Defining and Measuring Development: Gross National Product (GNP) and Gross Domestic Product (GDP)

Defining and Measuring Development: Gross National Product (GNP) and Gross Domestic Product (GDP)

Chapter 10 explores the key question of how development is defined and measured. One of the primary measures of development is Gross

About Defining and Measuring Development: Gross National Product (GNP) and Gross Domestic Product (GDP)

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Slide1DevelopmentChapter 10

Slide2How do you Define andMeasure Development? Key Question:

Slide3Measuring DevelopmentGross National Product (GNP) Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year. Includes things produced inside and outside a country’s territory. Gross Domestic Product (GDP) Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year. Gross National Income (GNI) Measure of the monetary worth of what is produced within a country plus income received from investments outside the country. ** Most common measurement used today.

Slide4Issues with MeasuringEconomic Development • All measurements count the: – Formal Economy  – the legal economy that governments tax and monitor. • All measurements do not count the: – Informal Economy  – the illegal or uncounted economy that governments do not tax or keep track of.

Slide5Other Ways ofMeasuring Development • Occupational Structure of the Labor Force • Productivity per Worker • Transportation and Communications Facilities per Person • Dependency Ratio

Slide6Differences inCommunications Connectivity Around the World

Slide7Dependency Ratio by Country, 2005A measure of the number of people under the age of 15 and over the age of 65 that depends on each working-age adult.

Slide8What does Development Mean?• Development implies “progress” – Progress in  what ? – Do all cultures view development the same way? – Do all cultures “value” the same kinds of development?

Slide9Development ModelsModernization Model Walt Rostow’s model assumes all countries follow a similar path to development or modernization, advancing through five stages of development, climbing a ladder of development. - traditional - preconditions of takeoff - takeoff - drive to maturity - high mass consumption

Slide10Rostow’s Ladder of Development

Slide11Is the idea of economic development inherentlyWestern? If the West (North America and Europe) were not encouraging the “developing world” to “develop,” how would people in the regions of the “developing world” think about their own economies?

Slide12How does Geography affectDevelopment? Key Question:

Slide13Dependency TheoryThe political and economic relationships between countries and regions of the world control and limit the economic development possibilities of poorer areas. -- Economic structures make poorer countries dependent on wealthier countries. - - Little hope for economic prosperity in poorer countries.

Slide14Dollarization – Abandoning the local currency of a country and adopting the dollar as the local currency. El Salvador went through dollarization in 2001

Slide15*Cannot simply study what is produced. * Need to examine how and where it is produced and where the production is on the commodity chain. * Examine commodity chains and look for the kinds of economic processes operating at each link in the chain. Geography and Context

Slide16Commodity ChainHow processes operated at each step in the commodity chain that produced the dolomite stone for this fireplace? Series of links connecting the many places of production and distribution and resulting in a commodity that is then exchanged on the world market.

Slide17Three Tier StructureCore Processes that incorporate higher levels of education, higher salaries, and more technology * Generate more wealth in the world economy Semi-periphery Places where core and periphery processes are both occurring. Places that are exploited by the core but then exploit the periphery. * Serves as a buffer between core and periphery Periphery Processes that incorporate lower levels of education, lower salaries, and less technology * Generate less wealth in the world economy

Slide19Compare and contrast Rostow’s ladder ofdevelopment with Wallerstein’s three-tier structure of the world economy.

Slide20What are the Barriersto and the Costs of Economic Development? Key Question:

Slide21Barriers to Economic Development• Low Levels of Social Welfare – Trafficking • Foreign Debt – Structural adjustment loans • Political Instability • Widespread Disease – Malaria

Slide22Foreign Debt ObligationsTotal interest payments compared to the export of goods and services.

Slide23Foreign Debt and Economic Collapsein Buenos Aires, Argentina, 2001 Foreign Debt Obligations

Slide24Widespread Disease• Malaria kills 150,000 children in the global periphery  each month . Tamolo, India This baby sleeps under a mosquito net distributed to villagers by UNICEF workers.

Slide25Global Distribution ofMalaria Transmission Risk

Slide26Costs of Economic Development• Industrialization – Export Processing Zones (EPZs), maquiladoras, and special economic zones (SEZs). • Agriculture – desertification • Tourism

Slide27Export Processing Zones

Slide28Areas Threatened by Desertification

Slide29Think of a trip you have made to a poorerarea of the country or a poorer region of the world. Describe how your experience in the place as a tourist was fundamentally different from the everyday lives of the people who live in the place.

Slide30Why do Countriesexperience Uneven Development within the State? Key Question:

Slide31How Government PoliciesAffect Development • Governments – get involved in world markets – price commodities – affect whether core processes produce wealth – shape laws to affect production – enter international organizations that affect trade – focus foreign investment in certain places – support large-scale projects

Slide32Governmentsand Corporations can create Islands of Development Places within a region or country where foreign investment, jobs, and infrastructure are concentrated.

Slide33Government-created Island of DevelopmentMalaysian government built a new, ultramodern capital at Putrjaya to symbolize the country’s rapid economic growth.

Slide34Corporate-created Island of DevelopmentThe global oil industry has created the entire city of Port Gentile, Gabon to extract Gabon’s oil resources.

Slide35NongovernmentalOrganizations (NGOs) entities that operate independent of state and local governments, typically, NGOs are non-profit organizations. Each NGO has its own focus/set of goals. Microcredit program: loans given to poor people, particularly women, to encourage development of small businesses.

Slide36how do actors in nongovernmental organizations (ngOs)mobilize political change? An Indonesian woman (on left) who migrated to Saudi Arabia as a guest worker talks with an Indonesian activist (on right) who works to defend migrant workers’ rights.

Slide37Take an item of clothing out of your closet, andusing the Internet, try to trace the commodity chain of production. What steps did the item go through before reaching you? Consider whether core or peripheral processes were operating at each step and consider the roles governments and international political regimes played along each step.