BRIDGING THE DEVELOPMENT GAP

Measuring the development gap:

DEVELOPMENT is the ways in which a country seeks to develop economically and to
improve the QUALITY OF LIFE/STANDARD OF LIVING for its inhabitants.
There are differences in the level of development in the worlds richest and poorest
countries this gives rise to the DEVELOPMENT GAP. These variations can also exist
within countries between regions or between rural and urban areas. Development
levels are usually measured using ECONOMIC INDICATORS of a countrys wealth.

GROSS DOMESTIC PRODUCT (GDP) the total value of goods and services
producing by a country during a year.
GROSS NATIONAL INCOME (GNI) similar to GDP, but also includes income from
overseas investment by organisations and residents. This includes income from
shares and company profits from manufacturing or investment overseas.

North and south:

Using GDP, countries can be classified into two categories developed and less
developed.
The BRANDT LINE (North-South divide) is a boundary that essentially separates the
wealthy North from the poorer South. The World Bank modified this twofold classification
into HICs, MICs and LICs. The differences between these countries in the development
gap.
Human development:
According to the UN, development is about improving the SOCIAL AND ECONOMIC
WELLBEING of people. In other words, it is important to address human development
rather than just economic development.
More recent DEVELOPMENT INDICATORS focus on demographic and social factors such
as:

Literacy rates
Life expectancy
Number of people per doctor
Infant mortality

The HUMAN DEVELOPMENT INDEX (HDI) has been created by the UN to describe
economic and social human development. It ranges from 0 (least developed) to 1 (most
developed). The top 5 countries are Iceland, Norway, Australia, Canada, and Ireland. The
bottom 5 countries are Sierra Leone, Burkina Faso, Guinea-Bissau, Niger, and Mali. It is
comprised of three factors:
1. Life expectancy
2. Literacy
3. Per capita GDP

Gender:
The GENDER-RELATED DEVELOPMENT INDEX (GDI) shows the inequalities between men
and women. It looks at inequalities existing in:

Life expectancy

Education levels
Income

Continuum:
DEVELOPMENT CONTINUUM is the difference between countries there is a gradation of
countries at different levels of development rather than clusters in distinct groups.
Distribution:
Development data can provide information regarding the distribution of inequality. Levels
of development are affected by various social, economic, political and physical factors.
Physical resources water availability, quality and location of mineral deposits, harsh
environments, natural soil quality, and agriculture potential.
Social population levels, dependency levels, birth rate, population policies, education
levels, workforce skills, and infrastructure quality.
Economic stage of industrial development, dependency on particular industries and
globalisation trends, location of TNCs, trade links, and economic groupings.
Political commitment of governments to take action, levels and conditions of overseas
investment, level of debt, corruption, and the legacy of colonisation.
The development cable:

Theories of development:
Theories of development help to explain the widening development gap between
developed and developing countries.
ROSTOW this model argues that a country passes from underdevelopment to
development through a series of stages of economic growth. It is based on the economic
development experienced by Western Europe and North America, and therefore it is not
applicable to the entire world. Rostow believed that developed countries should aid the
development of developing countries through the transfer of capital.

POVERTY CYCLE this model suggests that less developed countries are trapped in a
continuing cycle of poverty as a result of the lack of capital and low incomes. This model
has disadvantages including:

It does not take into consideration the rapid economic emergence of countries
such as the BRICs.
It assumes that development occurs in isolation.
It assumes that development is free of global interactions.
It does not take into consideration foreign aid or loans from international banks.

The CYCLE OF DEVELOPEMENT is an extension of this model which takes a more positive
approach.
POLITICS these types of models examine the impact of different philosophies on
equality and development.
DEPENDENCY Franks dependency theory of development suggests that
the worlds richer nations control and exploit less developed satellite
areas. As a result, there is a relationship of dominance and dependency.
The possible consequences of this are poverty and underdevelopment in
the less developed countries.

CORE-PERIPHERY Friedmann argued that beneficial effects can spread from

developed ore regions or countries to less developed, peripheral regions. Myrdals model
is similar to Friedmanns, but it argues that the spread effects are outweighed by
backwash effects which favour the core regions. As a result, the development gap
widens.
GLOBALISATION these models show that geographical disparities in wealth and
development arise from different social, economic and political systems.
DEBT interest payments on loans put increasing pressure on countries that are already
struggling financially. Loans often have strings attached and large amounts of interests.
The debt crisis affects the poorest countries, causing even more barriers to development
and prevents the closing of the development gap.
The debt crisis continues to exist because of:

HIGH INTEREST RATES charged by some banks.

Government CORRUPTION.
Political INSTABILITY.
New IMF and World Bank LOANS to help pay back the old ones.
TRADE BARRIERS imposed by developed countries.

Global players:
INTERNATIONAL ORGANISATIONS include the UN, World Bank and the IMF. Their key focus
is monitoring and providing investment. This can provide investment for economic and
social projects to improve standards, however this is sometimes perceived as a topdown approach. Other examples are the WTO, and economic trade blocs such as the EU.
Their key focus is to promote trade and economic cooperation between countries. This
can promote trade between countries and raise business standards. However, it can also
result in trade dependency and trade barriers.
INTERNATIONAL COMMERICAL ORGANISATIONS are TNCs, and examples include NIKE
AND LG. Their key focus is to create supply chains across the world. This creates
employment and investment, although workers are often exploited in developing
countries to maximise cheap labour.
NATIONAL POLITICAL ORGANISAYIONS are governments of particular countries. Their key
focus is to influence economic and social conditions in their countries. They regulate the
economy in a way that makes the most of market opportunities, attract investment and
maintain economic competiveness. They also provide physical infrastructure to support
further development.
NON-GOVERNMENTAL ORGANISATIONS are humanitarian bodies and charities such as
UNICEF and Oxfam. Their key role is to raise awareness of concerns, and give aid and
practical assistance to developing countries. They provide non-biased assistance to
development projects or relief programmes, and take a bottom-up approach.

Indicators:
Various indicators can be used to measure how global or transnational a company is.
The UNs TRANSNATIONALITY INDEX (TNI) is based on three ratios:
1. Foreign assets to total assets
2. Foreign sales to total scales
3. Foreign employment to total employment
The GEOGRAPHICAL SPREAD INDEX addresses the number of countries in which a
company operates.
Whether or not TNCs invest in a country is dependent on several factors such as:

Its RESOURCES
The size of the ECONOMY
The BUISNESS ENVIRONMENT
Government POLICIES
SKILLS of the workforce

TNCs impact host countries in different ways.

DIRECT ECONOMIC

INDIRECT ECONOMIC

SOCIAL AND

ENVIRONMENTAL

IMPACTS
Linkages between
foreign and domestic
companies supply
chains, service
contracts
Competition for local
companies
Foreign direct
investment
Leakage of profits/
finance out of the
country
Can help smaller
companies reach
economies of scale
Potential TNC
dependency

IMPACTS
Multiplier effects in
local community
Infrastructure
development
Affects
macroeconomic
performance of the
host country income
distribution, economic
growth, balance of
payments
Financial linkages to
the government via
taxes, wages, shared
profits
Exports help to
generate foreign
exchange

POLITICAL IMPACTS
Employment
Development of skills
and knowledge
Management not
often local
Disrupts traditional
lifestyle
Cost of government
incentives to attract
this investment
Impacts if TNC
withdraws from the
area unemployment,
poverty
Exploitation of
workers
Health and safety
concerns
Influx of migrant
workers

IMPACTS
Exploitation of local
resources
Pollution and longterm health issues
Impact on local
ecosystems
Factories need large
amounts of energy
and water
Planning for
accidents/ cleaning
operations

Trade and investment:

TRADE FLOWS are the movements of exports out of a country; increasing the amount of
exports can help a country to narrow the development gap.
Trade is often unequal some countries have trade surpluses while others have deficits.
Trade surplus means that the exports exceed imports, and trade deficit means that the
imports exceed exports.
ECONOMIC GLOBALSIATION has impacted trade flow, and some countries have seen large
increases in trade (China, India, Mexico and Brazil).
International trade is dominated by wealthy countries in the EU, North America and East
Asia.
A countrys TERMS OF TRADE is the ratio between currencies earned from its exports and
the prices of imports.
In general, world prices for raw materials have seen a decline in recent years in relation
to the price of manufactured goods. Manufacturing adds value to the price of goods. As a
result, any country that exports raw materials and imports manufactured goods will have
declining terms of trade.
Impact of the developing gap on people in poor countries:
The development gap gives rise to social, economic, environmental and political
consequences for being living in the poorest countries. The cycle of poverty tends to
affect rural areas much worse than urban areas, mostly because of the inability to
produce sufficient food for the population.

In India, CASTE is a key factor affecting the decision of who gets access to public facilities
and services.
In developing countries, WOMAN are more likely than MEN to be unpaid family workers,
occupy low-status jobs and have lower earnings. It is difficult for women to have any sort
of influence over policies as they have limited involvement in government and politics.
Megacities and the developing gap:
The growth of cities is accompanied by an increase in the cost of meeting BASIC NEEDS
which include housing, infrastructure and services. This had also led to an increase in the
pressure placed on the environment.
New MIGRANTS often have little money and so struggle to afford housing prices, and
usually move in with friends or relatives, sleep rough on the streets or build MAKESHIFT
HOUSES on unused land. Most of the URBAN POOR do not have TENURE SECUIRY due to
illegal dwellings.
DEPRIVATION is a major issue facing people living in URBAN POVERTY. Some of these
hardships and daily challenges include:

Limited access to employment opportunities

Lack of sufficient income
Dependency on the informal economy
Inadequate services
Violent and unhealthy environments
Lack of social protection mechanisms
Limited access to health services

Development and poverty reduction tend to occur at the expense of the environment,
unless there is careful management or significant efforts to promote SUSTAINABLE
DEVELOPMENT.
Cities in developing countries are affected by the BROWN AGENDA associated with
economic development it has two components.
1. Environmental health issues.
2. Problems resulting from rapid industrialisation.
The GREEN AGENDA looks at development on the natural environment, and the BLUE
AGENDA looks at water quality and supply.
Developing country cities are faced with POLLUTION PROBLEMS.

Air pollution
Water pollution
Waste disposal
Water supply
Transport-related issues

Social and political unrest:

WEALTH DISPARITIES can lead to uneasiness, discrimination and unrest between rich and
poor. These disparities are affected by SOCIOCULTURAL DIFFERENCES such as ethnicity,
religion, political allegiance and class.
The consequences of development:
The positive consequences of development include better and more frequent
EMPLOYMENT OPPORUNITIES, higher WAGES and improved QUALITY OF LIFE. However,

there is not an equal distribution of these benefits and many people in certain levels of
society miss out on opportunities.

The wealthy continue to become richer

The poor become poorer and tend to increase in number

Environment:
ENVIRIONMENTAL POLLUTION and an increase in ECOLOGICAL FOOTPRINT occur as a
result of development. Ecological footprint is the amount of land and water required to
provide a person with the energy, food and resources they consume and to absorb the
waste they produce.

Migration:
Development tends to be accompanied by IMMIGRATION, this includes the migration of
business people, technicians and workers from less developed countries, and the
emigration of people now able to seek a better standard of living elsewhere in the world.
BENEFIT
S

COSTS

SOURCE COUNTRY
Natural increase slows as young, fertile
adults leave
Less pressure on resources
Remittances sent back
Migrants return with skills and money to
invest
Population becomes older
Fewer people available to develop
countrys resources
Loss of skilled workers

HOST COUNTRY
Diminished cultural diversity
Migrants boost declining populations
Human resources enhanced
Labour-forced needs filled
Higher pay for skilled workers who then
pay taxes
Multicultural society
Racial and social tensions
White flight of original population
Gender concentrations
Increased pressure on resources
Educational demands
Illegal labour
Low pay for unskilled jobs

Theories relating to development:

NEO-LIBERSALISM a set of economic policies based on market forces, privatisation and
reducing state intervention in the economy. The development gap is unlikely to change,
and the rich grow richer and the poor grow poorer.
MARXISM a believe that capitalism is based on the exploitation of works by the owners
of the means of production. The aim is to replace existing class structures with a system
that manages society for the benefit of all. The development gap is likely to reduce.
POPULISM a philosophy that supports the people in a struggle against societys elite
and the development gap is unlikely to change.
Critique:
The following criticisms have resulted in ANTI-DEVELOPMENT.

Development in todays world is EUROCENTRIC as it is based on MATERIAL

PROSPERITY

SPATIAL INEQUALITIES and created or made worse

LOCAL CULTURES and ways of life and undermined
It is ENVIRONMENTALLY UNSUSTAINABLE

Aid strategies:
HUMANIRARIAN AID aims to alleviate suffering in the short term, for example in
response to disasters.
DEVELOPMENT AID aims to address poverty in the longer term.
PROJECT AID is tied to large-scale schemes such as dam construction.
VOLUNTARY AID tends to come from NGOs that raise money in developed countries for
use on small-scale projects such as sponsoring a village.
BILATERAL AID involves a one-to-one relationship between the donor and recipient
country.
MULTILATERAL AID involves donor countries giving to organisations such as the World
Bank, a UN agency or Oxfam, which then distribute the aid to areas where it is required.
Official development aid:
Developing countries receive assistance in the form of aid from the developed countries
that from the ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT. This is
referred to as OFFICIAL DEVELOPMENT ASSISTANCE. ODA can be given on a governmentto-government basis through government aid agencies or through international
institutions. Assistance is given to developing countries to support their economic, social
and political development. The largest donor countries are the USA, UK, Japan and
France.
Top down:
This type of AID STRATEGY is CAPITAL-INTENSIVE and tends to be controlled by the
government. Top down approaches have been criticised as rich people tend to benefit the
most at the expense of poorer people. The ODA used to support this type of strategy
creates winners and losers.

Winners urban areas, major disaster areas, topical issues such as global
warming, etc.
Losers rural areas, recipients of tied aid, countries that have corrupt
governments, etc.

Bottom up:
This type of aid strategy follows a LOCAL APPROACH that is led by NGOs who work with
local COMMUNITIES.
Forms of aid:
A significant amount of aid is given in the forms of LOANS which attract INTEREST and
have to be repaid. As interest builds up it is easy for receiver countries to experience a
DEBT CRISIS.
Trade, investment and economic growth:
Trade expansion is a key driver of economic growth, and developing countries are
becoming more involved in INTERNATIONAL TRADE.
FREE TRADE aims to remove TRADE BARRIERS such as tariffs and quotas, and
government subsidies.

SPECIAL ECONOMIC ZONES can be set up by governments to attract foreign companies;

this is done through INCENTIVES such as preferential tax rates.
TRADE AGREEMENTS such as NAFTA and the EU have been put into place to encourage
free trade within their boundaries.
Fair trade:
The aim of the FAIRTRADE FOUNDATION is to obtain a fair price for a wide variety of
goods exported from developing to developed countries, including coffee, cocoa,
bananas, tea and handicrafts. This NGO works alongside poor small-scale producers to
help improve ECONOMIC SECURITY.
Doha:
The aim of the DOHA DEVELOPMENT AGEDNA NEGOITATIATIONS was to establish
improved trade conditions for developing countries by allowing them access to EU and
US AGRILCULUTRAL MARKETS. This was in return for opening their doors to more EU and
US manufactured goods and services.
Debt cancellation:
DEBT REDUCTION SCHEMES aim to reduce the DEBT BURDEN put on developing
countries.
The MAKE POVERTY HISTORY CAMPAIGN wanted the debt of the worlds poorest countries
to be completely cancelled.
HIPCs heavily indebted poor countries.
STRENGTHS
Allows loans to be rescheduled in order to
make them more manageable
Makes the countrys economy more
competitive
Improves foreign investment potential by
removing trade
Boosts foreign exchange by promoting exports
Reduces government deficits through spending
cuts

WEAKNESSES
Often accompanied by a shift from domestic
food cultivation to production of cash crops or
commodities for exports
Reduces government expenditure by cutting
social programmes
Increase pressure on countries to generate
exports to pay off debts
Some developed countries accused of
protecting their own interests

Tourism:
For developing countries, tourism can be the path to development as many of them have
BIODIVERSITY and SCENERY which attracts tourist from developed countries.
PATH TO DEVELOPMENT
Tourism allows the less developed world to
develop in the same way as the developed
world
Foreign investment, expertise and technology
are provided by TNCs
Mass tourism brings holidaymakers from
wealthy countries
Traditional local culture is replaced by modern
western culture
Development of the local infrastructure
Generates local employment and helps to
increase wealth

PATH TO UNDERDEVELOPMENT
Tourism helps the developed world to develop
more than developing countries because
profits go back to the rich countries
TNCs control tourisms in their own interests
Mass tourism may spoil the character of the
resort
The local community may be resentful if its
culture is devalued
Pressure put on local resources
Exploits cheap local labour

Tourism can generate a MULTIPLIER EFFECT as profits from tourism increase and
become more widespread, they begin to trickle down into the local economy.
Technology:
The DIGITAL DIVIDE is the uneven distribution of information and communications
technology.
Legal rights:
The UN regards legal empowerment of the poor as a valuable way forward. This involves
ensuring such things as property rights, access to justice and labour rights, and making it
easier for people to start, own and pass on businesses.
Millennium Development Goals:
These goal provide a vital framework for monitoring the development gap and measuring
any progress towards reducing it.