Development and Globalisation

What is development?
Development is the process in which someone or something grows or changes and becomes more
advanced. https://dictionary.cambridge.org/dictionary/english/development
Traditional economists define development as an improvement in people's well-being.
https://www.cgdev.org/blog/what-development
The Nobel prize–winning economist Amartya Sen defines development as consisting of more than
improvements in the well-being of citizens, even broadly defined: it also conveys something about the
capacity of economic, political and social systems to provide the circumstances for that well-being on a
sustainable, long-term basis. https://www.cgdev.org/blog/what-development
Development is a process that creates growth, progress, positive change or the addition of physical,
economic, environmental, social and demographic components.
The purpose of development is a rise in the level and quality of life of the population, and the creation
or expansion of local regional income and employment opportunities, without damaging the resources
of the environment.
Development is visible and useful, not necessarily immediately, and includes an aspect of quality change
and the creation of conditions for a continuation of that change.
Human development indicators include:

 Life expectancy - the average age to which a person lives, eg this is 79 in the UK and 48 in Kenya.
 Access to education - measures how many people attend primary school, secondary school and higher
education.
 The Human Development Index (HDI) is a composite statistic (composite index) of life expectancy,
education, and per capita income indicators, which are used to rank countries into four tiers of human
development: Very high human development, High human development, Medium human development,
Low human development.
 Infant mortality rate - counts the number of babies, per 1000 live births, who die under the age of one.
This is 5 in the UK and 61 in Kenya.
 Poverty - indices count the percentage of people living below the poverty level, or on very small
incomes (eg under £1 per day).
 Access to basic services - the availability of services necessary for a healthy life, such as clean water and
sanitation.
 Access to healthcare - takes into account statistics such as how many doctors there are for every
patient.
 Risk of disease - calculates the percentage of people with diseases such as AIDS, malaria and
tuberculosis.
 Literacy rate - is the percentage of adults who can read and write. This is 99 per cent in the UK, 85 per
cent in Kenya and 60 per cent in India.
 Access to technology - includes statistics such as the percentage of people with access to phones,
mobile phones, television and the internet.
 Male/female equality - compares statistics such as the literacy rates and employment between the
sexes.
 Government spending priorities - compares health and education expenditure with military expenditure
and paying off debts.
Economic development indicators include:
 Gross Domestic Product (GDP) is the total value of goods and services produced by a country (within its
borders) in a year.
 Gross National Product (GNP) measures the total economic output of a country, including earnings from
foreign investments by nationals/citizens.

 GNP per capita is a country's GNP divided by its population. (Per capita means per person.)
 Economic growth measures the annual increase in GDP, GNP, GDP per capita, or GNP per capita.
 Inequality of wealth or the Gini Coefficient is the gap in income between a country's richest and
poorest people. It can be measured in many ways, (eg the proportion of a country's wealth owned by
the richest 10 per cent of the population, compared with the proportion owned by the remaining 90 per
cent). The Gini index or Gini coefficient is a statistical measure of distribution developed by the Italian
statistician Corrado Gini in 1912. It is often used as a gauge of economic inequality, measuring income
distribution or, less commonly, wealth distribution among a population. The coefficient ranges from 0
(or 0%) to 1 (or 100%), with 0 representing perfect equality and 1 representing perfect inequality. Values
over 1 are theoretically possible due to negative income or wealth.
 Inflation measures how much the prices of goods, services and wages increase each year. High inflation
(above a few percent) can be a bad thing, and suggests a government lacks control over the economy.
 Unemployment is the number of people who cannot find work.
 Economic structure shows the division of a country's economy
between primary, secondary and tertiary industries.
 Demographics study population growth and structure. It compares birth rates to death rates, life
expectancy and urban and rural ratios. Many LEDCs have a younger, faster-growing population
than MEDCs, with more people living in the countryside than in towns. The birth rate in the UK is 11 per
1,000, whereas in Kenya it is 40.
 Men's Underwear Index is an unconventional measure of how well the economy is doing based on sales
of men's underwear. The reasoning behind this measure assumes that men view underwear as a
necessity (not a luxury item), so sales of this product should be steady - except during severe economic
downturns, when men will wait longer to buy new underwear. The notable decrease in underwear sales
is said to reflect the poor overall state of the economy. Conversely, when underwear sales pick up, the
economy is considered to be improving.
Factors) which influence the economic development of a country.

Sustainable development is development that meets the needs of the present without compromising
the ability of future generations to meet their own needs.
 Globalisation
We now communicate and share each other's cultures through travel and trade, transporting products
around the world in hours or days. We are in a huge global economy where something that happens
in one area can have knock on effects worldwide. This process is called globalisation.
What is globalisation?
Globalisation is the process by which the world is becoming increasingly interconnected as a result of
massively increased trade and cultural exchange. Globalisation has increased the production of goods
and services.
The biggest companies are no longer national firms but multinational corporations [MNC: Multinational
Corporations (MNC) are sometimes called Transnational Corporations (TNC). These are large and
powerful businesses that have factories that make products and offices that sell products in different
countries. ] with subsidiaries in many countries.
Globalisation has been taking place for hundreds of years, but has speeded up enormously over the last
half-century.
Facilitators of/Reasons for globalisation
There are several key factors which have influenced the process of globalisation:
 Improvements in transportation - larger cargo ships mean that the cost of transporting goods between
countries has decreased. Economies of scale mean the cost per item can reduce when operating on a
larger scale. Transport improvements also mean that goods and people can travel more quickly.
 Freedom of trade - organisations like the World Trade Organisation (WTO) promote free trade between
countries, which help to remove barriers between countries.
 Improvements of communications - the internet and mobile technology has allowed greater
communication between people in different countries.
 Labour availability and skills - countries such as India have lower labour costs (about a third of that of
the UK) and also high skill levels. Labour intensive industries such as clothing can take advantage of
cheaper labour costs and reduced legal restrictions in LEDCs.

Globalisation has resulted in:

Types of Globalization

Financial globalization
 Interconnection of the world’s financial systems e.g. stock markets
 More of a connection between large cities than of nations
 Example: What happens in Asian markets affects the North American markets.
Economic Globalization
 A worldwide economic system that permits easy movement of goods, production, capital, and
resources (free trade facilitates this)
 Example: NAFTA, EU, Multinational corporations
Technological Globalization
 Connection between nations through technology such as television, radio, telephones, internet, etc.
 Was traditionally available only to the rich but is now far more available to the poor. Much less
infrastructure is needed now.
Political Globalization
 countries are attempting to adopt similar political policies and styles of government in order to
facilitate other forms of globalization
 e.g. move to secular governments, free trade agreements, etc
Cultural Globalization
 Merging or “watering down” of the world’s cultures e.g. food, entertainment, language, etc.
 Heavily criticized as destructive of local culture
 e.g. The Simpsons is shown in over 200 countries in the world.
Ecological Globalization
  seeing the Earth as a single ecosystem rather than a collection of separate ecological systems
because so many problems are global in nature
 e.g. International treaties to deal with environmental issues like biodiversity, climate change or the
ozone layer, wildlife reserves that span several countries
Sociological Globalization
 A growing belief that we are all global citizens and should all be held to the same standards – and
have the same rights
 e.g. the growing international ideas that capital punishment is immoral and that women should have
all the same rights as men.

Transnational corporations
Globalisation has resulted in many businesses setting up or buying operations in other countries. When
a foreign company invests in a country, perhaps by building a factory or a shop, this is called inward
investment. Companies that operate in several countries are called multinational corporations (MNCs)
or transnational corporations (TNCs). The US fast-food chain McDonald's is a large MNC - it has nearly
30,000 restaurants in 119 countries.

The majority of TNCs come from MEDCs [MEDC: A More Economically Developed Country (MEDC) has
high levels of development based on economic indicators such as gross domestic product (the country's
income). ] such as the US and UK. Many multinational corporations invest in other MEDCs. The US car
company Ford, for example, makes large numbers of cars in the UK. However, TNCs also invest in LEDCs
- for example, the British DIY store B&Q now has stores in China.
Factors attracting TNCs to a country may include:
 cheap raw materials
 cheap labour supply
 good transport
 access to markets where the goods are sold
 friendly government policies
Positive impacts of globalisation
Globalisation is having a dramatic effect - for good or ill - on world economies and on people's lives.
Some of the positive impacts are:
 Inward investment [Inward investment: When a foreign company invests in a country, perhaps by
building a factory or a shop. ] by TNCs helps countries by providing new jobs and skills for local people.
 TNCs bring wealth and foreign currency to local economies when they buy local resources, products and
services. The extra money created by this investment can be spent on education, health and
infrastructure.
 The sharing of ideas, experiences and lifestyles of people and cultures. People can experience foods and
other products not previously available in their countries.
 Globalisation increases awareness of events in far-away parts of the world. For example, the UK was
quickly made aware of the 2004 tsunami tidal wave and sent help rapidly in response.
 Globalisation may help to make people more aware of global issues such
as deforestationdeforestation: the process of cutting down a large number of trees in a forest and not
replacing them and global warming [global warming: The rise in the average temperature of the Earth's
surface. In the last 100 years it is believed to have risen by 0.6°C. ] - and alert them to the need
for sustainable [sustainable: Doing something in a way that minimises damage to the environment and
avoids using up natural resources, eg by using renewable resources. ]development.
Negative impacts of globalisation
Critics include groups such as environmentalists[environmentalists: Environmentalists work towards or
advocate the protection of the environment from destruction and pollution. ], anti-poverty campaigners
and trade unionists[trade unionists: Workers who belong to an organised association that protects their
interests when negotiating hours, wages, conditions etc. ].
Some of the negative impacts include:
 Globalisation operates mostly in the interests of the richest countries, which continue to dominate
world trade at the expense of developing countries. The role of LEDCs in the world market is mostly to
provide the North and West with cheap labour and raw materials.
 There are no guarantees that the wealth from inward investment will benefit the local community.
Often, profits are sent back to the MEDC where the TNC is based. Transnational companies, with their
massive economies of scale [economies of scale: When big companies can produce things cheaper than
smaller companies. There are two reasons for this. Firstly, they can buy in bulk, so can negotiate with
suppliers to pay less. Secondly, the more a company produces the lower the average cost per product will
be of overheads (fixed costs, such as buildings). ], may drive local companies out of business. If it
becomes cheaper to operate in another country, the TNC might close down the factory and make local
people redundant.
 An absence of strictly enforced international laws means that TNCs may operate in LEDCs in a way that
would not be allowed in an MEDC. They may pollute the environment, run risks with safety or impose
poor working conditions and low wages on local workers.
 Globalisation is viewed by many as a threat to the world's cultural diversity. It is feared it might drown
out local economies, traditions and languages and simply re-cast the whole world in the mould of the
capitalist North and West. An example of this is that a Hollywood film is far more likely to be successful
worldwide than one made in India or China, which also have thriving film industries.
 Industry may begin to thrive in LEDCs at the expense of jobs in manufacturing in the UK and other
MEDCs, especially in textiles.
Anti-globalisation campaigners sometimes try to draw people's attention to these points by
demonstrating against the World Trade Organisation. The World Trade Organisation is an inter-
government organisation that promotes the free flow of trade around the world.

Key points
 Globalisation is the way the world's getting more interconnected due to increased trade and cultural
exchange.
 Telephones and the internet have created a global village. UK businesses can now have call centres in
India.
 Transport has become cheap and quick.
 Multinational corporations operate in several countries.
 Globalisation helps countries by providing new jobs and skills for the locals and bringing foreign
currency to their economy.
 Globalisation works mostly in the interests of rich countries and at the expense of developing ones.
There are no guarantees that investments will benefit the local community.
 Without strictly enforced international laws, multinationals may operate in a way that would not be
allowed in an MEDC for instance by polluting the environment.