Unequal Development: the Chicken or the Egg

1. Unequal Development: the Chicken or the Egg

4. Barriers to Economic Development • Social Conditions • Demographic factors (CBR, Life Expectancy, Dependency Ratio, etc) • Inadequate Nutrition • Lack of Sanitation (sewage systems, clean water, health care) • Lack of access to Education • Lack of Gender Equality

5. Barriers to Economic Development • Disease

6. Barriers to Economic Development • Foreign Debt

7. International Trade

8. Trade Barriers • the EU’s internal market is about removing barriers to free movement of goods, services, people and capital • the flow of goods and services in the world economy is also important • organizations have been set up to encourage the removal of barriers to free global trade

9. Why the stress on free world trade? • The world economy went into a deep depression in the 1930s, as many countries closed their barriers to trade with other states. This led to: • Mass unemployment • Social upheaval • Rise of fascism and World War II

10. How to prevent chaos happening again? • Global powers set up bodies to support international trade • International Monetary Fund • World Bank • All countries encouraged to join these organizations, or face exclusion from benefits of free world trade

11. What do the IMF and World Bank do? IMF: • Lends to countries with balance of payments problems • Pushes for economic reforms • Reports on policies in member states

12. What do the IMF and World Bank do? World Bank: • Aims to help development by advising and lending – with many conditions • Countries encouraged to lift import and export barriers, cut subsidies and remove price controls

13. Criticisms of IMF IMF only lends money if countries agree to: • Sell their resources cheaply • Cut public spending Critics say this serves to increase the problems of poverty in poor member countries

14. Criticisms of World Bank Loans depend on countries agreeing a ‘Structural Adjustment Programme’ • Leads to rapid increase in price of goods in country • Increases poverty • Lower investment and cut social spending Little evidence that these policies work

15. What about the World Trade Organization (WTO)? • The WTO deals with the rules of trade between countries • It developed from the General Agreement on Tariffs and Trade (GATT) • WTO agreements set the ground rules for international commerce

16. Why so much outrage over globalization? Other than the criticisms raised earlier, opponents of globalization point to: • Falling share of world trade taken by developing countries • Subsidies and tariffs set by rich developed economies: USA steel tariffs, EU agricultural subsidies are two of the culprits

17. 10 Benefits to the WTO • Keeps the peace • Disputes handled constructively • System based on rules rather than power • Freer trade cuts the cost of living • Gives consumers more choice

18. 10 Benefits of the WTO • Trade raises incomes • Trade stimulates growth, inc. employment • Basic principles makes system more economically efficient • Shields governments from narrow interests • Encourages good government

19. Ten Arguments against the WTO • Only serves interests of multinational corporations • Is a stacked secretive court • Tramples over labor and human rights • Is destroying the environment • Is killing people

20. Ten Arguments against the WTO • US adoption of WTO was undemocratic • Undermines local development and penalizes poor countries • Is increasing inequality • Undermines national sovereignty • The tide is turning against free trade and the WTO