Module 3

Question 1

The Spread of Development

Answer 1

Development often occurs to specific locations. These developments grow by attracting investment, people and new economic opportunities. Government may try to spread development, for some of the following reasons:

(i)Economic- reducing unemployment, raising productivity, more efficient use of resources

(ii)Social- increasing standards of living, slowing migration, reducing regional inequalities

(iii)Political- attempting to win votes before an election

(iv) Strategic- important in times of military conflict and threats to national security

(v) Environmental concerns- dereliction, blight and contamination

Attempts to spread development vary with the type of development. For example, economic development is frequently associated with industrialisation, while human development may be more affected by the provision of clean water or an education system.

Development is often associated with a change in a country’s employment structure, from largely rural and agricultural to urban and industrial. However, these stages of growth do not indicate how the growth occurs.

Question 2

Causes of Disparities in the Caribbean

Answer 2

There is clear evidence that shows that the present patterns of development is strongly based on the region’s history. However, there are other factors that have also played a role:

1) Resource Endowment: resource availability (natural and human) is often critical in the development process of regions. Regional disparities occur because some areas have little or no resource base upon which to promote development activities.

Such regions are generally sparsely populated with little investment, poor infrastructure and few employment opportunities relative to other areas in the country or region.

Within the Caribbean region, locations with large populations and well-developed social and economic infrastructure include those that have mineral (petroleum in San Fernando, Trinidad, bauxite in Linden, Guyana and Mandeville, Jamaica). The
presence of sandy beaches and clear ‘blue’ waters, as a major resource, along the coasts of many Caribbean countries has also led to the citing of tourism facilities,
which in turn, have also strongly influenced the coastal orientation of the populations of these countries.

2) Geographical Factors: spatial development is also strongly affected by factors such as soils, topography, vegetation and climate. In some countries of the Caribbean, vast areas are underdeveloped because of the presence of steep mountain slopes which
make transport networks development difficult and expensive, poor soil which are unsuitable for food production, swamps and dense forests, as in the case of Guyana and Belize, which prove unattractive for investment and population movement.

Thus, in Guyana, large portions of the hinterland remain poorly inhabited and undeveloped while the coast (low-lying and easily accessible) is relatively
developed.

3) Economic Factors: regions within countries differ in their levels of development, depending on the nature of their economies and the stage of development. For
example, countries or areas which have a diversified economy, have the potential to be much “better off” that those who are less diversified economy, as it prevents the major commodity (source of income generation and employment) to decline in
terms of trading of the commodity (leading to an economic decline).

Investment is also an important economic factor in spatial development, as it tends to generate
income and employment. Countries or regions that are able to attract investment tend to be “better off” than those that attract limited resources.

4) Governments policies: Due to differences in availability of resources and constraints. The extent to which these constraints affect development largely depends on the efforts made by the national government to convert these into opportunities.

Question 3

Consequences of Disparities in the Caribbean

Answer 3

1) Disparities lead to over- concentration of population and resources in some areas at the expense of others. This is particularly so in most Caribbean countries where infrastructure development, population and socioeconomic opportunities concentrate in the major urban centres.

This tends to perpetuate rural-urban migration, which gives rise to a number of adverse effects such as urban pollution, crime, slum development and traffic congestion among others.

2) Disparities lead to underdevelopment and marginalisation of some areas in the Caribbean region. In many of the peripheral rural areas, migration has stagnated population growth rates and altered the age-sex distribution making it uneconomical to provide services to some communities.

3) Perpetuation of regional disparities undermines national/regional development as it allows that utilization of resources in some areas to be either unutilized or underutilized.

4) Disparities prevent equity in development, often leading to political discontent among people from underdeveloped regions.

Question 4

What is poverty?

Answer 4

It can be defined as a condition in which a person or community is deprived of, or lacks the essentials for a minimum standard of well-being and life.

In purely economic terms, income poverty is when a family’s income fails to meet a federally established threshold that differs across countries.

Typically it is measured with respect to families and not the individual and is adjusted for the number of persons in a family.

Economists often seek to identify the families whose economic position falls below some minimally acceptance level. The international standard of extreme poverty is set to the possession of less than US$1 a day.

Question 5

Absolute Poverty

Answer 5

Absolute poverty measures poverty in relation to the amount of money necessary to meet basic needs such as food, clothing, and shelter.

It is usually defined as affecting people living on less than US $1 a day and is used when considering the Human Poverty Index (HPI)

The concept of absolute poverty defers from relative poverty as it is not concerned with broader quality of life issues or with the overall level of inequality in society.

The concept therefore fails to recognise that individuals have important social and cultural needs.

It refers to a set standard that is consistent over time and between countries. For example, one absolute measurement of poverty would be the percentage of the population eating less food that is required to sustain the human body (approx. 200-2500 calories a day for adults)

Question 6

Relative (Normative) Poverty

Answer 6

Relative poverty defines poverty in relation to the economic status of other members of the society: people are poor if they fall below prevailing standards of living in a given societal context.

To further develop the definition of the concept of
relative poverty or relative deprivation, three perspectives are relevant:

i. the income perspective indicates that a person is poor only if his or her income is below the country’s poverty line (defined in terms of having
income sufficient for a specified amount of food)

ii. the basic needs perspective goes beyond the income perspective to include the need for the provision by a community of the basic social services
necessary to prevent individuals from falling into poverty

iii. The capability (or empowerment) perspective suggests that poverty signify a
lack of some basic capability to function

Question 7

The Human Poverty Index (HPI)

Answer 7

This was introduced in 1997 to measure different dimensions of deprivation (the proportion of people in the country who are excluded from progress).

As an aggregate measure, the HPI focuses on the prevalence of poverty in a country and concentrates on three essential elements of human life that are part of the HDI.

The difference between the HDI and HPI is that while the HDI measures progress in a country as a whole, the HPI highlights the extent of deprivation.

There are two sets of measurements used to calculate the HPI:
1. HPI-1 is used for developing countries and the following measures are used in the calculation:
- % of people not expected to survive to the age of 40
- % of adults who are illiterate
- % of people without access to safe water
- % of people without access to health services
- % of moderately or severely underweight children under 5

2. HPI-2 is used for developed countries and the following measures are used in
   the calculation:
   - % of people not expected to survive to the age of 60
   - % of people functionally illiterate
   - % of people living below the income poverty line set at 50% of the median disposable personal income
   - Rate of long-term unemployment (12 months or more)

Question 8

How development occurs

Answer 8

There are three broad ways in which development occurs:

i. Natural- under free market conditions, countries exploit their resources and base their growth on their advantages (e.g. MDCs)

ii. Forced- in socialist countries like North Korea, the government controls all the resources and dictates the type and place of growth that it wants

iii. Planned- Newly Industrialising Countries (NICs) like South Korea have progresses from using import substitution industries, which reduce debt, into
developing export oriented industries which gain valuable currency.

Question 9

Where development occurs

Answer 9

While the three ways indicate how a country develops, it fails to show which regions prosper and which fail. Regional inequalities develop overtime due to economic forces.

Initially, development takes place in particular places, due to comparative advantages, such as natural resources, location or labour supply, which stimulates
industrial growth. In turn, multiplier effects occur.

Acquired advantages, such as improvements in infrastructure and a skilled workforce, reinforce the area’s reputation and attract further investment. This
ensures that the region grows and stays ahead.

Spatial interaction increases, meaning that skilled workers, investment and new developments move to the growing area, the core.

By contrast, the peripheral areas are flooded by manufactured goods from the core (known as the backwash effect). This prevents the development of manufacturing in the periphery.

The spread effect occurs when the core stimulates surrounding areas to develop to meet consumer demand.

These ideas have been used extensively in planning. Places or districts which are favoured by reason of location, resources, labour or market access are economically more attractive.

Consequently, they are developed by planners to form natural growth poles, from which development can spread and these expand faster than other districts.

Generally, these are urban-industrial complexes which have good transport and accessibility.

Question 10

Development and Underdevelopment

Answer 10

Some theories suggest that the way in which Europe and North America developed is the ‘ right’ way and that developing countries should copy them.

More recent theories, including the dependency theory, show that MDCs may, in fact, be the cause of underdevelopment in many LDCs.

Clark’s sector model is the most basic of the development models. It describes how MDCs have changed from agricultural societies to industrial and post-industrial societies.

Change occurs because success in one sector produces a surplus revenue. This revenue is then invested in new industries and technologies, thereby increasing the range of industries in any area.

The main weakness of this model is that it is descriptive and only a crude level of analysis. It does not say how or why the country developed nor does it show regional variations within it.

Question 11

Colonialism and Development

Answer 11

From the mid-15th century onwards, Europeans countries began to explore and expand into the rest of the world.
Three main motives for this expansion are:
i. Explorative motive- the desire to discover places and peoples that were unknown to the explorers
ii. The desire to take Christianity to other people across the world
iii. Exploitation- the craving to gain wealth and/or territory through trade or
possession

Europeans ‘discovered’ new lands in Asia, Africa and the Americas and settled, traded and took possession of them either by treaty or by force.

By the end of the 19th century, much of the world was controlled by the Europeans countries either directly, as part of their empires or indirectly, through power held by colonial settlers from the home nations.

In the 20th century, neo-colonialism or economic control, over some former colonies still exists through transnational corporations.

Question 12

Colonialism & Caribbean Development

Answer 12

The spatial development process in the Caribbean during the colonial period was strongly influenced by the dominance of plantation agriculture, primarily sugar cultivation and later on by bauxite and petroleum mining.

Three major steps taken by the 16th century plantations that influenced the spatial development process are:
i. The ‘”opening-up effect” of plantations
ii. Establishment of Towns
iii. Growth of Mining Centres

Question 13

Colonialism & Caribbean Development

Answer 13

The spatial development process in the Caribbean during the colonial period was strongly influenced by the dominance of plantation agriculture, primarily sugar cultivation and later on by bauxite and petroleum mining.

Three major steps taken by the 16th century plantations that influenced the spatial development process are:

1) The “opening-up effect” of plantations-
Like most countries in the Third World where plantations were established, the Caribbean region witnesses the clearing of large areas of tropical forest for the production of sugar for the export to Europe.

The preoccupation with this export crop meant that areas considered unsuitable for sugar cultivation were allowed to remain idle in their natural state.

In general, the early plantations avoided the steep slopes that had poor soils and were susceptible to erosion. Hence, sugar plantations were established
predominantly along the flat, low-lying coastal areas.
In this way, sugar-cane came to dominate the best agricultural land in the Caribbean.

This beginning set the stage for spatial disparities in Caribbean development as only the areas that were directly linked to the production of primary products for export attracted infrastructure investment.

2) Establishment of Towns
This was the second effect of the establishment of sugar plantations. The export- oriented nature of the crop meant that transshipment points had to be built.

In most countries, towns were constructed on the leeward side of the territories for protection against strong winds. These became the principal ports, the links between the colony and the metropolitan country.

Like the activities around the sugar factory, the infrastructure around the ports also attracted related commercial activities that encouraged growth.

These towns were also administrative centres and housed the colonial administrative class. The amenities attracted the local elite as this class emerged.

Municipal spending was biased in favour of this urban elite and outside of the sugar- cane growing areas, there little or no investment in rural areas. In fact, resources flowed from rural to urban areas and this is one of the reasons that the term ‘parasitic’ has been applied to the relationship between the colonial port cities and the rural hinterland.

Thus, the colonial period was marked by a disparity in development between urban and rural areas.

3) Growth of Mining Centres
The spatial polarisation pattern of development was further reinforced in the colonial period in some of the countries with the development of mining activities.

In Guyana and Jamaica, where bauxite was found and Trinidad and Tobago where petroleum resources were important, company towns were established to facilitate the mining and processing of the minerals.

Thus, towns such as Mandeville in Jamaica, Linden in Guyana and San Fernando in Trinidad, emerged as new growth points.

Many of the mining and refining towns showed the internal structure of the colonial towns which developed in the East with the ‘native quarter’ for local employees and a European quarter for administrative and technical staff that came from overseas.

The ports and mining towns were oases of develop-ment in the colonial period.

These preceding developments established the pre-conditions for the uneven pattern of development across the Caribbean in the colonial period.

As population grew, migration occurred in response to employment opportunities and access to social facilities provided by the towns, the plantations and the mines. These formed the focus of social, cultural and economic life of the colonies.

Even after emancipation when the freed slaves exited the plantations and some were closed, the infrastructure provided the basis for new settlements as the Caribbean peasantry emerges.

The economic base of the countries was quite narrow with little option outside of the mining and agriculture sector. Peasant farming based for the most part, on poor, shallow soils, a legacy of plantation society and a growing urban sector relying heavily on trade and
commerce and public service employment dominated the rural sector where the bulk of the population lived.

Question 14

Theory of Plantation Economy

Answer 14

This theory of plantation economy grew out of the insights attained from the theory of dependence in the Caribbean.

Economist Lloyd Best initially developed the theory in collaboration with Canadian economist Karl Levitt.

It consists of an historical and structural analysis of the development of plantation economy in the Caribbean from the 17th century to present day.

Best and Levitt, for the purpose of analysis, detected three broad phases of historical development:

1. Pure Plantation Economy, covering the period from about 1600 to the abolition of slavery in 1838. This phase is critical as it sets the framework for the development of the Caribbean as an overseas economy of a distant metropole. The metropolitan country provided organisation and decision-making,
   capital, transport, supplies, markets and transplanted labour from Africa. The Caribbean was a mere focus of production.

The local economy had internal inter-dependence and control, more or less, of the plantation sector. Pure Plantation Economy was seen as unlikely to be profitable in the foundation period.

2. Plantation Economy modified, spanning the hundred years from 1838 to the ever of the Second World War. In this phase, adjustments were made to the system, most notably by the abolition of slavery and the removal of imperial preference for sugar,
   the main staple of the Commonwealth Caribbean.

This period marked the rise of the local peasantry on non-plantation land and the recruitment of indentured immigrant workers from India.

3. Plantation Economy further modified, representing the period from 1938 onwards. In this phase, changes occurred in the period beginning with the Second
   World War. The depression of the 1930s saw large-scale unemployment, social dislocation and political rebellion. These prompted attempts after the war by colonial and post-colonial governments to seek greater indigenous development in the region.

This period saw the introduction of import-substitution industrialisation, the growth of new mineral export-sectors (bauxite) and the extensive promotion of the tourism industry, all fuelled by an
inflow of foreign private investment.

Question 15

Limitations of the Plantation Theory

Answer 15

The social and economic characteristics of the Caribbean were treated as if they were unique and different from other colonial societies. The writers ignored the role of class in colonial societies and failed to specify how changing political interest and patterns of collaboration permitted the plantation economy to survive with radical transformation.

Economic aspects were exaggerated and therefore the theory cannot explain why sensible technocratic proposals for structural economic reform in the Caribbean constantly run into intractable political opposition from vested interest.

Question 16

The Dependence Theory

Answer 16

The term dependency describes the relationship in which the rich countries exploit the poorer countries.

According to the dependency theory, some countries become dependent upon stronger, frequently colonial, powers, as a result of exploitation, trade and ‘
development’.

As the more powerful country exploits resources of its weaker colony, the colony becomes dependent upon the strong power. Goods flow from the colony to support consumers in the overseas country.

Andre Frank (1971) described the effect of capitalist development on many countries as ‘ the development of underdevelopment’. The problem of poor countries is not that they lack the resources, technical know-
how, modern institutions or cultural developments that lead to development, but that they are exploited by capitalist countries.

The dependency theory is a very different approach from most models of development:
-it incorporates politics and economics in its explanation
-it takes into account the historical processes of underdevelopment, i.e. how capitalist development began in one part of the world and then expanded
into other areas
-it sees development as a revolution or a change in the political power of the people, a clash of interests between the ruling classes (bourgeoisie) and the
working classes (proletariat)
-it stresses that to be developed is to be self-reliant and to control natural resources
-it believes that modernization does not necessarily mean westernisation and that underdeveloped countries must set goals of their own, appropriate to
their own resources, needs and values.

Question 17

The Dependence Theory in the Caribbean

Answer 17

This theory dominated the thinking respect to Third World development in the 1960s and 1970s. It had its origins in the writings of several Latin Americans and scholars from the Caribbean, specifically the so-called New World Group at the UWI Mona Campus.

The theory was present as a conditioning situation in which the economies of one group of countries are conditioned by the development and expansion of others.

The situation of developing countries was not the result of climatic conditions or inefficiently but that of the role these countries played in the global capitalist
system.

The role of colonial territories was to produce raw materials at low costs for the metropole and to this end; a chain of exploitative relationships was set in motion.

It began with the farmer in rural areas and extended to rural market towns, primate cities and finally the metropole. The terms of trade were always more favourable for the next higher level so that the highest beneficiary was the metropole.

In this way, the surplus of developing countries was siphoned off by the dominant capitalist countries. Therefore, development and underdevelopment was seen as opposite sides of the same coin.

The theory argues that it is the basic situation that has allowed the Caribbean to emerge as a group of backward and exploited countries.

The only way that poor countries could free themselves from this type of exploitation was to erect trade barriers and control the activities of trans-national corporations within their borders.

This theory is seen as being irrelevant to the modern age in that it advises poor countries to divorce themselves from the global economy at a time when the world system is promoting and embracing globalisation.

Moreover, it sees the economic system as the root cause of all ills of developing countries.

In response to the various criticisms of the theory, economist Clive Thomas advanced an alternative hypothesis. He argued that Europeans destroyed those indigenous social forces, which otherwise might have transformed the mode of production and in return offered colonies like those in the Commonwealth Caribbean the opportunity to participate in the global division of labour as suppliers or raw materials and consumers of manufactures.

As a result, Caribbean countries display a pattern of consumption that does not represent the needs of the community and a pattern of production oriented to
neither domestic consumption nor domestic needs.

Clive suggested that the continued participation of Third World countries in the world capitalist system would be futile for national development and that a strategy for the transition to socialism should be advocated.

Thomas’ analysis had a distinctly political element; he not only describes and explains the historical origins and contemporary economic consequences of the
worldwide spread of capitalism, but also seeks to understand the political underpinning of the present structure of production relations and productive forces in the Third World.

One of the major criticisms of Thomas’s hypothesis was that inadequate regard was taken of such constraints as size and technological dependence.

Also, it is felt that Thomas was too easily dismissive of export specialisation as a development strategy of Third World countries.

Question 18

Small Island Developing States

Answer 18

SIDS were recognized as a special case both for their environment and development at the United Nations Conference on Environment and Development (UNCED), also known as the Earth Summit, held in Rio de Janeiro, Brazil in 1992.

SIDS are spread over three geographical regions namely, the Caribbean, the Pacific and the Atlantic, Indian Ocean, Mediterranean and South China Sea (AIMS).

Eg: Trinidad and Tobago, Barbados, Fiji, Tonga, Maldives, Guam, Cape Verde, Mauritius

Question 19

Challenges faced by SIDS

Answer 19

SIDS are highly disadvantaged in their development process and require special support from the international community. The common challenges faced by SIDS are:

1) narrow resource base depriving them of the benefits of economies of scale

2) domestic markets and heavy dependence on a few external and remote
markets

3) little resilience to natural disasters

4) fragile natural environments

5) high volatility of economic growth limited opportunities for the private sector and a proportionately large reliance of their economies on their public sector;

Question 20

Overview of Rostow’s Model of Development (International Trade Model of Development)

Answer 20

W.W Rostow was an American economist and government official who proposed his five stage model of development in the 1950’s.

The theory is essentially optimistic. It suggests that, once the development process starts, it builds up momentum and becomes self-sustaining.

His theory was heavily influenced by the historical and political context in which it was written as he was fiercely anti-communist and right-wing; he modeled his theory after western capitalist countries.

Question 21

Stages of Rostow’s Model of Development (International Trade Model of Development)

Answer 21

Stage 1-Traditional Society:
This stage is characterized by a subsistent, agricultural based economy, with intensive labor and low levels of trading, and a population that does not have a scientific perspective on the world and technology.
Eg: Sub-Saharan countries, and several of the tiny island countries in the Pacific Ocean,

Stage 2- Preconditions to Take-off:
Here, a society begins to develop manufacturing, and a more national/international, as opposed to regional, outlook.
Eg: Zaire

Stage 3- Take-off:
Rostow describes this stage as a short period of intensive growth, in which industrialization begins to occur, and workers and institutions become concentrated around a new industry.

Stage 4- Drive to Maturity:
Modern technology, previously confined to a few take-off industries, diffuses to a wide variety of industries, which then experience rapid growth comparable to the take-off industries. Workers become more skilled and specialized. The economy is diversifying into new areas the economy is producing a wide range
of goods and services and there is less reliance on imports.
Eg: Ireland and Spain

Stage 5- Age of High Mass Consumption:
The economy shifts from production of heavy industry such as steel and energy, to consumer goods, such as motor vehicles and refrigerators. Of particular note is the fact that Rostow’s “Age of High Mass Consumption” dovetails with (occurring before) Daniel Bell’s hypothesized “Post-Industrial Society.”

The Bell and Rostovian models collectively suggest that economic maturation inevitably brings on job-growth which can be followed by wage escalation in the secondary economic sector (manufacturing), which is then followed by dramatic growth in the tertiary economic sector (commerce and services).
Eg:Britain, USA, Germany, Japan, and Canada

Question 22

Limitations of Rostow’s Model

Answer 22

1) The theory describes but does not explain why do changes occur; i.e., it emphasizes the’ stages’ through which countries pass but neglects the processes involved in development

2) While Rostow illustrates faith in a capitalist system, scholars have criticized his bias towards a western model as the only path towards development.

3) Rostow also assumes that all countries have a desire to develop in the same way, with the end goal of high mass consumption, disregarding the diversity of priorities that each society holds and different measures of development. For example, while Singapore is one of the most economically prosperous countries, it also has one of the highest income disparities in the world.

4) His model is based on American and European history (anglo-centric) and aspiring to American norm

Question 23

Myrdal’s model of Cumulative Causation (Main concept)

Answer 23

Created by Swedish economist Gunnar Mydral (1898-1987) in 1956. This model is known as the model of Cumulative Causation.

It is a spatial model that attempts to explain why some areas become more economically developed than others. He believed that over time economic forces increase regional inequalities rather than reduce them. He argued that development was caused by natural advantages and regional interaction.

In theory, once the process of cumulative causation starts, it becomes self-sustaining and the core region continues to grow. This process may also work in
reverse.

For example, a factory may close creating an overall regional depression since other industries dependent on the factory would also close.

A downward spiral in the core is therefore established and it may only be possible to reverse this trend through government intervention.

Question 24

Stages of Myrdal’s model of Cumulative Causation

Answer 24

Stage 1: Traditional, preindustrial stage with few regional disparities

Early economic growth takes place where they are natural advantages. It may be a sheltered coastline where a natural harbour could lead to the development of the major port. Similarly, industries may develop where there is an abundance of natural resources (coal, iron and steel).

Once growth in a region as started, the area develops more rapidly than its surroundings as the process of cumulative causation (meaning that successful,
growing areas attract even more economic activity over time, thereby accentuating regional disparity).

Gradually, acquired advantages such as skilled labour, improved infrastructure, more efficient services and sizable markets, reinforce the natural advantages.
This area, with both natural and acquired advantages, constitutes the core. As job opportunities arise within the core, people continue to migrate from the
periphery.

Original industries prosper and the demand for labour increases as further industrial growth occurs. This is the multiplier effect which takes place as linked industries become established.

As the original growth area continues to develop, this then becomes a growth pole. A chain reaction is set in motion producing self-sustaining economic growth.

Stage 2: Increased disparities caused by multiplier and backwash effects as the country industrializes.

The concentration of economic activity leads to a backwash effect (the process of spatial concentration of economic activity into a core) or polarisation, as the core region develops at the expense of the periphery.

Downward spirals or vicious circles in the periphery then occur as people leave in order to find work in the core. Growth in the core, known as upward spirals or virtuous circles, is therefore sustained by a constant supply of labour, as well as resources, from the periphery.

The loss of valuable labour and resources reduces further industrial development in the periphery.

Stage 3: A reduction in regional inequalities as spread effects occur

As core areas flood the periphery which cheap products, the poor areas have little necessity to develop any industry. The result is the industrially expanding region of the core on the one hand and the
stagnating or declining periphery on the other.

Growth is supposed to spread or trickle-down from the core, as expansion of core activity increases the demand of agricultural raw materials and the core supplies the periphery with innovative goods and services as income levels rise.

As land costs and congestion increase in the core, many branch plants decentralize into the periphery, thus providing a further stimulus to growth. Whether the gap between the core and the periphery widens depends on the relative rates of backwash and spread.

Question 25

Myrdal’s model- Application to Brazil

Answer 25

The north-east region of Brazil is largely under-developed. In 2008, the per capita output in the north east was less than 50% of the national average with the more central and southern regions having greater levels of development

Poverty also decreased from north to south from 40% to 16.1% with the HDI for Brazil showing life expectancy, education and income moving in the same direction

Up to the 20th century there was even development as each region relied on the production of primary products for export and no region had an advantage over the other. However, the central and southern regions developed a comparative advantage as it was able to respond to the increased demand for it main crop of coffee due to the large amount of immigrant labourers settled in the region and due to the heavy investments by the British in infrastructure and technology.

The north-east suffered as a result of external factors such as the drop in sugar prices due to the competition with beet-sugar in Europe and sugar cane cultivation in the Caribbean. The northern regions also declined as it was unable to compete with its Asian counterparts in the production of rubber.

Regional Concentration increased as futher investment was made into the central and southern regions which made it more attractive to immigrants and migrants. With the population of Sao Paulo increasing from 3 million in 1930 to 6 million in 1965

To combat this, this was state intervention and direct investment into the north-east and north region which was spotty with regional poles (metal mining and petrochemical complexes) and traditional (sugar and cocoa) production

Question 26

What is Aid?

Answer 26

Aid is defined as a transfer of resources from a richer country (usually a MDC) to a poorer country, on terms which are non-commercial and ‘concessional’.

Basically, the aid is in the form of a gift or a loan at a lower rate of interest than charged by banks. The resources might be in the form of money, food, training or materials.

Question 27

Measures to Overcome Disparities: Debt Relief

Answer 27

The debt burden of poorer nations is hindering their economic development.

Budget and trade deficits negatively impact poor countries in the world and the debt load on these nations has crippled their capacity to meet all the needs of their population.

Many of these countries still have to find money to pay off debts and at the same time find the resources to develop.

It is now generally believed that there is a greater flow of money from the poorer to the richer nations due to the debt situation.

This has created a ‘wealth gap’ on a global scale where the rich nations continue to get richer and the poor countries even poorer.

Question 28

Measures to Overcome Disparities: Appropriate Technology

Answer 28

The use of equipment, know-how and other resources that are properly suited to the prevailing conditions in a country. It is a critical component of foreign aid toward achieving sustainable development since it allows underdeveloped countries to maximize the us of their resources without adversely affecting the natural environment

Question 29

Spearman’s Rank Coefficient

Answer 29

This a statistical technique used to measure the degree of association or correlation between two sets of variables.

Step 1
- State the null hypothesis (H0) which is that there is no relationship between the two variables.
- The alternative hypothesis is that there is a relationship between the two variables.

Step 2
- Tabulate the information and rank both sets of data independently from high to low, so the highest value will get a rank of 1, second highest 2, and so on.
- In the case of joint/tied ranks, find the average of the rank (e.g. if two values occupy positions two and three they both take on rank 2.5 [2 + 3=5/2]. If three values occupy positions four, five and six, they all take the rank 5 [4 + 5 + 6 =15/3].

Step 3
- Find the difference between the ranks of each of the paired variables (d).

Step 4
- Square each of the differences (d2)

Step 5
- Find the sum of the squared differences (Σd2)

Step 6
- Multiply the sum of the squared differences by 6 (6 Σd2)

Step 7
- Divide 6Σd2 by (n3 – n), with n being the number of paired variables.

Step 8
- Subtract that total from 1.

If a PREFECT POSITIVE correlation exists, the coefficient will be +1.0
If a PERFECT NEGATIVE correlation exists, the coefficient will be -1.0
If there is NO RELATIONSHIP at all between the two variables, the coefficient will be 0

Question 30

Friedman’s Core-Periphery Model

Answer 30

1) The Core Regions [Preindustrial Economy]
Core regions are concentrated metropolitan economies with a high potential for economic growth and innovation.
These are the centres of the national or international markets with large-scale industry, commercial services and high levels of technology. The core regions present a positive image and have a concentration of resources, professional and highly skilled workers and a well-developed infrastructure.
The growth of the core is often at the expense of the periphery because labour and resources from the periphery move to the core to sustain economic growth.
On a national level, this pattern can be seen in the urban hierarchy with the country’s capital as the nation metropolis and other large cities as secondary cores.

*Features- independent local centres, no hierarchy

2) Upward Transitional Areas [Transitional Economy]
These are growth regions within the periphery and are relatively close to the core. In these areas, the availability of natural resources promotes greatly intensified use of the resources.
They are characterised by high immigration rates and industrial and economic growth. These areas also benefit from high levels of investment in industry as well as in agriculture.

*Features- a single, strong centre emerges (dominates the colonial society as the stage of preconditions begins), growing manufacturing sector encourages concentration of investment in only a few centres

3) Downward Transitional Areas (Declining Areas) [Industrial Economy]
These are peripheral areas characterised by declining or stagnant economies, often with low agricultural productivity or the loss of a primary resources base, caused by a reduction in the demand for minerals (such as coal).
These areas may also have old and declining industries (negative image) and be unfavourably located in relation to the core.
Other characteristics of such areas are low rates on innovation, low productivity and an inability to adapt to new economic circumstances due partly to an ageing population as a result of young people moving out of the area. Usually, labour and resources are drained from this area by the core.

*Features- a single national centre, strong peripheral sub-centres, increased regional inequalities between core and periphery, upward spiral in the core and downward spiral in the periphery (Myrdal), the economy expands in time, more balanced national
development occurs (sub centres develop forming a more integrated national urban hierarchy)

4) Resource Frontiers [Post-Industrial Economy]
These areas also lie outside the core regions. They are zones where new development is taking place (for example, due to newly discovered mineral resources).
Other examples of resource frontiers include mountains, deserts and island areas
which could be used for recreational purposes.
Along with the core regions, these areas perform a major role in generating economic growth throughout the nation.

*Features- functionally independent urban system, the periphery is eliminated

Question 31

Types of Aid

Answer 31

1) Official Aid: This comes directly or indirectly via governments

2) Voluntary Aid: This comes from charities and NGOs.

3) Bilateral Aid: This is given directly from one country to another

4) Multilateral Aid: When it is given indirectly via third party organisations like the World Bank or agencies of the United Nations.

5) Development Aid: This is generally provided to finance medium and long term projects such as a water treatment plant (Long-term Aid).

6) Emergency Relief: This is used to alleviate short term events like famine or to help in the aftermath of a natural disaster (Short-term Aid).

7) Project Aid: This is given for a particular scheme

8) Programme Aid: This is for much larger in scale (e.g. debt repayment).

Question 32

Benefits of Aid

Answer 32

Foreign aid accelerates economic growth and reduces poverty in developing countries that pursue sound policies like free trade, fiscal discipline and avoiding high inflation

1) Transfer of Technology

2) Mitigates humanitarian crises

3) Response to natural hazards

4) Develops infastructure

5) Provides jobs, food, health care, shelter and education

Question 33

Criticism of Aid

Answer 33

1) Encourages corruption

2) Benefits donor countries financially

3) Food aid discourages farming

4) Used to exploit resources that donor wants

5) Discourages innovation and self-reliance

Question 34

What is development?

Answer 34

The state of a particular society and the processes of change experienced within it, It is generally regarded as involving porgress in four main directions: economic growth, technology, welfare and modernization. These dimensions are widely used for distinguishing between MEDCs and LEDCs

Question 35

Economic measures of development

Answer 35

1) Gross National Product measures the total monetary value of the output produced by a country’s residents. GNP is the value of all products and services produced by the citizens of a country both domestically and internationally minus income earned by foreign residents. As such, any output produced by foreign residents within the country’s borders must be excluded in calculations of GNP, while any output produced by the country’s residents outside of its borders must be counted. For instance, if a country had production facilities in a neighboring country and its home country, gross national product would account for both of these production outputs.

2) Gross Domestic Product (GDP) is a measure the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a
comprehensive scorecard of a given country’s economic health. GDP per capita is a measurement of the GDP per person in a country’s population. It indicates that the amount of output or income per person in an economy can indicate average
productivity or average living standards.

• These indicators of development do have its weaknesses.
  i. First, it is often very difficult to obtain accurate information about the economy of a country.
  ii. Second, what is actually produced in many economically developing countries does not always have a monetary value. For example, subsistence
  agriculture is still largely practised in developing countries and most of this agricultural produce is used for domestic consumption and is not part of the
  GNP calculations.
  iii. Apart from showing the monetary value of goods and services produced in a country, the GNP alone does not show anything about the quality of life experienced by the majority of the population.
  iv. Fifth, although an increase in GNP is necessary for improvements in living standards to occur, it does not always follow that economic growth automatically produces better living conditions. GNP does not show the actual distribution of wealth or the levels of inequality. They are quantitative
  rather than qualitative measures and therefore give no indication of the distribution of wealth in each country. Although it is easy to assess the growth of the economy through the GNP figures, GNP does not show if the increase in wealth has been used to improve living standards across the population as a whole.

Question 36

Non-economic measures of development

Answer 36

1) Physical Quality of Life Index (PQLI)
This was developed because the traditional measure of economic development (per capita GNP) does not provide adequate information about the life characteristics of individuals in Third World countries. It is based on three indicators of adult literacy; infant mortality and life expectancy at age one.

2) Purchasing Power Parity (PPP)
The World Bank prefers the use of the PPP, compared to the PQLI, which is the level of GNP adjusted to local costs of living. PPP compares different countries’ currencies through a “basket of goods” approach. This has the effect of raising the position of most LDCs, where the costs of living are lower and depressing the wealth of MDCs where the costs of living are higher.

3) The Human Development Index (HDI)
The HDI was introduced in 1990 as part of the United Nations Development Programme (UNDP) to provide a more reliable and accurate measure of
development, based on the acceptance that development is a considerably broader concept than growth and should include a range of social and economic factors.
- Life expectancy at birth
- Adult literacy rate
- Standard of Living

Question 37

Sustainable Development

Answer 37

Development that meets the needs of the present without compromising the ability of future generations to meet theirs. This form of development involves the wise use of resources and appropriate technology and can be sustained without any long term negative effects on the natural environment

Question 38

Opportunities in Caribbean Development

Answer 38

1) Diversity

2) Tropical Climate

3) Proximity to North America

4) Coral reefs and beaches

Question 39

Constraints in Caribbean Development

Answer 39

1) Lack of resources

2) Depletion of resources

3) Natural Hazards

4) US cultural and economic imperalism

Question 40

What is globalization?

Answer 40

The evolving global macroeconomic system that increasingly links together all countries of the world, making them more independent. This is facilitated by the worldwide exploitation of resources, and the international production and marketing of goods and services

Question 41

Application of Debt Relief

Answer 41

1) Debt rescheduling: Debt rescheduling is a traditional approach to debt management where the capital and repayment interests are rescheduled to a mutually agreed-upon time between the creditor and debtor nations.

2) Debt-for-nature swaps: This arrangement involves a country agreeing to preserve a designated area of rainforest or nature reserve in exchange for the cancellation of debt. However, this solution may not be attractive to creditors as there is no immediate advantage for them.

3) Debt-for-equity swaps: Debt-for-equity swaps involve selling debt at a discount to raise local currency for multinational investors who may be interested in local projects in the debtor nation. The acquired debt is then used as a substitute for local currency to make local investments, and the proceeds from these investments are used to repay the original debt. Any further proceeds beyond the debt repayment are considered the investor’s profits, and this process is known as debt equity conversion.

4) Debt forgiveness or cancellation: Debt forgiveness or cancellation is the idea of writing off the debts owed by poor countries. While this may be seen as a practical and compassionate solution to the debt problem in developing countries, many creditors may be unwilling to implement it.