A Divided World

1
A Divided World

• 1 - The Three Worlds
• 2 - The World Bank Classification of Development
• 3 - The United Nations Classification of
  Development
• 4 - The Human Development Index
• 5 - Inequalities

2
The Three Worlds

• Origins
• New American foreign aid policy (1948)
• President Truman.
• Providing financial, technical and military means
  for recent and fragile states (facing the
  communist movement).
• The geopolitical structure of the world was
  consequently settled for the next 40 years with
  three worlds the First, the Second and the
  Third.
• Third World
• Term brought forward in 1952 by the French author
  Alfred Sauvy.
• Duality between capitalist systems leaning
  market-based economies and control-based
  communist nations.
• What remained were nations that were ignored,
  exploited, despised and wishing to be recognized.

3
The Three Worlds

• Ignored
• Cold War putting the international attention
  towards the United States and the Soviet Union.
• Exploitation
• Almost all of them have been part of the colonial
  control of a European country.
• Despised
• Populated by non-European populations.
• Recognition
• Early stage of their independence or on the way
  to be.

4
The Three Worlds

• First World countries
• Market economies having a high Gross National
  Product (GDP) per capita.
• Generally capitalist democracies having the
  United States, Western Europe and Japan as
  leaders.
• The United States as the pole
• Military bases around the world and practicing
  foreign aid policies (neo-colonialism) for
  nations within its area of influence.
• Second World countries
• Centrally planned economies from socialism to
  communism.
• Average GDP per capita and a well-developed
  industrial structure.
• The USSR as the pole
• Satellite nations in Eastern Europe and allies in
  Asia, Africa and Latin America

5
The Three Worlds

• Third World countries
• Other nations having diversified political
  conditions.
• Low GPD per capita and a weak, and sometimes
  non-existent, industrial structure.
• Africa, South America and Asia were the stage of
  several ideological confrontations between the
  First and the Second worlds.
• Several situations of dependency were created
  between First World and Third World countries.
• Movements trying to organize Third World
  countries such as the League of Nonaligned
  Nations in the 1960s.

6
The Three Worlds
First World
Second World
Capitalist economies lead by the United States
Socialist economies lead by the USSR
North
East
West
South
Area of conflict between the first and the
second world (Korea, Vietnam, Africa, etc.)
Nonaligned nations
Third World
7
East / West Division, 1982
United States
Core USA ally
Pro USA
URSS
Core USSR ally
Pro USSR
Non aligned
8
The World Bank Classification of Development

• A new context
• Important political and economic changes from the
  end of the 1980s.
• Challenged the conventional economic
  classification of development as well as the main
  poles of the world-system.
• Changes from a bipolar organization (East-West)
  to a multipolar organization.
• Tendency toward some homogenization of
  political systems (with numerous exceptions).
• The classification now used is based on economic
  criteria.

9
The World Bank Classification of Development

• Income per capita
• Main classification criteria used by the World
  Bank.
• The average amount of capital earned by
  individuals.
• Straightforward relationship between the per
  capita income and the economic structure of a
  nation.
• The higher it is, the more a population is
  working in the industrial and services sectors.
• Observation backed by solid evidence drawn from
  the evolution of developed economies since the
  industrial revolution.

10
Income per Capita, 1993
695 and less
696-8,625
8,626 and more
Not available
11
The World Bank Classification of Development

• Patterns
• The GDP per capita underlines the important
  disparities between countries of the North and
  of the South.
• Does not well illustrate the development
  potential of the market
• China has a per capita income slightly over 300
  per year, whereas development opportunities are
  very high.
• Mali has a similar income per capita, but
  conditions of the economy are completely
  different.
• Income by capita doesn't necessarily represent
  the purchasing power
• The quantity of goods and services a currency can
  buy.
• The higher the purchasing power is, the more an
  economy is developed.

12
The World Bank Classification of Development

• Purchasing power parity
• Considers the comparative cost of living (food,
  lodging, energy, etc.) between nations.
• A low income country with a low cost of living
  may have a GDP with PPP similar to an average
  income country with a higher cost of living.

13
United Nations Classification of Economic
Development

• Structure
• Using several criteria related to income as well
  as the structure of the economy and exports.
• Advanced economies
• High income levels.
• The classifications proposed by the World Bank
  and by the United Nations are similar.
• Newly industrialized economies
• Manufacturing goods represent more than 25 of
  the GDP and 50 of the exportations.
• Around 20 countries have experienced a fast and
  recent industrial growth.

14
United Nations Classification of Economic
Development

• Petroleum exporting countries
• Drawing a significant portion of their income
  from the petroleum industry (notably its
  exportation).
• Also defined as rent economies having
  artificially high levels of per capita income.
• Continent sized countries
• India and China.
• Low income rural societies are dominant.
• Economic growth is having huge impacts of the
  demand a raw materials, goods and services, as
  well as over urbanization.
• Least advanced economies (LAE)
• Very low per capita GDP (less than 700), a low
  level of industrialization (less than 10 of the
  GDP) and alphabetization (less than 20 of the
  population).
• They mostly include African countries.

15
United Nation Classification of Economic
Development
Economies
Underdeveloped
Developing
Newly Industrializing
Advanced
Oil Export / Rent
16
Human Development Index

• Nature
• The Human Development Index (HDI) is a composite
  indicator developed in 1990 by the United Nations
  Program for Development (UNPD).
• More complex and representative measure.
• Definition
• Level of health
• The variable used is the life expectancy at
  birth.
• A good health system is likely to improve the
  life expectancy significantly in a nation.
• Level of education
• The alphabetization level and the average years
  of attending school are the two variables used.

17
Human Development Index

• Income
• It is represented by two transformations on the
  GDP per capita.
• The first adjust de GDP per capita to take
  account of the purchasing power parity.
• The purchasing power parity basically considers
  the cost of living in each country and adjusts
  the GDP accordingly.
• The second transformation considers that welfare
  increase in a non-linear fashion with income.
• Going from a GDP per capita of 1,000 to 2,000
  is more important for the human welfare of that
  country than going from a GDP per capita of
  15,000 to 16,000, even if the increase is the
  same.
• The HDI ranges from 0 to 1 and is a comparative
  measure.
• The country having the highest score for a
  variable has a value of 1 and other countries are
  graded from how far they are from this best score.

18
Human Development Index, 2001
19
Global GDP, 2002
20
Distribution of Global Income Groups, 1990

• Inequalities
• 20 of the worlds population was controlling 85
  of the available capital in 1995.
• This share was 70 in the 1960s.
• 1 of the population controls 40 of the capital.
• 50 of the global population live with less than
  2 a day.
• The richest 200 people
• Combined income of 41 of the global population
  (2.46 billions).
• Net worth of 1,042 billion.
• Make 500 per second.