Module 3 unit 2 geography

CAPE GEOGRAPHY
O.JOHNSON
MODULE 3- DEVELOPMENT
Development and Underdevelopment
The term development means different things to different people. To some it means that a
country has put all its productive resources to that fullest possible use. To others, it implies
a change from a traditional society using simple techniques to a modern high-income, high
technological society.
Underdevelopment is the opposite. The term was introduced to replace the less flattering
‘backwardness’ which was in use until the late 1940s. Since then, there has been a search
for a more satisfactory term to describe countries seen as underdeveloped and several have
been in use- Third World, undeveloped, developing, South. This suggests that if additional
capital, labour or technology were applied there would be an improvement in the standard
of living of the people. To many others, the term is synonymous with poverty.
A number of reasons have been suggested for underdevelopment. Underdevelopment is
sometimes believed to be a consequence of colonialism, and is particularly evident in
former colonies whose economy ( export-oriented cash crops) may still be structured to
benefit overseas investors or companies rather than the local population. Some argue that
there is too much reliance on the export of natural resources which prevents the
development of manufacturing. Overpopulation and overcrowding have been cites as
causes along with poor government, corruption, disregard for the law and property rights,
as well as ecological conditions in tropical countries that affect health and shorten lifespan.
Not all developing countries are at the same stage so there have been refinements of the
term. There are moderately developed and least developed countries; low and middle
income countries; newly industrialising and emerging economies. These efforts underscore

the difficulties of describing a group of countries with differing social and economic
circumstances.
Definition of development
In time, there was a call for a broader notion of development and underdevelopment, and
non- economic criteria were included. Development is defined as an economic, social and
political process which results in a sustained improvement in the standard of living in a
significant proportion of a country’s population. The use of the word sustained implies that
changes in living conditions should not be temporary and that the people of a country
should experience improvements over time. Moreover, the process should not simply affect
a small group within the society. In this broader concept of development, the view is that
the process must improve the lives of the majority of the men, women and children in the
society.
The terms ‘ more economically developed (MEDC) and ‘ less economically developed’ (LEDC)
or MDC and LDC are generally in use today. For most, it is a distinction between the rich and
poor countries of the world, between North and South. It is difficult to produce simple
definitions of the two that would include all possible criteria. One way of overcoming the
difficulty is to establish indicators of development and the extent to which countries meet
these criteria. It must be remembered, however, that these countries whose wealth and
well-being differ markedly from the majority. Disparities within developing countries are
often greater than within developed. These members of a country’s elite usually live in
urban areas.
Sustainable development
Sustainable development is defined as development which meets the needs of the current
population without compromising the ability of future generations to meet their needs. It s
linked with environmental issuesm and makes reference to the effective and ecologically
sound use of resources in the drive towards development. The point of sustainable is that
today;s population must beat in mind the needs of future generation and the emphasis is

often placed on the use of renewable rather than non-renewable resources, especially
energy ( wind and solar energy versus oil and other fossil fuels). Meeting the needs of the
majority of the population is also important, especially with respect to the basic
requirements of food, shelter, access to health care and education. The concept of
sustainable development arose out of the Brutland Report in 1987 which drew attention to
the need to link economic development with environmental protection and social equity.
Sustainable development focuses on the need to recognise the concept of carrying capacity,
emphasising the importance of maintaining a balance between population growth and
resources. If the carrying capacity is exceeded then there are consequences for the
population. Indeed, one of the tenets of sustainable development is the need to reduce
population growth in countries which are already having difficulties meeting their
population’s needs. According to the Encyclopaedia of Sustainable Development (2000). In
the context of sustainability, carrying capacity is the size of the population that can be
supported indefinitely upon the available resources and services of supporting natural,
social, human and built capital.
Sustainable development is very difficult for some countries to achieve. High population
numbers mean that there is stress on existing resources, as well as a pressing need for
further growth and development of these resources to provide for the existing and rapidly
growing population.
The main indicators
Economic indicators
Gross Domestic Product (GDP) - this is the value of all goods and services produced within a
country. It is usually measured in US$ and calculated per capita. This makes comparisons
between different countries easier.
Alternatively you could be faced with Gross National Product (GNP). The difference is that
GNP also includes goods and services produced by that country overseas.
GDP is probably the most widely used indicator. It implies a lot about the country. If the
figure is high it suggests they have a large number of productive industries producing goods.

It also suggests that the service industry is well developed. (Services include things such as
hospital and schools. If the figure is low it suggests that the country has few industries and
few services so therefore a poor standard of living.)
Advantages of using GDP/GNP as an
indicator:
Disadvantages of using GDP/GNP and an
indicator:
A useful figure for comparing countries.
Often used to rank countries to establish
a fair system of aid payments.
Can hide inequalities as it does not show the
distribution of wealth/it is an average, which
does not take into account regional variations
Is a good indicator of the state of the
economy and provision of services.
Can be manipulated by governments who want
to appear poor to collect more aid.
Fairly easy to calculate from official
government figures.
Easily collected
It is a simple measure to apply
Allow countries to be compared according
to the same characteristics
Does not take into account subsistence or
informal economies which are very important in
less developed countries.
It does not take into account the value of
voluntary or domestic work
Quantity does not measure quality
It does not take into account the social and
environmental cost of economic growth
Purchasing power parity
This is the GDP adjusted for the cost of living in the country. It examines how much a
standard unit of currency can purchase in different countries and, therefore, gives currency
can purchase in different countries and, therefore, gives an idea of how much it really costs

to live at a particular standard of living. It tries to address issues of exchange rates and the
relative values of different currencies.
Energy consumption
This is a measure of the use of energy and therefore, of the degree of industrialization and
technological advancement
Percentage employed in agriculture:
A high percentage employed in agriculture usually indicates limited economic development
and is associated with low per capita income. As agriculture is mechanised, productivity
increases and fewer workers are employed
NON-ECONOMIC INDICATORS
Non-economic indicators measures include health. There are many contrasts in health
between MDCs and LDCs. There are stark contrasts in maternal and infant mortality and life
expectancy for example. To some extent this is a reflection of social and economic
conditions, the availability and quality of health care.

Education is also important. In many poor countries school enrolment is low and attendance
poor. Girls are often disadvantaged and this has implications for birth rates. High levels of
illiteracy hamper development.
Life expectancy
This is the average number of years a person is expected to live to. It is used as an indicator
of development because it is a reflection of the health care system and nutrition levels that
is obtained within a country. The higher the life expectancy, the more developed the
country is.
Infant mortality: this is number of deaths of infants under the age of ONE (1) per 1000 live
births per year. The more developed a country, the lower its IMR.
This will tell us the state of the countries health service, food provision and water quality:

Advantages of using infant
mortality as an indicator:
Disadvantages of using infant mortality as an indicator:
Indicates quality of health
care, water quality, food
supply.
Hard to get an accurate figure as many births in the less
developed countries would be un-registered.
Very easy indicator to
understand.
Evidence from some countries that the level of infant
mortality is well above that disclosed.
Focuses on one of the most
significant aspects of
development.
High infant mortality could be a result of social or political
factors. For example in China the figure would be very high
because of the countries one child policy.
2008 data

Birth Rate: a simple one, the number of people born per thousand people per year. A high
birth rate indicates a low level of development due to a lack of contraception or the need
for large families. (See The Demographic Transition Model in the Population section.) A low
birth rate indicates a high level of development.
Advantages of using birth rate as an
indicator:
Disadvantages of using birth rate as an
indicator:
Clear indicator of a countries level of
development.
Can be affected by population policies such
as China's one child policy.
Can be used for predicting the future
situation and planning accordingly.
Figures in less developed countries not
necessarily accurate.
Death rate: this is number of people who die per thousand people per year. It will be a clear
indicator of the level of health care, quality of water, sanitation, accommodation, and food
supply.

Advantages of using death rate
as an indicator:
Disadvantages of using death rate as an indicator:
Indicates level of health care
provision, water quality,
sanitation, and living conditions.
Does not actually tell us what is responsible for the high
death rate. For example a high death rate could be a
result of a natural disaster not poor health care.
An easy to use indicator.
Very difficult to get accurate figure from the less
developed world.
Literacy rates (Adult): this is the percentage of people over 15 years old that can read and
write. Clear indication of the availability of education and also the extent to which people
can get into education - for example in India many children cannot get in to school as they
have to work to help support their families.
Advantages of using literacy
rate as an indicator:
Disadvantages of using literacy rate as an indicator:
Indicates the amount of
education on offer.
Takes no notice of other skills the people may have which are
equally valuable - for example a good understanding of
farming techniques.
Shows how many children
could/couldn't attend school.
When used on its own doesn't tell us whether the figure is a
consequence of too few schools or the fact that children are
having to work.

COMPOSITE INDEXES/INDICES ( CONTAIN MORE THAN ONE VARIABLE)
As you have seen each of these indicators have advantages and disadvantages. In an
attempt to minimise these disadvantages composite indicators have been developed.
Examples of these include the "Human suffering index" and the "Human development
index". Each of these uses several indicators to try and avoid the disadvantages of one.
Human suffering index - The country is ranked from 0 to 10 for each of the following
indicators (0 is very good, 10 very bad):
 Life expectancy
 Daily calorie supply
 Access to clean water
 Per capital income
 Civil rights
 Political freedom
 Inflation
 Communications
 Percentage in secondary school
 Immunisation of infants
The countries scores are totalled and then ranked accordingly. The worst a country could
have is 100, the best 0.
Using this score the worst countries would be Mozambique, Somalia and Afghanistan whilst
the best would be Denmark, The Netherlands and Belgium.
Physical Quality of Life Index (PQLI)
This index is a measure of three indicators combined; life expectancy, infant mortality,
literacy rate and life expectancy. It attempts to measure the quality of life or well-being of a
country. For each of the three indicators, individual countries are ranked on a scale from 0-
100, where 0 represents the worst possible outcome and 100 represents the best. The three
values are then averaged to obtain the PQLI which also ranges from 0 to 100. The higher the
PQLI, the more developed the country is.

Human development index: This uses fewer indicators than the above. It simply uses
wealth, health and education. It is calculated each year. Health is measured by life
expectancy, knowledge by a combination of adult literacy rate and school enrolment;
income/wealth represented by GDP/capita or GDP (PPP) per capita/ The best country get
"1" the worst "0". This score is compared to GDP tables. If a country is higher up
the HDI table than the GDP table then it must be successfully investing in health and
education. If it is below then there is room for improvement.
Currently, several countries including Pakistan, Vietnam and Cuba are doing well whilst
Namibia, Morocco and Algeria poorly.
Strengths of the HDI
 It is reported annually so data is usually current
 Integrates supplementary information with income data
 Highly recognized and visible indicator
 The ranking mechanism is an easily understood tool
 The data for calculating in index is widely available
Weaknesses of the HDI
 The index is selective of the issues it includes
 The data is not necessarily reliable
 The topics making up the index are not properly assessed; for example. Literacy is
only one part of knowledge
 It neglects other aspects of human development such as political and civil issues

 It does not cover the ecological aspect of sustainability

Many measures of development take no account of the sex structure of the society and in
many countries there are inequalities between men and women. These socially created
distinctions between the sexes are what constitutes gender and the United Nations try to
capture them in the Gender Related development Index {GDI). The GDI measures life
expectancy at birth, adult literacy rate (percentage aged 15 years and over), the combined
gross enrolment rate for primary, secondary and tertiary education (per cent), and the
estimated earned income (PPP US$) for both males and females. The UN uses a different
standard for life expectancy male (82.5years) and female (87.5 years) because in almost all
countries women live longer. The maximum score achievable is also 1.0. In many countries,
women’s development of the country suffers as a consequence.
Key points

 Economic development does not necessarily equal overall development
 Economic indicators cannot describe the total development of a country
 Underdevelopment can affect countries with many resources
 Sustainable development must take environmental issues into account
 There are disparities within and among countries which can be hidden statistical
indicators
 Social and economic indicators together give a better idea of a country’s
development status but each has its strengths and weaknesses
Conclusion
Development issues are complex and involve many different aspects of growth especially
social conditions and sustainability, in a country. Measuring development strictly be
economic indicators does not give a complete picture of the development status of a
country. If only economic indicators such as GDP or PPP are used, then there is little
information about distribution or access to services which may be critical to a better
standard of living. It distorts the actual living conditions experienced by the majority of the
population. Social indicators such as HDI and information about education and health care
access provide critical information which can help complete the development picture of a country.
GLOBAL DISPARITIES IN DEVELOPMENT
Definitions: Poverty, Life expectancy ad Gender
Poverty
Poverty as measured in development has a number of different meanings. On a day-to-day
level, poverty may be understood as the inability of persons to meet their basic needs for
goods and services such as food, water, health care, education and shelter. This is absolute
poverty. It is usually based on the cost of a standard basket of goods or not. Absolute
poverty can result in poor nutrition, a low life expectancy and high infant mortality. Persons
living below the country’s defined poverty line do not make enough money to purchase
basic necessities for an adequate standard of living.

The concept of relative poverty is also important in development, and it refers to the extent
to which a household’s financial resources fall below and average income threshold for the
economy- that is, whether a person can afford the same items that the average person in
the country can afford. It is a comparative measure.
On a global scale, poverty is measured bu the Human Poverty Index (HPI), which uses
indicators to represent the most basic types of deprivation- survival, knowledge, and
standard of living. The standards are different for LDCS and MDCS, reflecting socio-
economic differences between them.
The HPI-1 is used in LDCs, while the HPI-2 is used in MDCs. The basic HPI is measured by:
 Survival: The likelihood of death at a relatively early age. It is measured bu the
probability of not surviving to the age of 40 in LDCs and age 60 in MDCs.
 Knowledge: exclusion from the world of reading and communication. It is measured
by the percentage of adults who are illiterate.
 Standard of living: overall economic ability. It is measured in LDCS as the average of
the percentage of the population without access to safe drinking water and the
percentage of underweight children for their age. In MDCs, it is the percentage of
the population below the income poverty line (50% of the median household
disposable income).
HPI-2 also includes social exclusion, measured by the rate of long-term unemployment.
Life expectancy
Life expectancy is defined as the average number of years that a person can expect to live,
calculated at birth. It is a useful summary of mortality.
Gender
There are widely held beliefs in society about gender and the roles, behaviors and attitudes
considered appropriate for men and women. A distinction is made between sex which is

biological and gender which is cultural. The roles are imposed through a variety of
influences and institutions- the home, school, and peer groups. Some roles are traditionally
seen as more important than others. Women play a key role in unpaid processes such as
care in the home and this has been extended to care in the marketplace- nursing, teaching.
The roles and behaviors have given rise to gender inequalities.
Poverty- distribution
Figure 10.1 shows the world distribution of poverty and the extent to which it is
concentrated in South- in Africa and Asia especially. According to the United Nations, these
countries all have very low income (less than US $745 per capita). Roughly 50% of their
populations live on less than US $1 dollar a day, and 80% on less than US $2 a day. They face
extreme difficulties in providing social services such as health care and education; life
expectancy is declining as a result of malnutrition, HIV/AIDS, and other diseases like malaria
and tuberculosis; and they struggle to maintain a balanced and sound economy. The
resources and technologies available to most of the least developed countries are limited.
Several of these countries are further disadvantaged by geography. There are many that are
plagued by conflicts and natural disasters, making economic progress an even greater
challenge.
In 1970, most of the poor people in the world lived in South and East Asia, while Africa
accounted for only 11% of the total. This picture has changed over the years as the
countries of Asia have achieved higher levels of development, outstripping growth and
development in Africa. Asian countries including the Newly Industrializing Countries of
Singapore, Hong Kong and Taiwan have achieved significant growth in their manufacturing
sectors which has created a large number of jobs in this sector. The growth in exports of
manufactured goods has led to an increase in GDP. So the face of global poverty has
changed. A poor person in 2000 was more likely to be found in Africa and Asia. Repeated
natural disasters, in particular drought, have decimated the food supply of many African
countries, especially in the Sahel region, and caused famine and major suffering in many
sub-Saharan countries such as Chad, Sudan and Ethiopia.
Civil wars and the upheaval caused by massive refugee movement from war-torn areas in
Africa have also disrupted economic activities and livelihoods. Many persons in affected

areas have lost their homes, families and their way of life. In many African countries,
HIV/AIDS has considerably reduced the productive workforce because of the age groups
affected by the disease. Many children have been orphaned, and are being raised by
grandparents. Poor nutrition has also contributed to the spread of diseases, many of which
have been eradicated in MDCs, such as measles, smallpox and malaria. It is estimated that
by 2015, Africa will account for more than 60% of the world’s poor.
Disparities in the level of poverty exist between MDCs and LDCs. They also exist within
MDCs and LDCS. In 2002, almost 36 million people in the United States Lived below the
official poverty line. The South had the highest concentration with most living in central
cities and suburbs. In the United Kingdom, 30% of the working-age population of inner
London live below the official poverty line. In the Caribbean, there is an urban rural disparity
with higher levels in rural areas except in Barbados. Urban poverty is, however, more visible.
Developing countries usually focus on primary economic activities such as farming. It is the
major economic activity in most LDCs. The income that is earned from primary economic
activities are not as high as those earned from secondary or tertiary activities.

Life expectancy- distribution
The variation of life expectancy is not so great among MDCs. North America has the highest
life expectancy (77). The rapid increase in life expectancy is Europe at the end of the 19th
century was caused by improvements in public health and nutrition which improved infant
and maternal mortality rates.
Table 10.1 shows an 11-year gap between the life expectancy for MDCs and LDCs. Whereas
differences are so not great among the MDCs, they are considerable among LDCS. The
situation in sub-Saharan Africa is striking. Two-thirds of the total numbers of persons living
with HIV/AIDS lives in this part of the world. In 2008, 1.4 million persons died of HIV/AIDS-
related complaints. This disease has erased many years of progress in improving life
expectancies on the continent. It has been estimated that the epidemic has reduced overall
life expectancies by about 15 years.
Table 10.1 also shows that the life expectancy for women is higher than for men. It appears
that with development the gap widens. There is a gap of 3-4 years in LDCs but about seven
years in MDCs. The reasons for the sex difference is not fully understood and several
explanations have been put forward – that women are biologically superior; that men are
involved in more hazardous occupations and that they take more risks.

Education
At the primary level, the net enrolment for girls in 2004 was generally below that of boys in
most parts of the world. However, the disparities increase at higher levels of education.
MDCs are close to gender parity in secondary education, and in Latin America and the
Caribbean girls are more likely to be enrolled at the secondary level than boys. Here, girls
are more likely to be enrolled at the secondary level than boys. Here, too, the gender gap is
quite serious in sub-Saharan Africa as well as west Asia. Adult literacy shows a similar
distribution. It is a developing world phenomenon and almost two-thirds of the world’s
illiterates live in LDCs.

Reasons for global disparities in education
 Poor nutrition contribute to low literacy levels
 High levels of poverty contribute to low levels of income. People not able to afford
education
 High fertility rates result in persons having a lot of children and cannot afford to
educate all of them

Status of women
In 1995 the Human Development Report introduced two measures to document the status
of women
The Gender-related Development Index (GDI) measures achievement in the same basic
areas such as the HDI (Literacy, income, life expectancy), but it notes inequalities between
men and women. The measure penalizes countries when they allow the achievement levels
of men and women to fall or when disparity increases. These lose points gained on the HDI.
The Gender Empowerment Measure (GEM) evaluates the extent to which men and women
participate in the economic and political life of the country and take part in decision making.

Rostow’s Model of Development
ROSTOWS MODEL
One of the first and most simple models to account for economic growth. Put forward by
Walt Rostow in 1960.
Rostow felt that economic development was inevitable or all countries. LDCs were simply at
an early stage along the single development path that was already followed by developed
economies. Internal factors such as poor infrastructure, illiteracy, traditions were
responsible for their underdevelopment. However these factors could be change by capital
transfer and technology. That single path towards development was marked by several
stages
Stage 1: Traditional society

A subsistence economy based mainly on farming with very limited technology or capital to
process raw materials or develop industries and services.
Stage 2 preconditions for take-off
A country often needs an injection of external help to move into this stage. Extractive
industries develop. Agriculture is more commercialised and becomes mechanised. There are
some technological improvements and growth of infrastructure. The development of a
transport system encourages trade. A single industry often textile begins to dominate.
Investment is about 5 % of GDP
Stage 3 Take off
Manufacturing industries grow rapidly. Airports, roads and railways are built. Political and
social adjustments are necessary to adapt to the new way of life. Growth is usually limited
to one or two parts of a country and to one or two industries. Numbers in agriculture
decline. Investment increases to 10-15% of the GDP or capital is borrowed from wealthier
nations.
Stage 4 drive to maturity
By now growth should be self-sustaining. Economic growth spreads to all parts of the
country and leads to an increase in number and types of industry. More complex transport
systems develop and manufacturing expands as technology improves. Some early traditional
industries may decline. There is growth of the service industry. Rapid urbanisation may
occur
Stage 5: The age of high mass consumption
Rapid expansion of tertiary industries and welfare facilities. Employment in service industry grows
but declines in manufacturing. Industry shifts to production of durable consumer goods.

Criticisms of Rostow’s model
Rostows model, put forward in 1960, suffers the same criticism as any other models
 The model is both outdated and oversimplified.
 The model assumes, incorrectly that all countries start off at the same level
 While capital as needed to advance a country from its traditional society, often the
injection has been dwarfed by debt repayments which delayed, and has even
prevented some countries ( especially in Africa from reaching the take off stage).
 The model underestimated the extent to which the development of some countries
e.g. through colonialism
 The model has not seen a universal sequence and is according to Blake and O’Hare
among others, too Eurocentric
 Rostow’s theory is also criticised because it does not set down the detailed nature of
the preconditions for growth. It is therefore difficult for LDCs like the Caribbean to
use it as a blueprint for development.
Finally, it is essentially a GROWTH model and does not address the issue of
development or disparities in the wider context.

DEPENDENCY THEORY
The neo-Marxist dependency theory rejects the view that the people of LDCs are
responsible for the failure of their societies to develop. Instead, Andre Gunder Frank, the
leading dependency theorist, suggests that lack of development is because Western nations
have deliberately under-developed them.
Global capitalism
Frank argues that there exists a global system of capitalism in which core nations such as the
USA and UK exploit what Frank calls the peripheral nations or LDCs. The periphery is kept in
a state of dependency and under-development because the developed world requires
cheap raw materials and labour. Frank argued that this relationship of exploitation and
dependency occurred historically through slavery and colonialism, and continues today
through Western dominance of the international trading system, the practices of
multinational companies and the LDC’s reliance on Western aid.
Historical exploitation – slavery and colonialism
Frank argued that the trade in slavery resulted in tremendous profits for both slave-traders
and plantation owners in the 18th century. This led to a super accumulation of capital which
was invested in Britain’s industrial revolution and consequently helped kick-start industrial
development in the UK.
According to Paul Harrison, in the 18th century Europe was able to use its advanced military
technology to conquer and colonise many parts of the Third World. First World countries
exploited the colonies for cheap food, raw materials and labour. For example, land
traditionally used for growing food was turned over to the production of cash crops for
export.
Contemporary exploitation
International trade
The way world trade is organised today is a legacy of colonialism. Most colonies have
achieved political independence but their economies still tend to be based on exporting
cash crops and raw materials to the West. Moreover, many LDCs find it difficult to achieve
full economic independence because many are overdependent on either one or two

primary products or Western demand for those products. Therefore, any over-production or
fall in Western demand can have a severe effect upon LDC economies. Western nations
further limit the export earnings of LDCs by setting the prices for many LDC products and
setting tariffs and quotas which tax or limit LDC products entering the First World, especially
manufactured products.
Neo-colonialism
Frank and others such as Therese Hayter argue that traditional forms of colonialism are
giving way to new forms: neo-colonialism. At the forefront of this type of exploitation are
the multinational companies (MNCs). In their search for profit, these companies allegedly
exploit LDCs for cheap labour, cheap raw materials and new markets.
Multinationals
The search for new markets encouraged Western companies to expand in size and market
their products globally. These multinational companies (MNCs) imported raw materials from
the LDCs and exported manufactured goods back to them. After World War II, increasing
numbers of companies started to produce manufactured goods in the LDCs, taking
advantage of cheap labour, relaxed health and safety laws and low taxes.
Simpson and Sinclair point out that MNCs now dominate the capitalist world economy and
many have greater economic and political power than LDCs. Moreover, the MNCs are not
accountable for their actions in law. Many have been accused of interfering in the internal
politics of LDCs to ensure that local élites supportive of their activities retain power. Others
have been accused of environmental destruction and pollution and playing a major role in
the eviction of native peoples from their land. Moreover, some have been accused of
marketing drugs and pesticides banned in the West. Illich argues that MNCs are guilty of
creating ‘false needs’ in their marketing of products in LDCs which may have detrimental
effects on health such as high-tar tobacco, soft drinks such as Coca-Cola, hamburgers and
baby-milk powder.
According to Marxists, then, MNCs do not invest in LDCs because they want to kick-start
their economies. Their motive is primarily profit.

Official aid
Another form of neo-colonialism according to dependency theory is official aid. Bilateral aid
refers to the flow of resources from one country to another – most usually in the form of
loans but also as weapons, medicines and human expertise. Multi-lateral aid involves
financial institutions such as the World Bank and the International Monetary Fund lending
money to LDCs.
Most loans to the Third World involve interest. However, economies grow too slowly and
long-term development projects such as irrigation schemes, dams, etc. can be slow to
generate the predicted income or may fail. In the meantime, the interest builds up and can
eventually outstrip the initial loan.
By 1980 LDCs owed the West $600 billion. By 1998, this had increased to $2.2 trillion. Most
of the countries in real trouble are extremely poor African states, e.g. in 1998 Sub-Saharan
Africa owed $222 billion (which makes up 71% of its national earnings) whilst Mozambique
and Ethiopia spent almost half their export earnings servicing their debts. Nearly a quarter
of the aid African countries receive this year will be immediately repaid to the West to repay
debts.
COLONIALISM
Colonialism is:
 The maintaining of colonies in one territory by people from another
 The practice of domination which involves the subjugation (conquest) of one people
to another
Potter et al (1999) describes three phases of colonialism beginning in the 16th century. The
first was mercantile colonialism and the motives were predominantly trade and commerce.
In the Caribbean, this was the stage of the development of plantations. In Africa and Asia,
the early contacts were essentially related to the exchange of commodities- Europeans
goods for slaves or for spices, porcelain and silk. The commodity exchange in Africa and
Asia, though extensive and lucrative, did not result in a settler population. But to protect the
trade, Europeans made alliances and got involved in conflicts that had severe repercussions.

In the Caribbean and America, settlers from France, Spain and Britain became involved in
that production of plantation products. Regulations were imposed that allowed the colonies
to trade only with Britain. Activities everywhere became linked to the growing world
economy.
A transition period occurred around the beginning of the 19th century as mercantilism began
to fade. The American colonies gained their independence. Trading companies in the East
went bankrupt and European countries were at war. However, the vast fortunate made
from trade in commodities and especially the triangular trade was fuelling the Industrial
Revolution and giving Europeans more power to launch a more intensive and extensive form
of colonialism.
Industrial Capitalism
Wealthy merchants in the trading ports of Britain – London, Liverpool, and Bristol- wanted
cheaper sources of raw materials and new markets for their goods. Africa would provide
both and the scramble for African territory began. Between 1884 and 1914 Europeans
arbitrarily carved up and distributed African territory among themselves and ignoring
existing geographical and tribal divisions. Raw materials were needed and agricultural
production in Africa and other colonies were restructured through the establishment of
plantations. The range of crops was narrowed sometimes to one or two needed by the
metropolitan country. Labour was forced into mines by taxes and where insufficient labour
existed workers were brought in from local manufacturers were seen to be a threat, they
were suppressed. Large plants processing sugar and tobacco sprang up in British towns such
as Liverpool, Glasgow and London.
Towns were the centres of administrative control. They were also centres of the retailing of
imported manufactures and the manufacture of small consumer goods. Much of the activity
in Africa and Asia was in the hands of non-European immigrant groups. Just one or two
centres selected for development and this gave rise to urban primacy that is still a feature
today. Within the cities there were the spacious European areas separated from the
crowded indigenous quarter.
The call for independence came after the Second World War. Some colonial powers
withdrew more gracefully than others.

The legacy of colonialism
Britain was fortunate in that it discovered large quantities of coal which was used n the
development of early industries and which set it on a path to prosperity. However, the
contribution of its colonies cannot be denied. The profits from West Indian sugar were huge
and while some of it might have been spent on ostentatious displays, much entered the
banking system, which released investment funds to industrialists. British towns prospered
through shipping, trade and manufacturing.
In the Caribbean:
 British trade regulations prevented contact with neighbouring countries settled by
different colonial powers. This has stifled local economic cooperation and has
prevented the region from capitalising on what economists refer to as
complementarities. It has prevented the emergence of regional trade patterns.
 Colonial policy discouraged the production of goods in the colonies which could
compete with metropolitan exports. This retarded development in the colonies while
promoting it at home.
 A dichotomy was created between export agriculture which was promoted by
colonial policies, while the poorer, local farmer tended to be neglected
 The focus was on a limited range of primary products and this has persisted
 The Caribbean and colonies in general became exporters of primary products and
importers of manufactured goods. Britain exported manufactured goods and
imported primary products.
 There was a spatial concentration of activities- urban primacy, plantations, mining
towns- that created regional inequalities.
Colonialism imposed a pattern of trade and development that reflected the needs and
desires of the colonial power. The pattern became ingrained and remained substantially
unchanged under later models of development.

ROLE OF HISTORY IN THE SPATIAL DEVELOPMENT PROCESS
RELATIONSHIP BETWEEN COLONIALISM AND CARIBBEAN DEVELOPMENT
The spatial development process in the Caribbean during the colonial period was strongly
influenced by the dominance of plantation agriculture, primarily sugar cultivation, and
somewhat later for bauxite and petroleum. There were three major steps taken by the 16th
century plantations that influenced spatial development process.
 The opening-up effect of plantations: like most countries in the third world where
plantations were established, the Caribbean region witnessed the clearing of large
areas of tropical forest for the production of surf for Export to Europe. The
preoccupation with this export crop meant that areas considered unsuitable for
sugar cultivation were allowed to remain idle in their natural state. In general, the
early plantations avoided the steep slopes that had poor soils and were susceptible
to erosion. Hence, sugar plantations were established predominantly along the flat,
low-lying coastal areas. In Guyana the hinterland was avoided because of mountains,
forests and swamps. In this way, sugar-cane came to dominate the best agricultural
land in the Caribbean. This beginning set the stage for spatial disparities in Caribbean
development as only areas that were directly linked to the production of primary
products for export attracted infrastructure investment
 Establishment of Towns: This was the second effect of the establishment of sugar
plantations. The exported-oriented nature of the crop meant that transhipment
points had to be built. In most of countries towns were constructed on the leeward
side of the territories for protection against strong winds. These became the
principal ports, the links between the colony and the metropolitan ports also
attracted related commercial activities that encouraged growth. These towns were
also administrative centres and household the colonial administrative class. The
amenities attracted the local elite as this class emerged. Municipal spending was
biased in favour of this urban elite and outside of the sugar-cane growing areas,
there was little or no investment in rural areas. In fact, resources flowed from rural
to urban area ad this is one of the reasons that the term parasitic has been applied
to the relationship between the colonial port cities and their rural hinterland. Thus,

the colonial period was marked by a disparity in development between urban and
rural areas.
 Growth of mining centres: the spatial polarization pattern of development was
further reinforced in the colonial period in some of the countries with the
development of mining activities. In Guyana and Jamaica where bauxite was found
and Trinidad and Tobago where petroleum resources were important, company
towns were established to facilitate the mining and processing of the minerals. Thus
towns such as Mandeville in Jamaica, Linden in Guyana and San Fernando, to the
south of the large refining of complex of Point-a-Pierre in Trinidad and Tobago,
emerged as new growth point. Many of the mining and refining towns showed the
internal structure of the colonial towns which developed in the East with the ‘native’
quarter for local employees and a European quarter for administrative and technical
staff drawn from overseas. The ports and mining towns were oases of development
in the colonial period.
These developments established the pre-conditions for the uneven pattern of development
across the Caribbean in the colonial period. AS population grew, migration occurred in
response to employment opportunities and access to social facilities provided by the towns,
the plantations and mines. These formed the focus of social, cultural and economic life of
the colonies. Even after emancipation when the freed slaves exited the plantations and
some were closed, the infrastructure provided the basis for new settlements as the
Caribbean peasantry emerged. The economic base of the countries was quite narrow with
little option outside of the mining and agriculture sector. Peasant farming based, for the
most part, on poor, shallow soils, a legacy of plantation society, and a growing urban sector
relying heavily on trade and commerce and public service employment dominated the rural
sector where the bulk of the population lived.
Post-Colonial development strategies in the Caribbean
Across the Caribbean the post-colonial administrators were faced with the problem of
spatial dualism that is, a relatively a well-developed urban sector and a backward rural
sector dominated by peasant agriculture. There were high unemployment levels and poor

social facilities as rural areas without access to pure water supply, electricity and proper
transportation networks. This dichotomy between urban and rural areas further led to
growth of the population of towns and as a consequence, new problems emerged. In
response, a number of strategies was devised across the Caribbean. Some of those helped
to reduce, while others intensified disparities.
 Industrialization Strategy: As the countries of the Caribbean attained independence
they adopted what is known as import substitution industrialisation. Governments
established the infrastructure, the industrial parks and gave incentives to foreign and
local companies to produce goods that were formerly imported. This encouraged a
number of small plants and consumer goods industries- foodstuffs, textiles, clothing,
plastics, light electrical. Later, investment was encouraged to produce goods for the
export market. In most countries this type of industrialization led to the creation of
small inefficient companies producing at high costs and a small privileged workforce.
The locational consequences was that most industrial development took place in the
main city. The city had obvious advantages for industrial development. It contained
most of the social and economic infrastructure, a concentration of people and of the
educated and skilled and the government bureaucracy. It was to the advantage of
those industries that needed a market location to establish themselves here. The
goods produced were expensive and only higher income groups could afford them.
The poor rural fold could not. A location in the cities was also favoured by the
dependence of these industries on imported goods- machines, spare parts, and
energy.
In addition, governments in the Caribbean exert great economic influence. They
impose tariffs, issue licences, influence wages. As a result, the managers of
companies are in constant dialogue with government officials and often, personal
contacts with Ministers are necessary. Therefore, easy access to government
becomes an important factor in the location of industries.
 Education: In the colonial period primary schools in rural areas in the British islands
were very poorly equipped and, for most part badly housed. Enrolment throughout
the territories was fairly high but school attendance was irregular. Only a small urban

elite has access to secondary education and the education received was based on
the English grammar school. Education, therefore, served to sharpen distinctions not
only between the classes but also between rural and urban areas.
In the post-independence period education was seen as the vehicle for social and economic
development. The network of schools was expanded; backed by research at the University
of the West Indies (UWI) established in the colonial period, there were curriculum changes
to reduce the alienation from Caribbean societies; institutions offering technical education
were introduced and a Caribbean based examination system began to cater for a wider
range of abilities. These developments did reduce the stark disparities which had developed
in colonial times. However, in many islands, rural schools are still poorly staffed and
equipped relative to urban institutions. Rural children must travel great distances to gain
access to the range and quality of education open to the children of urban areas. Poverty in
rural areas is a great barrier to access.
The University of the West Indies has campuses in three islands- Jamaica, Trinidad and
Tobago and Barbados. Non-camp territories are at a disadvantage and in order to reduce
this, some community colleges are providing first year university courses. In addition, a
distant education programme transmits lectures complemented by other teaching material
including videotapes to both campus and non-campus territories. Thus, nationally and
regionally, the UWI is reducing the disparities in access to tertiary education. However,
affordability is a problem and it is noticeable that university enrolment in Barbados and
Trinidad and Tobago is increasing at a faster rate than that in Jamaica.
 Relations with Trans-nationals: Mineral deposits in the Caribbean were controlled by
a number of trans-national organizations. As the bauxite industry in Guyana and
Jamaica entered its mature stage when output is stabilized and foreign investment
ceases, it was felt that foreign control explained why this valuable mineral had not
been able to transform the economies of these countries. When negotiations with
the bauxite companies for increased revenues failed. Guyana nationalized the local
subsidiary of one of the largest bauxite companies in the country in the hope that it
would generate more income for investment in the lagging sectors of the economy.
Since the bauxite companies were themselves the main markets for bauxite and
alumina, Guyana lost its markets as a result of this move.

Jamaica, tied up in long-term contracts with the bauxite companies, imposed a levy on the
companies operating in the island and Guyana did the same with the remaining company,
Reynolds. Reynolds closed its operations in Guyana and the bauxite companies in Jamaica
closed either temporarily or permanently. The economies of the two countries stagnated or
declined. Decline also occurred in the nationalized sugar industries in Jamaica. Barbados and
Antigua had success in developing its tourism and other service industries. Trinidad and
Tobago weathered setbacks in the 1980s and developed its natural gas and petroleum
based industries. Disparities in development between Jamaica and Guyana and the rest of
the Commonwealth Caribbean grew and widened.
 Trade policies: Through CARICOM the Caribbean countries have developed a trade
strategy to encourage and promote trade and economic development among its
member states. By coordinating their trading policies, the countries are expected to
increase their output in agricultural and industrial commodities and sell them to
each other as well as to favourable external markets. In this way the countries will
support each other’s economies by reducing imports from outside of the region and
promoting economic growth and development. Manufacturers in Jamaica complain
that Trinidad and Tobago has advantages which make them better to able to
compete in intra-regional trade. The cost of energy, for example, is lower; security
increases the cost of doing business in and Tobago have allowed entrepreneurs to
upgrade their plant and this makes them more efficient producers. Trinidad and
Tobago has a surplus CARICOM trade.
 Shelter Strategies: Governments in the Commonwealth Caribbean have adopted a
number of strategies to provide shelter at affordable prices to low income families.
They have made land available for self-help housing schemes. They have made land
available for self-help housing schemes. They have initiated sites and services
projects in which they provided the land and laid down the infrastructure and left
families to get on with the job of building their own homes. Another thrust is the
provision of core houses usually a room, bathroom and kitchen with room for later
expansion. There have also been squatter programmes in which residents of
squatter communities have been given security of tenure and infrastructure laid

down. This has brought about tremendous improvements to homes and
communities.
Despite these efforts large numbers of families throughout the Caribbean are inadequately
housed. The need is particularly acute in urban areas because of population growth from
natural increase as well as rural to urban migration. The very poor do not have the minimum
income required for participation in many of these projects. There are also instances in
which those who can afford the homes earn incomes which disqualify them from benefiting
but which are too low to purchase homes on the home market. This situation produces
disparities within urban areas. There is a wide gulf between the mansions of the rich and the
shanties of the poor in many Caribbean countries.
 Infrastructure: Infrastructure, both social and economic can contribute to
development. Regions are often under-developed because they lack the
infrastructure to attract investment capital. Access to pure water supply, medical
care, transport facilities and recreation are important factors in determining whether
people continue to live and work within an area or not . In take-off relative to other
areas because of poor infrastructure. Across the Caribbean region Barbados and
Trinidad and Tobago have been successful in developing new industries because of
improved infrastructure. The larger countries are better served by airlines and
shipping companies than the smaller and this is added incentive for enterprises to
locate within the large countries.
This is also a problem within countries and here too, there is rural urban disparity. Rural
areas are often served by road networks and roads that do serve these areas are poorly
maintained.

Small Island Developing States (SIDS)
There is no internationally accepted definition of SIDS. However, they were given political
identity in 1991 when the Alliance of Small Island States were established.
Currently, the United Nations lists 57 small island developing states. These are broken down
into three geographic regions: the Caribbean the Pacific and Africa, Indian
Ocean, Mediterranean and South China Sea (AIMS).
Example of SIDS
Caribbean: Anguilla, Antigua and Barbuda, Haiti, Jamaica, Grenada, Belize, Bahamas, Belize
Pacific: Figi, Kiribati, Solomon Islands, Papa New Guinea, Nauru, Marshall Islands
Small island development States Map
Many small island developing states (SIDS) face special disadvantages associated with small
size, insularity, remoteness and proneness to natural disasters. These factors render the
economies of these states very vulnerable to forces outside their control - a condition which
sometimes threatens their economic viability
Below are the characteristics of SIDS. There are disadvantages associated with some of the
characteristics of SIDS. Some of these disadvantages may limit their development.. These

characteristics are classified under five headings: small size, remoteness and insularity,
disaster proneness, environmental fragility, and other factors.
(a) Small size The size of a country can be measured in terms of its population, its land area
or its gross national product
Small size is economically disadvantageous for a number of reasons, including the following:
 Limited natural resource endowments and high import content
Small size often limits the availability of physical/natural resource which can be used in
manufacturing, or in a primary activity such as mining (poor natural resource endowment).
This result in a relatively high import content which makes the economy highly dependent
on foreign exchange earnings.
 Limitations on import-substitution possibilities
The small size of a domestic market severely limits import substitution possibilities. In many
SIDS where import-substitution policies were adopted, the end result tended to be a
protected economic environment, with inferior quality products and higher prices.
 Small domestic market and dependence on export markets
A small domestic market and the need for a relatively large amount of foreign exchange to
pay for the large import bill, gives rise to a relatively high dependence on exports.
 Dependence on a narrow range of products
In many cases, small size restricts the country’s ability to diversify its exports, and this
renders the country dependent on a very narrow range of goods and services. This carries
with it the disadvantage associated with having too many eggs in one basket notably
tourism, and thus intensifies the problems associated with dependence on international
trade, for example most of the Caribbean Islands.
 Small land area restricts the amount of space available for economic activities
Small land area restricts the amount of space available for economic activities and therefore
there is often high heavy competition for different land uses. For example, Limited space for

agriculture means that the use of agricultural land for housing reduces the amount of food
which can be produced.
 Limited ability to influence domestic prices.SIDS have negligible control on the prices
of the products they export and import. All developing countries are to an extent
price takers, but SIDS tend to be price takers to a much higher degree due to the
relative very small volume of trade in relation to the world markets in products they
import and export.
b) Government
Problems of public administration
 SmalI size creates problems associated with public administration, the most
important of which is probably a small manpower resource base from which to draw
experienced and efficient administrators. Very often specialists can only be trained
overseas in larger countries, without a guarantee that their services will be needed
on their return. For this reason, many specialists originating from SIDS decide to
emigrate to larger countries where their services are better utilized and where
remuneration for their services is better. SIDS tend to have a high emigration rate.
One outcome of this is that SIDS have to rely on larger states, generally the ex-
colonizing country, for certain specialized aspects of public administration. . For
example, overseas diplomatic missions of small islands states are often
undermanned, and many such states are represented by roving ambassadors.
 Another public administration problem in SIDS is that people know each other well,
and are often related to each other. This tends to work against impartiality and
efficiency in the civil service and against a merit-based recruitment and promotions
policy.
c) Insularity and remoteness
Many small islands are located in areas which are remote or isolated. For example
Seychelles are located 1000 km away from the nearest land and are not on major routes
between economic giants. Insularity and remoteness give rise to similar problems

associated with transport and communication, and these two factors are considered
together here.
 The father away the islands are from other places the more difficult and hence more
expensive it would be to engage in trade, or to access markets.
 High per-unit transport
It is to be expected that transport costs associated with the international trade of SIDS tend
to be relatively higher per unit of export than in other countries. The main reason for this is
that islands are separated by sea and are therefore constrained to use air and sea transport
only for their imports and exports. Moreover, the small size of SIDS often excludes them
from the major sea and air transport routes, which gives rise to delays and constrains the
ability of these states to exploit the advantages of modem and technologically advanced
means of transport.
 Uncertainties of supply
Apart from high per-unit cost of transport, insularity and remoteness from the main
commercial centers may also give rise to additional problems such as time delays and
unreliability in transport services. These create uncertainties in the provision of industrial
supplies. These disadvantages are greater for island chains and dispersed over a wide area.
Cook islands, located in the Pacific Ocean has a total area of 240km2 but spread over 2.2
million km2. Other island chains include Bahamas, Solomon and Marshall Islands.
 Large stocks
An additional problem is that when transport is not frequent and/or regular, enterprises on
islands find it difficult to meet sudden changes in demand, unless they keep large stocks.
This implies additional costs of production, associated with tied-up capital, rent for
warehousing and wages of storekeepers.
d) Proneness to natural disasters

Many SIDS are located in areas which are prone to natural disasters- hurricane,
earthquakes, volcanic activity. Some are low lying or have a concentration of activity in
narrow coastal strips.
 Some of the Caribbean Islands, are vulnerable to volcanic and seismic activity as
they are a volcanic island chain. They are also vulnerable to hurricanes as they lie in
a hurricane belt. In the case of Caribbean SIDS, these are located in the hurricane
belt and the almost annual recurrence of this phenomenon has profound
implications for all aspects of the sustainable development of these countries. The
small size of the population and economy of most Caribbean states means that
whenever a disaster strikes it affects a large proportion of the economy an people,
and development of the country is set back by several years. Grenada was
devastated by hurricane Ivan in 2004. They were dependent on nutmeg as well as
Banana for export. Ninety percent of the nutmeg trees were destroyed. Their
economy was in a critical condition after the hurricane.
 Many pacific islands lie on the edge of the Pacific tectonic plate, and are subjected
to frequent earthquakes and volcanic activity. Small islands find it more difficult to
recover from a natural disaster because resources are limited, there is nowhere to
go to get away from the hazard, and the small size of the country ensures that most
people would be affected in some way by bad weather or damage.
Some of the effects of natural disasters on small economies include the devastation of
the agricultural sector, the wiping out of entire village settlements, the disruption of a
high proportion of communication services and injury or death of a relatively high
percentage of inhabitants. Disasters bring about loss of income and employment but in
addition such disasters mean that scarce resources have to be diverted to the repair of
infrastructure, such as roads, power and water supplies. This money could have been
used for social development in areas such as health and education. The Caribbean
suffers tremendous financial losses when these disasters occur
(d) Environmental factors

As is well known, national statistics do not normally take into consideration environmental
degradation and resource depletion. Environmental problems are likely to particularly
intense in SIDS.
Pressures arising from economic development
The pressure on the environment arising from the process of economic development in SIDS
tends to be much higher than in other countries. In many islands, increased demand for
residential housing and industrial production has given rise to a fast depletion of agricultural
land. Small islands also experience intense use of the coastal zone for tourism and marine
related activities. They also tend to generate a relatively large amount of waste. These
problems are, of course, also faced by countries undergoing a process of economic
development, but their effect on SIDS is likely to be much stronger due to the small size of
these countries.
The process of economic development also brings with it an increased demand for
resources, some of which are non-renewable. Some SIDS have experienced depletion or
near depletion of such natural resources. This happened, for example, in the case of Fiji
(gold), Vanuatu (manganese), Haiti (bauxite), Nauru (phosphate) and Trinidad and Tobago
(oil).
They tend to have unique and very fragile ecosystems. The uniqueness, which is an outcome
of the insularity of SIDS, renders such islands important contributors to global diversity. The
fragility is the result of the low level of resistance of SIDS to outside influences, which
endangers bird and other endemic species of flora and fauna.
A major environmental problem associated with islands is global warming and rising sea
level. Many SIDS, especially the low-lying coral atoll ones, are faced with the prospect of
proportionately large land losses as a result of these changes. Another problem in this
regard relates to erosion.

SIDS have a relatively large coastline in relation to the land-mass. Thus a relatively large
proportion of land in such islands is exposed to sea-waves and winds, giving rise to a
relatively high degree of land and soil erosion.
(e) Other characteristics of SIDS Other important characteristics of SIDS include dependence
on foreign sources of finance and demographic changes.
(i) Dependence on foreign sources of finance Some islands have a very high degree of
dependence on foreign sources of finance including remittances from emigrants and
development assistance from donor countries. This reality is especially present in the SIDS in
the Pacific region. These inflows from abroad have permitted many SIDS to attain high
standards of living and to offset trade deficits.
(ii) Demographic factors
Demographic changes in small islands are sometimes very pronounced due to emigration
from the country, or in the case of multi-island states, emigration from one island to
another caused by the attraction of urban centers in terms of jobs and education. These
movements sometimes give rise to brain and skill drains and to social upheavals. This
happens also in islands which are economically successful
Debt burden
Small economies often have difficulties in meeting the social and economic needs especially
if their resources are limited. They need to resort to borrowing, which means that much of
their income must now be spent to service their debts, especially paying interest. This
restricts the amount is available to spend on social services, and many countries may remain
in debt for years.

Other characteristics of SIDS (from study guide)
Government policy
SIDS tend to be heavily dependent on international trade and several of them are facing
major difficulties in their negotiations with the WTO, both in terms of financial costs and
liberalisation commitments. They are being urged to undertake the same level of obligations
and to make extensive liberalisation commitments, as large countries.
SIDS tend to be heavily dependent on trade preferences, so that complying with the WTO
rules is likely to create a higher degree of difficulty for these states when compared to larger
ones
 The adoption of the WTO rules regarding subsidies is likely to hit small states harder
than larger ones, due to the fact that any SIDS rely on subsidies to counterbalance
the relatively high per unit costs of manufacturing
 Another trade issues relates to dispute settlement arrangement. SIDS tend to find it
extremely expensive to bring cases and mount a WTO defence in Geneva.
Technology
SIDS are characterised by rich and diverse cultures of indigenous and traditional knowledge
and technology; however
- Many SIDS lack a critical mass of qualified scientists and associated institutions
- Current reward systems in island countries do not encourage long-term careers in
science
- There is limited availability of funds for training and research in specialised field of
science
- Technology development in SIDS is limited by small manpower and inadequate
infrastructure that is dependent on very few industries
Britain may be considered a small island nation itself, especially when compared to
other MDCS such as Canada and Australia. However, it does not share many of the
limitations of the SIDS. Despite its vulnerability to mid-latitude storms, the country has
enough economic resources to recover from catastrophes. It has invested heavily in

education, research and development, and centres of excellence (especially at
universities) are found all throughout the county.
THE CONSEQUENCES OF GLOBAL DISPARITIES
Economic
 Trade imbalances- MDCs export more finished products to LDS than they may
import. LDCS tend to export raw material; the rich get richer and the poor get poorer
 Loans/aid
It is a fact that developed countries have more resources than developing countries.
Some of this wealth may even come from the days of colonialism. One of the
characteristics of LDCs is that they lack capital or have limited financial resources.
Developing countries often have to resort to burrowing funds from developed
countries. Institutions such as World Bank and IMF provide loans to developing
countries with stringent conditions. Developing countries may often have to adopt
policies, some that may even be totally against national policies. Sometimes there
are conditionalities or requirements for getting these loans. Some of these
conditions such as downsizing public sector work force and liberalising trade may do
more harm than good. These can cause unemployment and poverty levels may
increase.
 Debt- As aforementioned developed countries or multilateral organizations may
provide loans to developing countries. Some of these loans may have high interest
rates. Over time LDCS find themselves in huge debt. After the oil crisis in the 1970s
that led countries to resort to burrowing funds from developed nations, countries
such as Guyana owed 2.1 billion in external debt ( in the 1980s). Being highly
indebted will limit development as some of the export earnings, revenues will be
used to service outstanding loans/debts. There will be limited resources available for
other sectors of the economy.
Social

 There are disparities in development at a global and regional levels. On global level
there are developed countries and developing countries. Once an area is more
developed the movement of people to these area is inevitable. People are always
looking for better opportunities. There is this large scale migration of people from
developing countries to developed areas such as Canada, USA and Europe. Highly
trained and educated persons in LDCs often cannot find jobs, or their salaries at
home are far too low to satisfy their needs or wants. They move to MDCs, leaving a
gap in the LDCs. This situation is known as Brain Drain. Jamaica is now losing some of
its most qualified professionals such as doctors, nurses and teachers to some of
these developed countries.
 Over-concentration of population in some areas at the expense of others
 Improvement in social services- living conditions of certain groups such as women
and children are focused and improved, especially in LDCS
Environmental
 Depletion of resources
There is uneven development at almost all scales, international, local and regional.
As LDC’s try to catch up MDCs one of the inevitable consequence is the degradation
of the natural environment. In the process of economic development developing
countries may over use their natural resources. Continuous exploitation to facilitate
economic development may result in depletion of these natural resources. Some
developing countries especially SIDS have limited natural resources and therefore
economic development may involve this continuous exploitation of one or few
resources.
 Degradation- the natural environment can be degraded by population pressure and
the quest for economic development. Important ecosystems are usually damaged to
foster economic development. Removal of mangroves to facilitate tourism or
development, filling of swamps to facilitate industrial development. Forests have
been destroyed in Brazil to facilitate cattle ranching.
 Pollution- economic activity as resulted in major pollution in both MDCS and LDCs.
As LDCs play catch up with the rest of the world, pollution may be regarded as
natural by-product of economic activity, especially if they cannot afford sustainable

technologies. LDCS are very dependent on Multinational corporations to invest in
their countries to use up resources because they lack the financial resources to do
so. MNCs are allowed to pollute the environment because there are no strict policies
about waste disposal and environmental protection.
 Sustainable development- as a consequence of environmental degradation the need
for sustainable development has become very important in both MDCS and LDCS;
appropriate technology plays an important role in ensuring that sustainability is
achieved. Examples are using wind energy to pump water
Political
 Military/popular coups- There may be political instabilities within a country, as
persons become dissatisfied with government who are unable to satisfy their needs
and promote development. This may lead to coups where the population may try to
overthrow the government. For example Venezuela
 Civil wars- Thee may be social unrest in LDCS due to high levels of poverty in some
countries. People may fight each other for resources. different groups in societies
may fight over the rights to valuable natural resources, for example oil resources in
Nigeria
 Adoption/rejection- Countries may abandon ideologies to become more eligible for
financial aid or assistance’ aid may be limited to friendly countries or driven by
geographical advantage/reward for political support rather than humanitarian
reasons
 Democratisation- most MDCs are democracies, and there is a strong drive to convert
the rest of the world to this system of government, especially through the process of
globalisation.

Regional and local Disparities in Development
Myrdal’s Cumulative Causation Model/multiplier effect
Gunnar Myrdal was a Swedish economist whose views on development were put forward-
1950’s
His views on development provide an explanation of why inequalities (disparities) in
development are likely to develop between regions and countries. He believed that over
time economic forces would increase regional inequalities, rather than reduce them.
He suggested that at the beginning of the development process some form of initial
advantage (comparative advantage) such as location, availability of natural resources or
labour would provide this stimulus for the development of industry at a particular location
within a country.

The development of a new industry in an area would create more jobs and so increase the
spending power of the local population who would then demand more services. The
increased demand for services would result in more schools, medical centers, commercial
centers etc being built. There would also be a greater demand for housing as persons
migrate to the area to obtain jobs created in the service sector as well as the construction
industry. Other industries would also be attracted to the area as they establish backward
and forward linkages
And so over time the area would continue to grow and expand due to this multiplier effect/
cumulative causation (the term is used to describe the process whereby the expansion of
one type of economic activity leads to/results in the expansion of many other types of
economic activities within the same area… due to a domino effect). Such an area would
become what he termed, a growth pole and would continue to attract migrants, skilled
workers investment, entrepreneurs, capital and innovation
At the same time, areas outside of the growth pole (peripheral areas) would remain with
very little development taking place there.
Reason: Myrdal felt that peripheral areas would not benefit from the cumulative causation
multiplier effect because of what he described as backwash effects. Backwash effects are
the adverse effects on areas outside of the core area. There would be movement of skilled
labour, capital and investment from the peripheral areas to the prosperous growth pole.
The prosperous regions would therefore continue to grow at the expense of the periphery
which would become drained of its wealth and labour. All of this would ultimately cause a
great disparity in development between the prosperous core and the periphery.
With the passing of time however, the regional disparities would be reduced as spread
effects occur. Spread effects refer to favourable effects resulting from the expansion of the
core. For example, increased economic activity at the core areas may stimulate a demand
for raw material from the periphery (surrounding areas) causing some of the wealth of the
core area to filter to the periphery.

Myrdal felt that to prevent regional disparities there would need to be some form of
government/state intervention. These include infrastructural development in lagging
regions, or the provision of ta holidays or industrial estates. These would help to stimulate
growth, thus reducing the disparities between these growing and the lagging regions
In summary main stages are identified in Myrdal’s model:
1. Traditional pre-industrial stage with few regional disparities
2. Increased disparities caused by multiplier and backwash effects
3. Reduction in regional disparities due to spread effects

sarawak
The Core Periphery relationship is the negative side of the Malaysian model of economic
development, industrialization and prosperity in the period 1970 to date.
After Malaysia became independent major economic changes took place. After
independence the focus was placed on developing manufacturing industries. There was a
deliberate government policy to promote rapid industrialization through growth of the
secondary manufacturing sector from simple, TNC controlled, raw material processing (e.g.
rubber) for export, to TNC driven electronics consumer goods manufacturing for export. This
was guided and controlled by Malaysian government agencies and driven by negotiated
joint ventures e.g. With Japanese TNCs. There was a change from simple manufacturing to
high tech manufacturing. Transnational corporations especially from Japan played a huge
role in this movement.
The West including Kuala Lampur was the largest area of this new economic change. The
area had both natural/comparative advantage and acquired advantage. The natural
advantage is its location (locate close to a harbour). This can facilitate easy importation and

exportation. The acquired advantage was the excellent infrastructure including roads,
buildings and railways. It also had a well educated population. With both a mixture of
natural and acquired advantage the area started to develop more. Residents from rural
Malaysia or the east started to move into Kuala Lampur. So there was large scale in
migration into the core area a good example of a back wash effect. This only help the core
area and perpetuate inequality rather than reducing it.
Some of the characteristics of the rural areas (East Malaysia are: poor relief, poor
infrastructure, lack of education and lack of investment.
The unequal relationship between West and East Malaysia created disparities in health,
education and income. The GDP per capita as well as other social indicators tend to
decrease going towards the east of Malaysia (rural areas)
Disparities in Education
There is a higher percentage of persons with Tertiary education and secondary education in
the West than in the east. It’s a similar effect as in Jamaica where the major Universities are
located in the core in West Malaysia. That would instigate inward migration from the East to
the West. The higher paying jobs are located also in the core so even after finishing
universities would students would remain in the core (West Malaysia). As a result there is a
spatial disparity in education between West Malaysia and East Malaysia.
Disparities in Health
In the West there is a higher doctor to patient ratio.
Disparities in income
Malaysia has the highest income disparities between rich and poor in S.E Asia. Below is the
GDP per capita for Kuala Lumpur in West Malaysia and Sabah in East Malaysia.
Kualu Lumpur 94,722 RM

Sabah 19, 734 RM
RM is Malaysia ringgit (Malaysia dollar)
Characteristics of Core
• Higher levels of education (secondary )
• Salaried wages with benefits
• Employed by TNC
• Larger component of mobile educated people aged 20-40
• Larger component of young single people including young female for assembly industry.
Characteristics of Periphery
• Falling numbers of educated, skilled young people. Falling numbers of agricultural workers
due to higher wages in “Core” service jobs and falling demand for local produce as urban
consumers tastes change. e.g. domestic rice production.
• Possible collapse of indigenous village culture.

John Friedmann’s Core Periphery-Model
Friedmann’s version of the core-periphery model could be applied at several geographic
levels- international, regional and local. He outlined the process in a four-stage model
 Stage 1: Pre-industrial economy
This represents a pre-colonial stage, with independent local centres which are isolated
and self-sufficient. There is no hierarchy, nor surplus product; each centre stands alone
and there is a stable pattern of settlement and development. In this stage, most of the
country is engaged in primary activities.
 Stage 2: Transitional economy
A single strong centre is established due to some external influence that is colonialism.
Change becomes more dynamic. Growth occurs rapidly one main region, resulting in

urban primacy. The growing manufacturing sector encourages investment in a few
centres, creating the core region along with the primate city. This centre uses the
resources of the periphery, but this situation is unstable according to Friedmann.
 Stage 3 Industrial economy
A single national centre develops with strong peripheral sub-centres. There is a
breakdown with intervening peripheries Development moves to the periphery but is
spatially concentrated.
 Stage 4: Post-industrial economy
There is a functionally interdependent system of cities, with the elimination of the
periphery. No one country has actually reached this stage, although Friedmann has
argued that the United States has in fact reached stage four. He does however,
acknowledge that poverty in the peripheral region Of the Appalachian hills.
The first two stages if the model describe the situation of most LDCs. Friedmann argues that
the core-periphery relationship is a colonial one, and the uneven growth and urban
concentration arise out of the colonial pattern of settlement. On the face of it, he seem to
be arguing that disparities in income and welfare will disappear in time. Yet, he observed
that actual cases of this type of convergence are absent. Like Myrdal, he sees state
intervention as being necessary to move development from stage 2 to stage 3.

Spearman’s rank correlation coefficient (Rs)
This is designed to measure whether or not there is a significant stasticial correlation or
relationship between two sets of data. The data available must be ranked on an ordinal
scale, and the ranks are correlated, not the actual values
There are some limitations associated with the use of spearman
1. It requires a sample size of at least seven
2. It rests for linear relationships
3. It is easy to make false correlations; a significant relationship does not necessarily
indicate a casual one.
Using spearman
 State the null hypothesis, that is, there is no relationship between poverty
incidence and life expectancy. The alternative hypothesis is that there is a
relationship between poverty incidence and life expectancy
 Rank both sets of data from high to low; BOTH VARIABES SHOULD BE RANKED
THE SAME ( IF ONE VARIABLE IS RANKED FROM HIGHEST TO LOWEST THE NEXT
VARIABLE MUST ME RANKED FROM HIGHEST TO LOWEST AND VICE VERSA).
Where ranks are tied, find the average rank. Therefore, if two values are both
ranked second, the rank of both would be (2+3)/2= 2.5; if there are three values
tired, the rank would be (2+3+4)=3
 Work out the correlation using the formula:
Where d is the difference between the ranks, and n is the number of variables
The closer R is to +1 or -1, the stronger the likely correlation. A perfect positive
correlation is +1 and a perfect negative correlation is -1.

Computed the computed Rs with the critical values for a given level of significance in the
statistical tables. ( Critical values are the levels above which result is statistically
significant- usually 95 or 99%)

Country Population
Growth %
Rank Per Capita
GNP (US$)
Rank d D2
Costa Rica 1.89 6 4,300 3 3 9
Brazi 1.20 3 2,720 6 -3 9
Dominican
Republic
2.10 9 2,130 8 1 1
El Salvador 2.00 8 2,340 7 1 1
Jamaica 1.50 4 2,980 5 -1 1
United
Kingdom
0.24 1 28,320 1 0 0
Trinidad
and Tobago
0.70 2 7,790 2 0
0
Venezuela 1.71 5 3,490 4 1 1
Haiti 1.90 7 400 10 -3 9
Honduras 2.50 10 790 9 1 1
32
N= 10
N3
= 10 x 10 x 10 = 1000
Rs = 1- 6 x 32
1000- 10
Rs = 1 – 192/990
Rs = 1- 0.193
Rs= 0.807
Rs= 0.84
There is a strong relationship between population growth and per capita GNP

Module 3: Measures to overcome disparities
AID (also known as international aid, overseas aid, or foreign aid, especially in the United
States) is a voluntary transfer of resources such as goods, services, medicines, trained
personnel, food and weapons from one country to another, given at least partly with the
objective of benefiting the recipient country. The main objective of foreign aid is to promote
economic growth in poor countries and thereby fit countries and thereby lift people out of
poverty. The resource may be in the form of
 Money ( as grants or soft loans)
 Goods, food, machinery and technology
 Technical expertise
Aid however, may be politically motivated: that is, developing countries may receive aid
because they are politically or strategically important, not because they are the ones most
in need or most of capable of making effective use of the aid. It may be given to strengthen
a military ally. Aid may also be given to alleviate the effects of natural disasters.
The donor country is usually an MDCS and the receiving country is usually an LDC. Africa is
the chief beneficiary of international aid. Countries that provide aid to LDCS include Canada,
USA, the Netherlands, Sweden, The UK
Grants usually take the form of financial assistance, but they are not expected to be repaid.
Grants are provided to developing countries, usually targeting specific development area
especially those which have great potential for change within the receiving country. These
include education and health. Grants can be given as part of project aid, where aid is given
for a particular project or scheme, such as a small-scale irrigation project.
Soft Loans are loans made under generous terms, that is, the repayment period is very
generous, or the interest rates are below the prevailing market rate. These loans tend to be
given to developing countries by international agencies such as World Bank.
Types of Aid
There are three main forms of aid: bilateral aid, multilateral and non-governmental
organizations or charitable aid.

Bilateral aid
Bilateral aid is one of the most common types of aid given. This aid tends to flow directly
from one country to another. Bilateral aid may be given for development projects or as
relief funds after a natural or other disaster. In 1970, MDC pledged to give at least 0.7% of
their national income in aid to developing countries, but by 2002 only five countries
(Norway, Denmark, Sweden, The Netherlands and Luxemborg) had reached their target. The
wealthier countries are also among the least generous- in 2003, the US gave about 0.14% of
their national income in aid; Japan gave 0.2%, Germany gave 0.28%. Although official
development assistance has grown in absolute terms it has decline sharply as a percentage
of donor countries GDP in recent years.
Usually there are strong economic and political ties between the donor and recipient.
Food aid is one of the more common types of bilateral aid, with many countries giving
money and other resources to areas which are experiencing widespread famine because of
drought or civil war. The Sahel region of North Africa is one such place which has constantly
been on the receiving end of this type of aid in recent years.
One disadvantage of this type of aid is that sometimes a donor may require a recipient to
spend some or all of its foreign aid on good and services produces in the donor’s country, a
practice known as tying aid. As a result, the donor may gain substantial benefits from the aid
given.
Multilateral aid
These are the international financial institutions such as the World Bank group, the United
Nations, The International Monetary fund receive their money from individual countries and
then lend it to developing countries. Various countries provide funds to support those
institutions which then lend money to finance projects in other countries. The IMF and
World Bank are economic institutions which aim to foster economic growth and high levels
of employment, and give temporary loans and financial assistance to relieve debt. Aid is also
provided by various UN agencies including:
 UNICEF (United Nations Children’s Fund) which aims to build a protective
environment for children and provide them with health and education

 UNDP and UNEP ( United Nations Development Programme/ Environment
Programme) which focus on the elimination of poverty and animal protection
 FAO ( Food and Agriculture Organization) which leads international efforts to
eliminate hunger
 UNESCO ( United Nation Educational Scientific and Cultural Organisation) which
aims to encourage international peace and universal respect by promoting
collaboration among countries
 WHO (world health organization) woks to combat disease and promote health.
Conditionalities
When countries accept loans from other countries, or international agencies there are often
set of conditions which must be met by the borrowing country. These conditionalities may
also dictate what the funds are to be used for, and where and when they are to be given
out. According to the IMF, when a country borrows money, its government agrees to adjust
its economic policies to overcome the problems that led to seek financial aid in the first
place. These loan conditions also serve as a guarantee that the country will be able to repay
the fund. The IMF monitors the way in which the money loaned is used by the borrowing
country, especially since the money is not all given at once, but in phases. Countries must
satisfy the conditions of each phase before the next set of funds is released.
In some countries the number of conditionalities which must be met in order to access
funds from the IMF of World Bank can be extremely high. Poor countries face as many as 67
conditions to access a World Bank Loan. Uganda had 197 conditions attached to a 2005
development finance grant by the World Bank. In addition in creating a major administrative
burden for borrowing countries, these conditionalities often go against development
policies of the burrowing governments. Countries may be forced to adopt controversial
economic policy reforms, especially trade liberalisation and privatisation or essential
services. If trade is liberalised, this means that any barriers in place to protect local
industries would be removed. Local products would have to compete with imported goods,
which may be cheaper. Privatisation of essential services such as transport removes any
government subsidy which may make it affordable to the majority of the population. Private
companies are there to make the enterprise profitable, and may drive the cost of the

services out of the reach of most citizens. Conditonalities can, therefore have a harmful
impact on poor people, increasing their poverty rather than reducing it and denying them
access to vital services.
Non- governmental and charitable aid
Aid extended by charities such as save the children, Food for the poor and Oxfam. Most of
their funds are from public donations and these are used to support mostly small scale, local
self-help projects. Although charities occasionally collect funds for emergency aid, aid from
NGOs and charities is usually aimed at long-term development. International charities also
raise awareness and campaign for change in industrial nations
Money raised by NGOs and international charities goes towards:
Long term aid such as
 Dealing with the root causes of poverty
 Food production, water supplies, education
 Campaigning for change
 Health programmes ( such as Medecins Sans Frontieres, Doctors without borders):
maintaining basic health facilities, eradicating malaria and other diseases
 Technical assistance, for example training farmers to increase efficiency and prevent
erosion
Short term aid such as
 Helping refugees to rebuild homes and provide farming equipment in order to them
to be self-sufficient
 Medical and sanitation supplies
 Food and blankets

Global pattern of Aid in absolute terms
Countries Aid in billion dollar
United States 19
Japan 8.86
France 8.47
United Kingdom 7.84
Germany 7.50
Netherlands 4.23
Sweden 2.70
Italy 2.48
Official development assistance as % of GDP
Countries % of GDP (0 to 1%)
Norway 0.87
Denmark 0.84
Sweden 0.77
Netherlands 0.74

France 0.42
United Kingdom 0.37
Germany 0.28
Japan 0.19
USA 0.16
Donors
The Organisation for Economic Cooperation and Development (OECD) is the main
coordinating body for the international community’s efforts to make aid more effective. The
OECD’s work on aid effectiveness is done by its Development Assistance committee (DAC).
Today is comprises 23 members: Australia, Austria, Belgium, Canada, Denmark, France,
Germany, Greece, Ireland, Italy, Japan, Luxemborg, the Netherlands, Norway, Portugal,
Spain, Sweden, Switzerland, United Kingdom, United States. These countries all have
significant aid programmes

The effectiveness of AID
A review of the evidence suggests that when money is given to the governments of
countries, it is not always spent wisely and may actually create disadvantages of the
recipient country. Many African countries have received substantial sums of aids over a
sustained period. Nowhere else in the world has the aid-to-GDP ratio been high as I Africa,
particularly in Sub-Saharan Africa. Documented data on African countries such as Botswana,
Kenya and Tanzania show that overall, aid has not promoted economic growth, nor has it
led to improved policies in developing countries
Disadvantages:
 Very often aid is spent on projects that benefit the political leaders at the expense of
the citizens. When given to countries with dishonest governments, aid received may
be used to pursue political agenda. Such policies may actually be damaging to the
country’s economy.
 Especially in African countries, international aid has helped to strengthen corrupt
regimes that would otherwise have been throw out. Aid received may be used for
their own personal benefits and political advantages.

 Aid sometimes help to promote dependency on the MDCS and does not encourage
self-reliance. Rather than seeing opportunities to produce goods and services more
efficiently, entrepreneurs sometimes see hand-outs from donors as the easiest route
to wealth. No attempts are made to develop indigenous industries and so create
wealth for people. The culture of dependency can in the long term, increase poverty
levels.
 In the cause of bilateral aid, the aid may be tied to the purchase of goods/services
from the richer donor countries. If too much aid is tied to purchase of goods and
services from the donor, this might not be the most economical way of using the
funds
 Sometimes the aid offered is inappropriate for the country e.g. trucks sent to areas
where there are no roads, as in Ethiopia
 Emergency aid does not solve long outstanding problems of a country.
 Often aid does not reach those who need it/ corruption amongst politicians and
officials may prevent the aid from reaching the people who need.
 In order to access loan from organization like the IMF there are certain conditions
that countries must accept. They must accept western-free market policies.
Countries may be forced to adopt controversial policies such as trade liberalization
and privatization of services. If trade is liberalized this means that only barriers in
place to protect local industries would have to be removed. Local products would
have to compete with imported products which are cheaper. Trade liberalization
has affected the agricultural sector of many countries. There is a drastic reduction in
local products and farmers are out of jobs as they cannot compete with the
imported items. This increases poverty amongst these farmers. Another policy of the
IMF is that countries must downsize their public sector work force. This can have
harmful effect on people as these workers would now be unemployed. Some of
these conditionalities can therefore have harmful effect on poor people increasing
their poverty rather that reduce it. In the late 1990s most LDCS use 20% of export
earning to service debt per year.
 Some countries fall into high debt after borrowing loans. Some developing countries
have a high debt burden. The debt is intolerable. The high debt can harm

development. The money earn/revenue from export earnings are used to pay back
loans or service debts. This can directly harm development as there are not enough
to spend on other areas such as health, education and so on.
Advantages/benefits
 On the other hand, aid is offered by charitable institutions is often effective e.g.
when humanitarian support is sent to areas affected by natural disasters e.g.
earthquake, areas experiencing drought and famine, etc. Such aid helps countries to
recover more quickly and thus aids development. E.g. much aid was sent to Haiti
after damaged by earthquake 2010, also after ravaged by hurricane.
 Aid may be directed directly to the development of infrastructure within a country
e.g. roads, bridges, rail. Such activities help to make the country more attractive to
developers and so supports other types of development. Improvement in
infrastructure can stimulate development. Proper infrastructure attracts foreign
direct investment/investors can result in further development of a country.
 Aid provides capital for programmes in LDCS that otherwise could not be afforded by
their governments.
 Aid is sometimes sent as technical assistance. Technical experts are sent from
developed countries to train personnel in developing countries e.g. engineering.
These persons are now well trained and can use the new knowledge and information
to influence development in respective areas
Debt Relief
Another measure which proposed to reduce disparities in development among nation is
debt relief. Many developing countries often find themselves deep in debt after securing
loans from another country or countries or an international agency such as the World Bank,

and despite long repayment schedules, are under pressure to make even basic interest
payments. Proponents for the eradication of third world debt encourage richer lending
countries to forgive the debt of poorer countries so that foreign exchange currently sent
overseas to pay interest on loans can be used within the country for development projects.
Most of the existing debt in LDCs was accumulated in the 1970s and 1980s. This debt came
about because LDCS were forced to borrow money to fiancé the huge increase in the price
of oil imports. International banks had money to lend, and indebtness did not appear very
burden at the time because interest rates were low. Once large volumes of debt were
acquired, changes in US economic policy sent interest rates soaring and the prices of
exported raw materials fell sharply. The debt burden rapidly became intolerable.
The HIPC (Highly Indebted Poor Countries) Initiative was launched in 1996 by the IMF and
World Bank, with the aim of ensuring that no poor country faces a debt burden it cannot
manage. Since then, the international financial community, including multilateral
organizations and governments have worked together to reduce to sustainable levels the
external debt burdens of the most heavily indebted poor countries.
In 1999, a comprehensive review of the Initiative allowed the Fund to provide faster,
deeper, and broader debt relief and strengthened the links between debt relief, poverty
reduction, and social policies.
In 2005, to help accelerate progress toward the United Nations Millennium Development
Goals (MDGs), the HIPC Initiative was supplemented by the Multilateral. The MDRI allows
for 100 percent relief on eligible debts by three multilateral institutions—the IMF, the World
Bank, and the African Development Fund (AfDF)—for countries completing the HIPC
Initiative process. In 2007, the Inter-American Development Bank (IaDB) also decided to
provide additional (“beyond HIPC”) debt relief to the five HIPCs in the Western Hemisphere.
Two step process
Countries must meet certain criteria, commit to poverty reduction through policy changes
and demonstrate a good track-record over time. The Fund and Bank provide interim debt

relief in the initial stage, and when a country meets its commitments, full debt-relief is
provided.
First step: decision point. To be considered for HIPC Initiative assistance, a country must
fulfill the following four conditions:
1. Be eligible to borrow from the World Bank’s International Development Agency, which
provides interest-free loans and grants to the world’s poorest countries, and from the IMF’s
Poverty Reduction and Growth Trust, which provides loans to low-income countries at
subsidized rates;
2. Face an unsustainable debt burden that cannot be addressed through traditional debt relief
mechanisms;
3. Have established a track record of reform and sound policies through IMF-and World Bank–
supported programs; and
4. Have developed a Poverty Reduction Strategy Paper (PRSP) through a broad-based
participatory process in the country.
Once a country has met or made sufficient progress in meeting these four criteria, the
Executive Boards of the IMF and World Bank formally decide on its eligibility for debt relief,
and the international community commits to reducing debt to a level that is considered
sustainable. This first stage under the HIPC Initiative is referred to as the decision point.
Once a country reaches its decision point, it may immediately begin receiving interim relief
on its debt service falling due.
Second step: completion point. In order to receive full and irrevocable reduction in debt
available under the HIPC Initiative, a country must:
1. Establish a further track record of good performance under programs supported by loans
from the IMF and the World Bank;
2. Implement satisfactorily key reforms agreed at the decision point; and
3. Adopt and implement its PRSP for at least one year.
Once a country has met these criteria, it can reach its completion point, which allows it to
receive the full debt relief committed at the decision point.

Countries receiving debt relief. Of the 39 countries eligible or potentially eligible for HIPC
Initiative assistance, 36 are receiving full debt relief from the IMF and other creditors after
reaching their completion points. Three countries, which have been identified as potentially
eligible for HIPC Initiative assistance, have not yet reached their decision points.
Case Study (http://www.imf.org/external/np/sec/pr/2009/pr09243.htm)
Haiti was granted US$1.2 billion of debt relief by reaching the completion point under the
Enhanced Heavily Indebted Poor Countries (HIPC) Initiative approved by the Boards of the
International Development Association (IDA) and the International Monetary Fund (IMF).
Haiti is now the 26th country to reach the completion point under the Initiative.
To reach the completion point, Haiti carried out a number of reforms despite a challenging
environment marked by major natural disasters, a food and fuel crisis, difficult political
conditions, and the impact of the global economic downturn. These reforms were aimed at
establishing a more stable macroeconomic environment and at implementing its national
poverty reduction strategy. Haiti strengthened public expenditure management, tax and
customs administration and improved debt management and reporting.
Haiti established a financing mechanism to allow over 50,000 children to attend school,
allocated over 20 percent of recurrent spending to education, and made progress toward
implementing the teacher training program. In health, Haiti approved an HIV/AIDS
prevention and treatment plan and improved immunization rates for measles and DPT3.
Impact of debt on Poor Countries
 Jobs are lost as the World Bank and IMF routinely require countries in debt to limit
pay for government employees and to privatise state enterprises, which results in
mass layoffs
 Health care is reduced as there is underinvestment in health. Nearly 70% of heavily
indebted countries spent more on debt interest payments than on public health in

2002. The ability of those countries to respond to the AIDS epidemic, to fight
diseases like tuberculosis and malaria, and to provide routine preventative care is
hampered. There may also be a severe brain drain of frustrated health professionals
for example nurses which serves to further weaken health systems
 Global warming and climate change are already damaging agriculture and
contributing to the spread of disease. Extreme debt burdens pressure governments
to exploit resources for export and heavily indebted countries are major deforesters
 Heavy debts make it more difficult for governments to prevent and recover from war
and conflict. They also make it harder to afford a social safety net, leaving the
poorest more vulnerable to criminals from traffickers to terrorists
 Most of the money the country receives will go towards servicing loans so there is
not enough money left over to spend on health care, education, sanitation and
infrastructure.
 Investors will not go to a country that is heavily indebted because there might be a
tax increase when the country is low on money.
 Banks and other monetary organizations will not give out loans to countries that are
heavily indebted because the money that they lend might not be returned or the
country takes a long period of time to repay them.
 Migration of persons may occur as people leave the country to search for better job
opportunities. This may result in a brain drain as skilled people leave the country to
find jobs abroad with better working conditions.
Benefits of debt relief
 Debt relief frees up the resources of the country so that the government can spend
more on social programs as there is more money available
 Debt relief will allow poor countries to access loans from lending institutions
 With the cancellation of debt or debt relied poor countries will become attractive to
investors.

Just as debt is not the root of all development problems in LDCS, neither is debt cancellation
a cure. There will always be some corrupt leaders who prefer to use the proceeds to buy
weapons or build palaces rather than improving their people’s lives. But even small amounts
of debt relief can lead to remarkable results. For example:
 More than doubling school enrolment in Uganda
 Eliminating fees to allow 1.6 million Tanzanian children to return to school
 A 50 per cent increase in education and health spending in 10 African countries
 Programmes that have successfully stabilised HIV rates in Burkina Faso
 Plans to add more than 4,500 teachers and 800 medical personnel in Zambia
Further debt to cancellation would give impoverished country governments a better chance
of reducing inequality and protecting the environment in their countries.

Appropriate Technology
Appropriate technology is a fashionable way to say “doing things in low-cost, effective ways
that local people can manage and control
Development workers often use the term appropriate technology to refer to practical
simple things- such as tools, instruments, or machines- that people can make, use, and
repair themselves using local resources
Dr E Schumacher developed the concept of appropriate technology as an alternative course
for development for poor people in the 1960s. He founded the Intermediate technology
Development Group (ITDG) in 1966 and published his ideas in a book, Small is beautiful in
1973
In 1988 the ITDG stated that:
‘Essentially this alternative course for development is based on a local, small-scale rather
than the national, large scale approach. It is based on millions of low-cost workplaces where
people live- in the rural areas- using technologies that can be made and controlled by the
people who use them and which enable those people to be more productive and earn
money.
These ideas challenged the conventional views of the time on aid. Schumacher said:
The best aid to give is intellectual aid, a gift of useful knowledge… the gift of material goods
makes people dependent but the gift of knowledge makes them free- provided is the right
knowledge of course.’
To illustrate this he quoted an old proverb
‘Give a man a fish and you feed him for a day; teach him how to fish and he can feed himself
for life’
The first part of this might be seen as the traditional view of aid where ‘giving’ leads to
dependency. The second part, ‘teaching’ is a move in the direction of self-sufficiency and self-
respect.

Appropriate technology (formerly known as intermediate technology) is common in LDCs,
where resource or skills restrict the use of the same technologies as in MDCs. It makes use
of available local skills, resources rather than trying to transplant techniques, methods and
tools developed for use elsewhere. Appropriate technology is a practical approach in LDCs
to the use of techniques and machinery developed in MDCS. Appropriate technology in
LDCs tends to be low cost, makes use of local resources, and is often labour intensive
rather than capital intensive since LDCS have large populations and limited capital.
Technology best works and is adopted by most people when it can be shown to improve
their lives or standard of living in some way. The use of technology simply for the sake of
using technology is not an improvement.
The appropriateness of technology is not limited only to job creation, using local resources
and utilising renewable energy resources, but it is also about being affordable, easy to
maintain, compatible with existing infrastructure, efficient in the use of scarce natural
resources, environmentally benign and partial to small scale
There are many examples of inappropriate technology. After the 2004 tsunami in South East
Asia, the EU proposed to send European decommissioned fishing boats to affected area.
However, the European boats a much larger capacity than local boats and could lead to
overfishing. Also the size of the boats would cause a change in the way in which fishermen
operate from small single bats to a large crew; the age of the boats would require them to
be maintained more frequently which may be difficult for the fishermen, and spare parts
may not be readily available. There are other examples pointed out by Nagle (1998):
 Lorries sent to area where there are no roads, as in Ethiopia
 Tractors given to areas where there are no mechanics or spare parts, In a parts of
Zimbabwe
 Large scale irrigation schemes in desert areas, where they may cause salinization

Case Study
Kenya: Intermediate Technology Development Group (ITDG) projects
Intermediate technology development group ( ITDG) is a British charitable organization
which works with people in developing countries, especially those living in rural areas, by
helping them to acquire the tools and technique needed if they are to work themselves out
of poverty. ITDG helps people to meet their basic needs of food, clothes, housing, energy
and employment. ITDG uses, and adds to, local knowledge by providing technical advice,
training, equipment and financial support so that people can become, in Schumacher’s
words, more self-sufficient and independent. At present, ITDG is working in response to
requests from local groups, often women, in India, Bangladesh, Sri Lanka, Kenya, Sudan,
Malawi, Zimbabwe and Peru. The following is one of ITDG projects in Kenya
Kenyan women are almost entirely dependent upon wood as fuel for cooking. In the cities
women must buy wood as fuel for cooking. In the cities women must buy wood or charcoal
(transported from rural areas) to use their traditional stoves, while rural women spend long
hours gathering the fuel they need. At the same time Kenya’s resources of wood are
diminishing. An improved cooking stove ( jiko) has been developed which drastically
reduces the use of charcoal for urban households. It is based on traditional design and is
made by local metal workers, from scrap metal, and incorporates a ceramic lining, produced
by local potters. This development has improved the lives of many people.
 More than 40 000 households are now making sizeable savings in their fuel costs. In
many homes the new stove pays for itself in about a month. Moreover, the
improved stove reduces smoke and fumes in the kitchen and contributes to
improved women’s health.
 Large numbers of small-scale metal workers and potters are now engaged in
manufacturing the jiko and have found new support from the government, which
makes their business more stable.

Widespread use of the stove has potential impact on the environment, as any savigs in urban fuel
consumption helps relieve the pressure on rural wood resources
How appropriate is technology?
 Is it acceptable to the local people?
 Do they (or will they) use it effectively?
 Will it help to improve the well-being of those in greatest need?
 Is it low-cost and efficient?
 Does it make full use of local resources, traditions, and abilities?
 Does it take into consideration any local factors such as geography, climate, and traditions
that may affect its usefulness?
 Does it keep a natural balance with the environment?
Example
of Jikos

 Is it something that local people can easily understand, afford, and repair by themselves?
 To what extent were local people involved or consulted in its planning, design, selection, or
adaptation?
 Does it provide more local employment? Or does it take jobs away?
 Does it build people's confidence to find their own answers and make their own decisions?
Will it help close the gap between the rich and the poor? Or widen it?
 Does it help the weak to gain greater control and become more self-reliant?
Conclusion
The measures to combat development disparities must be tailored to reflect the
particular circumstances in each country. Aid can and does help some countries, but in
others which lack basic social services and where government is very dominant, the aid
may not help to whom it is directed.
Aid may be monetary or technical in nature and can be disbursed by one country or by
an agency which deals with development issues. Some LDCs are very dependent on
financial aid in order to meet their debt commitments, as they are caught up in a debt
crisis with origins in the 1970s and 1980s. The forgiving of high levels of debt has been
proposed and carried out in some situations. However, the LDCs still have to make
commitments to the World Bank or IMF in exchange for this order to try to improve the
standard of living in these countries.
The use of appropriate technology can enhance development progress in a country, as
there would be creation of jobs for the population as well as the use of local resources.
Once people are employed, they may have the chance to improve their standard of
living as well as improve the levels of technology which they use.

Module 3 unit 2 geography

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Module 3 unit 2 geography