Chapter 17: Critical Issues of the 21 st Century

1. Chapter 17: Critical Issues of the 21st Century

2. Global Interdependence International Trade • Flow of manufactured goods and armament from MDCs to LDCs (70% or world trade) • Flow of natural resources and cash crops from LDCs to MDCs (30% of world trade)

3. Global Interdependence • In MDCs: recession reduces the demand for LDC imports • In LDCs: reduced export earnings lowers the demand for MDC imports, resulting in a global recession • Each $1 billion exports in the U.S. sustains 25,200 jobs • 1981-82 recession: -400,000 jobs • 1982-83 Latin American debt crisis: -500,000 jobs • 1997-98 Asian financial crisis: -1,100,000 jobs

4. Global Interdependence International Finance • Flow of DFI from MNCs into LDCs (the “global factory”) • Flow of ODA from MDC governments to LDC governments • Flow of loans from IMF and World Bank to LDCs • Flow of debt-service payment from LDCs to MDCs • Flow of funds due to TOT decline from LDCs to MDCs • Flow of resident capital from LDCs to MDCs

5. Global Interdependence Human Capital • Flow of people from politically, socially, and economically repressed LDCs to MDCs • Legal immigration: The Brain Drain phenomenon • Illegal immigration

6. Global Interdependence • Reduce the debt and debt-service burden • Create new LDC funding: tax resident capital outflow and MNCs • Establish new international institutions to stabilize global economic relations • Reform IMF and World Bank policies

7. Global Environment The Greenhouse Effect and Global Warming • Excessive per capita energy fossil fuel consumption due to affluence • Rapid deforestation due to poverty, falling primary-commodity export prices, and commercial land development • Rapid desertification due to soil erosion due to land over-use and lack of fertilization

8. Global Environment The Rio Summit’s Agenda 21 • Alleviate poverty and improve environmental capital • Invest in R&D to reduce soil erosion • Improve family planning through female education and employment • Prevent the destruction of the rain forest • Protect the natural habitats and biodiversity • Invest in alternative energy to reduce pollution

9. Crisis in Sub-Saharan Africa • Decline in the standard of living Rapid population growth, but slow economic growth Social and political oppression and human rights violations • HIV-infection and death from AIDS (20 million HIV-positive in 1997 of which 9 million were women)

10. Transition in Eastern Europe • Sharp decline in the GDP • High and rising inflation • Increased poverty: 14 million (4%) in 1988 to 119 million (32%) in 1994 • Increased crimes and social injustice • Diversion of funds from LDC development ($100 billion per year)

11. Democracy • Help LDC people remove non-democratic governments and repressive regimes (Iran, Iraq) • Solve international conflicts that make the oppressed resort to violence and terror (Arab-Israeli land dispute) • Eradicate poverty and prejudice: one world, one people