Global inequalities

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Global inequalities

We can use a variety of these indicators to show us the general pattern of development around the world. You need to be able to explain why these differences exist:

There are three significant historical factors:

1. Coal

The UK was particularly fortunate to discover large quantities of high quality coal:

This coal was used in early industries such as iron smelting. This led to wealth that could then be spent on:

Education: meaning a more skilled and able workforce.

Experimentation: meaning innovating new technology. This included guns that could be used to secure new colonies. There was also significant investment in the armed forces.

Exploration: exploring the world and colonising much of it looking for new raw materials and markets to exploit.

2. Colonialism

This is the policy of obtaining and maintaining colonies. Basically, country A goes into country B and says we are now in charge! - Nice! Many European countries with greater armies and firepower were able to do this over most of Africa.

If you look at the historic reasons for colonialism you should start to appreciate how this hinders the development of some countries but promotes others. In the nineteenth century many countries from Europe went across to Africa to colonise them.

They wanted their raw materials to feed the industrial revolution that was taking place in their countries. This means that the materials from Africa were used to increase the wealth of the countries in Europe but obviously hindered the African countries chances of generating great wealth.

Colonialism

The industries that were developed in the colonies were extractive and road and rail networks were designed to bring products out of the countries rather than stimulate the economies.

3. The Slave Trade:

This took the strongest men and women from many African countries to work for European countries in strengthening their economies. Basically providing an incredibly cheap labour force to make them money. This again increased the wealth of the European countries and reduced the chance for African countries to develop.

1. Debt:

One of the greatest problems faced by less developing world countries is their level of foreign debt. By struggling to pay debt countries cannot invest in education, medical care, transport route and are often giving up more of their raw materials as pay off. Many countries particularly in Africa owe staggering amounts of money.

Ethiopia owes more than $10 billion. This is more than 13 times its foreign earnings. Ethiopia pays 4 times as much on debt repayment as it does on home expenditure. In the mean time 100 000 children die each year from diarrhoea.

You may have read about president Clinton put a system in place to write off debt. This is a good start and will be discussed in the reducing inequalities section.

2. The trade game:

Less developed countries are disadvantaged by the world-trading pattern. They primarily produce raw materials, which are sold to developed countries that manufacture a product. The profits on the raw material are very low whilst those on the manufacturing good are high.

Profits on the raw materials are kept low because so many countries are producing it. It is not unknown for that manufactured good to be sold back to the country that produced the raw material!

Raw materials

Coffee is a good example:

The UK imports 90% of its coffee as beans that it processes. On this it makes considerable profit. It prevents the developing world from setting up their own coffee processing plants by putting such a heavy tax on imported coffee that it would be unprofitable for them - i.e. it would be so highly priced because of the tax that no one would buy it.

3. Within the developing world the problems they face have often been made worse by political corruption:

In Zaire for example the late President Mobuto is reputed to have had a personal fortune of over £5 billion, much of which was money siphoned of loans from the World Bank.

In the time it took him to accrue this fortune the development of his country went into reverse. It was not even able to maintain the existing road networks.

4. When looking at the development of countries around the world it is always worthwhile considering the multiplier effect:

The simple principal is that if you have any investment in an area it will stimulate further investment. For example a new car plant in an area is likely to encourage linked industries to set up.

This could simply be the local catering van for the workers or textile industries making seat covers, engineering companies making shock absorbers or a new tyre plant. This gives more people work and therefore a wage that they will be inclined to spend so creating more jobs. The economy continues to grow.

Countries in the developed world have benefited significantly from this whilst those in the developing world have not.

1. Many less developed countries are located on or about the tropics. This means that they are in a situation where they will be prone to hurricanes:

These can have a devastating effect on a countries attempt to develop. Hurricane, which recently hit Central America, put back the development of Honduras by approximately 30 years.

Hurricanes

Their economy was left in ruin, as it was almost entirely dependent on single crop agriculture - bananas - for the export market. These were destroyed by high winds and flooding.

2. The discovery of coal as discussed earlier would also fall into this category.

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