Global Inequalities Global Inequalities (continued)(continued)

Dr Christopher KollmeyerDr Christopher Kollmeyer

Suggested Readings and Suggested Readings and Web SiteWeb Site

Readings:• World-systems theory: An introduction by

Emmanuel Wallerstein (chapter 2)

• The stages of economic growth: A non-communist manifesto by W.W. Rostow (Chapter 1 & 2)

Web site:UC Atlas of Global Inequality (http://ucatlas.ucsc.edu)• Especially debate on whether global inequality is

increasing or decreasing (http://ucatlas.ucsc.edu/income/debate.html)

Conceptualizing the problem

What’s the correct analogy for understanding the distribution of

wealth between countries?

1. Global class system(mobility is possible)

2. Global caste system(mobility is very unlikely)

Modernization and Neoliberal Modernization and Neoliberal TheoriesTheories

•Focuses on individual countries and problems with their socio-economic structures

Dependency and World-System Dependency and World-System TheoriesTheories

•Focuses on dynamics of interdependencies between rich and poor countries

Explaining Global Inequality: Competing Theories, Emphasizing

Different Problems

Explaining Global Inequality: Competing Theories, Emphasizing

Different Problems

Traditional Take-off

Drive totechno-logicalmaturity

Age of highmass consumption

Modernization Theory: Modernization Theory: Stages of Economic Stages of Economic

GrowthGrowth

Modernization Theory: Modernization Theory: Stages of Economic Stages of Economic

GrowthGrowth

Modernization Theory: Modernization Theory: UUneven spread of modern economic neven spread of modern economic

systemssystems

Source: Rostow, W.W. 1960. Stages of Economic Growth: A Non-Communist Manifesto. Cambridge Press.

Modernization Theory:Further Explanations for

Poverty

Modernization Theory:Further Explanations for

PovertyArgues that low-income countries are poor because:

–Traditional values

–Low rates of savings and investment

–Corrupt / inefficient institutions

–Too much government control of economy

IMF and World Bank oversee “structural adjustments”

–Privatize government-owned industries

–Promote free trade

–Reduce economic regulation (labor, environment)

–Cut government spending on social services

Neoliberalism: Updated version of modernization

theory

Neoliberalism: Updated version of modernization

theory

Key Concepts• International division of labour

1. Classic International Division of Labor» 1500s to 1960s

2. New International Division of Labor» 1970s to the Present

• Core vs peripheral countries• Core vs peripheral economic processes • Imperialism

Dependency and World-Systems Theories

Dependency and World-Systems Theories

Dependency and World-System Theory highlight the legacy of

colonialism

Rapid industrialization in the Rapid industrialization in the South does not produce South does not produce

income convergence with the income convergence with the NorthNorth

Source: Arrighi, Giovanni, et al. 2003. “Industrial Convergence, Globalization, and the Persistence of the North-South Divide.” Studies in Comparative International Development 38(1): 3-31.

If Southern countries are increasingly becoming integrated into the global economy, why aren’t they becoming wealthier?Answers:

• To some degree they are becoming wealthier.

• Product cycle• Global commodity chains

Product Cycle: Product Cycle: Core vs Peripheral in Products Core vs Peripheral in Products

and Countriesand Countries

1850 1900 1950 1970 2000

Year

Peripheral product

Core productCore Countries

Peripheral countries

Global Commodity Chains

Definition: A dynamic network of business functions and production processes that results in a finished product.

Key Point: Global North retains high-value added activities, while leaving the low-value added activities to the Global South.

reproduces global income inequality

A £100 Dress: Who gets what?A £100 Dress:

Who gets what?

•Retailer: £50.00

•Designer: £35.00(pays £22.50 for fabric)

•Subcontractor: £15.00(pays £6 to workers)

Customer Pays: £100

This money stays in the UK

This money stays in the UK

This money goes overseas