Development - Trade and Aid

Trade

Trade is the exchanging of goods and services between countries.

Most MEDCs and NICs import primary products which have low value and export high value manufactured goods an even higher value services.

Most LEDCs export lower value primary products, this means that they struggle to raise standards of living in their countries because they do not have much foreign money coming in from trade.

Positives

• International cooperation is promoted in the long term
• Boost employment
• Multiplier effect
• Spreads technology
• Help countries bring themselves out of poverty

Negatives

• Free trade can be risky for vulnerable economies
• Trade requires investment first
• Can lead to race to the bottom with cost

Case studies

• NICs like the Asian Tigers grew through trade.
• TNCs impact e.g. Coca Cola
• Trading blocs e.g. EU

Aid

Aid is money and support given to a country or region. 

Types of aid:

- Bilateral, when one country gives direct aid to another

- Multilateral, when aid is given through international agencies like World Bank

- NGOs and charities

- Emergency aid

Positives

• Usually focused on targeting a problem
• Can be given in different ways
• Sustainable with bottom up projects
• Aid can stimulate trade

Negatives

• Countries can become dependent on aid
• Can be unsustainable and inappropriate
• Hard to manage
• Corruption can lead to money not going to the right places

Case studies

Small scale - Mazoria, Ethiopoa

• Water Aid installed 8 new water pumps in the community 
• 2 people have been trained to maintain the pumps
• Provides better sanitation and health for the area
• Less time spent collected water (2-3 hours)
• However, in the long term the water supply could deplete and the pumps may not be able to keep up with increasing population.

Large scale - Cahora Bassa, Mozambique

• Located on the Zambesi river
• 85% financed by the Portugese 
• Full operation started in 1997
• Most energy is sold to South Africa because rural homes do not get electricity from the grid
• Local shrimp industry has been destroyed but there has been a large growth in Kapenta with 10,000 tonnes harvested a year

Development - TNCs

Transnational corporations are firms that operate in more than one country. The headquarters of these firms are usually in developed countries while the manufacturing of their goods occurs in developing countries. They Bring FDI into these developing countries.

Coca Cola

Advantages for host countries

• Creates jobs - 140,000 across the world
• Many bottling firms are local companies so all the profits stay in the host country
• They offer training and education
• Run community schemes
• Provided 4000 vietnamese women with training and equipment to start selling coke
• TNCs attract other TNCs to the host country
• Coca cola has invested $3.5bn into the russian economy, including training, construction of factories and improvements to infrastructure.
• Spread of technology

Disadvantages for host country 

• Work is low paid and usually unskilled
• Factories can close very quickly if somewhere cheaper is found
• TNCs take advantage of low environmental laws
• Profits returned to shareholders and not kept in the country
• Harsh working conditions in factories

Rio Tinto

Largest mining TNC.

77,000 employees worldwide.

Advantages

• Implementing health and safety, education and sustainability in African mining.
• Supporting Guinea's Classified Forest project
• $130m used to ensure sustainable water supply for iron ore mining in Australia, with excess water used to cultivate crops needed to feed 20,000 cattle.

Disadvantages

• Poor working conditions in Namibia leading to strikes
• Uranium miners exposed to radiation levels 7 times higher than limit
• Contamination of rivers in UK from poisonous metals

Development - Tourism

Sustainable tourism

Puerto Maldonado, Peru

• Ecotourism focuses on conservation and preservation in Peru
• Bird watching is a big thing with people trying to see Condors so there are many tours
• There is Machu Picchu, which is a natural and cultural world heritage site. To prevent disturbance to this area only 500 hikers are allowed to visit it a day and permits are needed.
• It is prohibited to litter, start fires and collects plants and animals.
• Guides are from local communities so it provides jobs.
• There are small huts to stay in with limited electricity and the food is all locally sources.

Unsustainable tourism

Goa, India

• Protests from locals
• Hotel chains sending profits out of the country
• All inclusive hotels compete with local restaurants and bars
• Mangrove forests cut down for hotels and pools
• Drying fish on beaches are banned so fishing industry has been hit
• Land price has increased so local businesses cannot afford rates
• Hotels using all the water so locals only get water for 2 hours a day
• Increased crime in the area

Tourism as a development strategy

Positives

• Creates jobs
• Income for indirect taxes from tourists spending for the government
• Infrastructure improvements 
• Attracts FDI
• Increased entrepreneurship from locals
• New skills and technology introduced

Negatives

• Dependency on tourism can lead to problems if there are things like natural disasters and political unrest.
• Pressure on services and resources
• Potential worker exploitation
• Economic leakage with TNCs profits going abroad

Development - Groupings of nations

The reasons for the growth of Social and Economic groupings of nations is aiming to advance development of domestic economies, social status and level of development of member states with examples like the G8, EU, NAFTA and the WTO. Despite the world is increasingly globalised, Groups of nations is still viewed as one of the best approaches to development - the process of social and economic advancements that allows improvements in people quality of life and general well being.

Types of alliances

• Free trade area - A free-trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreement e.g. NAFTA
• Customs unions - A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff e.g. CARICOM
• Common markets - Group formed by countries within a geographical area to promote duty free trade and free movement of labour and capital among its members e.g. EU
  
• Economic union - a type of trade bloc which is composed of a common market with a customs union. The participant countries have both common policies on product regulation, freedom of movement of goods, services and the factors of production(capital and labour) and a common external trade policy e.g. ASEAN

Advantages

• Greater chance of world peace
• Trade barriers removed - easier to trade
• Greater democratic function
• Sectors supported e.g. EU common agricultural policy
• Remote regions receive support
• May develop common currency to prevent fluctuations
• Geographical mobility
• Reduced crime e.g. European arrest warrants
• Spread of knowledge and culture
• Migration can can dependency ration
• Greater awareness of violations of human rights
• Could form a more collective effort to mitigate climate change
• Sustainability improvements

Disadvantages

• Loss of sovereignty
• Loss of financial control
• Pressure to adopt central legalisation
• Economic sectors have to share resources
• Elites hold disproportionate amount of power
• Drive towards federalism
• Separatist movements
• Loss of identity and culture
• Potential social tension 
• Debt defaulting
• Market fluctuations affect whole group
• Potential for conflict to escalate

Development - Structural Adjustment Programs

Structural Adjustment Programmes (SAPs) are economic policies for developing countries that have been promoted by the World Bank and International Monetary Fund (IMF) since the early 1980s by the provision of loans conditional on the adoption of such policies.

Conditions:

• Cut social expenditure
• Focus on economic output
• Devalue overvalued currencies
• Trade liberalisation
• Stop government overspending
• Remove state subsidies
• Privatise state owned enterprises
• Improve governance and fight corruption

Effectiveness:

• Privatised agriculture
• Exporting more food
• Stopped spending on education
• Less spending on healthcare
• In Sengal unemployment reached 40%

Development - Least Developed Countries

The poorest and most economically weak of developing countries with formidable economic, institutional and human resource problems, which are often compounded by geographical handicaps and natural and manmade disasters.

In 2014 there were 48 LDCs.

Classification:
1. Low income - under $992 per capita
2. Human resource weakness
3. Economic vulnerability - instability of agricultural production, economic smallness

Causes of debt in LDCs

• US spent money so $ devalued
• US then used QE
• Oil tied to $ so oil value drops
• OPEC increase price of oil in 1973
• OPEC puts savings into western banks and gain interest
• Banks have to loan money to make back interest money 
• LDCs take out loans to develop industry
• Prices of commodities drop and oil prices rise so debt cannot be paid back
• So solution also causes debt

Consequences 

• conflict
• environmental degradation - overfishing, over cultivation 
• drug production 

Solution

• Default
• Repay
• Cancel - e.g. Jubilee 2000 wiped debts
• Restructure - e.g. allocate 20% of export earnings

Development - Globalisation of services

India

Services like call centres are outsourced to India. This is because:

• its the 2nd largest english speaking resource in the world
• investment friendly
• supportive government policies
• adaptability to new technology
• good infrastructure
• 3rd largest brain bank, 2.5 million technical professionals
• stable democratic environment 
• large market size with increasing purchasing power
• special investment and tax incentives given for exports in certain sectors
• legal protection for intellectual property rights

Example: The International Technology Park, Bangalore

• One of the largest software companies in India, Infosys, is based is the park
• Covers 140000m²
• Best telecom infrastructure in the country
• Major IT hub
• 18km from city centre so created suburbs
• Green spaces
• Optical fibre connectivity
• Dedicated power plant
• Shuttle bus covering 80 routes

Development - Further growth of NICs

China

Pudong is an area in Shanghai.

Pudong has benefitted from Shanghai in many ways. Pudong has been able to:

• develop industries already well established in Shanghai
• share the research facilities and skilled labour
• attract capital investment because of Shanghai's business reputation
• benefit from a well developed travel network
• benefit from Shanghai's location in the Yangtze delta, a highly urbanised region

Development of Pudong:

• a highly urbanised area of futuristic high rises used by either commercial ventures or apartments. By 2030 it will cover 400km²
• highly efficient transport network
• international transport links
• international airports opened in october 1999

Development - Growth in the 21st century

Brazil

• Major trading partner with US $26.1bn 
• Only 10% with the rest of South America
• Largest exporter of coffee, sugar, chicken and beef
• Trade flows to neighbouring countries are weak
• Brazil has lots of Natural Resources – Brazil has large oilfields off the coast, it is also one of the largest exporters of iron ore which goes to make steel and it is also the largest agricultural exporter. This can be researched on the Brazil farming section of this website.
• High amounts of Direct Foreign Investment – many TNCs have invested in Brazil because it is open to FDI.  Companies investing in Brazil include Fiat and Brazil attracted 491 projects in 2011, and $65 billion of investment in 2012.  Brazil invested $28nillion overseas via its own TNCs (such as Vale, a mining company, or Petrobas, an Oil and Natural gas company) in 2006 according to KPMG
• Infrastructure – Brazil has good infrastructure across many parts of the country allowing businesses to operate
• Internal Demand – The Brazilian economy has grown and so has its inhabitant’s disposable income. The population has also grown which gives Brazil a large market and high levels of internal demand. 
• Tourism - Brazil has plenty of places to go and see the natural wonders, from scenic beaches to tropical rain forests. Ecotourism is also helping to preserve Brazil's natural wonders.

Development - Rapid economic growth in South Korea

Reasons:

- Command capitalism
 Military rule (1964-87)
 Export processing zones ( relaxed laws, concessions on tax and pollution control)
 Improve infrastructure (Seoul to Pusan highway)
 Gross domestic savings (34% of GDP)

- Cheap labour
 Low pay ($2.90 per hour in textiles)
 Long hours (72 hours a week for textiles)
 Large, flexible workforce 
 Suppressed unions
 Poor working conditions

- Asian work ethic
 Reduced personal freedom
 Work for the common good
 Paternalism of companies

- Commercial use of modern technology
 Steel works with state of the art production methods

- Traditional education system
 Geared towards industry
 Disciplined
 Teamwork promoted
 Well educated

- Foreign investment
 Japanese investment as reparation for WW2
 Proximity to China makes it attractive

- Protectionism
 Foreign imports restricted
 Infant industries subsidies

- Domestic demand
 Increased personal wealth

- Diversification
 Products aimed at foreign markets
 Labour intensive
 Increasing value of products over time
 Firms like LG, Hyundai and Daewoo set up

-Heavy industry
 Steel
 Ship building
 Products aimed at foreign markets

Development - Newly industrialised countries

Original Tiger economies - Singapore, Hong Kong, South Korea, Taiwan
Second generation Tiger economies - Malaysia, Thailand, Philippines, Indonesia

They all have high GDP per capita growth rates and high manufacturing output.

Causes of growth:

• Comparative advantage
• Development of low skill/ labour intensive industry
• Command capitalism
• Electronics industry promotion law
• Suppression of grain prices
• Attraction of FDI - Cheap labour, increasing domestic demand, non-unionisation, proximity to China, export production zones.
• High gross domestic savings
• Increasing value of products 

Disadvantages:

• Exploitation of women
• Child labour
• Erosion of national identity
• Deforestation
• Consumption of energy resources
• Pollution
• Loss of agricultural land
• Poor quality water supplies
• Poor infrastructure
• Loss of favourable trade agreements
• Over reliance in imported R&D

Advantages:

• Fall in poverty
• Rapid infrastructure improvement
• Gain foreign currency
• Growth of Asian TNCs
• Provides employment
• Less imports needed

Case study - Malayisa

1.   Labour – Malaysia had cheap labour in abundance in the 1970s and fulfilled consumer demand in richer MEDCs

2.   Transport – Malaysia had major ports such as Georgetown on Penang, this helped with trade

3.   Education – Malaysia has and had a well-educated workforce

4.   Government and politics – the country was governed by strong leaders including Dr Mahathir Mohamad who ruled from 1981 to 2003 who oversaw economic growth and increased prosperity for the people of Malaysia.

5.   Industrial policy – Malaysia allowed foreign companies to come in and invest, then strongly promoting the development of locally owned industries through protection and laws to give these home-grown industries privileges compared with foreign investors. 

6.   Growth poles - manufacturing was concentrated in growth poles in Malaysia. Domestic goods such as food and drink and household goods are located in and around the capital city, Kuala Lumpur, which has an inland location. The export-orientated growth industries, mainly electronics but also including electrical goods, machinery, equipment and textile industries, are concentrated south of Georgetown along the eastern side of the island of Penang, close to the port and the road bridge connecting Penang to the mainland and international airport.

7.   Development of TNCs – Malaysia has its own car manufacturer, Proton, which sells cars to every continent

Development - Flows of globalisation

Brand loyalty

McDonald’s Corporation began spreading domestically throughout the United States from 1973 thus establishing its brand recognition. 

McDonald’s is able to create global recognition with its customers through heavy advertising and branding. It is said that its “golden arches” are recognised by more people than the “Christian cross”

McDonald’s also sponsors things such as the Olympics, portraying itself as a global influence in major sporting events, whilst also creating mass advertising. In addition to this, it spends around $950 million every year on advertising alone.

Its initial strategy began by advertising directly to the middle and upper class citizens, as can be seen in countries such as India and China. However, with its many bargain deals on several of its food items, McDonald’s began to cater to several people belonging to the lower class. 

 China was McDonald’s first global country in which it researched heavily before opening up restaurants. In fact, through globalisation and internationalisation, McDonald’s was able to develop marketing strategies, while at the same time customising them for different regions in accordance to the cultural and national variations in order to serve specific target markets. 

 The company conducts heavy research in regions where it desires to open locations based upon a few elements, including social, cultural, technological, political, and economic situations. 

Containerisation

The island state is located on one of the world’s busiest and most congested shipping, as vessels travelling between the Far East and Indian Ocean (on to India, the Gulf states and Europe via Suez) are forced to pass through the bottleneck of the Malacca Straits.

• The port is the ranked second busiest, behind Shanghai, transporting 32,240,000 containers in 2013. It the busiest in terms of transfers of containers between vessels (whereas Chinese ports like Shanghai focus more on goods using the port to enter/exit the country).
• Ships from Singapore sail to over 600 ports in 120 countries, meaning it is ideal for the transfer of containers, allowing the flow of products.
• About 1000 ships in the port at any one time
• At any one time, there are about 1,000 vessels in the Singapore port. 
• Every 2-3 minutes, a ship arrives or leaves Singapore.
• Vessels passing through the Singapore Strait are monitored by the Maritime and Port Authority's (MPA) Port Operations Control Centre, using the Vessel Traffic Information System (VTIS), which has the capability of handling up to 10,000 tracks at any one time.
• Annually, more than 130,000 ships call at Singapore.
• Today, there are more than 5,000 maritime establishments contributing about 7% to Singapore's gross domestic product, and employing more than 170,000 personnel.
• In today's interconnected world of commerce, more than 90% of the world's trade is carried by sea.

• The port itself has 6000 employees keeping it running 24/7.
• The port has berths for 52 ships to dock at once, and mega ships (like Emma Maersk, which carries 15,500 containers = these would stretch nearly 50miles end to end!) can be unloaded and loaded again ready to set sail in 15 hours. This is facilitated by huge cranes, 6 of which can be remote controlled by one operator at a time. This is only possible because of the standardised nature of containers.

UK Brain drain

Latest figures show that approximately 10% of Britain’s skilled labourers have left the UK in an attempt to gain work abroad. The leading countries for UK migrants to seek employment are Australia and the United States. The largest reasoning for the flow of labour from the United Kingdom is the greater job opportunities available. Following the 2008 economic crisis, many students migrated to Australia from the UK, due largely to the fact that unlike the US and UK, the Australian economy wasn’t terribly affected by the economic crash. Large amounts of unemployment, and the poorly recovering UK and US economies encouraged graduate students to seek employment elsewhere. 

A further reason for the loss of skilled labourers is the greater quality of life and higher paying jobs in these countries. Although the standard of living rates are high in the UK, many skilled labourers prefer to work abroad, especially in Australia due to factors such as climate rather than employment rates. Despite the strict Australian migration policy, the country welcomes skilled workers, with the United States too welcoming of skilled labourers, with the US migration services allowing approximately 140,000 skilled workers permanent visas. This welcoming attitude combined with the high average wages of the US and Australia (average being approximately 35% and 23% higher, respectively) results in the wide spread migration from the UK to these countries.

Transfer of skilled workers - EA

EA appoint workers and people in senior roles without bias based on location – EA was given a 100% rating in the Corporate Equality Index in 2014; as a result, appointed workers who live abroad have to migrate permanently to work, through both internal and international migration.

Internal Migration 

• Fraud Analysts who studied at University at Cornell (New York – East Coast) before working for EA in its Global HQ in Redwood City, CA (West Coast)

• Members of the Global Media Marketing team were transferred from the Origin Florida Branch (Origin are a subsidiary of EA) to San Francisco.

International Migration

• The current CEO of EA, Andrew Wilson, joined EA in 2000, working in the company’s Asian and European markets after initially working in Sydney. When he was appointed Executive Vice President of EA in 2011, he too moved to the EA HQ in Redwood City before being appointed CEO in 2013.

• EA’s COO, Peter Moore, is a Briton who used to be the Corporate Vice President of Microsoft, moving from his home in Liverpool to work for Microsoft in Seattle (NW USA). However, in 2007 he resigned from his post to work as COO for EA, moving to Redwood City. 

Unskilled workers - Morocco to Spain

Movement into Spain

In the 80s levels of undocumented migration began to grow as networks in the host countries began to develop in the 70s.

There are two Spanish cities bordering Morocco, Melilla and Ceuta. Migrants from all across Africa regularly attempt to climb over the fences bordering the cities.

In March 2014 about 500 people attempted to storm the fences at Melilla.

Illegal attempts to cross doubled in 2013, but most failed to get over the fences.

Often Spain is only the point of entry in Europe, and from there most migrants will attempt to move to France or even further to Germany or the UK.

From 2000 to 2007, immigrants in Spain from Morocco increased by 500,000 to 700,000.

10% of migrants into OECD (worldwide economic group including 34 countries) went to Spain from 2000 to 2005.

Demographics of Migrants

From the Maghreb countries (Morocco, Tunisia, Algeria and Libya), approximately 70% of emigrating workers are classed as unskilled.

From Maghreb countries the proportion of female migrants is increasing, with gaps in the job market in Spain, such as working in the predominantly female domestic aid industry, encouraging migration from this demographic.

80% of female Moroccan immigrants are married, so appear to primarily migrate for purposes of family reunification.

Unskilled worker - Rural to urban China

Around 11% of the Chinese population are classified as rural-urban migrants, having moved from rural inner China to the urbanised and more industrial coastal regions for work. Most job opportunities in inner China are in the agricultural sector and do not require high skill levels or qualifications. 

As a result of rural-urban unskilled migration, the population in Chinese urban areas grew from 178 million (1978) to 540 million (2004). 

The urban areas offer a wider variety of job opportunities, better infrastructure and the prospect of higher wages. The size of the migration is so great that 40% of the total Chinese labour pool is made up of rural-urban migrants.

Place example: North Shaanxi region 

• Home to around 9,000 villages and just under 5 million people, the North Shaanxi region is one of the poorest in China. 
• 30% of the people in the region are classified as in poverty. This acts as a major push factor away from rural areas and towards the cities. 
• On average, 1 in 5 people in the region will move away during their lifetimes.
• The only areas without major problems with migration are those that require labour-intensive tasks that can’t be performed by machines, such as delivering animals on a farm. 
• This has led to a brain drain amongst the local population, as the future leaders of agriculture and industry in the region may not be the best the region can produce. Whilst the cities benefit from the arrival of more intelligent and able workers, those that opt to stay are more likely to live in poverty.

Airports - Chicago O'Hare

•  2nd largest airport in the world
• In 2014 it had a passenger volume of over 91 million, which seems to continue to grow
• Main attraction for the airport is that it is in a great location on the great circle because it is further north journeys are shorter which in turn saves fuel and time
• Airlines and some indirectly airports compete for conceiving passengers for minimum connect time, this requires waves to and from airports to maintain flows of passengers
• 4 pairs of runaways, 8 in total, to keep flow rates high of aircraft movement 
• Runway capacity is inefficient as traffic is a peaky diurnal pattern, which means its profile capacity is 75-80% across the day with 100% peaks
• Its main business is that small airplanes land at Chicago then the passengers are accumulated together to make a full aircraft capacity to make it financially viable for the route of a bigger aircraft to international locations. 
• Main american hull from east to west and from central America
• It attracts international links with Europe, Pacific Rim, Japan, Korea, Middle East
• Its in direct competition with Toronto airport for these routes
• It has a system of airports to maintain capacity
• Has two competing carrier networks United and American Airlines
• Its a hub for south west airlines which carry 118 million passengers to leisure and the sun
• Has two other business aviation airports: Chicago Executive and Du Page, this is for all the private planes
• Due to its busy nature it has started to decant some of its traffic to greater Chicago, Chicago Midway International Airport, Gary International 
• If there is ever a problem and activity is ever disrupted it is very hard to get back on schedule due to its sufficiently high activity, i.e. its resilience to disruption is not good

Refugees - Syria

3 million people have fled Syria since the start of the conflict. 

Lebanon – every fifth person is a Syrian refugee, thus emigration has caused a huge population surge. Thus there is an increased pressure on health and education services. Additionally, Lebanese communities are become increasingly myopic and frustrated causing tensions between the nationalities. Syrian children, after being deprived of education during the conflict, are less able than the Lebanese children thus acquire more attention from teachers causing tension between the students. 

Jordan – Syrian men are willing to work for less and in the process are being exploited. Jordanian men cannot afford a dowry so must delay marriage. Jordan suffers from a water scarcity, Syrian do not share the precious perception of water. 

Turkey – created high quality refugee camps, Turkish society has been the most accepting. 

Development - Glocalisation

Glocalisation is the concurrent process of globalisation and localisation.

From the 1950s TNCs focused on developing consistent global brands. But recently the focus has changed from consistent to coherent brands i.e. product can be different but retain key values.

e.g.

McDonald's Scotland have Irn Bru

McDonald's India have chicken Big Macs

Toyota change car names

Development - Globalisation

Globalisation describes the increased mobility of goods, services, labour, technology and capital, as well as cultural and political systems across geographical boundaries.

Causes

• Falling transport costs
• Falling trade barriers
• Falling communication costs
• FDI
• TNCs

Characteristics

• Comparative advantage
• Global interdependence
• Global markets
• Global domination of manufacturing services by TNCs
• Global migration
• Global communication systems
• Global financial institutions e.g. World Bank
• Global environmental issues
• Global media
• Americanisation

Flows of globalsation

• Flows of capital - enabled through ICT (cheap, reliable, instantaneous, continuous)
• Flows of labour - enabled through cheaper, faster transport, can include specialist workers, refugees, unskilled workers
• Flows of products - enabled through more efficient transport, containerisation, high speed railway
• Flows of services - enabled through outsourcing and ICT
• Global marketing - enabled through brand loyalty, international marketing strategies 

Advantages of Globalisation

• Resources of different countries are used for producing goods and services they are able to do most efficiently.
• Consumers to get much wider variety of products to choose from.
• Consumers get the product they want at lower prices due to competition.
• Companies get get access to much wider markets
• It promotes understanding and goodwill among different countries.
• Businesses and investors get much wider opportunities for investment.
• New jobs available.

Disadvantages of Globalisation

• Developed countries can slow development of less developed
• Economic issues in one country can trigger adverse reaction across the globe.
• It can increase spread of communicable diseases.
• Companies face much greater competition. This can put smaller companies, at a disadvantage as they do not have resources to compete at global scale.
• Exploitation of more resources.
• Jobs may be lost through outsourcing.

Development - Types and measures

Economic development - An increase in a countries level of wealth.

Demographic development - An increase in the life expectancy and an overall fall in the death rate combined with falling birth rates.

Political development - Freedom means that people have a greater say in who forms the government and therefore the impact that it can have on their lives.

Social development - Can include a range of changes affecting the quality of life of the population.

Cultural development - Greater equality for women and better race relations in multicultural societies.

North South divide

The Brandt Line is an imaginary division that has provided a rough way of dividing all of the countries in the world in to the rich north and poor south.
The Brandt line is now quite out of date, as many countries in the South are more developed now, NICs are not considered and the soviet block has collapsed. As well as this, GNI and GDP form the basis of this measure, and so cultural and social development is not represented.

Measuring development

1. Economic indices

Gross Domestic Product (GDP) - this is the value of all goods and services produced within a country.

Cons 

- Doesn't show disparities within countries

- Doesn't take into account black markets

- Can be manipulated by governments

- Ignores relative purchasing power

2. Multivariate analysis

Takes into account more than one measure.

For example the Social Development Index takes into account different variable within health, education and housing.

3. Quality of life indices

e.g. HDI

Takes into account life expectancy, education and GNI per capita.

Calculated by the UN to track growth and problem areas.

Cons

- Politically motivated

- Only 3 indicators

- Hides regional disparities

- Hides social disparities

- Progress is relative not absolute

Alternatives

Gini coefficient

-The Gini coefficient provides an index to measure inequality.

-It is a way of comparing how distribution of income in society compares with a similar society in which everyone earned exactly the same amount. 

-Inequality on the Gini scale is measured between 0, where everybody is equal, and 1, where all the country’s income is earned by a single person.

Less income inequality suggests the country is more developed because if there is large amounts of inequality then economic growth falls. It is a useful measure because it allows direct comparisons of income inequality between different countries and it isn't a measure of the average of the income so it is more representative of a population. It also doesn't matter how large the population of the country is and it can also show the inequality change over time.

However, some might say that it is oversensitive to changes in the middle and undersensitive at the extremes. It is also hard to accurately measure because benefits systems work differently in different countries so it may not be counted as income so with not be taken into account in the Gini coefficient.

Global Peace index

-The Global Peace Index is an attempt to measure the relative position of nations’ and regions’ peacefulness.

-The index looks at the three broad themes: the level of safety and security in society, the extent of domestic and international conflict, and the degree of militarisation.

When there is less money circulating and economy this can cause an increase in conflict due to lack of jobs and weak institutions. It is a useful measure because you can easily compare ranks between the countries. 

However, it can be hard to quantify peace so some of the orders may be not what you would expect so this may not reflect the rank of development. For example USA is a developed countries yet it is 101st in the global peace index.