Countries according to the Human Development Index (2010)Countries according to the Human Development Index (2010)

Poverty & Poverty & DevelopmentDevelopment

TodayToday

Developing countries & development

The debt crisis Current issues

Developing countries Developing countries & development& development

Recognizing developing Recognizing developing countries: countries: geographygeography

TimelineTimeline 1500s-1945: colonization1500s-1945: colonization 1945-1970s: decolonization1945-1970s: decolonization The Cold War contextThe Cold War context New countries as a New countries as a

“problem”“problem”

The choice of wordsThe choice of words Developing Developing

countriescountries Third World Third World

countriescountries Less developed Less developed

countriescountries The SouthThe South The global SouthThe global South

Recognizing developing Recognizing developing countries: countries: $ per day$ per day

1.1. GeographyGeography2.2. GDP per capita (PPPGDP per capita (PPP**): ):

$1/day or $365/year$1/day or $365/year $2/day or $730/year$2/day or $730/year

see data for the see data for the whole world

Proportion of population below $1/day (2008)Proportion of population below $1/day (2008)

See the World ResourcesInstitute search engine for basic poverty figures

** PPP: purchasing power parity takes into account the fact that the cost of the same products varies by country.

Recognizing developing Recognizing developing countries: countries: economic economic sector sizesector size

Size of economic Size of economic sectorssectors

in total GDPin total GDP in total employmentin total employment

““Development”: standard Development”: standard definition vs. human definition vs. human developmentdevelopment

Standard definitionStandard definition the Cold War & the the Cold War & the

invention of invention of “development”“development”

copying the US/European copying the US/European model model

industrialization of industrialization of agricultureagriculture

from agriculture to industry from agriculture to industry to mass consumptionto mass consumption

measured by GDP growthmeasured by GDP growth

Human developmentHuman development GDP growth not enoughGDP growth not enough harder to measureharder to measure

nutritionnutrition healthhealth physical securityphysical security leisureleisure participatioparticipationn in communityin community creative lifecreative life

Peasants Dancing, 1651Johannes Lingelbach (Dutch, 1622–1674). Oil on canvas; 26 1/2 x 29 1/2 in. (67.3 x 74.9 cm)

Defining Defining human development

“The basic purpose of development is to enlarge people’s choices. In principle, these choices can be infinite and can change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secure livelihoods, security against crime and physical violence, satisfying leisure hours, political and cultural freedoms and sense of participation in community activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives.” Mahbub ul-Haq, quoted in United Nations Development Program. (2008). “The Human Development concept”. Retrieved 9 February 2010, from http://hdr.undp.org/en/humandev/.

2011 Human Development Report

Measured by the Measured by the Human Development Human Development Index (HDI).Index (HDI).See how it’s See how it’s calculated.calculated.

The debt crisisThe debt crisis

Origins of Origins of the debt crisisthe debt crisis

OPECOPEC* * and oil pricesand oil prices

““Petrodollars” in Western banksPetrodollars” in Western banks

Developing countries’ need for Developing countries’ need for capitalcapital

Loans from Western banksLoans from Western banks

Interest rates riseInterest rates rise

** Organization of Petroleum Exporting Countries

•Algeria•Angola•Ecuador•Iran*•Iraq*•Kuwait*•Libya•Nigeria•Qatar•Saudi Arabia*•United Arab Emirates•Venezuela** Founding membersFormer: Gabon & Indonesia

•Algeria•Angola•Ecuador•Iran*•Iraq*•Kuwait*•Libya•Nigeria•Qatar•Saudi Arabia*•United Arab Emirates•Venezuela** Founding membersFormer: Gabon & Indonesia

The International Monetary Fund The International Monetary Fund (IMF) & Structural Adjustment (IMF) & Structural Adjustment Programs (SAPs)Programs (SAPs)

Lender of last resort Lender of last resort Allowing debtor Allowing debtor

governments to pay back governments to pay back debtsdebts

ConditionalityConditionality conditions for IMF & World conditions for IMF & World

Bank loansBank loans ““economic reforms”, economic reforms”,

“austerity measures”, “austerity measures”, “Washington consensus” “Washington consensus”

Debtors: those who have debtsCreditors: those to whom money is owedTherefore debtors are supposed to reimburse creditors

Washington Washington consensusconsensus

• Privatization of state-Privatization of state-owned enterprises owned enterprises

• Reductions in gov. Reductions in gov. spending (health, spending (health, education & social)education & social)

• Elimination of Elimination of subsidies (cooking oil, subsidies (cooking oil, staple foods, fuel)staple foods, fuel)

• Deregulation of labour Deregulation of labour markets (less markets (less protection)protection)

• Adoption of free tradeAdoption of free trade• Allow foreign Allow foreign

investors to buy investors to buy domestic companiesdomestic companies

SAPs’ objectives & SAPs’ objectives & resultsresults

Impose good Impose good economic policies toeconomic policies to restore government restore government

budget & guarantee budget & guarantee loan repayment loan repayment

restore credit ratingrestore credit rating

and createand create ““good investment good investment

climate”climate” ““conditions for conditions for

economic growth” economic growth”

and “give investors and “give investors confidence”confidence”

What they didWhat they did reduction in wealth reduction in wealth

redistributionredistribution increase in cost of increase in cost of

livingliving increase in poverty, increase in poverty,

child mortality, child mortality, maternal mortalitymaternal mortality

political instabilitypolitical instability

NB: since the late NB: since the late ’90s restoration of ’90s restoration of social, health & social, health & education spendingeducation spending

BenefitsBenefits Developing countries Developing countries dodo get investments get investments

from multinational/transnational corporationsfrom multinational/transnational corporations Jobs are createdJobs are created Taxable income for developing countries’ Taxable income for developing countries’

governmentsgovernments Ability to pay back loansAbility to pay back loans

ProblemsProblems 12 countries, 75% of investments12 countries, 75% of investments South-South competitionSouth-South competition Dubious labour practicesDubious labour practices There are more workers than are needed(!)There are more workers than are needed(!)

Source: International Labour Organization. (2004). A Fair Globalization: Creating Opportunities for All. Geneva: ILO. pp. 28-29. http://www.ilo.org/public/english/wcsdg/docs/report.pdf

Where did Where did investments go?investments go?

43.3%43.3%

56.7%56.7%

Same 12 developing countries 2005 to April 2011Same 12 developing countries 2005 to April 2011

Current issuesCurrent issuesMore issues will be raised in the documentaryMore issues will be raised in the documentary

Debt cancellationDebt cancellation

Jubilee 2000 Jubilee 2000 (UK, US & Vatican campaigns)(UK, US & Vatican campaigns) the “odious debt”the “odious debt” human consequenceshuman consequences impossibility of repaying the debtimpossibility of repaying the debt

Impossibility of repayment generally Impossibility of repayment generally acknowledged, but…acknowledged, but… which LDCs should benefit?which LDCs should benefit? ““moral hazard”moral hazard” G8 summit of Gleneagles, July 2005 G8 summit of Gleneagles, July 2005 debt cancellation for 36 poorest countriesdebt cancellation for 36 poorest countries

Some strings attachedSome strings attached

Group of 8 most indus-Group of 8 most indus-trialized countriestrialized countries

1.1. CanadaCanada

2.2. FranceFrance

3.3. GermanyGermany

4.4. ItalyItaly

5.5. JapanJapan

6.6. RussiaRussia

7.7. United KingdomUnited Kingdom

8.8. United StatesUnited States

The Millennium The Millennium Development Goals Development Goals (MDGs)(MDGs) Officially a UN initiativeOfficially a UN initiative But dependent on developed countriesBut dependent on developed countries … … and autonomous international and autonomous international

organizations (IMF & World Bank)organizations (IMF & World Bank) 8 goals to be achieved by 20158 goals to be achieved by 2015

1.1. Eradicate extreme poverty & hunger Eradicate extreme poverty & hunger 2.2. Achieve universal primary educationAchieve universal primary education3.3. Promote gender equality & empower women Promote gender equality & empower women 4.4. Reduce child mortality Reduce child mortality 5.5. Improve maternal health Improve maternal health 6.6. Combat HIV/AIDS, malaria, and other diseases Combat HIV/AIDS, malaria, and other diseases 7.7. Ensure environmental sustainability Ensure environmental sustainability 8.8. Develop a global partnership for development Develop a global partnership for development

Summary of Summary of successes successes & failures available& failures availablehere (red menu on here (red menu on the right)the right)

Summary of Summary of successes successes & failures available& failures availablehere (red menu on here (red menu on the right)the right)

Requires govern-ment intervention with taxes, regu-lations & targeted policies

Requires govern-ment intervention with taxes, regu-lations & targeted policies

ConclusionConclusion

A global capitalist systemA global capitalist system

An increasingly integrated economic An increasingly integrated economic system…system…

with wide disparities in wealthwith wide disparities in wealth

Numerous policies aimed at guaranteeing Numerous policies aimed at guaranteeing development & improvement in well-development & improvement in well-being…being…

with unclear resultswith unclear results

Annex 1: International Annex 1: International division division of labour 1of labour 1

Raw material and Raw material and agricultural productsagricultural products

+ some manufacturing+ some manufacturing

Developing country 1Developing country 1

ExportsExports

Developed Developed country 1country 1

Manufacturing of Manufacturing of finished goodsfinished goods

ExportsExports

Developed Developed country 2country 2

Manufacturing ofManufacturing offinished goodsfinished goods

ExportsExports

Developed Developed country country nn

Manufacturing ofManufacturing offinished goodsfinished goods

TradeTrade TradeTradeNNOORRTTHH

SSOOUUTTHH

Raw material and Raw material and agricultural productsagricultural products

+ some manufacturing+ some manufacturing

Developing country 2Developing country 2

Raw material and Raw material and agricultural productsagricultural products

+ some manufacturing+ some manufacturing

Developing country Developing country nn

At the time of developing At the time of developing countriescountries’’ independence independence

NNOORRTTHH

Annex 2: International Annex 2: International division division of labour 2of labour 2

Raw material and Raw material and agricultural productsagricultural products

+ + growing manufacturinggrowing manufacturing

+ services+ servicesDeveloping country 1Developing country 1

Developed Developed country 1country 1

R&D, manufacturing of R&D, manufacturing of hi-tech finished goodshi-tech finished goods

Developed Developed country 2country 2

R&D, manufacturing of R&D, manufacturing of hi-tech finished goodshi-tech finished goods

Developed Developed country country nn

R&D, manufacturing of R&D, manufacturing of hi-tech finished goodshi-tech finished goods

TradeTrade TradeTrade

SSOOUUTTHH

Raw material and Raw material and agricultural productsagricultural products

+ + growing manufacturinggrowing manufacturing

+ services+ servicesDeveloping country 2Developing country 2

Raw material and Raw material and agricultural productsagricultural products

+ + growing manufacturinggrowing manufacturing

+ services+ servicesDeveloping country Developing country nn

ExportsExportsincl. incl.

manufactured manufactured goodsgoods

InvestmentsInvestmentsand/orand/or

subcontractorssubcontractors

InvestmentsInvestmentsand/orand/or

subcontractorssubcontractors

InvestmentsInvestmentsand/or and/or

subcontractorssubcontractors

ExportsExportsincl. incl.

manufactured manufactured goodsgoods

ExportsExportsincl. incl.

manufactured manufactured goodsgoods

Different parts of the finished good made in different developing countriesDifferent parts of the finished good made in different developing countries

Since the 1980sSince the 1980s