Chapter 7

Rags and Riches: The Dimensions of Development

Activity 1: Economic Model of Development

Activity 2: Human Welfare Model of Development

Activity 3: Comparing Economic Development and Human Welfare Development Models

Activity 4: Alternative Indicators of Development

Learning OutcomesAfter completing the chapter, you will be able to:

Define development in economic and human welfare terms

Identify countries where economic and human welfare measures yield different rankings of development

Interpret the reasons for these different rankings

Consult UN documents and websites to identify other development indicators

Figure 7.1

Figure 7.2

Figure 7.3

Figure 7.4

Figure 7.5

Figure 7.6

School of Thought Time Period Main Ideas Real World Strategies

Modernization 1940s-1960s Progressive stages ofeconomic growth

Economic structural change Trickle-down economics

Investment Technology transfer Large-scale industrialization

projects

Dependency 1970s Human welfare Core-periphery model Circular and cumulative

causation Neocolonialism Bottom-up economics

Appropriate technology Small-scale and rural

enterprises Import substitution Nationalization

Neoliberal

Counterrevolution

1980s Free market economics Transition economies

Privatization Foreign direct investment Reduced role of the state Free trade Currency devaluation

SustainableDevelopment

1990s Global environmentalchange

Environmental economics Women and development Children and development

Partnership with developedcountries

Market mechanisms forenvironmental regulation

Resource conservation Renewable resources Loans to women and very

poor (microcredit) Women’s and children’s

rights

Figure 7.7

Figure 7.8

Figure 7.9

Figure 7.10

Figure 7.11

Figure 7.12

Productive Hours per Day by Gender, Selected African Countries

0

2

4

6

8

10

12

14

16

Botsw ana Burkina Faso CAR Cote d'Ivoire Nigeria Kenya Tanzania Uganda Zambia

Women

Men

Figure 7.13

Definitions of Key Terms• Appropriate technology: Small scale technology that rural peasants can afford and

use.

• Circular and Cumulative Causation: Self-sustaining economic growth that builds on itself, as capital, skilled labor, innovation, and services attract and create more of the same.

• Core-Periphery:A model of the economic development process over time and space that focuses on the evolving relationships between a rich, productive, innovative core region and a poor, dependent periphery.

• Dependency School: A school of thought that explains low development levels as being a result of the LDCs’ economic dependency on the MDCs. See core periphery and neocolonialism. It also stressed that development be measured in terms of human welfare indicators rather than economic indicators.

• Development: The extent to which a society is making effective use of resources, both human and natural.

• Economic Indicators: Development indicators based on a country’s economic production, i.e., how much it produces (e.g. GNP), what kinds of things it produces (ranging from raw materials to manufactured goods and services), and how it produces (ranging from labor-intensive, subsistence production to capital-intensive, specialized production).

• Gross National Product (GNP): The total dollar value of all final goods and services sold in monetary transactions in a country in a given year, including international transactions.

• Human Welfare Indicators: Development indicators based on a country’s success in meeting the basic needs of its citizens.

• Import Substitution: A development strategy whereby a LDC tries to develop its own industries instead of importing manufactured goods from the MDCs.

• Maquiladora: An export assembly plant in Mexico that relies on cheap labor to assemble imported components that are then re-exported as finished goods.

• Modernization: The change from traditional ways of life to more up-to-date ways involving greater use of specialization, technology, and capital. Also, the name given to the dominant school of thought from the 1940s to the 1960s.

• Neoliberal Counterrevolution: The 1980s school of development emphasizing free-market approaches and participation in global trade.

• Neocolonialism: When a previously colonized country has become politically independent but remains economically dependent on exporting the same commodities (raw materials and foodstuffs) as during its colonial past.

• Polarization Effects: Concentrating tendencies, which reinforce growth in the core at the expense of the periphery.

• Spread Effects: Forces of deconcentration from the core to the periphery.

• Structural Change: Change in the structure of an economy, from one dominated by agriculture to one dominated by industry and services.

• Subsistence Economy: Food and craft production primarily to meet consumption needs at the household or community level.

• Sustainable Development: Development providing for the needs of the present without diminishing the options of future generations. Also the name given to the emerging school of thought in the 1990s.

• Technology Transfer: The diffusion or transfer of technology, usually from a more-developed country to a less-developed country.

• Transition Economy: Countries in the process of converting from a centrally planned to a capitalist economy.