Chapter 9 - Development Brittney Baca

Key Issue #1 Why Does Development Vary Among Countries?

Key Terms

➔  Development: the process of improving the material conditions of people through diffusion of knowledge and technology.

➔  More Developed Country (MDC): a relatively developed country ➔  Less Developed Country (LDC): a country in an earlier stage of

development ➔  Human Development Index (HDI): indicator of level of

development for each country that is determined by the combination of income, literacy, education, and life expectancy.

Indicators of Development ➔  Economic Indicators of Development

◆  Gross Domestic Product Per Capita ◆  Types of Jobs ◆  Productivity ◆  Consumer Goods

➔  Social Indicators of Development ◆  Education and Literacy ◆  Health and Welfare

➔  Demographic Indicators of Development ◆  Life Expectancy ◆  Infant Mortality ◆  Natural Increase Rate ◆  Crude Birth Rate

Economic Indicators of Development

➔  Gross Domestic Product Per Capita ◆  The most important indicator of development ◆  GDP: the value of the total output of goods and services produced in a

country in the course of one year. ◆  GDP Per Capita: GDP divided by the country’s population

➔  Types of Jobs ◆  Primary sector: materials are extracted directly from Earth ◆  Secondary sector: raw materials are assembled into useful products ◆  Tertiary sector: goods and services are provided in exchange for

payment

Economic Indicators of Development

➔  Productivity ●  the value of a particular product compared to the amount of labor

needed to make it ◆  Value added: the gross value of the product minus the costs of raw

materials and energy ◆  MDCs are more productive than LDCs.

➔  Consumer Goods ◆  This is where part of the MDCs’ wealth is spent. ◆  The most important goods and services are the ones related to

transportation and communication (mostly in MDCs)

Social Indicators of Development

➔  Education and Literacy ◆  The higher the educational service, the higher the level of development

in a country. ◆  Literacy rate: the percentage of a country’s people who can read and

write ➔  Health and Welfare

◆  People are healthier in MDCs. ●  Receive enough food for their daily diet. ●  Most of their health-care cost is paid.

Demographic Indicators of Development

➔  Life Expectancy ◆  People live longer in MDCs rather than in LDCs

➔  Infant Mortality Rate, Natural Increase Rate, Crude Birth Rate ◆  Rate is greater in LDCs

Key Issue #2 Where Are MDCs and LDCs Distributed?

Distribution of MDRs and LDRs ➔  More Developed Regions

◆  North America ◆  Europe ◆  Russia ◆  Japan ◆  Oceania

➔  Less Developed Regions ◆  Latin America ◆  East Asia ◆  Southwest Asia and North Africa ◆  Southeast Asia ◆  Central Asia ◆  South Asia ◆  Sub-Saharan Africa

More Developed Regions

➔  North America: HDI 0.95 ◆  Was once the world’s major manufacturer of steel, automobiles, and

other goods; it is now the world’s largest market and leading consumers of these products.

◆  World’s highest percentage of tertiary-sector employment ◆  World’s leading food exporter

➔  Europe: HDI 0.93 ◆  World’s largest and richest market (EU) ◆  Dependent on international trade

More Developed Regions

➔  Russia: HDI 0.73 ◆  Centrally planned economy while under communism ◆  HDI dropped drastically after the Soviet Union split ◆  Tried to work its way back up through high production of oil

➔  Japan: HDI 0.96 ◆  Low cost labor ◆  Selling low cost products ◆  High-quality, high-value products

➔  Oceania: HDI 0.90 ◆  Australia - leader in mining numerous important minerals ◆  Australia and New Zealand - net exporters of food and other resources

Less Developed Regions

➔  Latin America: HDI 0.82 ◆  More people living in urban areas than in any other LDC ◆  Deforestation to sell timber/open new land for agriculture ◆  Has potential to upgrade to MDC, but is hindered by inequitable

income distribution ➔  East Asia: HDI 0.77

◆  China has become the world’s second largest economy, and the world’s largest market and manufacturer

◆  High population and loosening restrictions may lead to higher development

Less Developed Regions

➔  Southwest Asia and North Africa: HDI 0.74 ◆  Rich in oil, but some countries lack significant reserves ◆  Trying to promote development without leaving traditions behind

➔  Southeast Asia: HDI 0.73 ◆  Some petroleum reserves ◆  Exportations from India, Malaysia and Thailand ◆  Lacks infrastructure

➔  Central Asia: HDI 0.70 ◆  Most countries were once part of the Soviet Union ◆  Recuperating through petroleum reserves

Less Developed Regions

➔  South Asia: HDI 0.61 ◆  High population makes region unfavorable because of the population

to resources ratio. ➔  Sub-Saharan Africa: HDI 0.51

◆  Rich in natural resources ◆  Poorest region in the world

Key Issue #3 Where Does Level of Development Vary by Gender?

Development and Gender

➔  Gender-Related Development Index ◆  Economic indicator of gender differences ◆  Social indicator of gender differences ◆  Demographic indicator of gender differences

➔  Gender Empowerment ◆  Economic indicators of empowerment ◆  Political indicators of empowerment

Gender-Related Development Index

➔  Economic indicator of gender differences ◆  Per capita female income as a percentage of per capita male income

➔  Social indicators of gender differences ◆  Number of females enrolled in school compared to number of males

and percent of literate females compared to percent of literate males ➔  Demographic indicators of gender differences

◆  Life expectancy of females compared to males

Gender Empowerment

➔  Economic indicators of empowerment ◆  Per capita female income as a percentage of per capita male income

and percentage of professional and technical jobs held by women ➔  Political indicators of empowerment

◆  Percentage of administrative jobs held by women and percentage of members of the national parliament who are women

Key Issue #4 Why Do LDCs Face Obstacles to Development?

Development Strategies

➔  Development Through Self-Sufficiency ◆  Elements of Self-Sufficiency Approach ◆  Problems with the Self-Sufficiency Alternative

➔  Development Through International Trade ◆  Rostow’s Development Model ◆  Examples of the International Trade Approach ◆  Problems with the International Trade Approach

➔  International Trade Approach Triumphs ◆  World Trade Organization ◆  Foreign Direct Investment

➔  Financing Development ◆  Loans

➔  Fair Trade

Development Through Self-Sufficiency

➔  Elements of Self-Sufficiency Approach ◆  Promotes balanced growth ◆  Focuses on all working sectors

➔  Problems with the Self-Sufficiency Alternative ◆  Inefficiency- without competition, companies lagged behind the rest of

the world and counted on the government to make a profit. ◆  Large bureaucracy complex admin systems that were corrupt, easily

bribed. Creation of a black market to get around all of the government issues.

Development Through International Trade

➔  Rostow’s Development Model ◆  The traditional society: No signs on development. Most of the region is

still engaged in primary sector activities. ◆  The preconditions for takeoff: Innovative economic activities are

initiated. New technology and infrastructure is introduced. ◆  The takeoff: Industrialization begins to spread, the region upgrades to

secondary sector activities. ◆  The drive to maturity: Industries diffuse as a larger amount, workers

become more specialized and skills. ◆  The age of mass consumption: The economy shifts from production of

heavy industry to consumer goods.

Development Through International Trade ➔  Examples of the International Trade Approach

◆  The Four Asian Dragons: South Korea, Taiwan, Hong Kong and Singapore trade manufactured goods due to their lack of natural resources.

◆  Petroleum-rich Arabian Peninsula States: Saudi Arabia, Kuwait, Bahrain, Oman, and the United Arab Emirates develop by increasing the prices of petroleum

➔  Problems with the International Trade Alternative ◆  Uneven resource distribution: Countries’ sales drop for only

depending on one asset ◆  Increased dependence on MDCs: LDCs depend on MDC buying their

products too frequently ◆  Market decline: Countries that depends on selling low cost products

will be affected due to this decline

International Trade Approach Triumphs

➔  World Trade Organization ◆  Attempts to remove barriers in order to freely trade with other

countries around the world

Financing Development

➔  Loans ◆  The World Bank: divided into two groups, the International

Bank for Reconstruction and Development, and the International Development Association.

◆  The IMF: Provides loans to countries experiencing balance-of-payments problems that threaten expansion of international trade.

Fair Trade

➔  Fair trade: products are made and traded according to standards that protect workers and small businesses in LDCs.