Less Developed and Newly Industrializing Countries

Latin America, Asia, and Africa

"Third World" - term originally stated by Jawaharlal Nehru to label the countries of the "Non-Aligned Movement" - now, however, it has come to mean countries that have ranked very poorly on the UN HDI

Other terms - Least Developed Countries (LDCs), Vulnerable Countries, Developing Countries, or the "Global South" or "Periphery"

Countries characterized by:

mixture of premodern and modern institutions

varieties of economic systems

varieties of political systems

Understanding the Developing World

developing economies and political systems

got a "late start" in comparison to Atlantic democracies (up for contention)

were not able to develop independently - usually invaded by stronger powers

usually grapple with poverty, health crises, and economic inbalances

3/4 of the globe's population fall under the category of the "Developing World"

raising "Malthusian spectre"

Thomas Malthus - British political economist 1766-1834

PRINCIPLE OF POPULATION - population would

eventually outrun food supply

leads to a decrease in food per person

Population is based on EXPONENTIAL RATE -

2, 4, 8, 16, etc

Food on LINEAR rate - 1, 2, 3, 4, 5

Natural causes (old age, accidents), Misery (war, famine), moral restraint (Infanticide, murder, contraception and homosexuality) could check excessive population growth -

Malthus himself supported contraception and abstinence - but only for LOWER social classes

the foundation for many development agencies' thinking today, as well as the encouragement of contraception and abstinence

So what causes countries to be UNDERDEVELOPED?

UNDERDEVELOPMENT - state of a country that has not reached maturity, very uneven outcomes

1. Differences in local and regional cultures

different responses to the world system. and its economic and political logic

responses range from acceptance and cooperation - to resistance and insurrection

a lot depends on cultural compatibility to the values of materialism, individualism,

competitiveness, popular democracy, etc that seem to dominate the contemporary

world system

so, Iran attempts to REMOVE itself from world-system (decadence of capitalist West)

potentially depriving citizens of benefits of growth

2. Geographical spread of the world system

patterns of incorporation into world-system have been varied

so in North America - largely successful incorporation, however, displaced indigenous

peoples

Africa and Brazil - world system imposed on subjugated peoples

Incorporation could be deep and widespread (Egypt/India), in others, patchy and

superficial (Cambodia, Libya)

Sometimes incorporation was imposed for ECONOMIC reasons (Brazil and Malaysia),

in others for POLITICAL reasons (Somalia - very geostrategic)

3. Some states have responded to unevenness of the system by pursuing ALTERNATIVES to trade-based capitalism

China, USSR, Eastern European satellites, and Cuba

a socialist way of life - yes, but it could also be a reclamation from Western and capitalist

domination

Global South can be divided into two areas: Newly Industrializing Countries and Least Developed Countries

NICs:

some level of industrialisation

a switch from agricultural to industrial economies

increased social freedoms and rights

an increasingly "open" economy, allowing for freer trade with neighbours

label first applied to "East Asian tigers" but now include Mexico, Turkey, Thailand, and South Africa --- China and India might apply - however, their massive populations will mean that their average incomes will still remain low

Least Developed Countries (LDCs)

sometimes referred to as "Fourth World"

about 50 countries worldwide

usually very low on the HDI list

characteristics:

poor, underdeveloped nations usually grappling with widespread conflict and political instability

no significant economic development or political institutionalization

usually run by corrupt and inefficient DICTATORSHIPS

very little democracy or freedom

ethnic clashes, ongoing scars of colonialism

almost half of LDCs are in Africa

Asia (10): Bhutan, Bangladesh, Cambodia

Africa (34): Chad, DRC, Mali, Niger, Senegal, Sierra Leone

Oceania (5): Samoa, Vanuatu

Caribbean: Haiti

Evolution of NICs and LDCs -

IMPERIALISM AND COLONIALISM

Imperialism: the system whereby a state extends its power in order to directly control territory, resources, and people beyond its borders

Colonialism: the physical occupation of a foreign territory through military force, businesses, or settlers

Colonialism is a goal of imperialism - but used interchangeably

Imperialism began with Spain's conquest of the Americas in the 16th century - established control over South and Central America

British then extended their empire -- "sun never sets on the British empire" - India, Africa, Asia, an extensive world empire

Germans held portions of East Africa, Belgium held Congo, Portugal held Brazil

Scramble for Africa (1880s - WWI)

saw European powers move from "informal" empire --- control through military and economic dominance -- to DIRECT control

David Livingstone, did the mapping of Africa, utilized by imperialists

attracted by Africa's natural resources - the richest continent - diamonds, oil, cotton, rubber, tin

also - European markets were CONTRACTING - and they needed to expand

hence, Africa was carved up into portions

Causes of this "New Imperialism":

competition for trade

superior military force

European power politics (balance of power)

racist belief in Euro superiority ("White Man's Burden," Rudyard Kipling)

Negative aspects of colonialism:

deprived developing societies of their right to self-government

forced indigenous tribes to give the colonizers control of their resources

rule by unelected individuals

shameless exploitation

creation of ethnic groups and ethnic conflicts that before did not exist (Belgium in Rwanda)

etc

Benefits of colonization:

opened up many societies to new trade with the West - although trade was usually heavily balanced in the West's favor

created new infrastructure - transportation systems, water-delivery systems, communications systems to facilitate commerce

argument that the peripheral regions didn't have the capital to implement these reforms

however - many of these advancements only fitted the needs of the colonizers - NOT the colonized people

Overpromotion of URBANIZATION - led to OVERURBANIZATION

cities were growing more rapidly, jobs and housing couldn't keep up, results in widespread unemployment, environmental problems, and inadequate housing and public welfare provisions

OTHER INSTITUTIONS OF COLONIALISM

Exporting the state

States became the supreme political order in the periphery - no longer tribes and clans

Problems with border formation - often reflected the needs of the EUROPEAN POWER STRUGGLE, than ACTUAL ethnic and tribal borders

Also - by IMPOSING borders, European powers did not allow states to consolidate BY themselves - therefore, setting the stage for future conflict and state weakness

ex: Biafra in Nigeria, Eritrea in Ethiopia, the Sudan

Bureaucratization of the State

Europeans favored a decentralized and removed system to organize society and resolve disputes

African society, however, had its own methods for conflict resolution

Not the decentralized and chaotic power structure which we may assume

Chinua Achebe - Nigerian author who attempted to show what a bad fit bureaucratic rule was for Africa in Things Fall Apart

general idea that Africa had no real culture and should adopt Western ways

Achebe wished to show the great diversity and evolution of African culture - most of all, he was tired of western writers - notably Joseph Conrad and Heart of Darkness - having the last word on Africa

Ethnicity, Nationalism, and Gender

New ideas brought by Europeans - not entirely good

Encouraged competition and conflict between various groups on the continent

Splintered potential unity against the white oppressors

Colonial elites shaped and formed national identities - structured political and social classes out of them

ex: new class of bureaucrats, lawyers, teachers, journalists, and bureaucrats sprang up due to British educational system, were coopted by the British to maintain the empire

National identity - another powerful idea sweeping the Global South

however - national identity is not something that enables the Imperial system to flourish, esp when the subjugated peoples are developing their own

DECOLONISATION

1922-1975 - some states began to revolt after the first World War (Egypt), resistance to the colonial system grew in the interbellum years - really took off after WWII

Self-determination gathered steam

Japan - non-White power that had defeated Western nations - it IS possible

Second wave: 1947 (Indian independence) to 1960

Causes:

World War II - drained Western powers monetarily and militarily

Great Depression - very damaging to rural colonies, agricultural products esp. hard hit, weren't adequately fixed by colonial powers

Bureaucratic rule - development of local BOURGEOISIE - who embraced new ideas of NATIONALISM (esp. in British Empire)

John Kenneth Galbraith - famous Canadian/US economist - argued that it had nothing to do with spread of nationalism - but stemmed from ECONOMIC DISINTEREST

The engine of economic well-being was now within and between the advanced industrial countries. Domestic economic growth — as now measured and much discussed — came to be seen as far more important than the erstwhile colonial trade... The economic effect in the United States from the granting of independence to the Philippines was unnoticeable. The departure of India and Pakistan made small economic difference in Britain. Dutch economists calculated that the economic effect from the loss of the great Dutch empire in Indonesia was compensated for by a couple of years or so of domestic post-war economic growth. The end of the colonial era is celebrated in the history books as a triumph of national aspiration in the former colonies and of benign good sense on the part of the colonial powers. Lurking beneath, as so often happens, was a strong current of economic interest — or in this case, disinterest."

Two differing paths to independence: Botswana and Zimbabwe

Botswana - became a British protectorate after the Batswana and Boer settlers had conflicts (Boers -- descendents of Dutch farmer settlers who inhabited the Cape of Africa - spoke Afrikaans) 1888

Enjoyed British protection until 1964, when they petitioned the government to allow them to implement democratic self-governmnet. 1965 constitution led to first general elections, to independence in 1966

Zimbabwe - 1888 - Cecil Rhodes comes on the scene (British imperial capitalist, very exploitative of Africa's natural resources - also founded Rhodes Scholarships). Obtained a charter from the British to found RHODESIA - encompassed the area now known as Zimbabwe and Zambia.

1922 - became a self-governing COLONY

1953 - became a part of Federation of Rhodesia and Nyasaland (modern-day Malawi)

1963 - Federation dissolved, but British imposed a policy known as NIBMAR - No Independence before Majority African Rule - basically, British said that these states had to implement democratic reforms and illustrate that the majority would rule - NOT the colonial white elite

In response - PM Ian Smith made a declaration of independence (very strong white presence in Zimbabwe). Smith had an apartheid like system in place

Civil war - Africans began to engage in GUERRILLA ATTACKS against white settlers

Eventually defeated Rhodesian military front - negotiated with:

ZIMBABWE AFRICAN NATIONAL UNION (ZANU) led by Robert Mugabe.

Another group - ZIMBABWE AFRICAN PEOPLE'S UNION

These two groups joined to form PATRIOTIC FRONT - PF

Hence - ZANU-PF

So very different ways

In Africa, 2 remarkable factors about decolonization:

Speed with which it occurred

Lack of violence - only 3 countries had serious wars:

Sudan - civil war on religious conflict

Algeria - bitter war against France, which did not want to relinquish its power

Rwanda - Hutus asserted control over Tutsis

Violence occurred also in countries with significant white settler populations - notably Rhodesia, South Africa, and Kenya

HOWEVER - WEAKENED STATE OF WEST MADE INDEPENDENCE WARS EASIER TO WIN

THE DEVELOPMENT PARADIGM

At first, it was believed that the economies of LDCs couldn't be compared with developed economies, and that new models would have to be constructed

DEVELOPMENT PARADIGM - GENERAL IDEA THAT ALL ECONOMIES WILL END UP CAPITALIST AND DEVELOPED

Is this true? Should this be altered? Is it absolutely necessary for countries to develop capitalist economy for economic well-being?

Yes

Enables greater trade opportunities --> leads to greater wealth and stability

Also, facilitates the development of a free and fair democratic government

No

Some cultures and economies are not receptive to the ideas of capitalism - esp materialism and cutthroat competition. Therefore, these societies would flourish in an alternative economic system

POSTCOLONIAL AFRICA

Post-colonial states had a hard time restructuring their economies, because of the economic relationships of their dependent economies (relying on mother country for all industrialised goods, providing raw materials to only the mother country)

Also, many states found themselves without the necessary resources to provide for their citizens - also, had many difficulties in managing different cultures and religions within their borders

Problems creating national identities: due to arbitrarily imposed boundaries, and ethnic and religious divisions

led to war, hostilities, and instability

Africa was frequently used as a pawn in Cold War skirmishes

Examples: Suez Crisis

South Africa's role in refueling the war in Angola

overthrow of Kwame Nkrumah - founder of Pan-Africanism, founder and first president of Ghana

Colin Legum describes African history since independence in three stages:

A. The Romantic Period (1939-1970)

belief in self-determination

felt that Africa could be a major world power centre because of its resources and its expansive population

The rulers were local modernizing elites - wanted to implement development strategies to allow Africa to "catch up" with the West and be on an equal playing field

used the institutions of the colonizers to implement their programs and organize their government

However, 3 factors led to the failure of this aim:

1. Foreign control of African economies (MNCs, trading companies, banks, etc), lack of economic independence

NEOCOLONIALISM - developed nations aim to control developing nations through indirect means, much like under colonialism - use economic, financial, and trade policies to dominate less powerful countries

2. Tendency toward democratic centralism

No room for devolution or cultural or regional accomodation

3. Personalization of politics

Removed questions from PARTIES - became a competition between INDIVIDUALS for STATE POWER

B. Era of disillusionment

became clear that Africa was not going to follow in the footsteps of Europe in political or economic development

1966-1993 - 63 military coups, 24 violent conflicts

10 million deaths, 50 mill wounded, 20 mill became refugees or IDPs

Rise of MILITARY REGIMES

very successful

usually led by MODERNIZING ELITE

resulted from failure of post-independence institutions:

inadequate checks and balances on branches

lack of accountability and transparency

absence of CIVIL SOCIETY

military regimes were as equally corrupt and mismanaged as the previous governments

also, re-emergence of tribalism and ethnicity - most states were multiethnic and multinational

corruption was RAMPANT in all government ministries

serious economic decline

beginning of 90s - 42 states under military or one-party rule

C. The Period of Realism (1985-present)

A realisation that something must be done

Rampant dictatorships, poor economies, corruption need to be handeled

no African country ranks well in HDI

1990 - 216 mill in poverty

2000 - 304b mill

women and female-headed households hit hardest

unemployment is at 22%

underemployment - 100 million

So - greater transnational cooperation

Organization of African Unity, concerted attempts to work together to solve Africa's problems and intervene in conflicts

Since 1980 - 29 serious election campaigns

only six military regimes remaining

Economic recovery: growth rates are up for most countries

Now, Africa is in a state of "transitional democracies"

Things are looking up - but there is a LOT to do still

Returning to Economic matters -

So, the idea of neocolonialism is rampant

development - too often the path of development is determined by what the European market needs, not what the developing society needs

Dependency theory

- Dependency theory posits that the cause of the low levels of development in less economically developed countries (LEDC's) is caused by their reliance and dependence on more economically developed countries (MEDC's) -

i.e. the LEDC's are undeveloped because they rely on the MEDC's.

Some proponents of dependency theory assert that LEDC's will remain less developed because the surplus that they produce will be siphoned off by MEDC's - under the guise of multinational corporations. There is, as such, no profit left for reinvestment and development.

ex: Caribbean - produces sugar for the developed world, doesnt have the resources to industrialize

Washington Consensus - f ocus on a certain form of free market economic liberalisation - however, the removal of trade barriers and protective tariffs usually harm developing societies more than helping them

Two policies that were applied through developing world:

Import substitution - ISI - trade and economic policy based on the premise that a developing country should attempt to SUBSTITUTE products which it imports, with locally produced substitutes

That way - REDUCE dependency on external trade

INDUSTRIALIZE the nation

Three components:

a. active industrial policy to subsidize and orchestrate production of strategic substitutes

b. protective barriers to trade

c. monetary policy that keeps the domestic currency strong

In Latin America - followed from 50s to 70s - deemed very successful in creating economic growth - ISI MOST SUCCESSFUL in countries with large populations and high living standards

ISI was REJECTED by East Asia, who later went on to have substantial economic growth.

So - not sure if it really works, as in most economic theories

EXPORT-ORIENTED INDUSTRIALIZATION (EOI)

a trade and economic policy aiming to speed up the industrialization process of a country through exporting goods for which the nation has a comparative advantage.

requires opening up domestic markets to foreign competition in exchange for market access in other countries

needs: reduced tariff barriers, devaluation of currency, and government support for exporting sectors

Japan, South Korea, Taiwan, and Singapore all followed this path

STRUCTURAL ADJUSTMENT PROGRAMS

International Monetary Fund - before they give out loans to struggling nations, they must agree to abide by these programs

Components: Cutting social expenditure

Lifting export and import restrictions

Increasing stability of investment

Removing price controls and state subsidies

Privatization of state-owned enterprises

Critics: describe SAPs as a new form of neocolonialism

Africa: before loan forgiveness program that was announced last week (in which 18 LDCs were awarded debt forgiveness), it paid more money every year to the IMF than to all the money it receives in loans from them

Privatizing industries - critics say it results in deteriorating health, education, an inability to develop infrastructure, and in general, lower living standards

Prospects for Democracy and Development?

Some say the world is moving towards great things - and will be able to overcome the past

However, others see still too many obstacles to reducing global poverty and global inequality

State capacity:

it's been shown, esp in Africa, that giving the state too much power doesn't ensure stability or democracy

but is lessening state power the answer? Then, you're compromising the ability of the state to deal with crises, to provide for the people (infrastructure, etc), and for the economy to flourish

MERITOCRACY - rule by merit, not by connections

the opposite of clientelism and patrimonialism

reforms: entrance exams, tenure system, decentralization of state agencies, devolution of power, greater involvement of citizens in determining state policy

IMPORTANCE OF CIVIL SOCIETY

organizations that help people define and advance their own interests

is thought to be the basis of democracy - Alexis de Tocqueville pointed to the expansive civil society in the US as a reason for its democratic success

NGOs are also key here, although have to be careful they won't usurp too much power from the state

ECONOMIC DEVELOPMENT

sometimes state-driven policies work - but not always, and it's difficult to reverse such a system

Now, the WTO - freedom of trade and equality of competition idea

allow markets and industries to evolve without state involvement

problem of the INFORMAL ECONOMY - an economy that exists OUTSIDE of state control, not subject to tax or reform

women play a very large role in the informal economy

But - doesn't produce tax revenue

no regulation - so no protection of the laborers

financial problems - lack of capital to expand - people wind up losing out from this process

To combat this, Grameen Bank has embarked on a MICROCREDIT SCHEME

MICROCREDIT - a system that involves an individual lender and borrower, but borrowing groups are made up of several individuals

enabled the impoverished, and esp. impoverished WOMEN, to engage in self-employment projects that allow them a generation of income, and begin to build up WEALTH

has been TREMENDOUSLY SUCCESSFUL

Grameen Bank - focused on microcredits to Bangladeshi citizens

use of "solidarity groups" - local tribal councils that meet weekly - to ensure that loans are repaid, and they generally are

World Bank: estimates there are 7000 microfinance institutions in the world

serving 16 mill poor people in developing countries

Economic and Social Council (ECOSOC) of UN declared 2005 as the International Year of the Microcredit

Reasons why microfinance is a good way to go:

Savings/investment is preferable to aid - independent borrows earn dignity and self-confidence with responsible loan repayment.

Entrepreneurial talent and energy are scarce but valuable resources for economic growth - state needs to find the people who have the initiative to create new enterprises and stimulate the economy

Traditional private banks will not offer microcredit - better because this way, financial sector is secure, while people will still have the chance to qualify for loans, whereas before they might not have

Cost of doing research is MUCH smaller for these microcredit institutions, than would be required to implement extensive, STATE-WIDE policies

Critiques:

Some people turn a profit on the loan (excessive interest rates)

Inability to reach the poorest of the poor

Microcredit dependency

Durability of poverty reduction - how long will it last?