Ch. 9 Key Issue 1

1. Ch. 9 Key Issue 1 Why Does Development Vary Among Countries?

2. What do you think development is? • How should development be explained? • How should it be viewed? Is it an inherently “Western” idea?

3. What is Development? • Process of improving the material conditions of people through diffusion of knowledge and technology. • Development implies progress- usually means improvements in tech., production, and social and economic welfare of people • Countries cluster at the high (MDC) and low (LDC) ends of the spectrum • MDCs and LDCs tend to cluster together in space

4. Key Terms/Indexes • Gross National Product (GNP)- total dollar value of the officially recorded goods and services produced in and out of a country • Gross DomesticProduct (GDP)- total value of goods and services produced only within the country per year • Gross National Income (GNI)- GNI = GDP+income -payments to other countries • Informal economy is not counted- what the government does not keep track of or is illegal

5. The 3 Indicators of Development • Stems from idea that Indus. Rev and tech. can improve lives of people • There are three ways we can measure a country’s development: • Economic indicators • Social indicators • Demographic indicators

6. Human Development Index • To reveal the level of development, the HDI, created by the UN, combines 4 factors: • 1 economic • 2 social and • 1 demographic indicator • HDI ranges from 0-1 • 30 of lowest 32 countries found in sub-Saharan Africa

7. Economic Indicators of Development • HDI uses Gross Domestic Product (GDP) per Capita (per person) • Per capita GDP can help determine average wages in a country • Dividing GDP by the population (per capita) = contributions made by each person towards a country’s wealth • GDP alone can be misleading: Not everyone is starving in LDCs with GDP p/c of $3000. Or wealthy in US with $45,000 GDP p/c

8. Other Economic Development Indicators • These indicators are used to distinguish between MDCs and LDCs but not used to calculate HDI. • Types of Jobs • Worker productivity • Consumer goods

9. Types of Jobs • Wages are higher in MDCs than LDCs because people earn living in different ways • Called the International Division of Labor • Primary sector- extracting materials, hard manual labor (mostly LDCs) • Secondary sector- manufacturing process (raw materials into products) (more LDCs than MDCs now) • Tertiary sector- services: exchanging goods and services for money (mostly MDCs)

11. Occupational Structure • China GDP $6,200 • agriculture 49%, industry 22%, services 29% • Australia GDP $32,000 • agriculture 3.7%, industry 26.4%, services 70% • Philippines GDP $5,100 • agriculture 36%, industry 16%, services 48%

12. Occupational Structure • Luxembourg GDP $59,143 • Agriculture 1%, industry 30%, services 69% • Singapore GDP $21,492 • agriculture 0%, industry 30%, services 70% • Equatorial Guinea GDP $5,900 • agriculture 20%, industry 60%, services 20%

13. Occupational Structure • Haiti GDP $346 • Agriculture 32%, industry 20%, services 48% • Malawi GDP $156 • agriculture 37%, industry 29%, services 34%

14. Worker Productivity • Workers are more productive in MDCs – they produce more with less effort • MDCs have machines and tools • LDCs rely on human and animal power • Value added per capita measures productivity • Selling price – inputs = VA • High p/c GDP allows countries to invest in productivity  increases wealth

15. Consumer Goods • High GDP p/c wealth used to purchase cars, cell phones, internet, etc. • More necessary in MDCs than in LDCs- population is more dispersed • Creates a gap of “haves” and have-nots” in LDCs = conflict? • Owners of consumer goods are concentrated in urban areas in LDCs

16. Social Indicators of Development • MDCs use wealth to provide schools and healthcare  healthier, educated, protected from hardships = economically productive citizens • 2 social indicators used to measure HDI: Education and Literacy • Student/teacher ratio- Less students, more personalized instruction in MDCs • Literacy rate- More book, magazines, newspapers printed in MDCs

17. Social Indicators of Development • Health and welfare • Diet- more calories and protein in MDCs • MDCs have resources to care for sick- more hospitals/doctors p/c • LDCs have to pay more for health care- gov’t does not have GDP resources to pay for • MDCs have “safety net” programs”: Struggled to pay for recently because of slowing economic growth and aging population • Faced with cutting benefits or increasing taxes

18. Demographic Indicators of Development • Demographics: characteristics of a population (demographic transition) • HDI uses life expectancy as main indicator • Better health and welfare permit people to live longer (60 in LDC, 70 in MDC) • Low life expectancy means more young people in LDCs (6x more) • IMR, NIR and CBR can be used to distinguish between MDCs and LDCs

19. Uneven Development within Countries • Islands of Development • Gov’ts prioritizing creation of wealth • Companies usually set up close to their resources, need cities to house workers and fulfill their needs • Leads to one super developed city in an “underdeveloped’ country • Port Gentile, Gabon, Africa – oil city