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E&BE. Summary of Chapter 1-9, 11,12. Course: Global development studies.
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Summary of Chapter 1-9,11,12 of the book of Adam Szirmai: socio-economic development.
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CHAPTER 1 DEVELOPING COUNTRIES AND THE CONCEPT OF DEVELOPMENT1.1 APPROACHES TO DEVELOPMENT/ 1.2 DEVELOPMENT DEBATE
There are two general approaches that can be distinguished when discussing development issues:
The fight against poverty: This approach focuses on the problems of widespread poverty, hunger and
misery in developing countries and on the question of what can be done in order to realise
improvements of the situation in the short-term.
The analysis of long-term economic and social development: This approach concentrates on comparing
developments in different countries, regions and historical periods in order to gain a better
understanding of the factors that have long-term effects on the dynamics of socio-economic
development.
Central questions in each chapter are:
How do the factors discussed influence the growth of productive capacity; the development of per capita
income; the standard of living; and the conditions of life in poor countries?
Which are the factors that contribute to socio-economic development?
Which are the factors that hamper development?
What are the explanations for the observed developments and trends?
How can the differences between regions and between historical periods be interpreted and explained?
There are no final answers to these question. They are debates on issues of development, which are
characterised by numerous clashing perspectives and theories and deep differences of opinion.
1.3 GROWTH AND DEVELOPMENT
What actually is, or what do we mean by development? Development has different measures.
Development as economic growth
Since we always ask questions such as: why are poor countries poor? Why do they lag behind? How
can they catch up? So development refers to economic growth or growth of national income.
Development as structural change
When there is economic growth, there occur qualitative changes in the structure of
production/employment, these are structural changes. Another qualitative change is technological
change: the ongoing process of change in process and product technologies, resulting in radically new
modes of production and new product ranges.
Development as poverty reduction
When there was a time that living conditions did not rise in developing countries, a conclusion was
reached that development is more than economic growth/changes in the economic structure. Three
additional requirements for development were now: decrease in poverty and malnutrition, declining
income inequality, improved employment situation.
Development as social welfare
Critics went even further, this led to emergence of the ‘social indicators’ : life expectancy, literacy,
levels of education, infant mortality, availability of phones, computer connections, good doctors,
availability of calories etc.
Development as modernisation
One should also pay attention to changes in family structures, attitudes, mentalities, cultural changes,
demographic movements, political changes, urbanisation etc.
Development as freedom
Someone argued that development is an integrated process of expansion of substantive freedoms.
Freedom from malnutrition, from poverty, from premature mortality, and access to healthcare.
Development as sustainability
Sustainable development is development that does not diminish the life chances of future
generations. When economic advance comes at the expense of future generations, this should not be
seen as a development.
,Four remarks can now be made:
1. Our assumptions should be made explicitly.
2. Mostly, development goals include reduction of poverty, increased economic welfare, improved
health and education, better governance, more participation of population in politics, political and
social freedom, and environmental sustainability. Development is a movement in the direction of
these goals.
3. An increase in productivity per worker and production per capita of population in poor countries is an
essential element of almost all definitions of development. So increases in productive capacity is
necessary for long-term development, otherwise there is no money to invest in development issues.
4. Not all societies develop in the same way, and there is no end in development.
1.4 ARE GROWTH AND DEVELOPMENT DESIRABLE
There has never been a choice whether or not to strive for development, it just happened, given rapid rates of
population growth for example, socio-economic development is needed to let poverty not sink into a hole.
Although not all developmental ideals are supported by all inhabitants of developing countries, almost
everybody longs for the socio-economic side of development. In turn, socio-economic development is
impossible without extensive social modernisation and institutional changes.
1.5 DEVELOPMENT AND WESTERNISATION
Words like development/modernisation are strongly determined by the international political and economic
balance of power. The countries that are economically and technologically advanced and politically/culturally
dominant become the models for development in the eyes of their own citizens, as well as in the eyes of the
people trying to break away from their dominance. This means that (nowadays!!, can change) development
and westernisation are entwined; explicit/implicit ideals of developments are modelled on the west.
1.6 INDICATORS OF GROWTH AND DEVELOPMENT
Even though there are many indicators of development, most of the times, national income per capita is still
used as the main indicator. This can be calculated in three different ways:
1. As the sum of all incomes that have been earned by workers and owners of capital/land during a
period of one year in a specific country. (national income)
2. As the sum of all value added in an economy in a given year. (national product)
3. As the sum of all expenditures in a country (C+I+G+X-I). (national expenditure)
One of the important advances in the measurement of national income is the development of PPP’s
(purchasing power parities). This leads to :
incomes of the poorest countries being actually higher than first estimated, poverty is more
realistically pictured since lower prices in country are taken into account.
Income rakings of countries can change quite substantially
The inequality of average per capita incomes in the world is diminished, as incomes in the poorest
countries now tend to be ‘higher’, while incomes in the richest countries tend to be ‘lower’, than
estimates based only on exchange rates.
But GDP/GNP cannot be used alone to describe development as already fully explained in 1.3. So, the Human
Development report (HDR) reports on many of the indicators described in 1.3 that need to be used along with
GDP/GNP. (Indicators were: life expectancy at birth, people below poverty threshold, data on malnutrition etc.)
This HDR has also introduced a measure/indicator called the Human development index(HDI). This is an
average of three variables:
an index of per capita gross domestic income(GDP), where higher incomes have lower weights due to
declining marginal utility.
life expectancy at birth
the level of education, where literacy counts for two-third, and the average number of schooling
counts for one-third.
,Still, in practice, other indicators have not superseded GNP as a summary indicator of the level of development.
If GNP stagnates over time, this will be reflected in a deterioration of social indicators. While income growth is
reflected in improvements in social indicators. So the development of GDP/GNP provides an indication of the
development of a country’s productive potential. So there cannot be a long-term improvement of the living
conditions without a corresponding growth of productive capacity.
1.7 DOES THE THIRD WORLD EXIST?
First world: advanced capitalist countries.
Second world: industrialised socialist countries in Eastern Europe.
Third world: developing countries.
This implies that all third world countries have common characteristics and interests, and that a wide gap
separates them from the industrialised countries.
Low-income countries (LIC), have a per capita GNI of less than 1036 dollars. LIC are sometimes called
LDC – least developed countries. These countries are in Africa, Asia and Haiti.
Lower-middle income countries (LMIC), have a per capita income of 1036-4085 dollars. The countries
are from diverse places.
Upper-middle income countries (UMIC), have a per capita income of 4086-12615 dollars. The countries
are from diverse places.
High-income countries (HIC) have a per capita income of over 12616 dollar.
- Next to this classification, the oil-exporting developing countries form a separate category. The central
challenge for these economies is how to realise a structural transformation into a more diversified economic
structure.
- Also, there are the newly industrialising countries (NIC). These have experienced impressive industrial growth
since the WO2. There is also a group of countries that have realised a little bit less growth since WO2, and
these are called the semi-industrial countries (SIC).
- After 1989, the berlin wall fell, and since then, Eastern European countries, the former Yugoslav republics and
the former Soviet republic are referred to as transition economies.
- Poverty is primarily concentrated in sub-Saharan Africa and Asia. But the greatest number of poor people
actually live in East and South Asia.
CONCLUSION: The third world/ the south are unacceptable simplifications, they do not justice to the diversity
of circumstances and developmental experiences in different parts of the world. The preferred term in this
book is : developing countries. Which emphasises the diversity of development experiences and the dynamic
nature of development processes.
Developing countries differ in:
- levels of per capita income (LDC, LMIC, UMIC)
- demographic characteristics
- natural resources and geography (oil exporting/importing, landlocked/access to sea etc.)
- structure of production
- economic regime
- differences in colonial experiences
- regional characteristics(Africa, US etc).
1.8 THE GAP BETWEEN RICH AND POOR COUNTRIES
How unequal is the world economy?
The ratio between the richest country-Norway, and the poorest country-Congo, is 172 to 1. Income
inequalities are even larger since they differ in countries.
Can the gap be bridged?
Despite of the huge differences, there is not an unbridgeable gap between rich/poor countries.
, Paradox of increasing inequality and increasing mobility: as world income differentials widen, the speed with
which some countries engage in catch-up accelerated. And the speed of catch up is now faster than in the
twentieth century due to the increasing mobility. So the acceleration of catch-up is related to globalisation and
greater possibilities for international technology diffusion.
In the Bottom Billion, Collier argues that one billion people in the poorest countries, are mired in stagnation and
diverge from the rest of the developing countries. The characteristics of these bottom billion countries is that
they have not been growing in contrast to the majority of developing countries. (Mostly countries in Africa and
Latin America).
1.9 WHAT DO DEVELOPING COUNTRIES HAVE IN COMMON?
In 1.7 some differences between developing countries were listed, but there are a number of important
characteristics and problems in common which justify a specialised professional focus on development(if there
were no common charachteristics, this book would not make sense). The characteristics are:
Poverty and malnutrition
Poverty is measured by the headcount: the numbers of persons in a given country with
incomes/consumption lower than a given poverty line. Or measured by poverty gap: the amount of
money needed to bring persons below poverty line up to the level of poverty line.
Malnutrition is associated with high death rates, low life expectancy, bad health, low productivity.
Large shares of agriculture
Labour productivity in agriculture is much lower than in the industrial sector, therefore in developing
countries a much larger proportion of the labour force is active in the agricultural sector than in
affluent countries.
Dualism and inequality
The problem of dualism, is the absence of technological diffusion from the modern technologically
advanced sectors(manufacturing, mining, modern services) towards the rest of the economy
(traditional sector: agriculture, food production etc.). I.e. there can also be ethnic dualism; some
ethnic groups are active in the modern sector, others in the traditional sector. When dualisms
coincide, problems can be extreme and may lead to conflicts and civil wars. Dualism go hand in hand
with high levels of income inequality.
Rapid population growth
This is as a result of a decrease in death rates and a continued high level of birth rates.
Rapid urbanisation
There are large-scale migrations from rural to urban areas and rapid growth of the urban population.
This leads to slums and megacities. Where dualism between modern/traditional is also clear to see.
Underutilisation of labour
Underutilisation means: only part of available labour is utilised, or labour is being used so
unproductively that labourers can hardly make a living despite working very long hours.
Political instability and pervasive corruption
There is a lack of national integration, feelings of solidarity with common culture are not fully
developed. Loyalties are oriented to a tribe, ethnic group, family or religion. So there are many ethnic/
religious conflicts in these countries. Law is poorly developed, human rights are not guaranteed and
corruption exists.
Environmental degradation
Industrial production is mostly delegated to developing countries. High population growth degrades
land.
Low levels of technology capabilities
Developed countries continue to import much of their technology from abroad. There are low levels of
schooling, training and experience, so implementing new technology is hard. So they depend on
outside knowledge and expertise.
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