6GEO3 Unit 3 Contested PlanetTopic 5: Bridging the Development Gap

What is this topic about?

• ‘Bridging the Development Gap’ should be seen as complimenting the ‘Superpower Geographies’ topic

• The two topics represent two sides of the same coin – the rich and developing on one side, the poor and underdeveloped on the other

• The topic explores the causes and consequences of the development gap

• The last section of this topic focuses on solutions – can the ‘gap’ be narrowed?

1. The causes of the gap2. The consequences of the gap 3. Bridging the gap

CONTENTS

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1. The causes of the gap • The development gap relates to global inequality

• Around 2.8 billion people live on under $2 per day (‘moderate poverty’)

• Some 1.1 billion people live on less than $1.25 per day (‘extreme poverty’)

• Over time a greater proportion of wealth has concentrated in the hands of the richest 20% of people, compared to the poorest 20% of people (see graph)

Since 1980, the percentage of people living in extreme

poverty has fallen from 40% to 20% of world population, but because of population growth the total number of people is extreme poverty is still very

high.

Measuring development

• Measuring development levels is a challenge.

• Traditionally development has measured using economic data such as GDP or GNI per capita.

• These measures fail to recognise:

1. Income distribution 2. The local value of money3. The non-money economy

e.g. barter and exchange• It is also important to

recognise that development has social and quality of life aspects

• Measures such as life expectancy, education level, access to sanitation are important

*data for Dec 2009

This basket of goods costs 112 Indian Rupees in India, the equivalent of £1.50*.

To buy the same basket of goods in the UK would cost around £6.

The difference in how much goods and services really cost, is why PPP

(purchasing power parity) GDP income is used rather than ‘raw’ GDP.

Using raw GDP per capita average income in India is about $1000, but PPP GDP per

capita income is $2800

• As the development cable model (right) shows, development is a multi-faceted process

• At its core is economic development, but to achieve real progress social, political, environmental and personal development is also needed.

• Recognising the complex nature of development is why development is often measured using an index, which combines a range of data

• Indices are considered more accurate than single data points such as GDP per capita.

The Human Development Index (HDI)

Life expectancy at birth + Literacy rate + Enrolment rate + GDP per

capita PPP

Physical Quality of Life Index (PQLI)

Life expectancy + Literacy rate + Infant Mortality rate

The Millennium Development Goals• The MDG were adopted by the UN in

the year 2000• The MDG are a global attempt to

measure, and actively improve, quality of life for the poorest people

• There are 8 Goals, with 21 targets within these. The target date to achieve the MDG is 2015

• The most famous Goals are1. Halve the proportion of people living on less

than $1 a day2. Halve the proportion of people who suffer from

hunger3. Achieve universal primary education4. Reduce by two thirds the under 5 mortality

rate

• Progress has been patchy, especially in Africa and South Asia were the problem tend to be most acute.

Explore MDG progress and annual reports athttp://www.un.org/millenniumgoals/

The development gap• The geography of the development gap is more complex than a simple ‘North-South divide’• Latin America has HDI levels similar to eastern Europe; China’s HDI and some others in SE Asia are relatively high• South Asia has a concentration of levels below 0.6• Level in the Middle East are relatively high, although not in Yemen, Syria and Iraq• The picture for Africa is very complex, with the extreme north and south having decent HDI levels, but some regions with shockingly low numbers

Core and Periphery

• Some countries remain largely unconnected to the modern globalised world.

• This is especially true in Sub-Saharan Africa , which remains very much part of the global periphery (see map)

• Other peripheral regions include north South Asia, the Andean region, parts of East and Central Asia.

• Growth areas (upward transition) are much better connected to the global core areas.

Sub-Saharan Africa has a range of factors which make development very challenging; these

include debt levels, landlocked states, conflict, corruption, Aids/ HIV, malaria, lack of

infrastructure and communications, low education levels, drought and many others

Global Players

• There are a range of players involved in the development process:

Player Role

World Bank / IMF

These two IGOs lend money to the developing world – essentially funding development, and as part of this process guide economic policy (the IMF). Much of the developing world’s debt is owed to the IMF and WB.

TNCs Invest in the developing world e.g. building factories; Foreign Direct Investment tends to flow to low cost locations, but where people are educated and skilled; Africa’s share of FDI is therefore small.

United Nations

Monitors the MDG, but has many component organisation which focus on development (UNDP), health (WHO), food and farming (FAO) and environmental issues (UNEP); often involved in disaster relief as well as longer term aid.

Governments Developed world governments provide funding for the UN, IMF and WB. They also provide bi-lateral aid the developing world in the form of Official Development Assistance (ODA). Developing World governments manage their countries path to development.

NGOs Charities and not-for-profit organisations provide aid to the developing world, often in a smaller, more localised way compared to Governments and IGOs. Some NGOs receive government funding

Individuals As consumers and voters, individuals can alter government policy both in the developed and developing world; community led development in becoming more common; developed world consumers may support fair trade.

Trade and development

• Trade is important to development, because it generates income.

• Least developed countries play a limited role in trade:

• LDCs tend not to be part of trade blocs, so their exports are subject to tariffs

• LDCs often export commodities, the price of which fluctuates wildly (see graph)

• Cheap commodity export earn few Dollars, but Dollars have to be used to import manufactured good – this creates poor terms of trade (see picture)

• Much of the value of the products we buy is added outside the country which supplied the raw materials

The 49 least developed countries

account for only 0.9% of world trade,

but have over 700 million people

2. The consequences of the gap • The development gap

means that poverty is common in least developed countries, especially in Sub-Saharan Africa

• In many countries males still have more access to education than females, and this has an impact on opportunities later in life (see diagram for Pakistan)

• In some situations, such as the Indian Caste system (still prevalent in rural India – see pyramid), society has built inequality into the social system

The African countries shown all have infant mortality rates of over 80/1000 live births, and under 5 mortality of over 100/1000; Sierra Leone’s 2008 rates were 160 and 278

Megacities

• Poverty and lack of opportunity is often most acute in rural areas*

• However, developing world megacities contain growing concentrations of urban poverty

• Some 1 billion people live in urban slums, likely to grow to 2 billion by 2030

• Slums often have:Poorly built, shack housingLimited and expensive water supplyLimited sanitationInformal, unreliable employmentLack of rubbish collection Social problems such as disease,

crimeFew services such as education and

health*see the rural urban data for Pakistan and Guatemala on previous and next slides

A UN-Habitat report in 2006 stated there was “concrete evidence that there are two cities within one city – one part of the urban population that has all the benefits of urban living, and the other part, the slums and squatter settlements, where the poor often live under worse conditions than their rural relatives.”

Ethnic and religious dimensions

• Ethnic and religious minorities often suffer worse poverty than the wider population

• The data for Guatemala show a large different between poverty rates for Native Indians and the White Hispanic population

• Such differences can result from subtle prejudice, and direct discrimination and persecution

• In South Africa, the long history of apartheid has left a legacy of stark differences between black and white populations

• Often different ethnic groups live in different geographical areas e.g. white gated communities versus black townships in South Africa

2001 Census Black South Africans

White South Africans

Under 15 yrs old 34% 19%

No education 22% 1%

Households with a telephone

31% 95%

Adult mean income

$1600 $8800

East Timor

• East Timor (Timor-Leste) was a Portuguese colony which gained independence in 1975, and was invaded by Indonesia in the same year.

• Indonesia occupied East Timor until 1999; East Timor regained its independence in 2002.

• The Indonesian campaign against East Timorese resistance fighters involved forced resettlement of 1000s of people into camps

• The death toll from fighting was high

• Portuguese was banned• Around 150,000 Indonesians were

settled on East Timor as part of the Transmigration Programme

• Most businesses were taken over by Indonesians

East Timor

Indonesia

Colony of Portugal Holland

Religion Catholic Muslim

Ave Income

$2300 $4000

HDI 0.49 0.73Indonesia’s occupation created a dual population of poor Timorese and better off

Indonesian migrants, reflected in the post-independence

differences in HDI and income

Poverty reduction at a price?• The pressing need to reduce

poverty has led some countries to ‘go for growth’

• Both China and India (and the ‘Asian Tigers’ before them) have opened their economies to world trade and investment

• This has created employment, raised incomes and reduced poverty

(estimates of extreme poverty)

1980 2005

India 45% 25%

China 60%+ 10%

Social and Environmental Issues

•Increased rural –v- urban inequality

•Mass rural-urban migration and rise in urban slums

•Increased air and water pollution from industry

•Stress on forests and water supply as resource demands rise

•Possibility of rising debt; financial crises

•Social problems – urban crime and disease

•Worker exploitation and human rights abuses

•Breakdown of traditional family structures and community

support

3. Bridging the gap

• How should the development gap be bridged? • This question is important because there are a number of

different approaches that might be taken • The choice of approach is influenced by political viewpoint

Neo-liberal / Capitalist

Marxist/ Socialist

Populist Grassroots

China, Asian Tigers

Cuba, Kerala (India)

Venezuela / Latin America

Community based

•Market led development, following the ‘Modernisation Theory’ of WW Rostow•Stressing industry and infrastructure, free trade and attracting foreign direct investment to create jobs and raise incomes.

•Breaking free of capitalism and profit.•State ownership and planning so that profits from industry and uses for health and education; usually involves wholesale land reform .•State control and limited involvement in world trade and TNCs

•Charismatic ‘man of the people’ leaders create a ‘them and us’ discourse promising social equality and using policies that appeal to the pockets of ordinary people•Critics state populism is directionless and leads to poor economic decision-making

•Small-scale, community focussed development often aiming to meet basic needs rather than hugely improve incomes•Often involves local or international NGOs who provide some funding and other support.

Strategies

• Development projects are often characterised as either ‘top-down’ or ‘bottom-up’: (see the next slide for examples)

Bottom up Top Down

Scale Small; based on one community or area e.g. a valley

Large; often part of national planning aims

Leadership

Community and NGOs; partnership arrangements

Government and government agencies; construction and engineering TNCs

Funding source

Local people and NGOs; donations or earned income recycled into the community

Government, via multilateral aid (WB / IMF) or bilateral aid; private investment

Aims Meeting basic needs of food, health, education and water; small improvements in income

Meeting national needs in terms of energy or water supply, or transport; profit

Technology

Intermediate / appropriate Hi-Tech

Types of project

Food production, water supply, small scale renewable energy

Electricity, transport, industry and infrastructure

Winners Local people; the environment Industry, urban dwellers, TNCs

Losers Usually are none Environment, rural people

• These three projects show contrasting strategies.

• ‘A’ is a small-scale, bottom-up intermediate technology project

• ‘C’ is a classic ‘top-down’ ‘big project’ with clear winners and losers

• ‘B’ is less easy to pigeon-hole as it is a national scheme, hi-tech, but aimed at the poorest and led by an NGO with a private partner

Aid

• Aid means assistance given to the developing world

• Aid can be in the form of money, food, goods, advice and technical assistance

• Aid comes from a variety of sources (see diagram).

• Development Aid given by OECD countries is termed Official Development Assistance (ODA)

• An UN target of OECD countries giving 0.7% of their GDP as ODA has existed for 40 years, but few countries actually give this amount (2006 data):

OECD average = 0.45%USA = 0.17%UK = 0.52%Sweden = 1.02%

Investment

• Flows of money to the developing world may be in the form of aid, but investment is important

• When companies and TNCs invest in the developing world this flow is called Foreign Direct Investment (FDI)

• FDI is motivated by profit• FDI is used to set up factories

fund construction in the developing world

• Most FDI flows towards NICs and RICs because they have a skilled workforce, and large markets

• There are question marks over the environmental and social value of FDI is relation to pollution and worker rights

The top 10 developing world locations for FDI in 2007 (in $ millions).Notice the lack of least developed countries in the listChina & Hong Kong 1,511,000Brazil 328,000Mexico 266,000Turkey 146,000Chile 106,000South Africa 93,000Thailand 86,000Malaysia 77,000India 76,000Saudi Arabia 76,0000

Governments use Export Processing Zones (EPZs)and Free Trade Zones (FTZs) to help attract FDI. China has

over 50 of these. In these zones foreign investors receive special tax breaks, rents are low and unions are

often banned.

• Some of the least developed countries face stark development choices

• In order to qualify for debt relief under the HIPC scheme they must undertake ‘structural adjustment policies’ (SAPs)

• Critics argue that World Bank and IMF sponsored SAPs and HIPC are simply another way of OECD countries controlling the least developed world

• Others say Washington Consensus reforms open countries and workers up to exploitation by TNCs

• The counter argument is “Look at China”

The Washington ConsensusThis is a set of economic reforms

which the WB and IMF advise developing nations to undertake as

part of a SAP to qualify for debt relief, and to help development. The reforms

include:

•Cutting public spending•Currency devaluation in some cases•Removal of import / export barriers

•Opening up to FDI•Removing subsidies

•Privatisation and deregulation

The aim of these policies is to help a country enter the global economy and

benefit trade.

Fair trade

• There are alternatives to FDI and Free Trade

• ‘Fair-trade’ is perhaps the most well known

• Fair-trade coffee, cocoa, cotton and tea farmers receive a ‘fair price’ for their produce, above market prices.

• The extra money improves income and some moneys is invested in community health and education projects

• Fair trade has grown and spread, but how much difference does it actually make?

•Fair Trade coffee price = $1.55 per lb,10% above market price.• Growers get 50¢ per lb. after Fair Trade cooperative fees, taxes and farm expenses. •Most farmers earn $1,000 ($2.75 per day).• According to Fair Trade researchers at the University of California, the price needed for farmers to rise above subsistence level is more than $2 / lb.

In 2008 fair-trade coffee sales were

$1.75 bil of the global $70 bil market; only $5 bil of that $70 bil

went to the developing world

Development futures

• Bridging the development Gap is a story of both good and bad news:

Good news Bad news o In some countries, such as India and China, the gap has narrowedo Debts have been reduced fro some HIPC countries, possibly giving them a chance of a new start o Aid in 2008 was at record levels and many OECD countries seem serious about the MDGo Some initiatives such as Fair Trade have helped, and NGOs often make a difference with bottom-up community led projects, but these need to be spread much more widelyo Progress has been made with some diseases such as Aids and Malaria

o In regions such as Sub-Saharan Africa little progress has been made and the gap has widenedo Many African nations will fail to achieve their MDG targets o The 2008-09 recession may have tipped up to 200 million people back into poverty and hunger, reversing progresso Aid may be less of a priority in the next decade as OECD countries struggle with their own financial problemso Corruption, conflict and bad governance still bedevil may LDCs o Neo-colonial relationships persist