Why are some places more developed than others?

1 in 5 people live on less than $1 a day

On average, an American consumes 200

times more resources than an Indian

112 new cities will be created each year for the next 25 years

Europeans spend more on pet food than Africa spends on food

1 billion people live without fresh water

24,000 die each day from hunger-related causes

Examples

Indonesia

Colombia

Uganda

Democratic Republic of Congo

Kenya

Burma

Iraq

Sudan

Civil Conflict and Governance

AIDS kills two million people in Africa a year, ten times more than war.

In MEDCs the HIV infection rate amongst the adult population is less than 1%. In South Africa, it is 20%, with 1,500 more people being infected every day.

“Up in Smoke?” report (2005, updates 2006)

Climate Change and Development

"In my view, climate change is the most severe problem that we are facing today, more serious even than the threat of terrorism." David King, Chief Scientific Advisor to the UK Government

The digital divide …

Technology:

A virtuous circle of development

Advanced technology

Improvements in productivity – • farming techniques

• factories

• health

• energy generation

Higher income

A better quality of life • Healthier

• More educated

• Improved food security

Higher productivity and greater knowledge

Adapted from UN Human Development Report 2001 (Chapter 2)

www.commissionforafrica.org

Focus on Africa …

Economic ‘Unfair’ trade High transport costs (a colonial legacy?) Reliance on primary commodities Late entry into manufacturing sector Overseas debt High risks of overseas investment

For every dollar received in sub-Saharan Africa in aid and debt relief between 1970-2000, the region lost $14 from trade barriers, debt servicing and poor investment policies

Political Civil conflict Poor governance

Environmental Low agricultural productivity Impact of climate change

Social Poor health and education Pressures of popl growth and urbanisation ‘The brain drain’

The Millennium Development Goals

DATADebt, AIDS, Trade, Africawww.data.org/

Make Poverty Historywww.makepovertyhistory.org/

International Financial Institutions.International Financial Institutions.

•Western countries previously dominated the Globe through colonization (Early form of Globalization)

•After dependence, poorer countries still depend on financial aid, credits and support from ex-colonizers (Increased economic dependency).

•This has helped contribute towards the debt burden.

World TradeWorld Trade

Problems with tradeProblems with tradeTrade is the exchange of goods for sale e.g. raw materials like

coal, cotton, tin and bananas.

However, If there is a change in demand e.g. copper telephone wires were replaced by fibre optics then demand falls. Zambia’s national income was greatly affected by this.

Bad advice is sometimes given by theWorld Bank. E.g. Coffee example-Tanzania case study-Basic economics of supply and demand

Task: Watch the Red Nose video and answer the questions onthe worksheet in your booklets

Trade and Unequal Development

Trade barriers (tariffs, subsidies, quotas)

Surplus dumping

The balance of power in the W.T.O.

TNC control

The ‘race to the bottom’ …

The world’s 49 least developed countries

account for only 0.4% of world trade

World Development Movement website

Dependence on primary commodities – terms of trade now at their lowest for 150 years

Lack of infrastructure, technology and a manufacturing base

Unsustainable exploitation of natural resources

Overseas debt

The case of coffee …

1997-2002: Coffee prices fell by 70%, costing LEDC exporters $8 billion in lost foreign exchange earnings

Dominated by four TNCs – 25 million coffee growers receive an average of $1/kg; consumers pay $15/kg

The potential benefits of tradeThe WTO estimates that the 1994 Uruguay Round trade deal added $109 – 510 billion to world income.

Trade creates more and better paid jobs.

Poorer countries can exploit their comparative advantage (‘do what you do best and trade for the rest’)

Task: Find out what the Round table agreement is?

ICA (International Commodity Agreement)ICA (International Commodity Agreement)

The ICA tried to stabilize prices, but attempts often collapsed e.g. International Coffee Agreement in 1989 when coffee fell from $US 1.4 to .70 per pound in just 4 months.

Also Brazil in 1974 had a fungi that affected crops in Columbia and Mexico and there was a war in Angola which also decreased supply and prices increased. Then many countries switched to growing more coffee (crop substitution) and supply increased and prices decreased.

What else affects the price of commodities?What else affects the price of commodities? Fashions in food etc often change which affect demand and

prices which lead to fluctuations in price as well as the effect of weather and harvests e.g. Coffee, Tobacco & sugar

Also factories often close down during recessions in the North which affects demand from the imports from the South and creates further poverty.

Commodity substitutes also affect commodities e.g. synthetic cocoa butter, vanilla flavouring and food sweeteners.

Case Studies and other examplesCase Studies and other examples

Artificial sweetener production decreased demand for natural sugar and lead to one quarter of a million people unemployed in the Philippine island of Negros.

Non-agricultural commodities can also be affected e.g. Tin from Bolivia which lead to more gold being mined. The impact was more people migrated to the cities (General problems of urbanisation) and more rainforest destruction.

Problems with tropical storms e.g. Hurricanes affect the Caribbean which grows a lot of bananas.

Trading policiesTrading policies Tariffs in the west result in LEDCS selling raw,

unprocessed commodities rather than exporting manufactured goods e.g. Pineapples have a 9% duty, but canned pineapples are 32% and Juice is 42%.

Tasks:Tasks:1. Answer questions 6,7,8 & 9 of page 137 of

Population, resources and development.2. Explain what Trading blocs are and give examples

of political and economic collaboration (Page 137)3. Answer questions 1,2,5,7 & 8 from the Geoactive

on trading blocs in your booklet4. What is UBEP? – What have they done to try and

stabilize the prices of Bananas? (137)5. Answer questions 10 and 11 on page 140.

TasksTasks

Read the page on Reducing disparities 2:1. What is the difference between Export

processing zones and Free trade zones?2. How do Transnational's benefit from EPZs?3. Name 4 EPZs.

More tasksMore tasks

Read the section on Fair or ethical trade in your booklets

Find out what fair trade is and research an example of fair trade and evaluate its successes and failures

Watch and take notes on the manufacture of footballs in Pakistan.

Fair Trade-Is it always fair? Read the opinion below, and summarise the arguments

Fair Trade-Is it always fair? Read the opinion below, and summarise the argumentsGoods produced under a 'fair trade' arrangement are sold

under the brand name of the 'fair trade' organization and hence lose their local identity. The producers are forever dependent on the 'fair trade' intermediary who continues to determine unilaterally the size of the price premium. Producers who do not accept the conditions imposed by the 'fair trade' intermediary can be summarily dropped from the scheme.

Draw backs of fair trade continuedDraw backs of fair trade continued

The main concern of business firms who sell the same products as the 'fair trade' organizations is what makes the prices paid 'fair'. (a) In commerce, a 'fair' price is one that is based on the price consumers will pay for the goods minus all the costs and risks involved in the operation between the market-place and the producer. This is the 'market' price. A 'fair trade' price is usually higher than the market price. But why is a price higher than the market price 'fair'? What determines how much higher the so-called 'fair' price should be? Who decides? The answer to these questions depends on the way 'fair trade' goods are marketed.

(b) As a business model, the 'fair trade' movement can be portrayed as selling 'absolution' to consumers who feel guilty about how well off they are compared to the producers who supply them with certain goods, especially foods. When these consumers pay the premium price, they feel they are doing the 'right thing'. In other words, the price premium they pay is a kind of charitable contribution. The 'fair trade' intermediaries share the premium paid by consumers with the producers in a proportion that they decide. The part they keep for themselves is used to finance their own organizations and provide their employees with a first world life style.

Current 'best practice' to improve the livelihood of small producers involves some kind of co-operation between donors and business firms in which the producers receive business and technical training so that they meet market requirements for better quality goods and so increase their income and improve their life in whatever way they see fit.

the preferred development mode