¤

Development Hurdles: II & IF

Political stabilityInfrastructure & institutions

Development Hurdles: Gender Equality

UN Gender-related Development Index (GDI)

Country GDP p/c Women

GDP p/c Men

Dev. Level

Saudi Arabia $16,197 $78,689 Very High

Norway $56,994 $70,807 Very High

U.S. $41,792 $63,163 Very High

China $9,288 $13,512 High

Botswana $11,491 $18,054 Medium

Pakistan $1,707 $7,439 Low

Development Hurdles: Gender Equality

Gender inequality hinders developmentLess literacy higher populationLess education more child laborLower GDP p/c for women

v. men in every country¤

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

Income Inequality

http://www.theatlantic.com/international/archive/2011/09/map-us-ranks-near-bottom-on-income-inequality/245315/, 2011

Development Hurdles: Income Inequality

Gini index- measures inequality Gap bt. rich/poor

Development income equality More developed greater equality Less developed lesser equality

Stark exception is US Brazil: 10% control 51% of wealth Mexico & Argentina: 10% control 42% of

wealthhttp://en.mercopress.com/2010/03/27/gap-between-rich-and-poor-in-latinamerica-is-largest-in-the-world-says-un

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Development Hurdles: Income Inequality

More income equality = higher growth rates (IMF report)

Consequences of income inequality Fewer people with resource access

Banking, formal sector credit Social services

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: GN Reliance

Conflicting interests with GN Self-interested actors

Reliance on GN Foreign Aid Technology FDI

Employment¤

Development Hurdles: ITS

Promoting sustainable development Sustainable development expectations Environmental issues Human security issues Need to diversify

Cash crops taxes farmland; deforestation Non-renewable resources

Nigeria- 75% of GDP petroleum¤

Development Hurdles: ITS

Resource exploitation- Conservation article

Why is poaching such a huge problem in GS countries?

Lack of investment in local communities Wildlife damage crops, livestock Poverty Lack of job opportunities Corruption Arable land designated as national parks Need to address demand¤

Development Hurdles: ITS

Labor in Bolivia articleWhy did Morales back a law to lower the minimum age for child labor? Reflects the reality of the situation in Bolivia

42% families need kids’ earnings Creates wider safety net for workers They’re already working anyway- law

mandates work permits, humane conditions, fair wages

Stay in school- can legally work Kids actually pushed for the law Keeps kids off the streets

Development Hurdles: ITS

What are the criticisms of this policy? Lack of enforcement Kids working in adult-only more hazardous

industries Many just aren’t aware of the new law Focus should be on sex education and birth

control Need to limit family sizes in rural areas to curb

poverty At same time, gov’t has under-population issue

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Development Hurdles: Corruption

Not limited to GS, but far more endemic Correlation bt. corruption and parking tickets

Transparency Int’l TI Index Mo Ibrahim Foundation

Est. 2007- but only 4 winners¤

What similarities do the highlighted countries have that are tied to corruption?

Authoritarian rule built on some guiding principle Surrounded by cronies Regulate media Firing challengers Bribes

See as ‘merit-based’ reward for public service or to the state

Everyone else does it; if don’t, seen as untrustworthy Claim to serve ‘their people’ Try to conceal corruption

Point fingers to accuse others =image of addressing issue Apathy, tacit consent of public

Especially during economic growth Distractions

Economic growth, nationalism, public shows of humility

Development Hurdles: Job Availability

Lack of FDI• Primary goods reliance

Remittances• China, India, Mexico, Philippines

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Development Hurdles: Job Availability

How could migrants’ money be put to better use? Expensive money transfer services

• Migrants often lack formal financial services Fear of money laundering, financing

terrorism Huge fees for transferring $

Don’t invest money- keep at home• Lack financial infrastructure, literacy• Hurdle of preferred informal channels

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Development Hurdles: Job Availability

Need GN intervention• Argument: Better development potential

with improved system to remit $• G8 (now G7)- reduced fees• Hurdle of preferred informal channels

Why were banks willing to comply?¤

INTERNAL & EXTERNAL POLICY STRATEGIES

GS Development Tactics

GS Development Tactics

Internal Policy Strategies Import substitution Nationalization of industries Establishing cartels Protectionism

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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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Good News?

Fewer people in extreme poverty

Healthier people¤

Year Billion People % Living on <$1.25/ day

1981 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

Recap

The Global South

Who is the GS?Development HurdlesGS Economic Development Tactics

GS Development Tactics

You’re the leader of an average income GS country. What development tactics might you implement to foster development?*Be sure to keep in mind the development hurdles*