Disparity!

Economic and Social Development

In addition to the demographic transition discussed in the Population unit. Countries go through economic and social stages of development. For example if a countries economy is enhanced the population’s standard of living is also enhanced, education and income will also rise and according to the demographic transition their birth rates should decrease.

The Industrial Revolution created a huge transformation, but only in countries in Europe and North America. Their economies moved towards ‘Industrialization’. Not only did Europe and North America go through social and economic change, so did other parts of the world, the parts that had the resources to fuel this industrialization.

From this point on Rich and Poor countries emerged.

Rich countries were called Industrialized or Developed. Development can be broken down into seven Dimensions:

Development

Cultural Dimensions

Political Dimensions

Environmental Dimensions

Gender Dimensions

Social Dimensions

Economic Dimensions

Human Dimensions

Cultural Dimension: Deals with local history and culture.

Political Dimension: Deals with freedom and democracy.

Environmental Dimension: Deals with sustainable development and ecological sensitivity.

Gender Dimension: Deals with gender inequalities such as income, involvement, education, and life expectancy.

Social Dimension: Deals with inequalities in poverty and age groups.

Economic Dimension: Deals with the size of the economy. The income and purchasing power of the population. Job availability is also important.

Human Dimension: Deals with education, basic needs, freedom of choice and overall health and well-being.

The above dimensions can be measured using what we call economic and social indicators. Birth rate, death rate, GNP, number of people per doctor, population pyramids etc.

When we think of Developed we think of:

• Manufacturing of products

• High levels of consumerism – buying goods and services.

• An advanced infrastructure, that is a strong transportation and communication network.

• Higher education – University and College.

• Ownership of land and capital (money)

• The existence of Multi-National companies.

• Centres of political power.

• Global communications.

The poorer countries are designated; Developing or less developed. These terms suggest that in order to reach the Developed stage they have to pass through other stages in order to be like Europe or North America.

There are a number of theories that try to illustrate the road to development:

The Modernization Theory (the stages to economic growth) by W.W. Rostow

Stage 1, the traditional society: This stage is characterized by rural and agricultural economies. Little change occurs in this stage with only a very low level of technology. Bangladesh and Ethiopia today and Canada before 1850.

Stage 2, preconditions for takeoff: This stage is apparent when a strong central government encourages “entrepreneurs” to develop businesses. Society has a surplus of wealth. In this stage natural resources become important and are exploited. Britain was the first in 1750 (Industrial Revolution). India and Indonesia today and Canada from 1850 on.

Stage 3, the takeoff: This stage is characterized by higher rates of capital investment and more and more entrepreneurs which leads to a manufacturing industry and technological innovations. The tertiary sector starts to grow as well as urbanization. People start to save money which creates a class of future spenders. Foreign Aid could place a country in this stage, Brazil and Mexico today and Canada in the 1900s.

Stage 4, the drive to maturity: A strong manufacturing sector is evident. Technology and innovations is widespread. Diversified economy. High levels of saving create wealth. Economic gain outstrips population growth. Hong Kong, South Korea today and Canada in the 1950s.

Stage 5, the age of high mass consumption: The society in this stage is predominately urban. There is a high use of technology, high levels of productivity, and a high per capita income. A surplus of money to be spent on non-essentials. Japan, the U.S. and Canada after 1950 to the present.

The above is a theory created by someone from a rich country, it is a capitalist point of view. The developing countries found it hard to reach the latter stages. Brazil and Mexico borrowed lots of money to create capital but of course they fell into debt. Their debt led to economic hardship. They became rich in human resources but the creation of wealth and entrepreneurs did not happen.

Often the capital for the developing world’s business remains in the hands of the developed world. Multinational companies invest in the businesses of the developing countries, but the profits go back to the developed countries.

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1. Traditional Society

2. Preconditions for takeoff 3. Takeoff

4. Drive to maturity

5. Age of high mass consumption

Core and Periphery Theory by Immanuel Wallerstein

Wallerstein stated that the existing world economy that is based on capital existed since the time period of 1450 to 1670. He states that countries centered in Western Europe formed an economic “Core” around which the development of the rest of the world – the “Periphery” – took place. These western countries had strong governments, and strong armies to support later economic expansion. Trading developed around the main urban centres of London, Paris and Madrid. Large amounts of Capital was available and this financed the development of later empires.

The “periphery” included Asia, Africa, Eastern Europe, and Latin America. These countries were essentially controlled by other countries. They developed economies to feed materials back to the core. Much of the labour provided in the periphery was forced labour, controlled by the core countries.

In Canada will call the core the Heartland and the Periphery the Hinterland. The Windsor to Quebec corridor is the Canada’s heartland and the rest of Canada can be considered the hinterland. Countries and even regions in countries can have core and peripheries.

Wallerstein suggests that there are four categories into which each region of the world may be placed:

Core, Semi-periphery, Periphery, External

1. Core:- initially developed in Europe- strong central governments with military support- surplus money from periphery returns to core- Urbanization and Industrialization- international trade works in core’s favour

2. Semi-Periphery:- areas bordering the core and Periphery. Outlying core areas that are in decline or Outlying Periphery areas that are economically getting stronger.- access to international banking is either declining (core) or increasing (periphery)- manufactured goods – (electrical, computers)- exploits the periphery countries

3.Periphery:- most industry is owned by core- no central or strong government- surplus profits go back to core- raw materials sent back to core for consumer markets- inexpensive labour

4.External:- countries are outside the world economy- not really controlled by any economic or political powers- isolated from trading countries- Cuba, North Korea, Iran, Iraq before the war.

-Today the core countries can consist of North America (Canada and the US.) Interesting but in the early 1900’s Canada was considered a Semi-Periphery country.

- The Semi-Periphery countries today are Eastern Europe including Russia and China and India and Malaysia.

- The Periphery countries include most of Africa, except South Africa (Semi-Periphery), Central Asia (Middle East, Turkey, the ‘stan countries – Pakistan, Afghanistan, Kazakhstan and South-East Asia (Burma, Thailand, Cambodia)

Wallerstein has noticed a change. Countries that are rapidly developing and industrializing are creating their own cores. A good example is East Asia. The strong economies of South Korea, Singapore, Taiwan and China (as well as Hong Kong) have joined Japan to form a core of trade and centre of banking and investment. Emerging cores can challenge the traditional cores (Europe and North America) but usually these cores remain regional.

The theory suggest that the traditional cores will continue to dominate the periphery regions of the world. Latin America will be dominated by North America and Africa will be dominated by Europe.

Cores may shift in size and even multiply by their function will remain the same.

Wallerstein sees that the present capitalist world economy will be detrimental to a large proportion of the world’s population. He sees the disparities of the world increasing. The gap between rich and poor serves the economic needs of the rich. The rich need to exploit the low wages of the poor. This is the only way Multi-nationals can make money.

According to the UNDP (United Nations Development Programme) the gap between rich and poor has widened from 30:1 in 1960 to 60:1 in 1990.

The End!