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International Politics, GOV
207 Global North and Global South. The Global North
refers to the 57 countries with high human development that have a Human The
Global South refers to the countries of the rest of the world, most of
which are located in the Southern Hemisphere. It includes both countries
with
medium human
development (88 countries with an HDI less than .8 and greater than .5)
and low human development (32 countries with an HDI of less
than .5). Some twenty countries do not provide information necessary to develop their HDI.
Seven of
these probably belong into the high human development category. (Andorra,
Liechtenstein, An earlier classification system looked at the world as being made up of three worlds of development. Worlds of Development First World: The First World refers to the Highly Industrialized Countries of the world most of which are located in Western Europe, North America, and Japan. These countries used to be called the Free World or the West. These countries have primarily free-market economies and democratic forms of government. Second World: This
term used to
refer to the centrally Planned Communist Countries. Third World: The Third
World originally described the Non-Aligned States that attempted Fourth World refers to the
estimated 6000 groups of indigenous people, who make up from World Bank Classification The World Bank differentiates countries by their economic performance.
According to its There are 66
Low-income economies
having a Gross National Income per Capita There are 52
lower-middle-income
economies with GNI per capita
$746 - $2,975 There are 38
upper-middle-income
economies with GNI per capita
$2,976 - $9,205 There are 52 High-income economies with a GNI/Capita of $9206 or more. The low-income economies are sometimes referred to as the least developed of the less developed countries (LLDCs LDCs are the Less Developed Countries
NIEs are the Newly Industrializing Countries including the Four Tigers of South Korea, Singapore,
Taiwan, Heavily Indebted Poor Countries (HIPCs) is another World Bank category. See my Web page entitled Third World Debt. Other Terminologies Core States Semi-periphery Periphery Countries in transition:
28 countries of the former Soviet Union and its satellites (Yugoslavia, Zones of Conflict Failed States Crazy States South: Latin America, South and Southern Asia, Middle East, Africa, Pacific Region. North: North America, Western Europe, Japan.
First World
-- developed, industrialized, free-market economies. North-South Issues The Global South faces many issues but the most important is economic development. Economic Development -- What does it mean? There are many different definitions. But the core issue is how to raise the living standards of the Global South to the same level as exists in the Global North. The disparities in living standards between the rich and poor countries cannot be justified. For the Global South countries, economic development means the process whereby living standards will gradually be brought up to the levels enjoyed in the Global North. There are many reasons why the Global South lags behind the Global North. The two main Theories of Economic Development are
Modernization Theory emphasizes the internal reasons for economic backwardness. The Global South has itself to blame for its condition. All human societies are in a process of transformation from traditional societies, to transitional, to modern. It is the Industrial Revolution which has caused these changes. The Industrial Revolution began in England in the 1750s, spread to the the Belgium, Netherlands, and France by the 1830s, then to Germany, Japan, and the United States in the 1870s, and on to Russia just before World War I. Since World War II, the industrial revolution and the modernization process has slowly spread throughout the rest of the world. The societal changes needed to transform a traditional society into a modern one take time. Modernization theory emphasizes the internal obstacles to social change. Traditional elites, religious values, social mores combine to make social change difficult. During the transition period, there is a great deal of social dislocation. Corruption and bribery may be endemic. Military elites may seize power and see themselves as the only force ready to save the nation from internal conflict and foreign enemies. Democratic values, respect for human rights, and other "modern ideas" are as yet weak and poorly established. The judiciary is often under political influence and does as the current regime wants. Protectionist sentiments may be very strong. Free trade, foreign investments, foreign aid, and multinational corporations (MNCs) are seen as positive agents of social change and modernization. Dependency Theory blames the international system for the backwardness of underdeveloped countries. Indigenous economic development was subverted first through political imperialism and now through what might be called economic imperialism. First, the Europeans subjected the Third World to their colonial domination and now, after independence, Third World countries are being kept in the vice of economic dependency. Free trade, foreign investments, foreign aid, and MNCs work to the disadvantage of the Third World, it is asserted. They keep the Third World in a permanent condition of economic neo-colonialism. Dependency Theory is based on Karl Marx. It globalizes the class struggle. The world is seen as a division between the rich countries versus the poor countries. The poor, the Third World, is being exploited by the rich, the First World. The Third World has natural resources and cheap labor. Both are exploited by the industrialized countries of the North. Third World Countries are primarily producers of primary products, raw materials like copper, tin, uranium, and oil, or single crops like tobacco, bananas, peanuts, rice, and cotton. Many of these countries have only a single primary product to export. Prices of many of these commodities fluctuate, but the trend is mainly downward. If a commodity has a high price, then other producers will convert production to take advantage of the high prices or else consumers will switch to a substitute product. In the international division of labor, the South produces primary goods while the North produces manufactured goods. Generally, manufactured goods are more expensive to buy than raw materials. Until the South produces its own manufactured goods, it will always be dependent on the North. The international division of labor, according to Dependency Theory, creates unequal terms of trade. The ratio of export prices to import prices refers to the terms of trade. Monopsony refers to the condition where there are many sellers but few buyers. With many primary agricultural producers , this is the condition facing the Third World. There are many coffee growers or banana producers but very few buyers. Few buyers can force down the price which producers can charge. Dependency theorists argue that the entire international economic system needs to be changed. The relationships between the center and the periphery need to be transformed. The terms of trade must be altered. Probably both theories contain elements of truth. What is clear is that somehow the inequalities between the Global South and North must be overcome. Traditional Societies --> Transitional --> Modern Societies Traditional societies depend on long-established patterns of agricultural production for their existence. Depending on climate and region, agriculture may be intensive irrigation agriculture as in China and India or extensive slash and hoe agriculture. Improving agricultural productivity is an important first step. Building infrastructure like railways, roads, and harbors is another imperative in creating a modern market economy. Many Third World countries are rich in raw materials but depend on foreign investment for the technologies to exploit these resources. Foreign ownership of the most important resources in the Third World country often further distorts their development. Another major obstacle to modernization is the need for social development. The country needs to build a universal educational system. Community health standards need upgrading. Housing, water supply, and other infrastructures are inadequate. While modern (European) medicine lowers death rates almost immediately, there is a considerable lag in lowering birth rates. The result is a massive population increase that puts further pressure on all social institutions. It is difficult to transform a from an economy based on subsistence agriculture to a modern, industrialized economy based on manufacturing, services, and trade. The shift brings with it urbanization and demographic transition. Demographic transition: Traditional societies have a high birth rate and a high infant mortality rate. Both are in relative balance and population is stable. Modern societies have a low birth rate and a low infant mortality rate. Both are in relative balance and population has become relatively stable at a higher total population level. During the demographic transition, modern medicine lowers the infant mortality rate while traditional cultural values continue to encourage a very high birth rate. Population grows rapidly and internal social problems escalate. Even with economic growth, the per capita income level may actually decline. In many developing countries, women still have an average of six children during their child bearing age. Population grows by 3% per year; it doubles every 20 years; more than half the population is under 18. Infant mortality rates have declined from 100/1000 live births to 7/1000 live births. (The AIDS Crisis in Africa may change those figures once again.) This demographic transition, until population growth is again stable, has been called the S-Curve. Urbanization -- This is the shift from rural to urban. In traditional societies 85 to 95% of the population lives in the countryside and is engaged in agriculture. Only a small minority lives in cities and does not make a living working in agriculture. With modernization comes a shift to an urban society. More and more people live in cities, suburbs, and metropolitan regions. During the transition stage, cities are surrounded by vast urban slums providing a cheap, underemployed labor force. Sustainable development without environmental damage.
Multinational Corporations are often more powerful and have larger total sales than the GNP of entire countries. Since MNCs have plants in many states and produce many products, they can shift profits from one country to another through intra-corporate pricing techniques. They avoid paying appropriate taxes. Through political influence, including bribery, they can manipulate the indigenous political system to corporate advantage. While the same political strategies are used in industrial countries, they have a greater impact in the Third World. Foreign aid is often tied to political considerations. The recipient is often obliged to spend the foreign aid in the donor country. It serves more as a subsidy for the rich countries' exports than as a development tool within the poor country. Multilateral aid from international organizations like the World Bank often require structural changes in the Third World Country's economy which create hardships among the poorest segment of that country's population. The budget must be balanced; social expenditures must be reduced; subsidized food and housing prices must be allowed to rise according to market conditions. The economic policies imposed by the World Bank work to the detriment of the poorest segment of the societies on which they are imposed. The class war, according to Dependency Theory, rages not only internationally, but domestically as well. Third World Debt. Borrowing is another method of financing economic development. Much of the Third World has borrowed huge amounts of money: much of it has been squandered on military purchases, siphoned off by corrupt officials, and invested in massive projects that ultimately failed. The interest on this debt in now choking further development. Many Third World countries spend much of their hard earned foreign exchange on debt payments. Unless there is massive debt relief, the future development of many Third World countries looks bleak. Conclusion. Both the Modernization Theory and the Dependency Theory have a certain degree of plausibility. Neither is a complete explanation. Development is taking place: the facts are outpacing the theories.
Newly Industrialized Nations (NIC) Japan has pursued an export led industrialization strategy successfully since World War II. Indonesia's currency collapse in 1998. Suharto was overthrown. Development Strategies
Import Substitution Industrialization (ISI)
Nationalization of Primary Export Sectors
Aid and Development Updated August 27, 2007 |
