Global Inequality in Development (Edexcel GCSE Geography: B (1GB0))

• There are environmental, historical, social, economic and political reasons for global inequalities

Cycle of wealth

• One of the key consequences of development is the cycle of wealth
• Economic development creates wealth and if a country has a stable and effective government this leads to development
• As the economy grows, more people work and are earning more money:
  • The government can then collect more taxes and people have more disposable income to spend which increases business profits
  • The taxes collected and profits made by companies can then be invested in future growth as well as infrastructure, education, healthcare etc...

The cycle of wealth

Income inequalities 

• There is an imbalance between the rich and poor (the haves and the have nots)
• Some countries have lower levels of development and poorer quality of life than others
• Imbalances also exist within countries
• One way to show the scale of inequality between countries is to use income quintiles
• These are calculated by the World Bank: 
  • All 230 countries are put into order by their GDP per capita, the USA is at the top
  • The list is then divided into 5 equal groups of 46 countries with each group being called a quintile
  • The top quintile will contain the to richest 46 countries in the world - the top 20% who own 80% of the world's GDP
  • The bottom two quintiles will be the bottom 40% of countries that together own just 3% of all GDP

The 'champagne glass' of global income inequality showing that the poorest 60% of the world's population are equally poor.

• Global Inequality can lead to migration
  • Migration is the movement of people from place to place which can be voluntary or forced
  • International migration is a consequence of uneven development, as people seek to improve their quality of life
  • Movement can be two ways: Poor wanting a better life or the rich not wanting to live near squatter settlements
  • Mexico an emerging country, borders the USA an HIC, every year over 130,000 Mexicans migrate to the USA legally, yet thousands enter illegally hoping for a better quality of life and paid jobs

• There are economic, social, environmental and political reasons for international migration

• Economic:
  • More than 3 billion people live on less than $2.50 per day
  • This affects living standards and quality of life
  • People migrate to countries with better pay and more opportunities

  • Developing countries frequently lack the ability to pay for food, agricultural innovation and investment in rural development

• Social:
  • 1 in 9 people in the world do not have clean water where they live
  • Without clean water or access to healthcare, millions of people do not reach their full potential
  • Many developing countries do not have the ability to combat the effect of HIV / AIDs

  • More than 775 million people in developing countries cannot read or write

• Political:

  • Many people in developing countries want to live in safer countries with less corruption

• Environmental:
  • Developing countries have increased vulnerability to natural disasters
  • They lack the capacity to adapt to climate-change-induced droughts
  • Poor farming practices lead to environmental degradation

  • Raw materials are exploited with providing limited economic benefit to developing countries and little concern for the environment

• The Rostow model of the Stages of Economic Growth was developed in 1960
• Based on the study of 15 European countries
• Rostow suggested that all countries have the potential to break the cycle of poverty and develop through 5 linear stages:
  • Stage 1: Traditional society: economy based on bartering, subsidence farming and little investment
  • Stage 2: Pre-conditions for take off (transitional stage): surpluses are traded through improved infrastructure and shift to manufacturing
  • Stage 3: Take off: industrial and regional growth, investment and political change
  • Stage 4: Drive to maturity: growth is supported through technological innovation, diversification and investment
  • Stage 5 - High mass consumption: consumer orientated society, durable goods production, dominant service sector, higher disposable incomes

Rostow's model of modernisation development

Criticisms

• Model is outdated and too simple
• Model assumes all countries start at the same point (same resources, population, climate etc.)
• Capital is needed to advance from Stage 1
  • The model does not show how that capital is obtained: usually a development aid loan.
  • The debt repayments can delay or even prevent a country from reaching Stage 3 and take off
• Colonialism, and the impact this had on the development of some countries, are not taken into account or are underestimated 

• Ander Frank's  theory believes that countries are poor because of past relationships with other countries
• Developed in opposition to Rostow's model
• Frank believed development was through the core and its peripheries
• Where powerful developed countries are represented as the core (Europe, North America etc.)
• All 'other areas' are the peripheries which depend on the core for its market (developing nations; large parts of the African continent)
• Essentially, the periphery produces and sells low-value raw materials to the core (coffee beans, sugar, cocoa etc)
• The core processes them into high-value goods and become wealthier

Frank's dependency theory model

Criticisms

• Original model did not take into account emerging countries
• Countries that were once a periphery or had been dependent on core development have achieved economic growth (China, Brazil and India)
• Some countries which were never colonised lack infrastructure and are undeveloped - Afghanistan, Yemen
• Aid dependency and internal corruption is a barrier to development
• Other factors lead to lack of development: being land locked, civil conflict, lack of political will etc.
• Small countries have difficulties in raising enough investment capital to be independent of the core