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Globolizotion hos boih positive ond negolive effe.ts.Ihis section will focus on how
globolizotion hss oifected the disiribution of weohh on the globol, regionol ond
nqtionol levels.
There con be substoniiol equoliiy problems in the dislribution of the benefits from
globolizotion omong individuols, orgonizqtions, notions, ond regions. Mony of the
gcins hove 6een going to lhe rich nqtions or individuqls, creoiing gteolet inequoliJies
ond leoding to potenfiol conflicts nqtionolly ond internotionolly.
Some hove suggested the possibiliiy of norrowing of incomes globolly bosed on the
observotion thot lhe poor notions ore growing ot o foster rote thon the rich
notions. The reality, however, is ihot o smoll group of notions, lhe "tiget
economies" of Eost Asio, especiolly Chino, south Koreo, Toiwon, ond Moloysio hove
been growing ot ropid rotes, while the leosl developed notions of Africo, Asio, ond
Soufh ond Centrol Americo hove been qrowinq qt o slower rote thon the rich
notjons, leoding lo o bimodol "twin peoks" distribulion of incomes. The poor noiions
ore ihus becoming increosingly morginolized. The resull hqs been not o norrowing
but rother, wifh the importoni exception of Eqst Asiq, o widening or polorazqtion of
incomes worldwide. The ropid growth economies of Eost Asio ore joining the rich
notions, but the poor notions ore slipping even further behind.
The Brqndt Line is o visuol depiction of the Norih-South divide ProPosed by Willy
Brqndt (former Germon Choncellor) in the 1970s. It encircles the world oi lotiiude
30" N, possing between North ond centrol Americo, norlh of Africo ond Indio, but
lowered towords lhe south to include Ausirolio ond New Zeolond obove ihe line.
e,uq$.!E
THE SOUTH
The foll of the Sovief Bloc colntries ond the ossocioted povefliy further weokened
fhe expression "North-south Divide" since rnony Soviet Bloc notions now foll into
developing stotus. On the other hond, mony notions previously considered
" developing," such os the Eosi Asion figers, ore now developed: however,
in some
rnops of the North-South Divide, such notions ore depicted os port of the "south,"
which is inconsistenl with fhe obove given definition.
This simple pottern thus hides mony ateas of gtowing weolth (such os Chino ond
fndio) ond increosing poverty such os porfs of Africo ond mony former Communist
stotes.
Moreover weolthy countries do not wholly consist of'hqves', ond even the Poorest
countries hove lheir foir shore of weolthy people.
Ihere ore significonl vorioiions within the vorious regions. For exomple, oil-rich
countries (e.9. Squdi Arobiq, Libyo ond Venezuelo) ore comporoble in terns of 6DP
per copito, with sone induslriolised countries. There is olso consideroble voriobility
omongst the Dcs - U5$23 000 in UK qnd Austrolio ond U5$36 000 in the United
Stotes ond Luxenbourg.
Differences in income between the world's rich ond poor is qlso getting wider. For
e.g. the USA ond selected Africon countries: their 6DP Per copito dilference
increosed frorn oboui U5$3 000 in 19OO to more thon U5$37 OO0 in 2003.
Fig. 2t World's richest ond poor€sl counfries, 1820-2003 (6DP Per copito, Us$)
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Statk differences ore emetging \etween tegions, with some regions pulling oheod
ond reoching new levels of developmenl , while olhers ore f olling behind.
The some pottern is occurring within regions: some countries ore succeeding omid
disoppoiniing regionol trends, while oihers ore folling behind in regions moking good
overoll progress. For instonce, Loiin Americo ond the Coribbeon hove HDI levels
opprooching levels in DCs. Nevertheless, despite progress in some oreos such qs
educotion, the l99Os sow slow economic growth ond slighi increoses in poverfy.
There wos greot voriotion in fhe proportion of molnourished PoPulotionsr ihe
proporiion of hungry people olmost tripled in Cubo from 5% to 13%, while Peru hod
the region's 6iggesl reduclion,from 40% lo !!%.
The industriqlized countries ore identified qs the core ond the developinq countries
orc the periphery.
Economic well-being qlso vories ocross the Europeon Union countries. The most
qffluent regions of the continentol core of the Europeon Union hove per copito
incones fhot sre well over lOO% of the EU overoge. Some of the least developed
EU regions e.g. Gteece ond Portugol hove incomes thot ore only obout 80% of the
EU overoge. Condidote countries fhqf qre on the woifing list to join the EU hove
relotively lower incomes e.g. Bulgorio ond Romoniq hove per copitq incones thot ore
only 25% of lhe EU overoge.
High-Tech
The semi-periphery includes the Northenn Englond ond soufhern Frqnce. Ii includes
former economic cote steo which wos once leoding industriol centres of Europe.
However, lhese countries ore now suffering due to lheir overdependence on
declining industries like steel, textiles, ond cool mining. It olso includes o number of
up ond coming rurol regions e.g. Almerio in Andolucio, Spoin, os well os newly
industriolising tegions e.g. Emilio-Romogno, Ifoly ond iourist regions such os
Longuedoc in Fronce.
Regionsihoi ore logging behind the prcgressive tegions. Jhese hove o 6NP of
75% of the EU averoge. They ore of the centte of the EU's plon io reduce
regionol inequolities. Development sirotegies cenlte on infrosfructurol
inprovement - tronspor-1, communicotions, services ond focililies.
ll, Arecs thot ore ossocioled with -the decline of trodiiionol industries, e.g. coql,
iron, sieel, texiiles ond shipbuilding. These ore chorocierised by obove-overoge
rotes of unemployment ond on out-doted monufocturing secfor. Emphosis is
ploced on job creqfion, renovotion ond reconstruction. New smoll ond medium-
sized enlerptises Ne being totgeled os potenfiol new invesiors.
I . Rurol problem oreos - otiention is focused on non-ogriculturol improvements, e.9.
tourism, tronsport, service industries qnd the provision of omenities. Stopping
rurol depopulqtion is o centrol oim.
chino's rote of economic arowth during the lost guorter of o ceniury hos left mony
coun-tries croving for o similor expetience fo|their economies. However, whqt is
worrisome is the foct lhol this growth hos been on extremely skewed one. Thete is
growing imbolonce between econonic sectors, qnd both between ond wilhin regions.
6ops ore qlso qrising between the urbon ond rurol populolions in Chino.
1992 can 6e considered qs ihe yeff in which Chino decided to speed up iis process
of economic reforms. Since then the regionol gop hos increosed furfher. In 1998,
lhe per copifo 6DP of Shonghoi, the richesi provinciol uni.t, wos fwelve times ihot
of Guizhou, the pooresi pnovince. In the yeor 2000 the gap between incones in
coostql ond inlond regions went up to 57.3 per cent.
fn 1993, Chino's 3 richesf netropolises, Shonghoi, Beijing ond Tionjin were neqr the
top of the HDI ronking. Those ot fhe boitom were oll western provinces. Moreover,
the poorest provinces hove the highesf inequqliiy -Tibet hod the lowesl volues for
educotion ottoinment ond life expectoncy.
Similorly, urbon incomes ore gtowing fostet thon rurql incomes. The per copito
disposoble income of the urbon Chinese rose olmosf 42 Pet cent in the ftve yeots
belween 1998 and 2OO2. Over the some period, rurql disposoble income per copilo
rose o neogre 74.5 per cent.
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coupled with this, lhe increose in unemployment in rurol qreas due to the closure of
businesses suffering frorn ihe competition in urbon qreos ond bod investment is
worsening the economic dilference \elween the fwo oreos. fhe dtfference in
eorning powq is threotening to destqbilise the sociol sysfen os rurql dwellers, now
oble to nove to the cities ofler restrictions on mobiliiy were remo.Ved, ore unoble
Jo offord bosic needs such os housing in the urbon oreos.
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Fl)l:rs. I'cr.cnlirlc ofGDP iI Thr,:c llc.rrions
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Strotegies lo nqrrow the gdp
An excessively wide regionql gop could not only undermine sociol slobility but olso
disrupf poli.iicol stability ond spur secessionist ocfivities. fn o bid to oddress the
-to hove
issue of growing inequolities in fhe country, lhe chinese government seems
Joken steps to bridge ihe spirolling gop \elween lhe coostol ond inlond regions of
Chino, os well os thot belween urbqn ond rurol oreos.
The government's ossessment wos thoi the widening gqp wos o result of the decline
in the performonce of rurol enierprises in cooslol ond inlond Chino ond in 1992 if
decided io 'support vigorously' ihe developmenl of rurol enierprises in fhe centrol
ond weslern rcgions of chino. fn thol yeor the People's Bonk of Chinq offered
mulii-billion bonk locns with o view to supporting rurol enterprises in centrol ond
westetn Chino.
In qddiiion, lhe Chinese governnen-t olso onnounced cer-tqin iox exemplions, (which
included o thtee-year exemption from income tox for oll newly estoblished rurol
enlerprises in certoin oreos) for rurql enterprises in centrol ond westenn Chino.
Thqt the efforts of lhe Chinese governmenf lo boost investment in the bqckwqrd
regions hove yielded in lhqi ihe coost to inlond rolios of invesiment hos come down
in receni yeors. Also, locql governmenls of the coqstql region hove, ol loIe,6een
encouroging ond loying stress on supporting rurol enfsrprises of underdeveloped
regions. The developmeni of rurol enlerprises in inlond Chino is furll\er expecled to
curb ihe constont migroiion, both legql qnd illegol, of lobourers fron these regions
to coostol Chinq in seorch of o livelihood, thereby eosing the pressure on lhe
infroslructure of lhe coastol region.
Heovy exploilotion of the minerql resources of inlond Chino olongside o booming row
ond processed moleriol industry will soon leod lo environnentol degrodotion ond
resource depletion of the region, resulting in long-ferm cqlomiiy.
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Noiionol voriotions in economic weolth 'A Conparison of Norfhem and Southern
Ita/y'
Whqt is the Development 6oD?
Ihe develgpment gqp is ihe divide between rich ond poor, or 'hqves'ond 'hove nots'.
This exists qt severol levels. The 'hoves', ot o globol scole represent the richest
20% of people, who consume oround 80% of oll resources. The globol 'hove nots' ore
lhe poorest 20% of people who eorn only 1.3% of globol income.
Mops of globol income distribution sho!/ some countries to be very rich, whilst
otherc ote very poor.
4
Fig. 7 Annuol per copito 6DP growfh of regions
The powerful GB counlties (the UK, Fronce, Gernany,Iloly, the USA, Cqnqdo,
Jqpqn ond Russio) coniinue to see their weolth grow. whilst NfCs (5. Korao) hove
seen the most ropid growth os they benefit fnom outsourcing ond globqlisotion.
Other economies (RICs like Thoilond qnd some LDCs) ote growing more slowly;
others (mony Africon countries), ore hordly growing ot oll ond income growth in
these countries hos 6een negalive lor the lost decode.
Arguobly, much of ihe world's weollh is in fhe honds of lhe 68 / DCs. Most TNCs
originote in these countries, they hove the controlling stoke in instilutions such os
the IMF ond World Bonk, ond the mojoriiy of world trode (80%) occurs beiween
+he,se countries
Why hos ihe development gop increqsed?
Income surveys suggest fhol globol inequqliiy hos increosed since the 1980s. The
moin forces behind lhis divergence were:
. A widening income gop between the poorest ond richest people due to slow
growlh in rurol incomes in populous Asion countries relotive to rich oEDc
(Orgonisofion for Economic Cooperoiion ond Development) couniries.
. Foster progress in urbon Chino relqiive to rurol Chino ond to Indio.
. Shrinkoge in the world s niddle-incone group.
But these conclusions ore not enlirely conclusive due to the limited lime frqme
covered
The World Bonk divides the world's countries into 4 groups by income:
1. lou incone
2. louet niddle income
3. upper niddle incone
4. high incone
The distinctions ore node on the bosis of per copito gross notionol product or 6NP.
Il is generolly considered lo best tellect the level of notionol economrc
development.
6NP is the totol volue of o country's finol output of goods ond services produced in
a specific lime petiod - normolly o yeor. This includes income eorned by residents of
o country from obrood.
The onnuol 6NP per copiio for some countries exceeds $10 000, suggesting greoi
weolth ond o high level of economic development. For ihe most porf, these ore
modern s.toies wilh highly diversified economies - such os the United stoles,
Germony, Jopon, ond Austrqliq.
Approximotely 15% ol the world's populqtion live in oreqs wilh o high 6NP/copito.
The highest volues orel
. Luxembourgr $55 100
. The USAr $37 800
. Norwoyr $37 7oo.
At the opposile end of the scole ore countries wiih on onnuol per copitq 6NP of less
thon $500. These noiions mosi notobly ore concentroted in Africo qnd souihern ond
souiheqstern Asio. These ore the LDCs ond include Eost Timor, Sierro Leone ond
the 6qzq strip. Reosons for iheir slognotion includei-
6NI is o new term replocing GNP.6NI is ihe sum of volue odded by oll resideni
producers plus net receipts of income from obrood.
@DP is the totol volue of oll finol outputs of goods ond services produced by o
country's econony, i.e. wiihin the country's territory, in o specific time period -
nornolly o yeor. This excludes net overseos income.
PPP is o rote of exchsnge ihqt occounts for price dilferences between countries
ollowing internolionol comporisons of income qnd purchosing power. When odjusted
to PPP, $1 hos the sorne purchqsing power in lhe domestic economy os in the UsA.
Overnighi the relqtive importonce of the Third World doubled. However, it does
little fo reduce the confrosis ihot remoin between the richest of the Norfh qnd
fhe poorest of the South.
Thus, composite indexes like fhe Physicql Quqlity of Life Index (PQLI) ond the
Humon Development Index (HDI) ore now generolly recognised os befler indicotors
of o country's position in the globol developnenl spectrum fhon the lroditionol
economic meosure,6DP per copito.
one odvontoge of the PQLI is thot the index is simple to use. on the oiher hond,
its use is limited becouse it only tokes into occount of -ihree voriobles. Income
levels or purchqsing power qre no-i included in lhe colculoiion.
Humon Develqpment Index (HDI)
In 1990, the United Nqfions Development Progromme (UNDP) orgued lhot incone
growth olone wos nol q good indicotion of develoPment ond thof humon development
should feod to greoter qnd more sustoinoble economic growih. To meosure the
progress mode by notions in improving living sfondqrds, ihe Humon Developrneni
fndex ossesses o couniry's overoge achievements in ihree bosic osPects of humon
developrnent:
The HDf wos qealed to ploce people ond fheir copobiliiies os ihe ultimote criterjq
for ossessing the development of o country, roiher thon economic growth. As
Vietnqm hos o higher literocy rote ond life expectancy ihon Pokiston it hos o rnuch
higher HDI volue, olthough their per copito 6DP ore similor.
The HDI is expressed os o volue befween O ond 1. The closer fo l the score is,
ihe higher the level of humon development. A HDI below 0.5 is considered low
development.
Figu:e 1. Humax 0euelopmert lndex in Selecled
C0unkiss, l97$-ru03
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Mosi regions hove seen steody improvemenfs in HDI over the post decode wifh
Eost Asio ond the Pocific performing porticulqrly well. Arob slotes hove seen
substonliol growth, exceeding the overoge increqse for LEDCs. Sub-Sohoron Africo,
by confrqsf, hqs been olmost sfognont. Mony oil-producing countries, for exotnple,
hove nuch lower HDI ronkings lhon their 6NP ronking, while some poor counfries
ronk relolively high by their HDI becouse they hove deliberotely devoted scorce
resources io humon development. Countries such os Cubo (0.806), Costo Rico
(0.832) ond Sri Lonko (0.730) foll inio this cotegory.
6DI meqsures ochievemeni in the some dimensions ond using the some indicotors qs
lhe HDI i.e. life expectoncy, literocy, ond income, bul exomines inequqlities
beiween women ond men. ft
is simply lhe HDI odjusted for gender ineguolity.
Anofher meosure used by those working in development which, like lhe 6DI, hos o
built-in gender comporison. The 6EM, however, deols with economic qnd polilicol
spheres of qctivity cnd is thus more intetesled in women's involvement in these
qreos of life, not just with their stondord of living. Economic figures ore
gqthered oboui women in odministrolion, monogenent, professionql ond technicol
work. Politicol involvement is meosured in terms of seqts in government.
While ihe HDI meosures the overoll progress in o country in ochieving hunon
development. the HPI reflects the distribution of progress qnd meosures the
bocklog of deprivotions thot still exist. The HPI meosures deprivotion in the some
dimensions of bosic humon development os the HDI.