The Developing World

Presentation Outline

1) Characteristics of developing states2) Economic comparisons between developing

and developed states3) Newly industrialized states4) Economic Policies of developing states5) Democratization in the developing world

Most of the world’s states which are part of the developing world (yellow).

Mexico

Nigeria

Iran

1) Characteristics of developing states

• Lower economic development and less industrialized

• Large income gap between rich and poor• Lower educated population with lower literacy

rates• Higher birth rates and high death rates• Traditional societies where women tend to

have an inferior status to men• Poor governance and high levels of corruption

Many developing states were once part of European empires. Colonialism is a major legacy in the developing world

Mexico

Nigeria

Iran was never colonized

Shanty town in South Africa

Agricultural workers in Nigeria

U.N. Human Development Index (Measures literacy rates, life expectancy, and GDP per capita)

Mexico

Nigeria

Iran

Gini Index (Measures income inequality) Much higher income gap in the developing world with the exception of the USA

U.K.

MexicoNigeria

Iran

China

Russia

Transparency International (Measures Corruption levels)

MexicoNigeria

Iran

2) Economic Comparisons

Country PPP (in USD$)United Kingdom $34,800Russia $15,900Mexico $13,900Iran $10, 600China $7,600Nigeria $2,500

Comparative PPP (purchasing power parity in per capita GDP)

What conclusions can you draw from this table?

Comparative Economic Sectors

Country Primary(Agriculture)

Secondary(Industry)

Tertiary(Services)

Mexico 13.7% 23.4% 62.9%Iran 25% 31% 45%Nigeria 70% 10% 20%China 38% 46.9% 43%Russia 10% 31.9% 58.1%United Kingdom

1.4% 18.2% 80.4%

What conclusions can you draw from this table?

3) Newly industrialized states

• Political Scientists agree that developing state is too broad and general, since among developing countries there is a wide range of economic development

• New industrialized refers to states which are still developing their economies but which are moving towards full industrialization; some may eventually become developed states

The Newly Industrialized States

Mexico

4) Economic policies of developing states

A) Dependency TheoryB) Westernization Model

Dependency Theory

• Economic theory which states that the economic problems which developing countries face were caused by colonialism and economic exploitation by more developed states

• According to this theory, globalization and trade are not the solution rather the problem because developed states will always take advantage of developing states

How does this cartoon illustrate the dependency theory?

Import Substitution

• Developing states which follow the dependency theory believed that the best way to grow their economies is to protect local industries from international competition

• This is done by setting quotas on production, imposing high tariffs (taxes) on imported goods, and providing huge subsidies to local manufacturers- Iran still follows this model; Mexico and Nigeria used to follow this model

Drawbacks of import substitution

• Policies in Mexico created industries which were not internationally competitive

• High employment resulted in high inflation and government debt

• Exports to other countries were low• Mexico had to borrow money from the

International Monetary Fund (IMF) and the USA

Westernization Model

• According to this theory, the only way for developing states to grow their economies is to adopt the model Western countries have followed for decades:

create a market-based economy encourage foreign investment and trade develop a successful export industry

Export- oriented

• If you can’t beat them, join them!• Newly industrialized states such as South Korea,

India, Brazil, Mexico, and Malaysia have liberalized their economies and focused on trade and export

• South Korea exports many high tech products• Brazil exports resources such as timber, copper, and

other metals• India exports cheap clothing, and outsources services• Mexico exports cheap clothing, and food

Drawbacks of Westernization model

• States such as Mexico and Nigeria have given up sovereignty in exchange for more economic development

• World prices of oil, metals, food etc. are constantly fluctuating (going up and down) and states following the Western model have little influence over these prices and a more vulnerable to economic crashes and global recessions

5) Democratization in the developing world

• Nearly all developing states had an authoritarian regime at one point or another

• Mexico, Nigeria, and Iran all share this common history

• Today, Mexico and Nigeria are considered democracies

• Nearly all democracies in the developing world are emerging, struggling, or illiberal democarcies

Mexico

Nigeria

ChinaU.K.

Russia