A Divided World

1. A Divided World 1 - The Three Worlds 2 - The World Bank Classification of Development 3 - The United Nations Classification of Development 4 - The Human Development Index 5 - Inequalities

2. The Three Worlds • Origins • New American foreign aid policy (1948): • President Truman. • Providing financial, technical and military means for recent and fragile states (facing the communist movement). • The geopolitical structure of the world was consequently settled for the next 40 years with three worlds; the First, the Second and the Third. • Third World: • Term brought forward in 1952 by the French author Alfred Sauvy. • Duality between capitalist systems leaning market-based economies and control-based communist nations. • What remained were nations that were “ignored, exploited, despised and wishing to be recognized”.

3. The Three Worlds • Ignored: • Cold War putting the international attention towards the United States and the Soviet Union. • Exploitation: • Almost all of them have been part of the colonial control of a European country. • Despised: • Populated by non-European populations. • Recognition: • Early stage of their independence or on the way to be.

4. The Three Worlds • First World countries • Market economies having a high Gross National Product (GDP) per capita. • Generally capitalist democracies having the United States, Western Europe and Japan as leaders. • The United States as the pole: • Military bases around the world and practicing foreign aid policies (neo-colonialism) for nations within its area of influence. • Second World countries • Centrally planned economies; from socialism to communism. • Average GDP per capita and a well-developed industrial structure. • The USSR as the pole: • Satellite nations in Eastern Europe and allies in Asia, Africa and Latin America

5. The Three Worlds • Third World countries • “Other” nations having diversified political conditions. • Low GPD per capita and a weak, and sometimes non-existent, industrial structure. • Africa, South America and Asia were the stage of several ideological confrontations between the First and the Second worlds. • Several situations of dependency were created between First World and Third World countries. • Movements trying to organize Third World countries such as the League of Nonaligned Nations in the 1960s.

6. The Three Worlds First World Second World Capitalist economies lead by the United States Socialist economies lead by the USSR North East West South Area of conflict between the first and the second world (Korea, Vietnam, Africa, etc.) Nonaligned nations Third World

7. East / West Division, 1982 United States Core USA ally Pro USA URSS Core USSR ally Pro USSR Non aligned

8. The World Bank Classification of Development • A new context • Important political and economic changes from the end of the 1980s. • Challenged the conventional economic classification of development as well as the main poles of the world-system. • Changes from a bipolar organization (East-West) to a multipolar organization. • Tendency toward some “homogenization” of political systems (with numerous exceptions). • The classification now used is based on economic criteria.

9. The World Bank Classification of Development • Income per capita • Main classification criteria used by the World Bank. • The average amount of capital earned by individuals. • Straightforward relationship between the per capita income and the economic structure of a nation. • The higher it is, the more a population is working in the industrial and services sectors. • Observation backed by solid evidence drawn from the evolution of developed economies since the industrial revolution.

10. Income per Capita, 1993 $695 and less $696-8,625 $8,626 and more Not available

11. The World Bank Classification of Development • Patterns • The GDP per capita underlines the important disparities between countries of the “North” and of the “South.” • Does not well illustrate the development potential of the market: • China has a per capita income slightly over $300 per year, whereas development opportunities are very high. • Mali has a similar income per capita, but conditions of the economy are completely different. • Income by capita doesn't necessarily represent the purchasing power: • The quantity of goods and services a currency can buy. • The higher the purchasing power is, the more an economy is developed.

12. The World Bank Classification of Development • Purchasing power parity: • Considers the comparative cost of living (food, lodging, energy, etc.) between nations. • A low income country with a low cost of living may have a GDP with PPP similar to an average income country with a higher cost of living.

13. United Nations Classification of Economic Development • Structure • Using several criteria related to income as well as the structure of the economy and exports. • Advanced economies: • High income levels. • The classifications proposed by the World Bank and by the United Nations are similar. • Newly industrialized economies: • Manufacturing goods represent more than 25% of the GDP and 50% of the exportations. • Around 20 countries have experienced a fast and recent industrial growth.

14. United Nations Classification of Economic Development • Petroleum exporting countries: • Drawing a significant portion of their income from the petroleum industry (notably its exportation). • Also defined as “rent economies” having artificially high levels of per capita income. • Continent sized countries: • India and China. • Low income rural societies are dominant. • Economic growth is having huge impacts of the demand a raw materials, goods and services, as well as over urbanization. • Least advanced economies (LAE): • Very low per capita GDP (less than $700), a low level of industrialization (less than 10% of the GDP) and alphabetization (less than 20% of the population). • They mostly include African countries.

15. United Nation Classification of Economic Development Economies Underdeveloped Developing Newly Industrializing Advanced Oil Export / Rent

16. Human Development Index • Nature • The Human Development Index (HDI) is a composite indicator developed in 1990 by the United Nations Program for Development (UNPD). • More complex and representative measure. • Definition • Level of health: • The variable used is the life expectancy at birth. • A good health system is likely to improve the life expectancy significantly in a nation. • Level of education: • The alphabetization level and the average years of attending school are the two variables used.

17. Human Development Index • Income: • It is represented by two transformations on the GDP per capita. • The first adjust de GDP per capita to take account of the purchasing power parity. • The purchasing power parity basically considers the cost of living in each country and adjusts the GDP accordingly. • The second transformation considers that welfare increase in a non-linear fashion with income. • Going from a GDP per capita of $1,000 to $2,000 is more important for the human welfare of that country than going from a GDP per capita of $15,000 to $16,000, even if the increase is the same. • The HDI ranges from 0 to 1 and is a comparative measure. • The country having the highest score for a variable has a value of 1 and other countries are graded from how far they are from this best score.

18. Human Development Index, 2001

19. Global GDP, 2002

20. Distribution of Global Income Groups, 1990 • Inequalities • 20% of the world’s population was controlling 85% of the available capital in 1995. • This share was 70% in the 1960s. • 1% of the population controls 40% of the capital. • 50% of the global population live with less than $2 a day. • The richest 200 people • Combined income of 41% of the global population (2.46 billions). • Net worth of $1,042 billion. • Make $500 per second.