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Development

Infant mortality rate in Africa is still 10 times more than that of Europe Almost half of the world population live on less than two dollars a day One in 3 people globally do not have access to safe drinking water

What is development?

  • Development is about improving people’s lives .
  • To ensure better quality of living.
  • Promoting human dignity and respect.
  • Positive change for betterment.
  • More equal society and justice for everyone.
  • Chance to earn a good living and ability to meet the basic needs of life in terms of access to food, water, sanitation, quality education, health services.
  • Development is about finding ways to live sustainably.
Objectives of Development
  1. Raising peoples’ living standards.
  2. Establishment of social, political and economic justice
  3. Increasing peoples’ freedom to choose by enlarging the range of choices

 

A day in Grace's life: Living in poverty and destitute

Life of an average American teenager

Life-struggle in a Bolivian village

Generalized divisions of countries at different stages of socio-economic and political development 

  • More Economically Developed Countries (MEDCs)- Germany, Canada, New Zealand, Norway etc (all of these countries have 0.9 HDI score).

 

  • Less Economically Developed Countries (LEDCs)- Bangladesh, Pakistan, Myanmar etc.
  • LDC are least developed countries having very poor HDI ranking. They are the most merginalized countries in the world that are relatively unaffected by the global interactions. LDC were mostly the heavily indebted poor countries. 49 countries have been identified as LDCs in 2019 and majority of them (more than 30) are located in Africa.
  • Heavily Indebted Poor Countries (HIPCs) –the HIPC initiatives are nearly complete with 36 countries reaching the completion point in 2016 under HIPC initiative. The HIPC Initiative and MDRI (Multilateral debt relief initiatives) are nearly complete, with 36 countries having already reached the completion point under the HIPC Initiative. Chad, in April 2015, is the latest country to reach the completion point. Debt relief under the Initiative has alleviated debt burdens substantially in recipient countries.

 

  • Newly Industrialized Countries (NICs)- Taiwan, Singapore, Hong Kong, South Korea (known as four Asian Tigers),  Thailand,  Turkey, Mexico, Brazil, India, China, South Africa, Malaysia, Argentina.
  • Emerging Market Economies: BRICS nations (Brazil, Russia, India, China and South Africa), Indonesia. These countries are large demographic power ensuring large domestic market and skilled work force, high economic growth rate of more than 5% that confirms rising disposable income.

 

  • Transition economy or transitional economy is an economy, which is changing from a centrally planned economy to a market economy. For example, China, former Soviet Union and the group of communist bloc in the Central and Eastern Europe like Bulgaria, Hungary, and Romania etc.

China- A transition economy? Amazing Facts about China

Difference between LEDCs and MEDCs

Indicators to access the level of development of a country

Different countries of the world are classified according to their level of social and economic development. Levels of development are dependent on physical or environmental, economic, demographic, socio-cultural and political factors. Development involves complex series of interlinked processes (refer to the development cable diagram above).

Development Gap: indicates inequality in the process of development. It denotes polarization based on ‘haves’ and ‘have nots’. Development gap may exists between countries or even within a country.  Development gap could be generated due to Historical (colonial past), Physical (extreme environment, landlocked countries), economic (lack of investment and opportunities), demographic (unskilled working class, declining birth rate) or political (corruption) reasons.

Types of indicator Measures of developmentDescription Developmental gap (based on 2019 data)
Demographic and Social Adult Literacy The percentage of adults who can read and write with understanding. In 2019, global literacy rate is around 84%. Male literacy rate is 90% while female literacy rate is 83%. Many African countries still have below 50% literacy rate. One of the lowest literacy rates in the world is found in Niger, where just 20% of adults can read and write.
Demographic and SocialLife expectancyThe average age that a person is expected to live from birth.According to WHO, 72 years was the average life expectancy at birth of the global population. Global life expectancy grew by 5.5 years between 2000 and 2016. he country with the highest life expectancy is Monaco at 90 years; the country with the lowest is Chad around 49 years.
Demographic and SocialInfant mortality
Child mortality (under 5 years of age)
The number of babies who don't survive to the age of 1 (infant) per 1,000 live births. 60–80% of the infant mortality in developing countries are mostly caused by birth defects, preterm birth and low birth weight, maternal pregnancy complications. Afghanistan recorded the highest infant mortality rate in the world, with 111 deaths per 1,000 children 5 years old and younger. Accessing healthcare in Afghanistan is very difficult for pregnant women and young babies. Monaco, a small wealthy country in Europe records the lowest count with 1.8 because of its good healthcare system and woman education.
EconomicGNI per capitaGross national income per person. The value of a country's income, divided by the number of people in that country.Qatar has the world's highest GNI per capita while Burundi and the Central African Republic have the lowest incomes out of any country in the world. Almost half of the world's population live on less than $2.50 a day.
Social and environmentalAccess to safe clean waterThe percentage of people who have access to safe, clean water for their day to day needs. 1 in 3 people globally do not have access to safe drinking water, among whom 7 out of 10 live in rural areas and one third live in the Least Developed Countries.
Social and demographic People per doctorthe number of people per doctor. A lower ratio can indicate a richer country.Tanzania, Malawi, Niger and most of the LDCs in Africa has the lowest number of doctors per 1000 (less than 2 doctors per 100,000 people). The UK has fewer doctors per head of population than most other countries in OECD.
Economic and social Unemployment rate People as a percentage of the labour force those who are willing and available to work, but not getting a job for their qualification. Syria at present has the highest unemployment rate at 50%. The continent of Africa registers the higher average unemployment rate of more than 20%. Most of the developed countries register below 10% unemployment rate. There are just two nations Cambodia and Thailand with unemployment rates of less than 1%, mainly because of the self employed informal sector job.
Social Internet penetration rate Percentage of the population having access to telecommunication network and technology infrastructure The global average penetration rate was 57 percent. However, only 10 percent of the population in Somalia accessed the internet in 2019. in North Korea only 1%. only 6.2% of the World's Internet subscribers are Africans. Iceland, and Qatar, were jointly ranked first with an internet penetration of 99 percent.
PoliticalPolitical Transparency Denotes openness, accountability, and honesty of the politicians. Country's voting system and the nature of democracy.According to Corruption Perceptions Index (CPI) ranking Denmark and New Zealand, Finland, Sweden are perceived as the least corrupt countries in the world where as Somalia, North Korea, South Sudan and Yemen are perceived as the most corrupt countries in the world.

Purely Economic Measures of Development:

Gross Domestic Product (GDP) is the total economic output of a country in a year. It  is the total value of all final goods and services produced within an economy over a period of time, usually a year. GDP is an indicator of the local/national economy.

GDP per capita to understand how the wealth is distributed within the population, however it is an average so extreme rich and poor will be moderated by the result. GDP per capita is the total output divided by the total number of people or population, i.e. the average amount of money each person makes.

Gross National Product (GNP): GNP is the total value of all the goods and services produced  domestically and abroad by the citizen’s of a country. GNP represents how the nationals of a country are contributing to the country’s economy giving importance to citizenship but overlooks location.

Gross National Income (GNI): The total value of goods and services produced in a country (i.e. GDP), together with the balance of income and payments from or to other countries (including interest payment and dividends). GNI per person provides a better picture of the wealth distribution.

Better solution to GNI measure is to consider GNI at PPP:

Purchasing power parity (PPP): the measure of average earnings in relation to local prices i.e. how much one can buy in local currency equivalent to 1 dollar. GNI of a country is converted into US dollars on the basis of how the value of a currency can be compared to other countries in relation to its buying power (means the real value of money).

Click here to see Ranking of world’s Economies based on GDP and PPP 

and ranking of the countries based on GDP per capita in 2019

 

Why only economic indicator is not reliable to measure development or disparities?

  • Development is not purely an economic phenomenon but a multi-dimensional process involving reorganization and reorientation of the entire economic and social system.
  • These measures are purely economic and are not composite indicator. They do not provide any idea of human capital formation (education, training, health condition), gender equality, and condition of human rights. Even as an economic indicator it is not a holistic one as it does not include the income generated by the informal economy, which plays a significant role in many developing countries.
  • There are alternative well developed composite measures available since 1990s like HDI including GDI etc that measures average achievements of the population in terms of health, education and access to goods and services.

Composite Indicator (HDI- Human Development Index)

HDI was devised by the United Nations Development Programme (UNDP) in 1990s and has been in use in its current form since 2010.  HDI is a composite indicator that ranks countries from 0 to 9 index values based on the following criteria.

Economic Criteria : Gross National Income per capita adjusted for purchasing power parity

Social Criteria: life expectancy and literacy.

With more than 0.9 index value Norway, Switzerland, Australia, Ireland and Germany are the top rankers in 2018 HDI report. On the other hand, with 0.3 HDI index values Niger, Central African Republic, South Sudan, Chad and Sierra Leone rank the lowest.

Inequality within a country

Poorest countries in 2017

The most developed countries in 2019 (HDI ranking)

Emerging Markets Investing for Beginners

Classification of production into different sectors

Primary SectorExtraction of raw materials from the nature e.g. agriculture, fishing, farming, forestry and mining etc.
Secondary SectorTransforming raw materials into semi-finished goods or finished goods. This sector includes metal working and smelting, automobile production, textile production, chemical and engineering industries, aerospace manufacturing, energy utilities, engineering, breweries and bottlers, construction, and shipbuilding.
Tertiary SectorProvision of services to businesses and consumers. Activities associated with this sector include retail and wholesale sales, transportation and distribution, entertainment (movies, television, radio, music, theatre, etc.), restaurants, clerical services, media, tourism, insurance, banking, healthcare, and law. In most developed and developing countries, a growing proportion of workers are devoted to the tertiary sector. In the U.S., more than 80% of the labor force is tertiary worker.
Quaternary SectorResearch and development,
This sector is said to be that of intellectual organization in a society such as government, research, cultural programs, information technology (IT), higher education, and libraries.
Quinary SectorHighest levels of decision making in a society
or economy. Top executives or officials in
senior management in government, Research,
Universities, healthcare and in media.

Informal sector in Bolivia

Globalization and its impacts

What is globalization: “The growing interdependence of countries worldwide through the increasing volume and variety of cross border transactions in goods and services and of international capital flows, and through the more rapid and widespread diffusion of technology” (source: IMF).
It is a process that erodes national boundaries, integrates national economies, culture, technologies and governance, and produces complex relations of mutual interdependence.

Transnational Corporation or Transnational enterprise (TNC/MNC): A trans or multinational enterprise is a company or firm that has established production or other operations in more than one country through foreign direct investment. According to World Investment Report 2017, there are more than 82000 TNCs worldwide with more than 800000 foreign affiliates. Top 20 world largest corporations in 2017 are mostly American, Chinese, Japanese and French and German.

Global Impacts 1. Enhancement of world trade and growing power of TNCs and large brands.
2. Increasing interdependence and complexity of the global economy. FDI, outsourcing, role of the trading bloc such as EU, mass scale production are gaining more importance.
3. Cultural diffusion through labour movement, international tourism and migration playing a great role in the development of a hybrid global culture.
4. World is becoming a 'Global village' through high end connectivity and diffusion of internet technology.
4. Development of the civil society to safe guard interest such as Greenpeace.
5. Emergence of increasing number of NICs
6. Increasing cultural diversity within a country.
National level 1. Increasing transboundary pollution for example Fly-tipping (illegal deposit or dumping of waste).
2. International tourism as rise of mass tourism.
3. Concern about loss of sovereignty (autonomous decision making power of a country).
4. Growth of anti-globalization movement as an overreaction to loss of jobs to international labour and increasing cultural diversity diluting national identity.
5. Repatriation of TNCs profit (not paying taxes to the local authority).
6. Rise of Alpha cities as global hubs.
Local 1. Unemployment, uncertainty and loss of jobs due to the operation of the large global TNCs. Small local businesses find it difficult to compete with the large TNCs.
2.Rise of multicultural communities and cuisine.
3. Development of ethnic villages within cities such as China town in many megacities.
4. Creation of consumer culture and acceptance of global brands such as McD, Apple, Nike etc.
5. More connectedness through global social media such as facebook, instagram etc.

Global spread of McD

McDonald's the Fast food empire

World's largest TNCs in 2019

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