Unequal Development: the Chicken or the Egg
Dec 31, 2015
Unequal Development: the Chicken or the Egg
Barriers to Economic Development
• Social Conditions– Demographic factors (CBR, Life
Expectancy, Dependency Ratio, etc)– Inadequate Nutrition– Lack of Sanitation (sewage systems,
clean water, health care)– Lack of access to Education– Lack of Gender Equality
Barriers to Economic Development
• Disease
Barriers to Economic Development
• Foreign Debt
International Trade
Trade Barriers• the EU’s internal market is about
removing barriers to free movement of goods, services, people and capital
• the flow of goods and services in the world economy is also important
• organizations have been set up to encourage the removal of barriers to free global trade
Why the stress on free world trade?
• The world economy went into a deep depression in the 1930s, as many countries closed their barriers to trade with other states. This led to:
• Mass unemployment• Social upheaval• Rise of fascism and World War II
How to prevent chaos happening again?
• Global powers set up bodies to support international trade– International Monetary Fund– World Bank
• All countries encouraged to join these organizations, or face exclusion from benefits of free world trade
What do the IMF and World Bank do?
IMF:• Lends to countries with balance
of payments problems• Pushes for economic reforms• Reports on policies in member
states
What do the IMF and World Bank do?
World Bank:• Aims to help development by
advising and lending – with many conditions
• Countries encouraged to lift import and export barriers, cut subsidies and remove price controls
Criticisms of IMF
IMF only lends money if countries agree to:
• Sell their resources cheaply• Cut public spending
Critics say this serves to increase the problems of poverty in poor member countries
Criticisms of World Bank
Loans depend on countries agreeing a ‘Structural Adjustment Programme’
• Leads to rapid increase in price of goods in country
• Increases poverty• Lower investment and cut social
spendingLittle evidence that these policies work
What about the World Trade Organization (WTO)?
• The WTO deals with the rules of trade between countries
• It developed from the General Agreement on Tariffs and Trade (GATT)
• WTO agreements set the ground rules for international commerce
Why so much outrage over globalization?
Other than the criticisms raised earlier, opponents of globalization point to:
• Falling share of world trade taken by developing countries
• Subsidies and tariffs set by rich developed economies: USA steel tariffs, EU agricultural subsidies are two of the culprits
10 Benefits to the WTO
1. Keeps the peace2. Disputes handled constructively3. System based on rules rather
than power4. Freer trade cuts the cost of living5. Gives consumers more choice
10 Benefits of the WTO
6. Trade raises incomes7. Trade stimulates growth, inc.
employment8. Basic principles makes system
more economically efficient9. Shields governments from narrow
interests10.Encourages good government
Ten Arguments against the WTO
1. Only serves interests of multinational corporations
2. Is a stacked secretive court3. Tramples over labor and human
rights4. Is destroying the environment5. Is killing people
Ten Arguments against the WTO
6. US adoption of WTO was undemocratic
7. Undermines local development and penalizes poor countries
8. Is increasing inequality9. Undermines national sovereignty10.The tide is turning against free
trade and the WTO