october 29, 2015s. mathews1 human geography by james rubenstein chapter 9 key issue 4 why do less...

April 20, 2023 S. Mathews 1

Human Geography

By James Rubenstein

Chapter 9Key Issue 4

Why Do Less Developed Countries Face Obstacles to

Development?


In recent years, LDCs have made improvements in

development, but the gap between LDCs and MDCs have continued to widen.

Natural Increase has dropped 20% in LDCs compared to

83% in MDCs.1/5th of the world’s people (in

MDCs) consume 5/6ths of the world’s goods.


Progress toward

development


To reduce disparities between the rich and poor countries,

LDCs must develop more rapidly. They must . . .

adopt policies that successfully promote development

(emphasis is on international trade).

They must find funds to pay for the development (emphasis is

on self-sufficiency).


Elements of Self-Sufficiency Approach

1. Spread investment as equally as possible across all sectors of the economy and regions.

2. Isolate fledgling businesses from international corporations.

3. Set barriers to limit imports.


India: Example of the Self-Sufficiency

Approach1. Limited imports of foreign

goods2. Exports were discouraged.3. Government approval

required for expansion.4. Businesses subsidized.


Problems with the Self-Sufficiency

Alternative1. Inefficiency - protects

inefficient businesses.2. Large Bureaucracy – the

complex administration, needed to manage controls, encouraged abuse and corruption.


Elements of International Trade

Approach1. What resources does a country have in abundance that other countries are willing to buy?

2. What products can the country manufacture and distribute at a higher quality and lower cost to other countries?


*Rostow’s 5 stage Development Model

1. The traditional society.2. The preconditions for takeoff.3. The takeoff.4. The drive to maturity.5. The age of mass consumption.


The Traditional Society

A very high percentage of population engaged in

agriculture.A high percentage of national

wealth allocated to “nonproductive” activities,

such as the military and religion.


The Preconditions for Takeoff

Under influence of well educated leaders, the

country starts to invest in new technology and

infrastructure, such as water supplies and

transportation systems.


The TakeoffRapid growth, technical

advances, and high productivity occur in a limited

number of economic activities.

Other sectors of the economy remain dominated by traditional practices.


The Drive to Maturity

Modern technology diffuses from take-off industries to a wide variety of industries.

Workers become more skilled and specialized.


The Age of Mass Consumption

The economy shifts from production of heavy industry

to consumer goods.


MDCs are in stages 4 and 5.As a country concentrates on

international trade, it benefits from exposure to

consumers in other countries.Rostow’s model suggests that

any country can become more developed.


Examples of International Trade

ApproachPersian Gulf States used petroleum revenues to

finance large projects and provide consumers goods.South Korea, Singapore,

Taiwan, and Hong Kong used cheap labor to produce and sell products inexpensively.


Problems with the International Trade

Alternative.


Problems with the International Trade

Alternative1. Uneven Resource

Distribution2. Market Stagnation3. Increased Dependence

on MDCs


Uneven Resource Distribution

LDCs suffer when the resource that they have for sale

doesn’t command a large enough price to enable them to purchase products needed

for growth.


Market Stagnation

The slow growth of MDCs population can and has limited market size of products from LDCs.


Increased Dependence on MDCs

Investments in takeoff industries may reduce

production of necessities for the population, forcing an LDC to depend on MDCs

for those necessities.


Recent Triumph of the International Trade

Approach

Since India dismantled its barriers to international trade, its per capita GDP has increase

from 4% to 6% annually.


World Trade Organization

Established in 1995, by countries representing

97% of world trade,to promote, and remove barriers to international

trade in all countries.


Critics of the WTO

Liberals charge the WTO as antidemocratic.

Conservatives charge that the WTO compromises

the sovereignty of individual countries.


Financing Development

LDCs must generally obtain loans from MDCs.

From banks and international organizations, and

From direct investment by transnational corporations.


LoansThe World Bank and the

International Monetary Fund lend about $50 billion annually

to LDCs for development.Commercial banks from MDCs

have a current outstanding loans to LDCs totaling $2.1

trillion.


Problems with LoansHalf of the projects funded in

Africa have ended up as failures.Many LDCs have accumulated

debt that exceeds annual income.

Lending agencies have had to cancel debt and encouraged

LDCs to adopt structural adjustment programs.


Debt as a percentage of income


Structural Adjustment Programs

Policies that create conditions encouraging international trade, such as raising taxes, reducing

government spending, controlling inflation, selling publicly owned utilities to private corporations, and charging citizens more for

services.


Transnational Corporations

Corporations operating in countries other than the

one in which its headquarters are located.


Flow of Investment


Core and

Periphery

Most MDCs

Core and Periphery

Most MDCs are

located above the 30o north

latitude.


Finis

october 29, 2015s. mathews1 human geography by james rubenstein chapter 9 key issue 4 why do less...

Documents

international corporations

development emphasis

poor countries

country manufacture

country concentrates

consumers goods

worlds goods

traditional practices