Factors Affecting Economic Development

Study Notes

Globalization and regionalization reemerged in the 1980s and intensified after the end of the Cold War in the 1990s.
Initially, these two processes seem contradictory, with globalization being global in nature and regionalization being regional.

During the Cold War, policymakers divided the world into three distinct political and economic blocks:
- First World: capitalist, industrialized countries within the Western European and United States' sphere of influence.
- Second World: former communist-socialist, industrial states, territory and sphere of influence of the Union of Soviet Socialist Republic.
- Third World: all other countries, often used to describe developing countries in Africa, Asia, and Latin America.
After the Cold War, the category of Second World countries became null and void, leaving only the First World and Third World designations.

The Brandt Line is a model that shows the geographical divide between richer and poorer nations:
- Richer countries are mostly located in the Northern Hemisphere, with some exceptions like Australia and New Zealand.
- Poorer countries are mostly located in tropical regions and in the Southern Hemisphere.

The North refers to economically developed countries, regardless of geographical location.
The South refers to developing and less developed countries, often referred to as the "Third World".
The North, with 25% of the world population, controls 80% of the world's income, with 90% of manufacturing industries owned and located in the North.
The South, with 75% of the world population, has access to only 20% of the world's income.

The North: less population, high wealth, high standards of living, high industrial development, industrial society.
The South: large population, low wealth, low standards of living, low industrial development, agricultural society.

Classification of countries according to the United Nations:
- Least Economically Developed Countries (LEDCs): low-income countries with severe structural impediments to sustainable development.
- Middle Income Countries (MICs): developing quickly, but not as quickly as Newly Industrialized Countries (NICs).
- Newly Industrialized Countries (NICs): transitioning from agriculture-based to goods-producing industries, such as manufacturing, construction, and mining.
- Most Economically Developed Countries (MEDCs): high-income countries with financial resources to provide high levels of education, healthcare, and housing.

Environmental Factors: poor climate, limited water supply, few natural resources.
Economic Factors: poor trade links, lots of debt, primary products.
Social Factors: spread of illnesses and diseases, poor education.
Political Factors: unstable government, corruption.

Distribution of Income around the World: liberalization of markets, migration of people from South to North for better income.
Economic Competition Worldwide: requires appropriate infrastructure, stable macroeconomic framework, and well-functioning public and private institutions.
Standard of Living: affected by lack of trade and aid, single crop farming, abundance of debt, and neo-colonialism.

The United Nations' Millennium Development Goals aim to narrow the divide by improving education and healthcare, promoting gender equality, and ensuring environmental sustainability.