Human Geography By James Rubenstein

1. Human GeographyBy James Rubenstein • Chapter 9 • Key Issue 4 • Why Do Less Developed Countries Face Obstacles to Development? S. Mathews

2. In recent years, LDCs have made improvements in development, but the gap between LDCs and MDCs have continued to widen. • Natural Increase has dropped 20% in LDCs compared to 83% in MDCs. • 1/5th of the world’s people (in MDCs) consume 5/6ths of the world’s goods. S. Mathews

3. Progress toward development S. Mathews

4. To reduce disparities between the rich and poor countries, LDCs must develop more rapidly. They must . . . • adopt policies that successfully promote development (emphasis is on international trade). • They must find funds to pay for the development (emphasis is on self-sufficiency). S. Mathews

5. Elements of Self-Sufficiency Approach • 1. Spread investment as equally as possible across all sectors of the economy and regions. • 2. Isolate fledgling businesses from international corporations. • 3. Set barriers to limit imports. S. Mathews

6. India: Example of the Self-Sufficiency Approach • Limited imports of foreign goods • Exports were discouraged. • Government approval required for expansion. • Businesses subsidized. S. Mathews

7. Problems with the Self-Sufficiency Alternative • Inefficiency - protects inefficient businesses. • Large Bureaucracy – the complex administration, needed to manage controls, encouraged abuse and corruption. S. Mathews

8. Elements of International Trade Approach • 1. What resources does a country have in abundance that other countries are willing to buy? • 2. What products can the country manufacture and distribute at a higher quality and lower cost to other countries? S. Mathews

9. *Rostow’s 5 stage Development Model • The traditional society. • The preconditions for takeoff. • The takeoff. • The drive to maturity. • The age of mass consumption. S. Mathews

10. The Traditional Society • A very high percentage of population engaged in agriculture. • A high percentage of national wealth allocated to “nonproductive” activities, such as the military and religion. S. Mathews

11. The Preconditions for Takeoff • Under influence of well educated leaders, the country starts to invest in new technology and infrastructure, such as water supplies and transportation systems. S. Mathews

12. The Takeoff • Rapid growth, technical advances, and high productivity occur in a limited number of economic activities. • Other sectors of the economy remain dominated by traditional practices. S. Mathews

13. The Drive to Maturity • Modern technology diffuses from take-off industries to a wide variety of industries. • Workers become more skilled and specialized. S. Mathews

14. The Age of Mass Consumption • The economy shifts from production of heavy industry to consumer goods. S. Mathews

15. MDCs are in stages 4 and 5. • As a country concentrates on international trade, it benefits from exposure to consumers in other countries. • Rostow’s model suggests that any country can become more developed. S. Mathews

16. Examples of International Trade Approach • Persian Gulf States used petroleum revenues to finance large projects and provide consumers goods. • South Korea, Singapore, Taiwan, and Hong Kong used cheap labor to produce and sell products inexpensively. S. Mathews

17. Problems with the International Trade Alternative • . S. Mathews

18. Problems with the International Trade Alternative • Uneven Resource Distribution • Market Stagnation • Increased Dependence on MDCs S. Mathews

19. Uneven Resource Distribution • LDCs suffer when the resource that they have for sale doesn’t command a large enough price to enable them to purchase products needed for growth. S. Mathews

20. Market Stagnation • The slow growth of MDCs population can and has limited market size of products from LDCs. S. Mathews

21. Increased Dependence on MDCs • Investments in takeoff industries may reduce production of necessities for the population, forcing an LDC to depend on MDCs for those necessities. S. Mathews

22. Recent Triumph of the International Trade Approach • Since India dismantled its barriers to international trade, its per capita GDP has increase from 4% to 6% annually. S. Mathews

23. World Trade Organization • Established in 1995, by countries representing 97% of world trade, • to promote, and remove barriers to international trade in all countries. S. Mathews

24. Critics of the WTO • Liberals charge the WTO as antidemocratic. • Conservatives charge that the WTO compromises the sovereignty of individual countries. S. Mathews

25. Financing Development • LDCs must generally obtain loans from MDCs. • From banks and international organizations, and • From direct investment by transnational corporations. S. Mathews

26. Loans • The World Bank and the International Monetary Fund lend about $50 billion annually to LDCs for development. • Commercial banks from MDCs have a current outstanding loans to LDCs totaling $2.1 trillion. S. Mathews

27. Problems with Loans • Half of the projects funded in Africa have ended up as failures. • Many LDCs have accumulated debt that exceeds annual income. • Lending agencies have had to cancel debt and encouraged LDCs to adopt structural adjustment programs. S. Mathews

28. Debt as a percentage of income S. Mathews

29. Structural Adjustment Programs • Policies that create conditions encouraging international trade, such as raising taxes, reducing government spending, controlling inflation, selling publicly owned utilities to private corporations, and charging citizens more for services. S. Mathews

30. Transnational Corporations • Corporations operating in countries other than the one in which its headquarters are located. S. Mathews

31. Flow of Investment S. Mathews

32. Core and Periphery Core and PeripheryMost MDCs Most MDCs are located above the 30o north latitude. S. Mathews

33. Finis S. Mathews