IB Notes

Disparities in wealth and development

HUMAN DEVELOPMENT INDEX

- The Human Development Index measures the development of people in different countries. It includes life expectancy, literacy rate (along with average years of education) and standard of living (including income and cost of living).

- High levels of human development can be achieved without high incomes and vice versa.

- Most countries have had an improving HDI over the past 15 years. However, CIS countries (former Soviet republics) are going through a long, painful transition to market economies. Poor African countries' development has been hindered or reversed due to HIV / AIDS and internal / external conflicts.

- Many oil producing countries have a high GNI but low HDI. On the otherhand, some poor countries (Sri Lanka, Cuba, Vietnam) have high HDIs because resources have been devoted to improving it. 

- Advantages of HDI: It encompasses many other indicators to indicate well-being and standards of living.

- Disadvantages of HDI: Doesn't include gender equality, female empowerment, etc.

- An HDI value doesn't tell the whole story. Some factors may be very high but other factors may drag it down. It also doesn't show extremes between different areas, states or provinces, it only takes an average of the entire country. HDI is only a snapshot of time, always changing. 

 

- The main differences between the GDP and GNI, is that the Gross Domestic Product is based on location, while Gross National Income is based on ownership. It can also be said that GDP is the value produced within a country’s borders (overall economic output), whereas the GNI is the value produced by all the citizens (GDP + income obtained from other countries such as remittances, dividends, interests).

 

- PPP means purchasing power parity. This compares what the same amount of money can buy in different countries. It takes into consideration different costs of living, eg a dollar may buy more goods in Afghanistan than it can in Switzerland.

Other measures of development:

Infant mortality rate (IMR)

- High IMRs are found in the poorest countries. However, these are usually preventable.

- IMRs are low where water supply, sanitation, housing, nutrition and basic healthcare are adequate. 

 

Gender-related development index (GDI)

- Measures achievements in the same dimensions using the same indicators as HDI, but examines inequalities between women and men.

 

Gender empowerment measure (GEM)

- Reveals whether women are taking an active part in economic and political life. Exposes inequalities in opportunities in selected areas.

- Tracks the % of women in parliament among legislators, professional & technical workers and gender disparity in earned income which reflects economic independence. 

 

Education index

- Based on the adult literacy rate and the combined enrolment for primary, secondary and tertiary schools. Score goes from 0.0 to 1.0. 

- Adult literacy rate is the proportion of the adult population (15 and over) who can read and write short, simple sentences. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HUNGER

- There are 815 million hungry people in developing countries. 

- Up to 10 million people die every year from hunger or hunger-related diseases. 

- 75% of hungry people live in rural areas. These people depend heavily on agriculture for income and emplyment with limited alternatives.

 

Child hunger:

- One child dies every 5 seconds from hunger. 

- 167 million children under 5 years of age who are underweight. They lose curiosity, motivation and the will to play. 

- Inadequate nutrition and before during pregnancy results in 17 million children born underweight annually. 

- Chronic hunger delays or stops physical and mental growth of children. 

- Economists estimate that hunger reduces the GNP of some developing countries by 2-4%.

 

Women hunger:

- Women are the world's primary food producers but they are more affected by hunger and poverty than men. 

- 70% of the world's hungry people are women and girls.

 

ORIGIN OF DISPARITIES

- The world is becoming increasingly unequal in terms of development between different countries.

- NICs like Taiwan and South Korea is where state-led industrialization, spontaneous industrialization and TNC-led industrialization resulted in these "tiger economies".

- Countries in sub-Saharan Africa remain trapped in the cycle of poverty for the past decades.

 

- The world's urban growth population is nearly double of the population growth rate. In 2001, 32% and 72.8% of the world's and LEDC's urban population respectively lived in slums.

- Efforts have been made to improve living conditions of favelas. The United Nations Millennium Declaration aims to improve the lives of 100 million slum dwellers. 

- Slums have high concentrations of poverty, crime, social & economic deprivation. Slum dwellers have limited access to credit and formal job markets due to stagmatization, discrimination and geographic isolation. 

- Slum dwellers usually suffers from waterborne diseases such as typhoid & cholera, as well as HIV / AIDS.

- Slums have the most intolerable urban housing conditions including: Insecurity of tenure, lack of basic services, overcrowding, fragile houses built on unsafe / polluted lands. 

- Slums, however, allow migrants the opportunity to absorb into the urban environment, find a staple income and start a new life. Cultures can mix together as well.

 

Evidence of substantial gains in world economic development:

- Average death rates of children dropped by 55% since 1965.

- Life expectancy has increased 12 years since 1965.

- From 1970 – 2005 adult literacy rates rose from 48 % to 82 %.

- In 2007 average income per person was 18 times more than in 1947 and global
- GDP increased from $3 trillion to $54 .

 

Evidence of substantial setbacks in world economic development:

25% of people in LEDC’s still have life expectancies below 40 years.

 2.7 billion people live on less than US$2 a day.

2.5 billion people have no access to clean water.

 Warren Buffet, Carlo Slim and Bill Gates have total assets greater than the GDP of the world’s 57 least developed nations.

About 115 million primary aged children do not attend school; two thirds of them are girls.

 

REDUCING DISPARITIES

Expanding trade

- Trade links between developed and developing countries.

- Affects unskilled labour indeveloped countries: lower wages, higher unemployment, greater income inequality.

- LICs and NICs are increasing their exports of primary products and manufactured goods. 

- Each country specializes in different sorts of manufactured goods and services so there is a two-way flow of goods. 

 

Trading blocs

- Members within the same trading bloc have free access to each other's markets, whilst non-members face a tariff. 

- However, it is harder for developing countries to access these markets, to increase trade and to develop economically. 

 

Fair trade

- Brings benefits to people involved in every single production process.

- Crops are grown locally using appropriate technology, and processes can often be labour intensive in order to raise the skill of the workforce and to alleviate poverty.

Environmental impact will be minimized

- Promotes natural and organic farming

- Avoid polluting substances

- Protect water supplies

- Use biodegradable substances where possible

- Recycle products where possible. 

 

Remittances

- The value of remittances going back to LEDCs are often more than double the value of foreign aid.

 

Export processing zones and Free trade zones

 - EPZS and FTZS are paths towards quick industrialization.

- Propblems of indebtedness and serious foreign exchange shortfalls in LEDCs since the 1980s.

- Spread of new liberal ideas in the 1990s that encouraged open economies, foreign investment and non-traditional exports. 

- The search by MNCs for cost-saving locations. This shifts manufacturing, assembly and component priduction from locations in the advanced economies. 

 

Debt relief

 

 

Aid

- Top-down developmet: Usually large scale and carried out by governemtns, international organizations and experts. They're done by people from outside the are and are imposed upon the area or peoople by outside organizations. These projects are well funded and quickly responsive to disasters. They do not involve local people in the decision making process. 

- Bottom-up development: Small in scale and labor intensive ( common projects include building earthen dams, creating cottage industries). It involves local communities and local areas. It is run by locals for locals and they are involved in the decision making process. Limited funding is available. 

Effective aid:

- Provides humanitarian relief

- Provides external resources for investment and finances projects that could not be undertaken with commercial capital. 

- Project assistance helps expand much-needed infrastructure.

- Contributes tto personnel training and builds technical expertise. 

- Can support better economic and social policies. 

Ineffective aid:

- Might allow countries to postpone improving economic management and mobilization of domestic resiurces.

- Replaces domestic saving, direct foreign investment and commercial capital as the main sources of investment and technology development.

- Provision of aid might promote dependency rather than self-reliance.

- Some countries have allowed food aid to depress agricultural prices, resulting in greater poverty in rural areas and a dependency on food imports. It has also increased the risk of famine in the future. 

- Aid is sometimes turned on and off in response to political and strategic agenda of the donor country, making funds unpredictable, which can result in interruptions in development programmes. 

- The provision of aid might result in the transfer of inappropriate technologies or the funding of environmentally unsound projects.

- Emergency aid does not solve the long-term economic development problems of a country.

- Too much aid is tied to the purchase of goods and services from the donor country, which might not be the best or the most economical. 

- A lot of aid does not reach those who need it- the poorest people in the poorest countries.