Development
Definition:
GDP: The total monetary value of goods and services produced in the country in a given
year.
Limitations to it being the main development indicator:
- Doesn’t inform about informal sector
- Its an average, so doesn’t give an idea of marginalization or polarization of wealth of
the whole country’s population
- Doesn’t include money used in smuggling, blackmarketing
- Poverty line is never constant, due to the dollar (standardized currency)
- Doesn’t give you intraregional disparity – eg cities and states
- Manipulation/ lack of adequate data
- Doesn’t include any qualitative indicators that doesn’t include well being
- Doesn’t give understanding of environmental degradation
GDP per capita: GDP per capita is the sum of gross value added by all resident producers
in the economy plus any product taxes (less subsidies) not included in the valuation of
output, divided by mid-year population.
GNI: Gross national income (GNI), the sum of a country’s gross domestic product (GDP)
plus net income (positive or negative) from abroad. It represents the value produced by a
country’s economy in a given year, regardless of whether the source of the value created is
domestic production or receipts from overseas.
- GDP + export promotion – import/ trade deficit (balance of trade)
GNP: is the total value of all finished goods and services produced by a country’s citizens in
a given financial year, irrespective of their location.
- Basically the gdp – tnc – fdi (domestic market value)
Space for notes:
- GDP has been refined at the rate PPP USD (purchasing power parity) – value of
goods and services differ in each country – measures the buyoing potential of a
country
-
Composite indicator – HDI
Human Development Index (HDI)
A tool developed by the United Nations to measure and rank countries' levels of social and
economic development based on four criteria:
Life expectancy at birth,
mean years of schooling and expected years of schooling and
gross national income per capita.
Scale - 0-1, 1 being the maximum
Consider economic, social and environmental factors
The HDI makes it possible to track changes in development levels over time and to compare
development levels in different countries.
Advantages of HDI as a composite indicator:
- Gives a holistic view of the country’s development considering social, economic and
environmental indicators
- It is quantitative and therefore can be compared
- Regional and international comparision
- Qualitative indicators
Disadvantages:
- GDP
- Environmental sustainablility
- Quantitative, no qualitative indicaators like wellness or happiness index
What is Globalization?
Global – many countries
International – two countries ish
Globalization is the process by which the world is becoming interconnected as a result of
trade and cultural exchange.
Main reasons that have caused globalization:
- Trade
- Migration – labour/ education
- Media – diffusion of culture
- Glocalization – global + local – adaptation to local culture (eg mcd selling aloo
tikkies)
- Tourism- include sports and leisure
- Advancements in technology
- Development in transport and communication
- Containerization – shipments – faster movement of goods
- Trade blocks – BRICS, EU
- Increased FDIs increasing trade relationships
Advantages of Globalization:
- Cultural exchange
- Increased job opportunities – increased standard of living
- MNCs and TNCs setting up –
- More export promotion – increase in GDP
- Development of infrastructure
- Decrease in market price
- Availability of more foreign goods
Disadvantages of Globalization:
- Westernization leading to loss of local culture
- Leakage of wealth
- Local businesses close down due to increased competition
- Environmental damage – trade and transport leading to more carbon footprint and
dumping of waste by TNCs and oil spills
- Exploitation of workers in LEDCs
- More sophisticated jobs being held by people from host countries
- Leakage of wealth
- Exploitation of raw materials
- Decision of government is influenced by TNCs – impacts sovereignty.