GNP and GDP

• Development improves material conditions through knowledge and technology diffusion.
• Wealth depends on how and where things are produced.
• To develop means to advance in technology, production, and socioeconomic welfare.

Gross National Product (GNP)

• The total value of officially recorded goods and services produced by a country's citizens and corporations in a year.
• GNP includes goods and services produced both inside and outside a nation's borders.

US GNP

• The US GNP was graphed from 1969 to 2001, indicating the change in the billions of 1996 Dollars.
• The US GNP was also graphed from 1950 to 2020 in USD millions quarterly.
• A world map illustrates GNP rankings of the top 22 countries in 2010, using a color-coded scale.

Gross Domestic Product (GDP)

• The total value of officially recorded goods and services produced by a country's citizens and corporations within the nation's borders in a year.
• A graph of the US GDP between 1960 - 2010 illustrates the change over time.

Formal vs Informal Economy

• Formal economy consists of legal economic activities that governments tax and monitor.
• Informal economy consists of illegal or uncounted activities that governments do not tax or track, this includes black markets, drug trades, and barter systems.
• The informal economy often sustains countries, like Mexico, Afghanistan, and the Golden Triangle region.

Gross National Income (GNI)

• Calculates the monetary worth of what is produced within a country, plus income from investments outside the country.
• Many consider GNI a more accurate way to measure a country's monetary worth.
• To standardize data, GNI is divided by the population to yield the per capita GNI.
• GNI is often unevenly distributed.
• Kuwait and the UAE exemplify cases where wealth is concentrated at the top.
• GNI only measures output, failing to account for environmental damage from resource depletion or pollution.
• Beneficial changes, like increased use of energy-saving devices, can negatively affect GNI as electric companies lose revenue.
• Norway had the world’s highest GNI as of 2015, with $103,630 per person.
• 25% of Norway's income comes from oil, and its population is 5.2 million.
• Qatar has a GNI of $92,000; it has 2.8 million citizens and abundant oil.
• In Qatar, wealth is primarily held by the top 1%.

Walt Rostow's Modernization Model

• The classical development model, the aim was to explain how modern countries developed, to help plot routes for developing countries.
• Assumes that all countries can achieve the same level of development and follow the same path.

Rostow's Model - The Stages of Economic Development

• Stage 1: traditional where the dominant activity is subsistence farming
• Social structure is rigid, technology is at low levels.
• Stage 2: preconditions of takeoff where new leadership creates the conditions for takeoff,
• Greater flexibility, openness, and economic diversification is needed.
• Stage 3: takeoff is where there is essentially an industrial revolution, the economy enjoys sustained growth, urbanization, and mass production are in full swing.
• Technology also Improves.
• Stage 4: drive to maturity: technologies diffuse, industrial specialization occurs, and international trade expands
• Modernization is evident in key areas, and population growth slows.
• Stage 5: represents high mass consumption, high incomes and wide spread production of many goods and services.
• The service sector dominates.
• This model is also known as the ladder of development.

Rostow's Model and American History

• Stage 1: Jamestown and Plymouth, where survival was a constant struggle.
• Stage 2: American colonies developed diverse agriculture/trade, including tobacco, cotton, rice, indigo, rum, molasses, and slaves.
• Stage 3: The American Industrial Revolution and regional growth occurred after 1820.
• Stage 4: The late 1800s and early 1900s in America.
• Stage 5: The Roaring 20's till now in America.

Problems with Rostow's model

• Uneven distribution of resources can leave some countries with little to sell.
• Reliance on selling one product can be problematic, as demonstrated by Nigeria's copper and declining prices.
• Limitations in purchasing power due to the stagnation of the world market.
• Rostow's model is more applicable to development than self-sufficiency, with many countries seeing greater results after switching to international tarde.
• The World Trade Organization was founded to remove barriers to international trade.

Defining Developement

• Development is the process of improving material conditions through knowledge and technology.
• A more developed country (MDC) is relatively far along on the development continuum.
• Alternative names are; relatively developed country and developed country.
• A less developed country (LDC) is in an earlier stage of development.
• Alternative name is a "developing country", or a “third world country, although that label is seen as offensive.
• The need for development drives improvements in food, shelter, health, and protection availability, improvements in “levels of living,” including jobs, income, and education and expansion in the range of economic and social choices available to individuals and nations.

Measuring Development

• United Nations Development Program Overview 2005. Included areas for measuring were;
  • Gross Domestic Product (GDP)
  • Types of Work (Economic Sectors)
  • Social Indicators
  • Education and Literacy
  • Health and Welfare
  • Demographic Indicators
  • Life Expectancy (37 - 80 years)
  • Gross National Product
  • Literacy Rate: the percentage of a country’s people who can read and write.
  • Types of Work (Economic Sectors).

Human Development Index (HDI)

• Official "scorebook" used by the U.N. to classify countries' development.
• HDI uses economic, social, and demographic factors.
• The economic factor is a country's GDP per capita.
• Social factors are literacy rate and education levels.
• The demographic factor is life expectancy.
• The dimensions include a long and healthy life, knowledge and a decent standard of living.
• The indicators of each dimension includes;Life expectancy at birth, Expected years of schooling, Mean years of schooling and GNI per capita (PPP $).
• Top 5 HDI : Norway, Australia, Switzerland, Netherlands, United States.
• Bottom 5 HDI : Sierra Leone, Chad, Central African Republic, DR Congo, Niger.

Effects of Geography on Development

• Development reflects forces operating at local, state, regional, and global scales.
• Neocolonialism is where former colonies are now free, but their economies remain controlled by major world powers.

Structuralist Theory

• The structuralist theory states economic disparities among countries result from historical power relations in the global economic system.
• Neocolonialism reinforces structuralist theory as political and economic relationships limit development in poorer areas.
• Nations with more historical power influence former colonies economically today.
• Historical wealth and military might of European countries led to domination over African nations, which remains through property rights, resource control, and loans.

Barriers to Economic Development

• Social Conditions can be a barrier to development which can affect the the development of a country.
• Some considerations include: high infant/child mortality rate (due to malnutrition), short life expectancy, lack of education, and cultural/religious views on gender equality.
• Many countries have a population mean at around 15 years old
• Too many people die young for reasons such as war, medical care, and famine.
• This normally leads to a poor uneducated society.
• The lack of education creates a strain on women, who often cannot go to school so that their brothers can.
• Women make up to ½ a typical workforce
• Trafficking is also another problem, where some girls seek labor only to become victims of trafficking as forced prostitutes, laborers, and domestic help.

Foreign Debt as a Barrier

• Banks started lending to former colonies post-independence, with conditions like privatizing government services, opening trade, lowering tariffs, and promoting foreign investment.
• These are called a structural adjustment loans.
• Loans require repayment. Debt forces nations to prioritize debt payment over citizen welfare.
• Interest can exceed revenue, leading to bankruptcy.
• Structural adjustment loans were elements of a neoliberalism trend that argued government interference in the market is inefficient/undesirable.
• International Monetary Fund is European, they pursued changes for European traders. Neoliberal policies transfer control to the private sector and limits power for states.
• Nations need to maintain a competitive position as an open marker, there is not safety net.
• Neoliberalism coupled with high government spending and corruption has led to economic crises.
• Venezuela provided Argentina with a loan and this was combined with economic growth for solvency.

Disease as a Barrier

• Disease is another barrier to development, namely; Malaria.
• Malaria is a vectored disease spread from one person to another via a mosquito host.
• It exists only in warm, moist climates, and kills 2 million a year, most under 5.
• It is most common in Africa and South America, but can also in India, Southeast Asia, and China.
• DDT was at one time a common product, but now is thought to cause links in cancer..

Political Instability as a Barrier

• Establishing political control is difficult in low-income or war-torn nations - Afghanistan.
• In former colonial societies, elites fight for power which can cause corruption, quasi-democracies, and military dictatorships in places like Kenya and Afghanistan.
• Civil war can begin with disenfranchisement of the poor.
• Robert Mugabe in Zimbabwe exemplifies dictatorship and stealing.
• Dictators remain in power via fear, and need outside political pressure to force some policy.

Costs of Development

• Any changes lead to a ripple effect, especially true to economic development.
• Agriculture in periphery or semi periphery countries is usually limited to: major conglomerate controlled or subsistence farming.

Agriculture - Desertification, Loss of Land

• In conglomerate settings crops are for trade, not benefitting the local population.
• Subsistence farmers have fragmented land, this provides little income.
• Without fertilizer, small farmers have limited yields.
• A lack of teaching on soil has led to erosion
• Africa Has had reported 270,000 square miles is now desertified.
• Increased industrial production leads to air and water pollution.
• Increased agricultural production leads to herbicides and pesticides in water.
• Increased tourism leads to overburdened infrastructure and changes to culture.

Industrialization

• Countries set conditions to attract manufacturers with special export processing zones for foreign tax regulations
• Examples are the Maquiladoras of Mexico and the special economic zones of China
• Maquiladoras supply manufactured goods to the US tax free, assembly plants with low wage and workers that account for 1 million jobs and 45% of Mexico exports.
• Special economic zones have lessened environment regulations to attract investment.

Tourism

• Tourism creates wealth/employment, but the effect is limited.
• Tourism is linked to foreign companies which takes income from the local population.
• Often many jobs are low with no security.
• Locals sometime adapt the culture to have tourism appeal.
• Infrastructure is created to satisfy needs of travel and may cause a world imbalance.

Political Institutions

• Development varies between sections due to political standings.
• Periphery countries have these issues the most.
• Cities often have development due to the government structure.
• The role of the Government is to set guidelines and structure development.

Islands of Development

• Government or corporations can control the the city or region.
• Showing country pride and establishing capital.
• Corporations establish buildings, housing, roads and provide housing for work force.

Creating Growth

• NGOS will come in and help.
• Giving loans for business encourages and provides women with jobs.
• Programs in which there is mortality or excessive rates have had less success.

Explore the concepts of Gross National Product (GNP) and Gross Domestic Product (GDP) and their significance in measuring a country's economic output. Understand how GNP includes production by citizens and corporations both domestically and abroad, while GDP focuses on production within a country's borders. Review US GNP and GDP data and global GNP rankings to analyze economic development.