Human Geography By James Rubenstein

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Human Geography By James Rubenstein

• Chapter 9
• Key Issue 4
• Why Do Less Developed Countries Face Obstacles to
  Development?

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• In recent years, LDCs have made improvements in
  development, but the gap between LDCs and MDCs
  have continued to widen.
• Natural Increase has dropped 20 in LDCs compared
  to 83 in MDCs.
• 1/5th of the worlds people (in MDCs) consume
  5/6ths of the worlds goods.

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Progress toward development
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• To reduce disparities between the rich and poor
  countries, LDCs must develop more rapidly. They
  must . . .
• adopt policies that successfully promote
  development (emphasis is on international trade).
• They must find funds to pay for the development
  (emphasis is on self-sufficiency).

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Elements of Self-Sufficiency Approach

• 1. Spread investment as equally as possible
  across all sectors of the economy and regions.
• 2. Isolate fledgling businesses from
  international corporations.
• 3. Set barriers to limit imports.

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India Example of the Self-Sufficiency Approach

1. Limited imports of foreign goods
2. Exports were discouraged.
3. Government approval required for expansion.
4. Businesses subsidized.

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Problems with the Self-Sufficiency Alternative

1. Inefficiency - protects inefficient businesses.
2. Large Bureaucracy the complex administration,
   needed to manage controls, encouraged abuse and
   corruption.

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Elements of International Trade Approach

• 1. What resources does a country have in
  abundance that other countries are willing to
  buy?
• 2. What products can the country manufacture and
  distribute at a higher quality and lower cost to
  other countries?

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Rostows 5 stage Development Model

1. The traditional society.
2. The preconditions for takeoff.
3. The takeoff.
4. The drive to maturity.
5. The age of mass consumption.

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The Traditional Society

• A very high percentage of population engaged in
  agriculture.
• A high percentage of national wealth allocated to
  nonproductive activities, such as the military
  and religion.

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The Preconditions for Takeoff

• Under influence of well educated leaders, the
  country starts to invest in new technology and
  infrastructure, such as water supplies and
  transportation systems.

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The Takeoff

• Rapid growth, technical advances, and high
  productivity occur in a limited number of
  economic activities.
• Other sectors of the economy remain dominated by
  traditional practices.

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The Drive to Maturity

• Modern technology diffuses from take-off
  industries to a wide variety of industries.
• Workers become more skilled and specialized.

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The Age of Mass Consumption

• The economy shifts from production of heavy
  industry to consumer goods.

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• MDCs are in stages 4 and 5.
• As a country concentrates on international trade,
  it benefits from exposure to consumers in other
  countries.
• Rostows model suggests that any country can
  become more developed.

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Examples of International Trade Approach

• Persian Gulf States used petroleum revenues to
  finance large projects and provide consumers
  goods.
• South Korea, Singapore, Taiwan, and Hong Kong
  used cheap labor to produce and sell products
  inexpensively.

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Problems with the International Trade Alternative

• .

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Problems with the International Trade Alternative

1. Uneven Resource Distribution
2. Market Stagnation
3. Increased Dependence on MDCs

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Uneven Resource Distribution

• LDCs suffer when the resource that they have for
  sale doesnt command a large enough price to
  enable them to purchase products needed for
  growth.

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Market Stagnation

• The slow growth of MDCs population can and has
  limited market size of products from LDCs.

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Increased Dependence on MDCs

• Investments in takeoff industries may reduce
  production of necessities for the population,
  forcing an LDC to depend on MDCs for those
  necessities.

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Recent Triumph of the International Trade Approach

• Since India dismantled its barriers to
  international trade, its per capita GDP has
  increase from 4 to 6 annually.

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World Trade Organization

• Established in 1995, by countries representing
  97 of world trade,
• to promote, and remove barriers to international
  trade in all countries.

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Critics of the WTO

• Liberals charge the WTO as antidemocratic.
• Conservatives charge that the WTO compromises the
  sovereignty of individual countries.

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Financing Development

• LDCs must generally obtain loans from MDCs.
• From banks and international organizations, and
• From direct investment by transnational
  corporations.

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Loans

• The World Bank and the International Monetary
  Fund lend about 50 billion annually to LDCs for
  development.
• Commercial banks from MDCs have a current
  outstanding loans to LDCs totaling 2.1 trillion.

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Problems with Loans

• Half of the projects funded in Africa have ended
  up as failures.
• Many LDCs have accumulated debt that exceeds
  annual income.
• Lending agencies have had to cancel debt and
  encouraged LDCs to adopt structural adjustment
  programs.

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Debt as a percentage of income
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Structural Adjustment Programs

• Policies that create conditions encouraging
  international trade, such as raising taxes,
  reducing government spending, controlling
  inflation, selling publicly owned utilities to
  private corporations, and charging citizens more
  for services.

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Transnational Corporations

• Corporations operating in countries other than
  the one in which its headquarters are located.

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Flow of Investment
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Core and PeripheryMost MDCs
Core and Periphery
Most MDCs are located above the 30o north
latitude.
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Finis