GEOG1012 Week 11 S1 2024 Development in Our Changing World PDF

11/21/2024 Mass deportation of illegal migrants: Ripple effects to the society 1 million deported immigrants impacts the lives of 100 to 150 million citizens. https://www.thisamericanlife.org/846 /this-is-the-cake-we-baked 1 ...

11/21/2024 Mass deportation of illegal migrants: Ripple effects to the society 1 million deported immigrants impacts the lives of 100 to 150 million citizens. https://www.thisamericanlife.org/846 /this-is-the-cake-we-baked 1  11/21/2024 Development in our Changing World Instructor: dr. Frank van der Wouden GEOG1012 – 1st semester 2024-2025 Why do we care? Development is at the core of lot of social science research “Improving” of human lives 2  11/21/2024 Why do we care? Development is at the core of lot of social science research “Improving” of human lives Not only in an economic sense, but in general well being But the processes we have discussed might shape winners and losers Why do we care? Development is at the core of lot of social science research “Improving” of human lives Not only in an economic sense, but in general well being But the processes we have discussed might shape winners and losers How can we promote development for those left behind? 3  11/21/2024 Content – part 1 What is development? Main indicators Human Development Index Track development over time Alternative Development Indices Thinking about Development Key take-aways Content – part 2 Major strands of development theory Modernization (“Stages”) Theory Dependency Theory Neo-Liberal (“Market-based”) Theory Development State Models Key take-aways 4  11/21/2024 Significant Reductions in Global Poverty & Hunger Global extreme poverty rate ($2/day) estimated ~ 9.3 % in 2020 This is a decline of 35% since 1990 Global under-5 mortality rate halved between 1990 & 2020 5  11/21/2024 Significant Reductions in Global Poverty & Hunger Global extreme poverty rate ($2/day) estimated ~ 9.3 % in 2020 This is a decline of 35% since 1990 Global under-5 mortality rate halved between 1990 & 2020 Maternal mortality declined by 45% over same time Access to basic services & education increasing in most of the developing world But there are still plenty of problems… 6 11/21/2024 7 11/21/2024 8  11/21/2024 Thinking about “Development” from an Economics Perspective 9  11/21/2024 Thinking about “Development” from Three Economics Perspectives Traditional (neoclassical) economics is largely concerned with the efficient allocation of scarce resources. Models of rational economic agents, complete information, perfect markets Thinking about “Development” from Three Economics Perspectives Traditional (neoclassical) economics is largely concerned with the efficient allocation of scarce resources. Models of rational economic agents, complete information, perfect markets Political economy extends these arguments to consider the social and political processes through which power become concentrated within groups. Thus, politics & economics are combined to understand economic change 10  11/21/2024 Thinking about “Development” from Three Economics Perspectives Traditional (neoclassical) economics is largely concerned with the efficient allocation of scarce resources. Models of rational economic agents, complete information, perfect markets Political economy extends these arguments to consider the social and political processes through which power become concentrated within groups. Thus, politics & economics are combined to understand economic change Development economics is broader still, concerned with social, political and economic concepts, but also how the interactions between these are influenced by institutions – by the “rules of the game”. Less developed economies are characterized by: imperfect markets, where producers & consumers have very limited information, where there is a much greater role of government influence, for good or bad, the rules of the game are unclear, where external pressures are strong 11  11/21/2024 Development & Values Recognize that when we talk about development, the elimination of poverty, universal education, freedom from persecution, the rule of law & democracy, we are making value judgements Development & Values Recognize that when we talk about development, the elimination of poverty, universal education, freedom from persecution, the rule of law & democracy, we are making value judgements As we move from (or compare!) advanced developed economies to the developing economies of the world, it is important to understand that we cannot so easily separate economic relationships from social, political and cultural values 12  11/21/2024 Development & Values These complex interactions complicate our understanding of growth & development Development & Values These complex interactions complicate our understanding of growth & development It also highlights the fact that development is more than simply economic growth & rising incomes 13  11/21/2024 Development & Values These complex interactions complicate our understanding of growth & development It also highlights the fact that development is more than simply economic growth & rising incomes Does it also mean protecting cultures, environments & ways of life? What about multi-dimensional measures of well-being? Who decides what is important? What is Development? +75 years ago, the United Nations Charter pledged to: free future generations from war to protect basic human rights encourage social progress to better standards of life & freedoms 14  11/21/2024 What is Development? +75 years ago, the United Nations Charter pledged to: free future generations from war to protect basic human rights encourage social progress to better standards of life & freedoms At the start of the new millennium, that pledge renewed in the form of the Millennium Development Goals: a series of targets to be met by 2015… promoting the reduction of poverty extension of human rights around the world What is Development? Human development is about: freedom building human capabilities allowing people to lead the kinds of lives of their own choosing 15  11/21/2024 What is Development? Human development is about: freedom building human capabilities allowing people to lead the kinds of lives of their own choosing U.N. recognizes that those capabilities are restricted by: poverty ill-health discrimination disenfranchisement (being deprived of a right) Main Indicators of Development: The Human Development Index The Human Development Index (HDI) is a summary measure of a country’s level of development 16  11/21/2024 Main Indicators of Development: The Human Development Index The Human Development Index (HDI) is a summary measure of a country’s level of development The HDI is based on 3 key variables: Health (Life Expectancy at Birth) Education (Years of Schooling – mean & expected) Standard of living (GDP per capita) 17 11/21/2024 18 11/21/2024 19 11/21/2024 20  11/21/2024 Other Indicators of Development GENDER DEVELOPMENT INDEX HDI adjusted for gender inequality GENDER EMPOWERMENT INDEX A measure of gender equality in economic power & political representation HUMAN POVERTY INDEX Measure of poverty Thinking about Development Development is about “life chances”, about having freedom of choice to live lives that have value This means developing peoples’ abilities & creating environments within which those abilities can be effectively utilized 21  11/21/2024 Thinking about Development Development is about “life chances”, about having freedom of choice to live lives that have value This means developing peoples’ abilities & creating environments within which those abilities can be effectively utilized For example, we can educate young women, but if they are denied access to the labor market or control of their own reproductive health, then in what way do they have real choices? Key take-aways Development seems to go in the right direction, but long way to go Development is not only economics, but consists of social, cultural and political elements → IT IS COMPLEX HDI Index tracks development across three measures: Health (life expectancy) Knowledge (mean & expected schooling) Quality of life (Income) Large differences across nations (and regions & groups of people?) Other measures exist that focus on specific elements → i.e. gender or poverty 22  11/21/2024 Content – part 2 Major strands of development theory Modernization (“Stages”) Theory Dependency Theory Neo-Liberal (“Market-based”) Theory Development State Models Key take-aways 23  11/21/2024 HUMAN DEVELOPMENT INDEX, 2015 ORIGINS OF THE MODERNIZATION MODEL Rostow’s “linear stages of growth model” Eurocentric: Originates in the economic growth history of European nations. European experience: shifting resources from agriculture to manufacturing and into ever more sophisticated industry was the path to development 24  11/21/2024 ORIGINS OF THE MODERNIZATION MODEL Rostow’s “linear stages of growth model” Eurocentric: Originates in the economic growth history of European nations. European experience: shifting resources from agriculture to manufacturing and into ever more sophisticated industry was the path to development ‘If less developed, poorer, regions of the world follow this same path, growth & development would surely result!’ 25  11/21/2024 ORIGINS OF THE MODERNIZATION MODEL Posits the history of the West as an ideal that should be imitated. Less developed countries are seen as little more than “backward” versions of the Global North ORIGINS OF THE MODERNIZATION MODEL Posits the history of the West as an ideal that should be imitated. Less developed countries are seen as little more than “backward” versions of the Global North Less developed countries are not seen as unique entities with their own distinctive mix of social, political, cultural institutions 26  11/21/2024 THE MODERNIZATION MODEL Core argument: developing economies have to generate capital through saving use savings to fuel greater investment in the economy investment seen as necessary to fuel the transition from A to M and further technological upgrading. THE MODERNIZATION MODEL Core argument: developing economies have to generate capital through saving use savings to fuel greater investment in the economy investment seen as necessary to fuel the transition from A to M and further technological upgrading. This model ignores the difficulties: of shifting cultures in emerging economies of changing institutions embracing the capitalist market system. Such changes are costly and difficult. It took Europe a few hundred years to manage this transition! 27  11/21/2024 CRITICISMS TO THE MODERNIZATION MODEL Necessary conditions (investments to upgrade) are not always sufficient conditions More saving & investment might stimulate growth But growth alone might not eliminate poverty & generate development for all → inequality CRITICISMS TO THE MODERNIZATION MODEL Necessary conditions (investments to upgrade) are not always sufficient conditions More saving & investment might stimulate growth But growth alone might not eliminate poverty & generate development for all → inequality Political change and inclusive institutions are critical but ignored Modernization model focuses: on the internal characteristics of countries not on the external political & economic circumstances (Development for emerging economies is much more difficult with more advanced nations as competitors.) 28  11/21/2024 THE STRUCTURAL-DEPENDENCY MODEL In the 1960s, several development scholars, particularly from Latin America, began to question the modernization framework THE STRUCTURAL-DEPENDENCY MODEL In the 1960s, several development scholars, particularly from Latin America, began to question the modernization framework They argued that the development of the “core-countries” of the Global North was dependent upon the under-development of the “peripheral-countries” of the Global South 29  11/21/2024 THE STRUCTURAL-DEPENDENCY MODEL In the 1960s, several development scholars, particularly from Latin America, began to question the modernization framework They argued that the development of the “core-countries” of the Global North was dependent upon the under-development of the “peripheral-countries” of the Global South The North exploits the South. THE STRUCTURAL-DEPENDENCY MODEL Dependency theory: unequal development of the world economy is a direct result of colonialism the rapid growth of Europe and North-America was achieved by systematic exploitation of under-developed regions 30  11/21/2024 THE STRUCTURAL-DEPENDENCY MODEL Dependency theory: unequal development of the world economy is a direct result of colonialism the rapid growth of Europe and North-America was achieved by systematic exploitation of under-developed regions Poverty and lack of development in the Global South are the spatial manifestation of the capitalist market system This system is largely controlled by the rich and politically powerful developed countries of the world They designed it to their advantage THE STRUCTURAL-DEPENDENCY MODEL Dependency theory: unequal development of the world economy is a direct result of colonialism the rapid growth of Europe and North-America was achieved by systematic exploitation of under-developed regions Poverty and lack of development in the Global South are the spatial manifestation of the capitalist market system This system is largely controlled by the rich and politically powerful developed countries of the world They designed it to their advantage Thus, under-development is not simply a stage that countries have to move through but rather it is an active process, produced and controlled to channel profits to the Global North 31  11/21/2024 STRUCTURAL-DEPENDENCY MODEL CORE 1. Core dominates periphery politically & economically 2. No matter the internal conditions in the periphery, it cannot escape the external conditions of domination PERIPHERY CORE Import-substitution strategy 1. Periphery erects trade barriers to limit the influence of the Core 2. Then replaces imported goods with goods made domestically 3. These import substitutes fuel local economic development in the PERIPHERY periphery STRUCTURAL-DEPENDENCY MODEL CORE 1. Core dominates periphery politically & economically 2. No matter the internal conditions in the periphery, it cannot escape the external conditions of domination PERIPHERY CORE Import-substitution strategy 1. Periphery erects trade barriers to limit the influence of the Core 2. Then replaces imported goods with goods made domestically 3. These import substitutes fuel local economic development in the PERIPHERY periphery 32  11/21/2024 THE STRUCTURAL-DEPENDENCY MODEL Dependency theory focuses on external not internal causes of poverty and the lack of development Poverty in the less-developed world is actively created by the very market processes that allow the developed countries of the world to prosper THE STRUCTURAL-DEPENDENCY MODEL Dependency theory focuses on external not internal causes of poverty and the lack of development Poverty in the less-developed world is actively created by the very market processes that allow the developed countries of the world to prosper International trade and prices are dominated by the rich nations of the world The structure of global markets is set to benefit those nations at the expense of the rest of the world (Prebisch & Singer argue “terms-of-trade” stacked against developing economies) 33  11/21/2024 THE STRUCTURAL-DEPENDENCY MODEL Dependency theory focuses on external not internal causes of poverty and the lack of development Poverty in the less-developed world is actively created by the very market processes that allow the developed countries of the world to prosper International trade and prices are dominated by the rich nations of the world The structure of global markets is set to benefit those nations at the expense of the rest of the world (Prebisch & Singer argue “terms-of-trade” stacked against developing economies) (Note: for modernization theory – trade and markets eliminate poverty, while for dependency theory they promote and sustain poverty) THE STRUCTURAL-DEPENDENCY MODEL The main solutions for many of the structural-dependency theorists was to: abandon trade erect trade barriers replace imports with domestic products 34  11/21/2024 THE STRUCTURAL-DEPENDENCY MODEL The main solutions for many of the structural-dependency theorists was to: abandon trade erect trade barriers replace imports with domestic products This is the policy of import-substitution that was practiced widely throughout much of Latin America in the 1960s and 1970s This policy failed – largely because the developing economies did not have markets that were well-developed enough to sustain local industry Example: Computer usage in industry Brazil → 1990: 90% vs. 1 to 5% CRITICISISM OF THE STRUCTURAL-DEPENDENCY MODEL Assumes that developing economies are merely passive & that they are incapable of change The success of several rapidly growing Asian economies suggested that growth & development were possible in the post-colonial era 35  11/21/2024 CRITICISISM OF THE STRUCTURAL-DEPENDENCY MODEL Assumes that developing economies are merely passive & that they are incapable of change The success of several rapidly growing Asian economies suggested that growth & development were possible in the post-colonial era (Note that successful East-Asian development occurred later than the experimentation with import-substitution in Latin America) At this time global markets provided new possibilities for emerging economies to exploit. (Also, nation-state played a much more active role in the East-Asian developing countries) Does this challenge the notion, perhaps, that the market alone will drive growth and development? NEOLIBERAL (MARKET-LED) DEVELOPMENT Crises of early-1980s prompted significant change in the management of development Developed nations take a more active role in development This role was directed through market mechanisms rather than through aid Market-based (neo-liberal) solutions to problems of: poverty slow-growth lack of development 36  11/21/2024 NEOLIBERAL (MARKET-LED) DEVELOPMENT Crises of early-1980s prompted significant change in the management of development Developed nations take a more active role in development This role was directed through market mechanisms rather than through aid Market-based (neo-liberal) solutions to problems of: poverty slow-growth lack of development Standard policies were: save & invest more have fewer children shift resources to more efficient uses remove trade barriers embrace free trade & markets NEOLIBERAL (MARKET-LED) DEVELOPMENT The IMF & World Bank became the primary institutions that provided loans to developing countries U.S. dominated these organizations 37  11/21/2024 NEOLIBERAL (MARKET-LED) DEVELOPMENT The IMF & World Bank became the primary institutions that provided loans to developing countries U.S. dominated these organizations This is a period of development we often refer to as the “Washington Consensus” The IMF & World Bank demanded reforms (structural adjustment) as a condition of loans: State austerity & limits on state spending Opening markets to goods & capital Privatizing state-owned assets Export-led development model RATE OF GROWTH GDP PER CAPITA, 1960-2000 GROWTH RATE GDP PER CAPITA KOR GNQ BWA.06 TWN ROUMLT JPN THA CYP CHN SGP.04 EGY IRL PRT GRC HKG ESP ARG PAN BRA CPVZWE ISR ITA INDTUNMYS TUR AUT FIN DEU MAR PER MUS CHL DOM FRA BEL SWENLD LUX.02 BRB DNK ISL GBR LSO MRT MOZ IDN PRY PAK AUS USA CAN CHE NOR COL PHL ECU CRI MEX NZL BFA NPL GTM ETH GNB MLI JOR ZAF BOL URYIRN TCD UGA MWI TZA HND CMR FJI SYR NAM RWA TGO GMB BEN GAB TTO BDIBGD KEN 0 COMCIVGHA JAM SLV MDGSEN ZMB VEN COG NGA CAF NER GIN -.02 COD 0 5000 10000 15000 20000 25000 GDP PER CAPITA 1960 roggdppc Fitted values 38  11/21/2024 POST-WASHINGTON CONSENSUS One size fits all model of development seen as incapable of alleviating global poverty and raising development by the late-1990s POST-WASHINGTON CONSENSUS One size fits all model of development seen as incapable of alleviating global poverty and raising development by the late-1990s IMF & World Bank increasingly criticized for the model of structural adjustment eroding the core of less-developed economies – especially their capacity to grow foodstuffs to feed their own populations (IMF provides loans while demanding open markets, markets open and global agri-business exports, lowering food prices & eroding domestic food production. Then prices begin to rise & food security issues become critical) 39  11/21/2024 POST-WASHINGTON CONSENSUS One size fits all model of development seen as incapable of alleviating global poverty and raising development by the late-1990s IMF & World Bank increasingly criticized for the model of structural adjustment eroding the core of less-developed economies – especially their capacity to grow foodstuffs to feed their own populations (IMF provides loans while demanding open markets, markets open and global agri-business exports, lowering food prices & eroding domestic food production. Then prices begin to rise & food security issues become critical) Neoliberal, market-based, policies generating some winners, but also many losers This, perhaps, generates instability / insecurity THE DEVELOPMENT STATE Through the 1970s and 80s several East Asian economies experienced rapid growth & development Japan first, followed by the newly industrializing economies of: Hong Kong South Korea Singapore Taiwan 40  11/21/2024 THE DEVELOPMENT STATE Through the 1970s and 80s several East Asian economies experienced rapid growth & development Japan first, followed by the newly industrializing economies of: Hong Kong South Korea Singapore Taiwan What had these countries in common? An active government THE DEVELOPMENT STATE Growth in these economies was closely regulated by a very active state that: Raised capital to finance growth & development Managed growth in key industries Regulated capital & labor markets (managing prices!) Protected emerging sectors (infant industries) by halting import competition & subsidizing exports Pushed an export-led model of industrialization Produce for export markets to grow industries 41  11/21/2024 THE DEVELOPMENT STATE Growth in these economies was closely regulated by a very active state that: Raised capital to finance growth & development Managed growth in key industries Regulated capital & labor markets (managing prices!) Protected emerging sectors (infant industries) by halting import competition & subsidizing exports Pushed an export-led model of industrialization Produce for export markets to grow industries These emerging economies did not experience rapid early growth because they were so competitive - they were massively subsidized by the state - they became competitive through growth! THE DEVELOPMENT STATE Growth in East Asian economies is seen by some as a celebration that development is possible Sometimes wrongly interpreted as market-driven 42  11/21/2024 THE DEVELOPMENT STATE Growth in East Asian economies is seen by some as a celebration that development is possible Sometimes wrongly interpreted as market-driven Strong role of the state (rather than the market) controls development Importance of governance regimes & institutions Interests in “mixed development regime” that recognizes that economies are different and that there are roles for the nation-state & the market Key take-aways History of development is complex Variety of different models/theories of development Each give rise to different policy options Limited success of purely market-based policies Important role of the state in directing development Role of cultural/institutional change along with political & economic shifts: Access to finance (not hot capital) Access to education Access to technology Fighting diversion/corruption Gender, land ownership, etc 43  11/21/2024 MAIN THEORY AUTHOR(S) KEY ARGUMENT PROBLEMS Modernization Rostow Capital investment Shift from agriculture to Eurocentric manufacturing Ignores structure of world Development occurs in stages based on internal economy & external relations conditions Dependency Andre Frank, Developed, core countries exploit those of the less Developing country markets not developed periphery in an inter-linked core- well-developed enough to Raul Prebisch periphery world system maintain economies Development leads to under-development Undermined by experience of East Asian developing economies Import-substitution Neo-Liberalism Deepak Lal, Developing countries should remove state Focus on growth did not alleviate intervention in the economy poverty Bela Balassa Embrace markets Not much convergence in growth either Open economies Developing economies weakened in some cases Development State Amsden, Strong state role in directing growth & Mixed results development Leftwich Infant industry protection & export-led industrialization 44