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Development Exam Review.docx

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Department
Social Science
Course Code
SOSC 2800
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Nga Dao

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Development Exam Review Social Capital  Refers to the extent to which individuals are willing to co-operate in the pursuit of shared goal and is usually thought to be essential to the development of a civic and democratic culture o When inequality becomes part of a national culture, it undermines the broad and diffuse social trust, social capital  Robert Putnam  Income inequality negatively impacts social capital Poverty  It is difficult to define  It is usually defined as an extremely low income level Absolute Poverty  Refers to being below the minimum level of income required for physical survival. The World Bank defines this level as US 1.25 per day in 2005. In 2008 it was changed to $ 1 per day o Measured in the purchase power parity  Which is, adjusted for the buying power of a US dollar in the local market o 1.4 billion people live in absolute poverty o Refers to the state of severe deprivation of basic human needs, which commonly includes food, water, sanitation, clothing, shelter, health care, education and information Moderate Poverty  Typically considered to be an income of US$2 per day, a level at which basic needs are barely met but survival is not actually threatened Relative Poverty  Refers to the kind of poverty that does not threaten daily survival but in which an individual may not have income necessarily to fully participate in his or her society o Not only about income levels, but about social, political, psychological, and moral elements  For example, a person without access to a computer would be seriously hampered in terms of their ability to access important information and do basic tasks such as looking for employment Distribution of Income  How the average wealth of a country is divided among the population. Distribution of income may be measured by comparing the average wealth of different deciles (tenths) or quintiles (fifths) of the population or by a measure such as the Gini- coefficient; also known as income inequality o What share of wealth is owned by the rich, and how much the poorest earn in comparison to the wealthiest o Income inequality is the direct link between GDP per capita and the number of people living in poverty  Income inequality can be measured in two ways 1. A comparison of the income earned by different strata of the population a. Income inequality is often evaluated by dividing the population into five or ten equally populous strata, and comparing the average incomes of these different strata to each other b. A standard comparison is between the earning power of the wealthiest 20 percent of the population and the poorest 40 percent 2. And the Gini- coefficient a. This is the most commonly used measure of income equality b. It is a number between 0 and 1, with relatively equal societies such as the Scandinavian countries scoring around 0.25 while very unequal societies like Brazil score around 0.6. c. 0 means income in equal among the population, but 1 means there is inequality  Latin America is a region with the most unequal income distribution, even though it is considered a upper-middle income area of the developing world  Income gaps are not just widening among the world regions, but also in nation- states  Income inequality is important in part because it forces us to confront the injustice in most developing societies: that a privileged minority lead luxurious lives, while the vast majority of their own countrymen and women struggle in poverty Purchasing Power Parity  A comparative indicator based on an exchange rate that equates the price of a basket of identical traded goods and services in two countries (It asks how much money would be needed to purchase the same goods and services in two countries) o In other words, the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency.  For example, a chocolate bar that sells for C$1.50 in a Canadian city should cost US$1.00 in a U.S. city when the exchange rate between Canada and the U.S. is 1.50 USD/CDN. (Both chocolate bars cost US$1.00.) o Takes into account the different buying power of a dollar in different economies o This gives an average income per person that allows is to compare the annual incomes of, for example, an average American who earns $45,692 to the average Nigerian who earn, $1,969. th  This kind of comparison reveals that the US is the worlds 9 richest country, and Nigeria is one the worlds poorest, 158 out of 182 Global Ethics  The field of study examining questions of morality at the level of the world, such as international justice, distribution of wealth among nations or among people in different nations, global trade, and humanitarian activity  Elimination of poverty is not a universally shared moral obligation o Human rights and security should apply to everyone no matter there situation  Global ethics  Approaches to global redistribution justice (global ethics): o Cosmopolitanism  Refers to the belief that we are all citizens of all the same world  No boundaries between peoples  Justice is owned to all people, everywhere, regardless of national borders  Common values apply across humanity  Responsibilities exist towards all of humanity  Although we live in Canada, we do not ignore those people who are poor in another region o Communitarianism  What matters within a community, such as family  Looking at that particular region o Libertarianism  Individual rights  Accord low value to national boundaries but do not believe in strong duties towards other individually, nationally or globally  One who advocates maximizing individual rights and minimizing the role of the state  Cosmopolitan Arguments for Global Redistribution o Types of cosmopolitanism  Consequentialist ethic (Peter Singer)  Moral obligation  Assesses whether an action is morally just on the basis of the goodness or value of the outcomes it produces  Contractarian ethic (Charles Beitz and Thomas Bogge)  Holds that moral norms are justified according to the idea of contract or mutual agreement  Also says that we are responsible for the current situation, and this is one of the main reasons to alleviate poverty o Exploiting resources and slave trade  Rights based ethic (Charlie Jones and Henry Shue)  Justifies moral claims on the basis of fundamental entitlements to act or be treated in specific ways. Justifications for rights-based morality are complex, but they include the idea that we have rights because we have interest or because of our status  Help those whose basic needs are not being met by their government or current economy  Food, shelter, and a level of health for basic function is a basic need, and without these, individuals can not express their rights  Arguments against Global Redistribution Justice o Communitarianism  National borders have no moral importance  Believe the political and social community is more relevant  Specific rights to duties are nation based  Help only our fellow citizens o People who share a common culture, language, history and so on  Specific rights and duties do not extend beyond national borders  Global redistribution is pursued in one‟s own interest, without consideration of any impartial moral obligation  A state would pursue redistribution only if it were in its own interest, without consideration of any imperial moral obligation  Sometimes referred to as nationalist o Libertarianism  The ethnical standpoint the holds individual freedom to be the highest moral principle and that it should not be infringed upon by the collectively, society or the state. Key individual rights, according to libertarianism, include rights to acquire and retain poverty. Individual rights should never be breached in favor of the collective good  Foundation of Neo-liberalism  Value on individual rights of private property, freedom and non- interference  Opposes redistribution of wealth, whether with one country or among countries  Taxation is a form of “forced labor”- Robert Nozick  People should be free to donate money if they want to, but there is no moral obligation to do so. o Moral positions on redistributive justice and global poverty and international development implications  United Nations: Promotes universal human rights and duty to protect and assist people everywhere  Millennium Development Goals  All human life is of equal worth o The promise of 0.7% of GNP to development assistance o Lip service to human equality o Do NGO‟s reflect a charitable or a duty view in the elimination of inequality and injustice Keynesian Policies  A theory of development  Policies to stimulate economic growth through state intervention in market processes, based on the idea that capitalist markets require state regulation to correct problems that emerge from the operation of free markets o Keynesian‟s sought to accelerate growth in developing countries through an injection of capital and macroeconomic policies adapted to developing economies. Assumptions such as decreasing returns to scale, labor scarcity, and perfect competition were discarded, as the problem was how to get a process of growth going in contexts where certain factors, chiefly labor, were not fully employed and capital and technology were scarce. o A theory stating that government intervention is necessary to ensure an active and vibrant economy. According to this theory, government should stimulate demand for goods and services in order to encourage economic growth. It thus recommends tax cuts and increased government spending during recessions to reinvigorate growth; likewise, it recommends tax increases and spending cuts during economic expansion in order to combat inflation. Obsolescing Bargaining Model  A model of state-firm relations developed by Raymond Vernon that ague that each actor- state and firm- wants to capture a greater share of the benefits of foreign investment and that over time the relative strength of each actor changes. At the time of the investment, the multinational corporation is in the stronger position, but over time, the initial contract over the terms of investment erodes as the state becomes more powerful o Relationship between stat and multinationals o Vary between firm, country, sector of activity o The firm wants more profits, while the government wants to increase the developmental spillovers of investment  Thus, there is a wide range of issues over which multinationals and governments can bargain  The outcomes of this bargaining is affected by their relative bargaining power (the resources each controls that are desired by the other party and not available elsewhere)  Strategy o How the investment fits into the firms and the countries economic strategy  Constraints o The existence of alternatives and pressure from domestic and international actors o The model generally assumes the firm has the upper hand when they firs invest, because governments try to out-compete other potential locations by offering attractive conditions  Once the investment is sunk, however, the bargaining power begins to shift towards the government. The government my change the rules of the game and try to extract more benefits from the firm o Example: The Barings Bank o Example: nationalization of US-owned copper mines in Chile  Heavy taxation  Chile created institutions to monitor and regulate it  Then create technology to take over  In manufacturing, firms do low state up costs, so they can move production somewhere else Structural Adjustment Policies  A controversial series of economic and social reforms promoted by the IMF and World Bank following the 1982 Debt Crisis that aimed to promote economic development through minimizing the role of the state in societies and liberalizing markets o The IMF and World Bank use their financial influence to promote structural adjustment polices. These policies involve a series of economic and social reforms designed to promote the role of market forces within the developing world. While the IMF and World Bank suggest that SAP promote strong and stable economic growth, critics claims that their effects nave been counterproductive and have led to increased poverty and growing inequality  Structural Adjustment and Conditionality o Severe austerity measures to restore macroeconomic balance o Shock therapy: liberalization of prices, currency devaluation, and fiscal discipline, rapid liberalization of trade, deregulation of markets, privatization of state-owned enterprises, and privatization of health care o Promotion of export industries o Debt repayment assurances  From project lending to program lending o Adjustment programs  To ensure that countries undertook these measures, numerous conditions were attached to World Bank and IMF loans, and the release of further portions of structural adjustment loans was made dependent on the successful implementation of prior requirements  IMF and World Bank austerity programs (SAPs) failed to produce sustained economic growth and reduce poverty.  As SAPs were also created to collect foreign debts, the IMF and World Bank were viewed as debt collectors for private banks  Accordingly, the IMF and World Bank had to reinvent themselves due to o The “East Asian Miracle”  Did not use loans or SAP‟s from the World Bank and IMF and was able to become a developed country o African stagnation  SAP‟s made the economic situation worse in Africa  Critics have also claimed that the rise of armed conflict and HIV/AIDS was do to SAP‟s o The Mexican peso crisis.  World Bank claims that SAPs failed because of systemic failure of developing countries‟ governments and state institutions.  „Good governance‟ is needed in order to support market economies, protect property rights, and ensure accountability. Boomerang Pattern  A concept developed by Margaret Keck and Kathryn Sikkink to explain how local non-governmental organizations can influence their own governments by pressuring actors external to the country, such as international organizations or the home government of a multinational corporation, which in turn directly pressure the host government in question o NGO‟s can help create a boomerang pattern in which they pick up the concerns of the local group, then put pressure on the actors external to the country such as international organizations or the home government of the multinational, which directly puts pressures on the host government and MNC o International NGO‟s are good at framing disputes in a way that makes them easy to understand moral issues, allocates clear blame, and proposes a credible way to change the situation  A “boomerang” pattern emerges when states block NGO access to policy areas; these NGOs provide information for or pressure on other states or intergovernmental organizations, which in turn apply pressure on the original state. This has proved to be an effective method of changing governmental policies, especially in areas involving human rights or environmental issues. A multinational corporation is an enterprise that engages in foreign direct investment and own or controls value-adding activities in more than one country (John Dunning)  Bring together people from different parts of the world  It is from within the firm itself  Operates beyond their own borders o Has businesses across the world o Control most foreign assets  Important role in globalization  Prefer mergers and oppositions o Infrastructure of the company is already intact,  Already has employees  Use infrastructure of a local company, buy the company and use what is already there International Division of Labor  A concept explaining the location of the activities of multinational corporations and their benefits and arguing that high-value manufacturing remains in the core countries and commodity and resource extraction is conducted in developing countries, thus maintaining and deepening the underdevelopment of the periphery o Characterized between the unequal exchange between
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