Chapter 8Globalization,

Inequality, and Development

Chapter Outline

• Introduction• Globalization• Global Inequality• Theories of Development and

Underdevelopment• Neoliberal versus Democratic

Globalization

Globalization

• In 1980 just 3.5% of the world’s population traveled internationally.

• By 2001 that figure had more than tripled to 11.3%.

• In 1980 about 14,000 international organizations existed in the world.

• By 1999, there were three-and-a-half times as many.

Indicators of Globalization, Early 1980s – Circa 2003

1980–81

1998–2003

% Change

Foreign direct investment as % of

GDP4.61 8.85 91.3

International tourist arrivals as % of world

population3.51 11.36 222.9

Air passengers (millions)

748 1,656 121.4

Indicators of Globalization, Early 1980s – Circa 2003

1980–81

1998–2003

% Change

Air freight and mail (billions of ton km)

33 124 275.8

Internet hosts (millions)

0 165 undefined

Number of international organizations

14,2732

50,3734

252.9

Foreign Visitors per100 Population

The Sources of Globalization

• Technology - commercial jets, telephone, fax, and email

• Politics -countries that are politically isolated have less integration with the rest of the world.

• Economics- industrial capitalism is always seeking new markets, higher profits, and lower labor costs.

Transnational corporations

• Depend increasingly on foreign labor and foreign production.

• Emphasize skills and advances in design, technology, and management.

• Depend increasingly on world markets.• Depend increasingly on massive

advertising campaigns.• Are increasingly autonomous from

national governments.

McDonaldization

• The spread of the principles of fast-food restaurants, such as efficiency, predictability, and calculability, to all spheres of life.

• McDonald’s now does most of its business outside the United States.

• McDonaldization has come to stand for the global spread of values associated with the United States and its business culture.

Regionalization

• The division of the world into different and often competing economic, political, and cultural areas.

• World trade is not evenly distributed around the planet or dominated by just one country.

Regionalization

• Three main trading blocs exist—an Asian bloc dominated by Japan, a North American bloc dominated by the United States, and a Western European bloc dominated by Germany.

• Each bloc competes against the others for a larger share of world trade.

Levels and Trends in Global Inequality

• The total worth of the world’s 358 billionaires equals that of the world’s 2.3 billion poorest people.

• The 3 richest people in the world own more than the combined GDP of the 48 least-developed countries.

• The richest 1% of the world’s population earns as much as the bottom 57%.

Levels and Trends in Global Inequality

According to the UN: • 800 million people in the world are

malnourished.• 4 billion people lack the ability to

obtain adequate food, clothing, shelter, and basic needs.

• 1/5 of the developing world’s population goes hungry every night.

Global Priorities: Annual Cost of Various Goods and

Services

Good/ServiceAnnual Cost (U.S. billion)

Education for everyone in the world

6

Cosmetics in the U.S. 8

Water and sanitation for everyone in the world

9

Ice cream in Europe 11

Global Priorities: Annual Cost of Various Goods and

Services

Good/ServiceAnnual Cost

(U.S. $billion)

Reproductive health for all women in the world

12

Perfumes in Europe and U.S. 12

Health and nutrition for everyone in the world

13

Pet foods in Europe and U.S. 17

Number Living on Less Than $1 a Day

Percent Millions

Region 1990 1999 1990 1999

Sub-Saharan Africa 47.7 46.7 242 300

East Asia (excluding China)

27.6 14.2 452 260

South Asia 44.0 36.9 495 490

Number Living on Less Than $1 a Day

Percent Millions

Region 1990 1999 1990 1999

Latin America 16.8 15.1 74 77

East Europe and Central Asia

1.6 3.6 7 17

Middle East and North Africa

2.4 2.3 6 7

Theories of Global Inequality

• Modernization theory– Global inequality results from

dysfunctional characteristics of poor societies.

• Dependency Theory– Economic underdevelopment is

the result of exploitative relations between rich and poor countries.

Core, Periphery, and Semiperiphery

• Immanuel Wallerstein argues that capitalist development resulted in a world system composed of three tiers:– core capitalist countries - major

sources of capital and technology– peripheral countries - major sources

of raw materials and cheap labor– semiperipheral countries - former

colonies that are becoming prosperous

Characteristics of Countries That Emerged

From Poverty• Have a colonial past that left them

with industrial infrastructures.• Enjoy a favorable geopolitical

position.• Implement strong, growth-oriented

economic policies and have socially cohesive populations.

Polling Question

• The citizens of poorer nations are more likely to be lazy when compared to the citizens of richer nations.A. Strongly agreeB. Agree somewhatC. UnsureD. Disagree somewhatE. Strongly disagree

National Priorities, U. S. 2000 (%)

• “We are faced with many problems in this country, none of which can be solved easily or inexpensively.

• I’m going to name some of these problems, and for each one tell me whether you think we’re spending too much money on it, too little money, or about the right amount.

• First, are we spending too much, too little, or about the right amount on . . .“

National Priorities, U. S. 2000 (%)

Priority% “Too Little”

1. Improving and protecting the nation’s health.

73.2

2. Improving the nation’s education system.

72.0

3. Assistance for child care. 65.1

4. Improving and protecting the environment.

63.3

5. Dealing with drug addiction. 61.8

National Priorities, U. S. 2000 (%)

Priority% “Too Little”

6. Social Security. 61.3

7. Halting the rising crime rate. 60.9

8. Solving problems of the big cities. 51.7

9. Mass transportation 39.6

10. Improving the conditions of blacks, 37.9

National Priorities, U. S. 2000 (%)

Priority% “Too Little”

11. Parks and recreation 36.8

12. Highways and bridges 35.7

13. Military, armaments, and defense 24.7

14. Welfare 21.2

15. Space exploration program 15.0

16. Foreign aid 8.7

Polling Question

• Global environment problems can be solved without any international agreements to handle them.A. Strongly agreeB. Agree somewhatC. UnsureD. Disagree somewhatE. Strongly disagree

Democratic Globalization

• Four reforms could change neoliberal globalization and turn it into “democratic globalization”– Stronger support for democracy in the

developing world.– More and better foreign aid.– Forgiving debt owed by developing

countries to rich countries.– Eliminating tariffs that restrict exports

from developing countries.

Democratic Globalization

• Research shows democracy lowers inequality and promotes economic growth:– Makes it more difficult for elite groups

to misuse their power. – Increases political stability and

provides a better investment climate.– Encourages broad political

participation.

Quick Quiz

1. Which of the following are indicators of globalization?a. the growth in tourismb. the increasing number of

international organizations and agreements

c. the increase in international trade and investment

d. all of these choicese. the increasing number of

international organizations and agreements, and the increase in international trade and investment

Answer: d

• The growth in tourism, the increasing number of international organizations and agreements, the increase in international trade and investment and, the increasing number of international organizations and agreements, and the increase in international trade and investment are indicators of globalization.

2. Transnational corporations:a. rely on domestic labor and

domestic productionb. sell to domestic marketsc. are increasingly autonomous

from national governmentsd. all of these choicese. rely on domestic labor and

domestic production, and sell to domestic markets

Answer: c

• Transnational corporations are increasingly autonomous from national governments.

3. George Ritzer coined the term "McDonaldization" to describe:a. a worldwide network of labor and

production processes whose end result is a finished commodity

b. the economic domination of one country by another

c. a form of rationalization involving efficiency, predictability, and calculability

d. the homogenization of many aspects of life worldwide

Answer: c

• George Ritzer coined the term "McDonaldization" to describe a form of rationalization involving efficiency, predictability, and calculability.

4. Regionalization is:a. a worldwide network of labor and

production processes whose end result is a finished commodity

b. a form of rationalization involving efficiency, predictability, and calculability

c. the division of the world into often competing economic, political, and cultural areas

d. the homogenization of many aspects of life worldwide

Answer: c

• Regionalization is the division of the world into often competing economic, political, and cultural areas.

5. According to dependency theorists, rich nations now rely on which of the following to exercise domination and control over poor nations:a. military occupationb. support for authoritarian

governmentsc. substantial foreign investmentd. all of these choicese. military occupation and support for

authoritarian governments

Answer: d

• According to dependency theorists, rich nations now rely on military occupation, support for authoritarian governments and substantial foreign investment to exercise domination and control over poor nations.

6. According to ______________, global inequality results from various dysfunctional characteristics of poor societies themselves.

Answer: modernization theory

• According to modernization theory, global inequality results from various dysfunctional characteristics of poor societies themselves.

7. Peripheral countries are:a. capitalist countries that are the

major sources of capital and technology in the world

b. former colonies that are major sources of raw materials and cheap labor

c. former colonies that are making considerable headway in their attempts to industrialize

d. colonies that have not yet gained independence and are therefore subject to exploitation

Answer: b

• Peripheral countries are former colonies that are major sources of raw materials and cheap labor.

8. In a survey conducted in 2000 in which Americans were asked to list spending priorities, foreign aid ranked:

a. first on the listb. in the top half of the listc. in the bottom half of the listd. last on the liste. foreign aid did not make the list

Answer: d

• In a survey conducted in 2000 in which Americans were asked to list spending priorities, foreign aid ranked last on the list.

9. A large body of research shows that democracy lowers inequality and promotes economic growth.

a. Trueb. False

correct: a

• A large body of research shows that democracy lowers inequality and promotes economic growth.

10. The United States supported Saddam Hussein during Iraq's war with Iran and funded Osama bin Laden when he was fighting the Soviet Union in Afghanistan.

a. Trueb. False

Answer: a

• The United States supported Saddam Hussein during Iraq's war with Iran and funded Osama bin Laden when he was fighting the Soviet Union in Afghanistan.