Chapter9andLatinAmericaTestReview

HDIWhodesignedit,Why,Howitworks
HumanDevelopmentIndex
CreatedbytheUNin1990andcomputesHDIsyearlyforeverycountry
ThehighestHDIpossibleis1.0or100%
Itconsidersdevelopmenttobeafunctionof3factors:
1. Decentstandardofliving
2. Longhealthylife
3. Accesstoknowledge
Countriesaregroupedinto4categories:veryhigh,developed,mediumhigh,low
Alsolooksat:happiness,livingconditions,economicwellbeingandGDP
HighestisNorway

GNI
GrossNationalIncome
Valueofoutputofgoodsandservicesinacountry,inayearincludingmoneyleavingandenteringthecountry

PurchasingPowerParity(PPP)
Takingcountriescurrenciesintostandardcurrenciestoseewhattheycouldbuyataglobalmarket.
Theamountofmoneyneededinonecountrytopurchasethesamegoodsandservicesinanothercountry
PPPadjustsincomefigurestoaccountfordifferencesamongcountriesinthecostofgoods

PrimarySector
Extractingmaterialsfromearth:mining,fishing,forestry

SecondarySector
Manufacturing,transforming,andassemblingrawmaterialsintoproductsandfabricatemanufacturinggoods
intoconsumergoods

TertiarySector
Theprovisionofgoodsandservicestopeopleinexchangeofpayment:banking,law,education,gov,retailing

Productivity
Thevalueofaparticularproductcomparedtotheamountoflaborneededtomakeit
Canbemeasuredbyvalueadded

ValueAdded
Usedinmanufacturing
Thegrossvalueofaproductminusthecostoftherawmaterialsandenergy

InequalityAdjustedHDI
AnindicatorofdevelopmentthatmodifiestheHDItoaccountforinequalitywithinacountry
SameHDIandIHDI=perfectequality
IHDIlowerthanHDI=someequality
GreaterdifferencebetweenIHDIandHDI=thegreaterinequality
Lowerincome,lesseducation=lowerIHDI

AccesstoKnowledge
Decideswhetherornotachildcancompeteintherealworld
Betterknowledge=Betterlife
LiteracyRate
Typeofschooling

QuantityofSchooling
yearsanexpectedyearsofschooling
Averageof5years
Global=7MDC=11LDC=6

QualityofSchooling
Pupiltoteacherratio
Improvededucationisthegoalinmanydevelopingcountries

LiteracyRate(whatitisandwhyit'simportant)
Percentageofpeoplewhocanreadandwriteinacountry

GenderInequalityIndex(whatitisandwhyit'simportant)
Measurestheextentofacountry'sgenderinequality(empowerment,labor,reproductivehealth)
HighertheGII,thegreatertheinequality
0=menandwomenareequal
1.0=menandwomenareasfarapartaspossible
CountrieswithhighHDIshavelowGIIsandviseversa

FemaleLaborForceParticipationRate
Percentageofwomenwithfulltimejobsforevery100men
Developing:65
Developed:75
SouthwestAsiainNorthAfrica:35

Energy
Coal
LeadingsourceinNorthAmericaandEurope
NaturalGas
Heathomesandelectricity
PetroleumSupply
Motorvehicles

Demand
Thequantitythatconsumersarewilling/abletobuy
Chinaconsumesthemost
NorthAmericahasthehighestpercapitaconsumption

Supply
Thequantityofsomethingthatproducershaveavailableforsale

ProvenReserves
Theamountofaresourceavailableindiscovereddeposits
Amountofaresourceindepositsnotyetidentifiedbutthoughttoexist.

PathstoDevelopment
SelfSufficiency
Increasedomesticproductionofgoodsandthinkforeignownershipisbad
InternationalTrade
Opentoforeigninvestmentandmarkets

RostowModel
1. traditionalsocietyagriculturereligion
2. preconditionsfortakeoffleaderinitiates
3. takeoffrapidgrowthwithlittleindustry
4. drivetomaturityalotofindustries
5. ageofmassconsumptionindustrythengoods

InternationalTradeExamples
FourAsianDragons(Firstplacestoadopt):SouthKorea,Singapore,Taiwan,HongKong
PetroleumRichArabianPeninsulaStates:SaudiArabia,Kuwait,Bahrain,Oman,UnitedArabEmirates

WorldTradeOrganization(WTO)what/why
Promotesinternationaltrade
criticssayit'santidemocratic
Enforcesagreements
Workstoreducebarriersin2ways=1)Negotiatetoeliminaterestrictionsongoods(export/imports)
2)Eliminaterestrictionsonmovementofmoneybybanks

InternationalMonetaryFund(IMF)what/why
Provideloanstothosewhoneedtorestoreorder
madetorestoreorderafterWorldWar2
highbothdevelopedanddevelopingcountries

ForeignDirectInvestment(why)
Helpforreconstruction

I
nvestmentmadebyaforeigncompanyintheeconomyofanothercountry

Whogivesloansandwhoreceivesloans,whatdotheyhavetogetaloan?
IMFandWorldBankgiveloans
countriesinneedreceivethembecausetheyneedhelprestoringorder

StructuralAdjustmentProgramwho/where/why
Includeseconomicgoals,strategiesforachievingtheobjectivesandexternalfinancingrequirements.
Economicpoliciesimposedonlessdevelopedcountriesbyinternationalagenciestocreateconditions
encouraginginternationaltrade,suchasraisingtaxes,reducinggovernmentspending,controllinginflation,
sellingpubliclyownedutilitiestoprivatecorporations,andchargingcitizensmoreforservices.
InLDCs

Stimulus
GovernmentshouldspendmoremoneyTHENcollecttax
Peopleworkbybuildingandhardjobsandoncetheeconomyrecovers,peoplewillbeabletopaymoretaxes
andofftheirdebt.
Promorejobs
Conincreasetaxes

Austerity
Sharplyreducethetaxessothattheeconomywillrevivebecausepeoplecanspendtheirmoneytheysaved
ontaxes.
ProReducedtaxes
ConLesshelpingthoseinneed

FairTrade
Productsmadeandtradedatstandardprice
Analternativetointernationaltradewhichproductsareproducedaccordingtostandardsthatprotectworkers
andsmallbusinessesinlessdevelopedcountries

Microfinance(microcredit)
programthatprovidessmallloanstopoorpeople,especiallywomen,toencouragedevelopmentofsmall
businesses

MillenniumDevelopmentGoalswho/havethegoalsbeenmet?
Goalsthatallmembersagreedtoachieveby2015toreducedisparitiesbetweendevelopedanddeveloping
countries,notmetat2015
1. Eradicateextremepovertyandhunger
2. Achieveuniversal/primaryeducation
3. Promotegenderequalityandempowerwomen
4. Reducechildmortality
5. Improvematernalhealth
6. CombatHIV/AIDS,malaria,andotherdiseases
7. Ensureenvironmentalsustainability
8. Developaglobalpartnershipfordevelopment

WallersteinsWorldSystemModel

illuminatedbyhisthreetierstructure,proposingthatsocialchangeinthedevelopingworldisinextricably
linkedtotheeconomicactivitiesofthedevelopedworldcoreandperipherytheory

Core/Periphery
Relationshipbetweendevelopinganddevelopedcountriesoftendescribedasanorth/southsplit
Developedcountries:oftennorthoftheequatorcore
Developingcountries:oftensouthoftheequatorperiphery

Maquiladoras
thetermgiventozonesinnorthernMexicowithfactoriessupplyingmanufacturedgoodstotheU.S.market.
Thelowwageworkersintheprimarilyforeignownedfactoriesassembleimportedcomponentsand/orraw
materialsandthenexportfinishedgood
OnU.SMexicoborderforeasyaccesstotheU.S

VenezuelasOil
Pricesaregoinguptohelppaytheirdebt
Wentfrom.07Boliverto1Boliver
.15centsintheusdollar

ChildLabor
Highinlessdevelopedcountries
Keepschildreninpoverty
Stopschildrenfromabetterlifeandeducation