Poverty & Development

1. Poverty & Development Countries according to the Human Development Index (2010)

2. Today • Developing countries & development • The debt crisis • Current issues

3. Developing countries & development

4. Recognizing developing countries: geography The choice of words • Developing countries • Third World countries • Less developed countries • The South • The global South Timeline • 1500s-1945: colonization • 1945-1970s: decolonization • The Cold War context • New countries as a “problem”

5. Recognizing developing countries: $ per day See the World Resources Institute search engine for basic poverty figures • Geography • GDP per capita (PPP*): • $1/day or $365/year • $2/day or $730/year see data for the whole world Proportion of population below $1/day (2008) * PPP: purchasing power parity takes into account the fact that the cost of the same products varies by country.

6. Recognizing developing countries: economic sector size • Size of economic sectors • in total GDP • in total employment

7. “Development”: standard definition vs. human development Standard definition Human development GDP growth not enough harder to measure nutrition health physical security leisure participationin community creative life Peasants Dancing, 1651Johannes Lingelbach (Dutch, 1622–1674). Oil on canvas; 26 1/2 x 29 1/2 in. (67.3 x 74.9 cm) • the Cold War & the invention of “development” • copying the US/European model • industrialization of agriculture • from agriculture to industry to mass consumption • measured by GDP growth

8. Defining human development “The basic purpose of development is to enlarge people’s choices. In principle, these choices can be infinite and can change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secure livelihoods, security against crime and physical violence, satisfying leisure hours, political and cultural freedoms and sense of participation in community activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives.”Mahbub ul-Haq, quoted in United Nations Development Program. (2008). “The Human Development concept”. Retrieved 9 February 2010, from http://hdr.undp.org/en/humandev/. 2011 Human Development Report Measured by the Human Development Index (HDI). See how it’s calculated.

9. The debt crisis

10. Algeria • Angola • Ecuador • Iran* • Iraq* • Kuwait* • Libya • Nigeria • Qatar • Saudi Arabia* • United Arab Emirates • Venezuela* • *Founding members • Former: Gabon & Indonesia Origins of the debt crisis • OPEC* and oil prices • “Petrodollars” in Western banks • Developing countries’ need for capital • Loans from Western banks • Interest rates rise * Organization of Petroleum Exporting Countries

11. The International Monetary Fund (IMF) & Structural Adjustment Programs (SAPs) • Lender of last resort • Allowing debtor governments to pay back debts • Conditionality • conditions for IMF & World Bank loans • “economic reforms”, “austerity measures”, “Washington consensus” • Washington consensus • Privatization of state-owned enterprises • Reductions in gov. spending (health, education & social) • Elimination of subsidies (cooking oil, staple foods, fuel) • Deregulation of labour markets (less protection) • Adoption of free trade • Allow foreign investors to buy domestic companies Debtors: those who have debts Creditors: those to whom money is owed Therefore debtors are supposed to reimburse creditors

12. Impose good economic policies to restore government budget & guarantee loan repayment restore credit rating and create “good investment climate” “conditions for economic growth” and “give investors confidence” What they did reduction in wealth redistribution increase in cost of living increase in poverty, child mortality, maternal mortality political instability NB: since the late ’90s restoration of social, health & education spending SAPs’ objectives & results

13. Benefits Developing countries do get investments from multinational/transnational corporations Jobs are created Taxable income for developing countries’ governments Ability to pay back loans Problems 12 countries, 75% of investments South-South competition Dubious labour practices There are more workers than are needed(!) Where did investments go? Same 12 developing countries 2005 to April 2011 43.3% Source: International Labour Organization. (2004). A Fair Globalization: Creating Opportunities for All. Geneva: ILO. pp. 28-29. http://www.ilo.org/public/english/wcsdg/docs/report.pdf 56.7%

14. Current issuesMore issues will be raised in the documentary

15. Debt cancellation • Jubilee 2000 (UK, US & Vatican campaigns) • the “odious debt” • human consequences • impossibility of repaying the debt • Impossibility of repayment generally acknowledged, but… • which LDCs should benefit? • “moral hazard” • G8 summit of Gleneagles, July 2005 • debt cancellation for 36 poorest countries • Some strings attached Group of 8 most indus-trialized countries Canada France Germany Italy Japan Russia United Kingdom United States

16. The Millennium Development Goals (MDGs) Summary of successes & failures available here (red menu on the right) • Officially a UN initiative • But dependent on developed countries • … and autonomous international organizations (IMF & World Bank) • 8 goals to be achieved by 2015 • Eradicate extreme poverty & hunger • Achieve universal primary education • Promote gender equality & empower women • Reduce child mortality • Improve maternal health • Combat HIV/AIDS, malaria, and other diseases • Ensure environmental sustainability • Develop a global partnership for development Requires govern-ment intervention with taxes, regu-lations & targeted policies

17. Conclusion • A global capitalist system • An increasingly integrated economic system… • with wide disparities in wealth • Numerous policies aimed at guaranteeing development & improvement in well-being… • with unclear results

18. Annex 1: International division of labour 1 At the time of developing countries’ independence N O R T H Developed country 2 Developed country n Developed country 1 Trade Trade Manufacturing of finished goods Manufacturing of finished goods Manufacturing of finished goods Exports Exports Exports S O U T H Raw material and agricultural products + some manufacturing Raw material and agricultural products + some manufacturing Raw material and agricultural products + some manufacturing Developing country 2 Developing country n Developing country 1

19. Annex 2: International division of labour 2 Since the 1980s N O R T H Developed country 1 Developed country 2 Developed country n Trade Trade R&D, manufacturing of hi-tech finished goods R&D, manufacturing of hi-tech finished goods R&D, manufacturing of hi-tech finished goods Exports incl. manufactured goods Exports incl. manufactured goods Exports incl. manufactured goods Investments and/or subcontractors Investments and/or subcontractors Investments and/or subcontractors S O U T H Raw material and agricultural products + growing manufacturing + services Raw material and agricultural products + growing manufacturing + services Raw material and agricultural products + growing manufacturing + services Developing country 1 Developing country 2 Developing country n Different parts of the finished good made in different developing countries