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Chapter 11

SOC101Y1 Chapter Notes - Chapter 11: Import Substitution Industrialization, Neoconservatism, Invisible Hand

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Margaret Gassanov;

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Chapter 11: Inequality Among Nations: Perspectives on Development
Women in Philippines work in horrifying conditions
Globalization: processes leading towards greater world integration economically,
politically, socially, culturally, in government policies, communications and
Globalization of production brought working conditions like this to many areas in
Southern hemisphere
Export-processing zones (EPZs): zones created for transnational corporations to
operate under conditions that free them from domestic laws, such as tariffs, corporate
taxes, safety and environmental protections, minimum-wage laws, etc.
Transnational corporations: corporations that have subsidiaries in more than one
Exploit cheap Southern labor recruited from villages
Young women usually suffer from headaches, deteriorating eyesight, and often
reproductive problems → replaced by younger recruits
International Monetary Fund (IMF): UN agency that attempts to minimize currency
fluctuations among countries by providing credit to countries with balance-of-payments
and international-debt problems
World Bank: provides commercial and low-interest loans to less developed countries
on the condition that they follow neo-liberal prescriptions
Recruits are created by group of farm families forced off the land by policies known as
the “Washington consensus” and promoted by the US, IMF and World Bank
Alan Greenspan- chair of U.S. Federal Reserve: Western form of capitalism is now the
consensus model of how each country should run its economy
Colonialism (imperialism): formal colonialism: country A takes over country B y
force of arms and rules it without the consent of the people of country B; informal
colonialism: country A decides that all other countries play by its rules, which it
enforces by diplomatic means, offering economic benefits or making economic threats,
and in the last resort threatening or carrying out “regime change” by military might
The Bush doctrine moves the US towards formal colonialism
Washington consensus mandates every country to remove domestic control over their
own economies by adopting neoliberal policies (dismantle control over foreign
ownership, investing and exchange… to encourage exports)
Under globalism, states are oriented more to the rights of transnational corporations
than to the demands of the votes, and are locked into neoliberal principles by
structural adjustment programs (SAPs): programs initiated by the IMP and the
World Bank involving stabilization and structural change (government deficits,
inflation; encourage foreign exchange earning through exports, and saving through
government spending cuts on social services and food subsidies)
Why are there rich and poor countries?
2 broad approaches: “Western-centric” and “anti-imperialist

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oDominant in Canada and other advanced capitalist countries
o“most countries in the world are poor because Western capitalist institutions
and values have not penetrated them deeply enough”
oPoor countries will be better if they become like “us”- by adopting western
values like capitalism, political democracy, strong work ethnic, adequate
schooling, etc.
oPoor countries fail because of ignorance, laziness, and corrupt elites
o“most countries are poor because Western capitalism and imperialism have
penetrated them too deeply”
oRich countries are rich because they have exploited poor countries
oPoor countries cannot follow neoliberal capitalist path trodden earlier by rich
countries because many obstacles now block that path
o97% of largest transnational are controlled in the North
oPower differentials and the persistent advantages of being ahead explain the
vast economic disparities among countries
Rich countries and dominant corporations have an interest to keep poor countries
underdeveloped (a precapitalist society), so they will remain sources of chap labor and
Ally with large landholders and military leaders to maintain exploitation and
Adherents of anti-imperialist approaches blame underdevelopment on external forces
and internal comprador elites: state and economic elites whose rule in a country
depends on alliances with external forces, such as transnationals, and who would be
unable to remain in power on the basis of local popular support
In their view: poor countries can develop only by weakening ties to rich countries,
abandoning capitalism and developing their own economic, political, and cultural
Unequal development and unequal benefits
Gross national product (GNP): value of all goods and services produced in a country
in a year, according to official statistics of market income (measures growth and living
GNP counts all monetary activity whether positive or destructive
E.g. Turkey’s earthquake in 1999 → GNP growth despite 17000 died
E.g. divorce contributes to growth of GNP because couple sells 1 home and buys 2
Economic growth coexists with poverty, exploitation… hides economic injustices
National averages hide poverty by lumping together the incomes of rich and poor (e.g.
Bill Gates’ annual income is $4.224 billion; 711 cashier earns $12000 → their average
income is 2 112 006 000/year, but 711 cashier does not raise out of poverty)
Human Development Reports weigh the life sustaining needs of the poorest billions
against the economic freedoms of the richest few
International agreements (NAFTA) protect privileges of transnational corporations,
which restrict elected governments from redistributing wealth to the poorest billions
“Human Development”: A Better Measure

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UN now measure well-being with the concept of human development rather than GNP
Human development- raising opportunities to gain income and employment, education,
health care, democracy….
Disparities between rich and poor countries are enormous
Life expectancy- 65 years in Third World Countries; 78 years in capitalist countries
Threat to “deep democracy” of actual rule by ordinary people rather than by
transnational corporations, as well as determination of country’s policies by the US
rather than by domestic voters
Class and Unequal Benefits
Class differences
E.g. Brazil- richest 1% control 50% of nation’s income; poorest half live on 10% of the
country’s income
1993-1996, more than 3000 11-17 year olds died violently in Rio de Janeiro, believed
to have been murdered by death squads hired by police, shopkeepers, or gangs
Rural poverty is also severe- land concentrations + small landholder who cannot
survive on their own land
Even in the US, number of homeless, unemployed and poorly paid people is large and
growing (750000 on any given night)
Class inequalities have not disappeared, they exist within and among countries
Women and Development
Women in Third World countries are the poorest of the poor
Land ownership is invested in men, but women do much of the farm work
They fetch water and firewood and mill sugar for more than 8 hours/day
They also bear and raise children and run households
Female-to-male ratio is 1.05 in Europe and North America; ~0.94 in Asia and North
Africa b/c women tend to be fed less and are less likely to receive costly medical care
Health risks of pregnancy are greatest for poor women (600 times higher than women
in developed nations)
Inequalities are common in educational opportunities (e.g. Islamic and Black African
cultures- girls get less schooling than boys)
In Southern Asia 1 in 3 men are illiterate; compared to almost 3 in 5 women
Greatest improvements in literacy rate for women occurred in sub-Saharan Africa (41%
in 1990 → 54% in 2000; Arab 37% → 50%)
Every country women work longer hours than men and at least ½ of women’s total
work is unpaid
How the west created rich and poor countries
Development: a society’s achievement of high living standards and high productivity
Most “developed” countries are the ones that are more developed now
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