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Global Development Issues Summary
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Summary Global Development Issues
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E&BE. Summary Chapter 10,13,14. Course: Global development studies.
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LECTURE 1: INTRODUCTION TO DEVELOPMENTTwo general approaches to development
The fight against poverty focuses on widespread poverty, hunger and misery in developing countries
The analysis of long-term economic and social development compares development in different countries,
regions and periods to understand what factors have long-term effects on socio-economic development
Relationship between economic growth and development
Economic growth is typically demonstrated by an increase in a country’s total output, Gross Domestic Product (GDP)
or national income per capita
It is an important and implicit dimension of the concept of development
Economic growth provides the resources which can be invested in a country’s development
Differences between economic growth and economic development
ECONOMIC GROWTH ECONOMIC DEVELOPMENT
It is considered single dimensional in nature as it It is a multidimensional phenomenon because it
only focuses on the income of the people of the focuses on the income of the people and on the
country improvement of the living standards of the people
of the country
Refers to a short-term process Refers to a long-term process
Measured in quantitative terms (increases in real Measured in both quantitative and qualitative
GDP, increase in a country’s total output, increase terms (Human Development Index, gender-related
in national income per capita) index, Human Poverty Index, infant mortality,
literacy rates etc)
Brings a quantitative impact on the economy Brings qualitative and quantitative impact on the
(increase in the indicators like per capita income economy (improvement in life expectancy rate,
and GDP, etc) infant mortality, literacy rates, poverty rates and
mortality rates)
Does not consider the income from the informal Does consider of all activities, whether formal or
economy informal
Does not reflect the depletion of natural resources Concerned with sustainability, which means
(e.g. pollution, congestion and disease) meeting the needs of the present without
compromising
In a certain period Continuous process
Economic growth occurs when Economic development occurs when
There is a discovery of new mineral/metal deposits There is an increased life expectancy
There is an increase in the number of people in the There is an increase in literacy and education
workforce or the quality of the workforce improves standards
There is an increase in capital and machinery There is improvement in the quality and availability
of housing
There is an improvement in technology There is improvement in levels of environmental
standards
Is development conceivable without economic growth?
Economic growth is a necessary but not enough for economic development.
For example, economic growth of a nation can be accompanied by increase in poverty and growing levels of
unemployment which would signal a decrease in development.
Development is a long-term process and looks at all aspects of growth, considering factors like the
environment and human needs.
Economic growth can only take place in the long run if there is development simultaneously.
Economic development is not conceivable without economic growth because this growth provides the
necessary conditions or factors that can be invested in a country’s development. The implementation of
policies or rules e.g. reducing infant mortality rates can only be successfully implemented if there is enough
‘money’ to invest in these projects.
,Development can be viewed in terms of
Structural change: economic growth accompanied by qualitative changes in the structure of production and
employment and technological change
Poverty reduction: economic growth should be ‘pro-poor’ and fulfil three requirements
o Decrease in poverty and malnutrition
o Decline in income inequality
o Improved employment situation
Social welfare: growth of productive capacity is a prerequisite for developments, here we see the
emergence of social indicators (e.g. life expectancy, literacy, levels of education, infant mortality, etc)
Modernisation: development as a change of entire society in the direction of modernisation ideals
o Rationality o Declines in social and economic
o Planning for development inequality
o Increases in production per capita and o National independence
production per worker o Political democratisation
o Improvements in the standard of o Increased social discipline
living
Freedom: integrated process of expansion of human freedoms (incl. freedom from famine and malnutrition,
freedom from poverty, access to healthcare and freedom from premature mortality)
Sustainability: development that does not diminish the life chances of future generations; if economic
advancement in the present generation comes at the expense of the life chances of future generations, then
this cannot be considered (sustainable) development
The Millennium Development Goals: eight development goals with quantified targets which were too be
achieved by 2015
o Strengths: systematic formulation of quantified policy targets and monitoring of progress towards
achieving them
o Weaknesses: list of desirable goals with no systematic discussion of how to allocate resources to
achieve the goals and no analysis of the economic and other mechanisms which contribute to their
realisation (absence of increases in productive capacity)
Gross national product (GNP) per capita is the dollar value of a country's final output of goods and services in a
year, divided by its population. The main drawbacks of this economic indicator are:
GNP does not include subsistence production: it refers to that part of the national income that is traded via
the market for money which doesn’t consider subsistence production (agriculture production to feed
themselves). If there is a shift from subsistence production to production for the market, it may seem as if
national income is increasing but in reality, it is not.
GNP does not include the informal economy: it does not adequately account for the output of the informal
or non-registered sector of the economy
GNP does not account for the effects that economic growth has on the environment: these effects include
the costs of environmental pollution, global warming and depletion of natural resources
GNP does not realistically represent the income of developing countries because it is not a relative measure
The most important dimensions along which developing countries differ from each other
Levels of per capita income
Demographic characteristics: population size, population density and population growth rates
Natural resources and geography: climate, geography, soil quality and natural resource
Structure of production: agricultural vs. industrial sectors
Economic regime: inward-looking regimes vs. outward-looking regimes; centrally planned regimes vs. market
economies → economies in transition
Differences in colonial experiences: some developing countries were colonised at an early state and some
not at all (variations in intensity of the colonial relationships)
, Differences in precolonial history: consider the precolonial history and the cultural and religious
development of the different societies → particularly: traditions of political centralisation and urbanisation in
Asian countries
Economic dynamism: developing countries are characterised by long periods of growth in some regions and
long periods of stagnation in others.
Regional characteristics: developmental experiences differ by region
Suitability of the term ‘Third World’
Szirmai concludes that the term ‘Third World’ is an unacceptable simplification. It does not do justice to the diversity
of circumstances and developmental experiences in different parts of the world. The preferred term in is the plural
‘developing countries’, which emphasises the diversity of development experiences and the dynamic nature of
development processes.
The use of this term implies that all Third World countries have common characteristics and
interests, and that a wide and growing gap separates them from the affluent industrialised countries.
However, data shows that there still exists great inequality both between rich and poor countries and among
poor countries themselves.
Instead, countries have been divided into three categories:
Low-income countries (LICs): per capita GNI of less than $1,036 🡪 these countries are eligible for aid and loans
on more favourable terms than richer developing countries; they are defined in terms of low income, weak
human resource base (e.g. education, health) and high levels of income vulnerability
Middle-income countries (MICs): composed of lower- and upper-middle-income countries
o Lower-middle-income countries (LMICs): $1,036-4,085 annual per capita income; struggle with
providing its citizens with essential services (e.g. water and electricity)
o Upper-middle-income countries (UMICs): $4,086-12,615 annual per capita income; struggle with
curbing corruption, improving governance, etc.
High-income countries (HICs): per capita income of over $12,615
Oil-exporting countries: this category cuts across the income classification because they belong to both the UMIC
and the LMIC categories. However, they are still considered developing countries because of their one-sided
economic structure (dependent on a single export product → oil/gas). They face one central challenge: how to
realise a structural transformation into a more diversified economic structure.
Saudi Arabia and Kuwait are technically part of the high-income country category. However, they are
considered developing countries because they are oil-exporting countries. They possess a one-side economic
structure as they are dependent on a single export product, in this case oil/gas.
Newly industrialising countries (NICs): these countries have succeeded in building up a modern industrial structure
in a short period of time → proves that industrialisation is a realistic option for developing countries
Is the inequality between rich and poor countries increasing or decreasing over time?
The degree of inequality is very high and has been increasing dramatically. The inequality between households is
even higher than between countries because it includes the richest of the richest and poorest of poorest → the
distribution of world income over households is even more unequal than the distribution of the world income over
countries. Inequality in MICs is greater than in LICs.
To what extent is there an unsurmountable gap between rich and poor countries in the world economy?
The gap between rich and poor countries has been increasing dramatically over time. For example, the average per
capita income of the forty-six high-income countries is 27.8 times as high as that of the thirty-six poorest countries
for which PPP income estimates are available. In 1998, the bottom 50 per cent of households received less than 10
per cent of world income. Despite the huge differences, it is not correct to speak of an insurmountable gap between
rich and poor countries.
, There is a paradox between the increasing inequality and increasing mobility. The speed of catch-up
in successful country is very high. However, while some countries move upwards others stagnate or decline
and some countries even seem trapped at the bottom due to political conflict, being landlocked and bad
governance. There is a constant process of change in the ranking of countries (no insurmountable gap
between rich and poor).
Regional differences in poverty, welfare and growth dynamics (main trends in global poverty)
Poverty is primarily concentrated in Sub-Saharan Africa and Asia
Asia has large and dense populations with more economic dynamism
Africa is sparsely populated and characterised by long periods of economic stagnation compounded by wars
and political instability
Large Latin American countries are much more affluent and prosperous than most other developing
countries, but their main development issue is that of distribution
Most common problems and characteristics of developing countries
Widespread poverty and malnutrition: poverty is not restricted to the poorest countries. There are also
large numbers of extremely poor people in developing countries with a higher average income → unequal
distribution of incomes
A relatively large share of agriculture in output and employment: the share of agricultural production in the
total production is much higher than in affluent countries → lower labour productivity
Dualism and inequality: high levels of income inequality are attributed to a wide gap between the modern
sector (e.g. mining, manufacturing, etc.) and the traditional sector (e.g. food production); technological
dualism, regional dualism, cultural and ethnic dualism → may lead to social conflicts or civil wars
Very rapid growth of population: the decrease in death rates and a continued high level of birth rates
results in a large excess of births over deaths
Explosive urbanisation: large-scale migration from rural to urban areas as well as rapid growth of the
existing urban population leads to the emergence of widespread slums and uncontrollable megacities →
growth of cities + relative depopulation of the rural areas reinforces existing dualism
Large-scale underutilisation of labour: 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
o Open unemployment is relatively low in most developing countries → absence of formal social
security systems forces people to find jobs in the informal sector
Political instability, weak governance, and pervasive corruption: nation-state and the rule of law are weakly
developed; lack of national integration
o Feelings of solidarity with a common national culture/society are not fully developed
o Ethnic or religious conflicts which threaten national unity
o Human rights are not guaranteed
o Strong military presence in politics
o Transparency is limited → corruption
Environmental degradation: pressure of population on natural resources (e.g. more intensive cultivation)
results in severe environmental degradation
o Pollution laws are not reinforced fully
o Population is concentrated in cities with inadequate sewerage and sanitation imposes heavy
burdens on the environment
o Expansion of agricultural land + logging + use of fuelwood = rapid deforestation
o Environmentally unfriendly methods of waste disposal are relocated to developing countries by
MNCs
Low levels of technological capabilities: inadequate schooling, training, and experience results in low levels
of technological capabilities → limits the rate of technological change and economic growth
Proximate, ultimate and intermediate sources of growth (Szirmai’s framework)
At the proximate level, we look at measurable economic determinants of economic growth
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