Chapter 9 Development
Let’s Go On a Vacation! • Where would you like to go on vacation? • Pick a less-developed destination and discuss that makes it an attractive destination. • Make a list of the amenities you would like it to have.
Hmm…now ask yourselves: • Are the people who live in this place year-round fortunate to live at such a desirable destination? • What do the local ppl depend on for income? Does tourism play a role? • What do the ppl in this country who do not live in a tourist area do for work? • Can any of these ppl come to our country on a vacation? Why not? Is that fair?
Modern Examples • Phuket • What we see here is vastly different from the post-tsunami • Most victims= Poor resident:
Key Issue 1: Why Does Development Vary Among Countries? • MDC = relatively developed or developed • LDC = developing. • 3 factors: • Economic • Social • Demographic • HDI = development is a function of all 3 • 1 econ (GDP) + 2 social (literacy, education) + 1 demographic (life expect) = HDI. • U.S = 10th
Human Development Index, 2005 Fig. 9-1: Developed by the United Nations, the HDI combines several measures of development: life expectancy at birth, adjusted GDP per capita, and knowledge (schooling and literacy).
Uneven globally U.N. Human Development Index ( life expectancy, education, income)
Uneven Nationally U.S. poverty (red dots)
YouTube Video • Best/Worst Place to Be A Mother
GDP • Gross domestic product (GDP): value of the total output of goods & svc produced in a country, normally in a yr. • GDP per CAPITA is typically the GDP divided among the population, but in countries w/guest workers that gets muddled. Basically the amt of money each citizen gets in that country, on avg. • Goods + Services / population • Per capita GDP = average wealth, not the distrib of wealth. Ex. U.S. GDP = $12trillion, pop is 300mil = GDP per capita of $40K
Annual GDP per capita, 2005 Fig. 9-2: Annual gross domestic product (GDP) per capita averages over $20,000 in most developed countries but under $5000 in most less developed countries.
Gross National Income (GNI) & GNI PPP • Another economic factor • Dollar value of all goods & svc in a country, plus the dollar value of exports minus imports. • Measure a country’s collective wealth, NOT personal income. Indicates a realtive std of living • Goods + Services + (Exports – Imports) • Gross Nat’l Income Purchasing Power Parity (GNIPPP) estimate that takes into acct diff. in prices between countries. Loaf of bread US = $1, cost equiv in China is 44 cents.
1. Economic Indicators • GDP & GDP per capita used in HDI depending on country (sometimes hard to figure in LDCs) • 4 others useful: Econ’c structure, worker product’y, access to raw materials, avail’y of consmr goods • Avg MDC = $27K, $15/hr • Most LDC’s = $4,000, $2/hr but increasing • Doesn’t mean poor or wealthy – 1/8 of U.S. population classifies as in poverty.
Types of Jobs (see handout from prev. chapter on Core/Periph. Model) • Primary • Secondary • Tertiary • Quaternary • LDCs more primary – 60% in Ag. Less than 5% in MDCs • MDCs increase in Tertiary, Quat, dec in Prim & Sec • This reflects increased global competition
Best Jobs projected in U.S. by Growth – CNN Money • Telecommunications Network Engineer 53% • Systems Engineer 45% • Personal Financial Advisor41% • Veterinarian35% • Senior Financial Analyst 34% • Business Analyst, IT29% • Software Development Director 28% • Physical Therapist 27% • Physician Assistant 27% • Computer/Network Security Consultant 27%
Productivity • Value added in mfg = Value of the product after you take out cost of materials & energy • Obviously more “value added” with cheaper labor. Is this exploitation?
Raw Materials • He who holds the valuable stuff we need, holds the $$$$!!! • Oil = huge.. Gas prices right now reflect this • Country with more material = better chance of developing but not a sure thing • Others without can still do well (Japan, Singapore, Switzerland) • Changes in science = changes in demand & profit.. Look at coal & iron demands - lowered
From the Financial Nut online…why gas prices so high • Again, 71% of the $3.00+ per gallon we are currently paying is determined by crude oil costs. This is key to understanding why gas prices are so high now
Why is Crude Oil Going Up? • That’s the real question! Because if we can answer that question, we will be able to see why retail gas prices (71% of which are directly influenced by crude oil costs) are gradually climbing. • GROWING WORLD ECONOMYExpansion economically again. As a result, energy needs increase in order to output more products and services. Additionally, we are seeing true growth in China, India, and Brazil (NIC ALERT!!!) Oil is a necessary component in economic growth. For these reasons, an increasing demand in crude oil exists, and that tends to drive prices up. • WEAK US DOLLAROil is purchased around the world in US dollars. If you’re from Japan, you must by US dollars with your Yen before you can purchase a barrel of crude oil. In other words, no matter where you come from, before you can buy oil, you must exchange your currency for the US dollar. Exchange rates will make it cheaper for some to buy oil. Because of this, investors are buying into oil… drives price up.
The Big Question to Discuss… • With the mass amount of scientific developments with corn/ethanol and electric/solar options, why do you think these options aren’t being rigorously explored in the U.S. (and many other countries)? • Support your theories!
Consumer Goods – we like our “stuff” in the U.S. Telephone Land Lines per Population
Have or Have Nots • Consumer Goods are a huge issue • People in LDCs know about them; they can’t afford them. • Look at Egypt, Libya, Tunesia… not the REASON for unrest, but part of it. You see gov’t officials, wealthy with all the “stuff” and you have nothing and have to pay more.
Why not the U.S.? – Another BIG question • Why do you suppose the U.S. hasn’t seen an uprising like in N. Africa & the Middle East?
Social Indicators of Development • Higher the level of Dev’t, greater the quantity & quality of education. • Quality measured by 1. Student/teacher ratio & 2. literacy rate • Avg = 10 yrs MDCs, Only a few in LDCs • S/T ratio twice as high in LDC’s • But does that mean BETTER education? • NPR Recording – falling behind?
Primary Student-Teacher Ratios Fig. 9-6: Students per teacher, primary school level. Primary school teachers have much larger class sizes in LDCs than in MDCs, partly because of the large numbers of young people in the population.
Health & Welfare • German Healthcare (VIDEO) • Govt pays 70% or more in EUR, private pay less than 30% • Private ind’l pay 55% in U.S. (employers pay), which more closely reflects an LDC than an MDC. • U.S. is #2 on Heathcare spending (Medicaid, Medicare, etc..)
The Healthcare crisis they talk about.. • In 2007, the U.S. spent $2.26 trillion on health care, $7,439 per person, up from $2.1 trillion, or $7,026 per capita, the previous year – Medicare/Medicaid resources. • Remember supply & demand? The more the demand… • Warren Buffett
Demographic Indicators of Dev’t • Life expectancy • Infant Mortality Rate • Natural Increase Rate • Crude Birth Rate
Key Issue 2: Where are More & Less Dev. Countries Distributed?
More & Less Developed Regions • More developed regions • Anglo-America – Western Europe • Eastern Europe – Japan • South Pacific • Less developed regions • Latin America – East Asia • Southeast Asia – Middle East • South Asia – Sub-Saharan Africa
This key issue.. • Do brief summaries of the regions on the sheets provided, i.e. • Anglo-America: • Homogeneous • Maj. Eng-speaking • Rich in raw material • Less mfg. survived w/high-tech, agriculture
Key Issue 3: Where does level of Dev’t Vary by Gender? • Men and women are different: Video: Friends • Not a single country with true equality (UN) • Agree or disagree? • Video on equality
QUESTION to consider… • What is an economic indicator of gender inequality? • What is social indicator of gender ineq? • What is a demographic indicator?
How to measure – 2 ways • GDI – Gender-Related Dev’t index • GEM – Gender Empowerment Measure • GDI first – 3 indicators Gender Differences are: • Economic – Reasons? • Social – education & literacy . Video: Nakzia - Afghanistan • Demographic – life expectancy. Gender gap GREATER in MDCs!! • Why these disparities?
GEM – 2 indicators • Economic: Professional & tech jobs are important measure – greatest advancement opp’y • Where is highest level? • Political: % of country’s administrative & managerial jobs – influencing decision making. % in public office • Highest?
MDCs MUCH better for women! • Women in MDCs – 2/3 of income on avg. • Avg 1 in 5 in political office • End Women’s Suffrage
Gender-Related Development Index (GDI), 2005 Fig. 9-13: The GDI combines four measures of development, reduced by the degree of disparity between males and females.
Gender Empowerment • Fewer women hold positions of power in both MDCs and LDCs • GEM calculated – 2 economic (income & prof. jobs) + 2 political power (managerial jobs & elected jobs). • Complete equality = 1.0. Highest are MDCs • Why do women have a tough time in politics? • 15% of reps in Senate & House of Rep are women
Key Issue 4: Why do LDCs face obstacles to development? • What evidence is there that LDCs are developmentally IMPROVING? • What evidence is there that they are NOT? • 1/5 of the world’s ppl in MDC’s consume 5/6 of the goods.