Key Concepts |
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What is a rich country or a poor country? Appelbaum and Chambliss (2000:165) suggest that in order to determine rich and poor countries, one would divide GNP (Gross National Product) of a country by the population of that country. The final figure is GNP per capita. They then use world bank figures to divide the countries of the world into three categories: High income countries, middle-Income countries, and low income countries.
High income countries include the U.S. and Canada, Australia, New Zealand, Japan and most of the countries of Western Europe.
Middle income Mexico and most countries in South America, Russia, most Eastern European countries, South Africa, Israel, Indonesia, Thailand, and most of the Middle East.
Low income countries include those found in Central America, much of Central Africa, the Balkans, and China and India.
Low income countries account for more than half the world's total population while high income countries account for only fifteen percent of world population (Appelbaum and Chambliss, 1997:166).
The typical individual in high-income countries has approximately 61 times more money that the typical person in low-income countries. The gap is growing (Appelbaum and Chambliss, 1997:167).
1.2 billion people Live in poverty. Poverty, in international terms, is much more intense than the most extreme poverty found in the United States. International poverty refers to an inability to meet the most basic human needs in terms of food, clothing, and shelter (Appelbaum and Chambliss, 1997:171).
325 million of the extreme poor live in Africa, 675 million live in Asia, 150 million live in Latin America, and 75 million live in North Africa and the Middle-East (Appelbaum and Chambliss, 1997:167).
The life expectancy at birth for people in high-income countries is 15 years longer than for people in low-income countries. Low-income countries lack proper sanitation, have polluted drinking water, suffer greatly from infectious disease and have inadequate healthcare facilities (Appelbaum and Chambliss, 1997:168).
Appelbaum and Chambliss (1997:169) contend that people in high-income countries are energy hogs. The energy consumption of people in developed countries is 15 times greater than for people in low-income countries. Excluding India and China, high-income people consume 39 times more than people living in low income countries.
In order for the low-income countries to catch up with high income countries, low-income countries will drastically increase their consumption of energy.
Africa is the center of widespread famine. In 1988, half a million children died in Africa from starvation. The World Bank believes 100 million people in Africa lack minimal adequate nourishment (Appelbaum and Chambliss, 1997:169).
A host of scholars, from the left to the right, connects the incredible change experienced in the modern era with modernization. Smelser (1988:387) defines modernization as a complex set of changes that take place in almost every part of society as a society attempts to industrialize.
Four General Characteristics of Modernization: |
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| 1. | There is a shift from the simple to the complex. |
| 2. | Agriculture progresses from being oriented toward subsistence farming that occurs on small plots to commercial farming of large scale. |
| 3. | There is a trend toward industrialization. Human and animal power are de-emphasized and are replaced by machinery driven production. |
| 4. | Society changes from one centered on the rural to one centered on cities. |
Market-Oriented theory argues that unrestricted capitalism, allowed to develop fully, is the best route to economic growth. Further, they argue that the best economic outcomes result when individuals are free to make their own economic decision, uninhibited by any form of government constraint. Constraints might include efforts by Third world governments to set prices and wages (Appelbaum and Chambliss, 1997:171).
The developmental or modernizationist view of social change was the dominant paradigm during the 1950s and 1960s. It lays out the conditions under which traditional societies can become fully modern (Appelbaum and Chambliss, 1997:171).
The following material presents some assumptions associated with modernization theory.
Modernization theory, according to Shannon (1989:2), views the world society as a "relatively stable system of interrelated parts." Modernization theory views social change as an evolutionary type process that gradually adapted to a changing environment (Ragin and Chirot, 1984:299).
Shannon (1989:2-3) contends that much of the modernization theory is based upon the European developmental experience. It suggests that all countries can become modern industrial societies.
The primary characteristic of modernization is differentiation. A few institutions that provided broad ranging services to the citizenry characterized premodern societies. Modern societies consist of a variety of specialized institutions.
Modernization theory views development as an internal process in each society (generally perceived of as nation-states.) They often view each case as independent of the others.
Institutional preconditions inevitably involve democracy, anti-communism, and laissez-faire government policy regarding the economy.
Modernizationist solutions to domestic economic problems advocated free-market activities that stress comparative advantage -- a philosophy that suggests that in order for countries to develop, each country should do what it does best.
New values have to be learned. People in developing countries have to develop traits like individualism, personal achievement, and a desire to control their own destiny. Individuals must learn to want economic growth and must be willing to become more mobile. They must learn to defer gratification. The legitimacy of the state becomes important.
Modernization theory argues that traditional cultural values and social institutions impede economic growth in developing countries (Appelbaum and Chambliss, 1997:172). It argues that:
- people in low income countries lack a strong work ethic
- They would rather consume today than invest in the future
- They have large families that prevent investment.
- They are fatalistic. They view hardship as inevitable.
Modernization theory contends that the wealthy countries can play an integral role in facilitating the development of the poor. First, the people living in poor countries have to shed their traditional cultures and institutions and begin to save and invest. Once developing countries have carried out structural and cultural changes, then rich countries can play pivotal roles in helping development. They can help by assisting with birth control programs and by providing low-cost loans for the building of power plants, roads and airports, and to begin new industries (Appelbaum and Chambliss, 1997:172).
With the help of high income countries (money and advise), the developing country will be on the road to technological maturity. During this phase, the economy may experience substantial economic growth but the majority of the population would remain poor. Reinvesting the earnings from their new industrial base will be necessary (Appelbaum and Chambliss, 1997:172).
Finally, the country would enter a period of mass-consumption where the population would enjoy the fruits of their effort and would achieve a high standard of living (Appelbaum and Chambliss, 1997:172).
Appelbaum and Chambliss (1997:173) suggest that some evidence supports the claims of modernization theory. Low and medium income countries with high rates of economic growth are connected with the global economy. The East Asian countries, which were once poor, now prosper because they have high rates of savings and investment. The workers display an intense work-ethic. Often, those countries rely on markets and not governments to people wealth creation.
On the other hand, modernization theory assumes that:
- poor countries are separated from the world economy. It ignores the possibility that one country's prosperity may mean another countries poverty.
- Further, modernization theory ignores the roles that powerful state governments play in helping with wealth-creation as they support, regulate, and direct economic growth.
Marxists argue that first-world involvement in the internal development of poor countries is not desirable. International relationships, overall, flow from a basic desire by first-world capitalists to acquire profit. Eventually, first-world capitalists have to look outside their border for new sources of profit (Appelbaum and Chambliss, 1997:173).
1. Agriculture
Appelbaum and Chambliss (1997:173) note that to profit from the sale of agricultural products, a first-world country might look to acquire land in a semitropical area where the crop can be grown in abundance. This is the case for crops like coffee, cotton, or sugar.
2. Exploitation of Natural Resources
Natural resources, such as petroleum, copper, and iron are needed in industrial economies. Poor countries are sources for these raw materials.
The search for agricultural and natural resources can lead to colonialism. Colonialism is a political-economic arrangement under which powerful countries establish, for their own profit, rule over weaker countries.
A relatively new strategy is to move factories from high-wage countries to low-wage countries. A company may choose this strategy when rising wage rates in industrial countries begin to threaten corporate profits.
Dependency theories represent a critique of modernization theory's assumptions that poor countries are poor because of their lack of economic, social, and cultural development. Dependency theories argue that the poverty experienced by low-income countries is the immediate consequence of their exploitation by wealthy countries on which they are economically dependent (Appelbaum & Chambliss, 1997:173).
The authors argue that poor countries are "locked-in to a downward spiral of exploitation and poverty." Andre Gunder Frank (1972) calls this the development of underdevelopment. Dependency results when foreign businesses make important economic and political decisions for their own advantage and without regard to the best interests of the local population. Except for a few local businessmen who serve the interests of foreign capital, the local population becomes impoverished (Appelbaum & Chambliss, 1997:173).
Is There a Third World?Many have problems with the all-encompassing term 'third-world,' 'developing nations,' or the 'periphery.' After all, countries link El Salvador, Cambodia, and Sierra Leone are lumped into the same category. Obviously, these three countries share no cultural characteristics and are physically far-removed from one another. One might suggest that it's ridiculous to categories these countries the same. On the other hand, El Salvador, Cambodia, and Sierra Leone as well as a host of other developing countries do share a common relationship to the advanced industrialized countries of the world (the first-world, developed nations, or the core). Historically, the common relationship was colonialism. More recently, old colonial affairs characterized by military oppression have transformed into neocolonial relationships. In the present, military control has given way to a situation where rich countries control poor countries through international markets. The core determines prices for commodities and uses the poor countries as dumping grounds for hazardous waste (see Henslin, 1999:245). |
The market oriented theories have generally ignored the role of the military and of political power. Dependency theories contend that power is central in enforcing unequal economic arrangements. Local leaders opposed to inequitable economic arrangements are suppressed. Unionization is outlawed. A popular government opposed to outside influence can be overthrown by the military. Often the police and the military act, not for the needs of the masses, but rather for the economic elite (Appelbaum & Chambliss, 1997:174).
Dependency theory is successful in explaining the lack of development experienced by some countries (like those in Central America), but cannot account for the development that occurred in areas like East Asia (Appelbaum & Chambliss, 1997:174).
Dependent development argues that, under certain circumstances, poor countries can develop, although the wealthier countries shape the development. The governments of the developing countries can assist in defining the course of development (Appelbaum & Chambliss, 1997:174).
The world system represents a system of international stratification. Its proponent, Immanual Wallerstein (1974, 1979), argues that "we must understand the world capitalist system as a single unit, not as individual countries" (Appelbaum & Chambliss, 1997:174). Unlike dependency theory, World system theory argues that there is room for poorer countries to advance within the context of the world economy although this happens rarely.
- The world system is a world market for goods and labor
- The world system calls attention to a division of the world's population into economic classes
- The world system is an international system of formal and informal political relations among the most powerful countries, whose competition with one another helps shape the world economy
- It includes a carving up of the world into unequal economic zones with the wealthier zones exploiting the poorer zones.
1. The Core
Core countries are the most advanced industrial countries and control most of the wealth in the world economy (Appelbaum & Chambliss, 1997:174).
2. The Periphery
The periphery consists of low-income, largely agricultural, countries. Core countries manipulate it for the economic advantage of the core.
3. The Semiperiphery
The Semiperiphery refers to countries that occupy an intermediate position in the world economy. They extract profit from the periphery and are simultaneously exploited by the core. The existence of the middle (the semiperiphery) is critical, because poor countries can hope to advance at least to this stage. With the possibility of advancement within the world system, revolutionary tendencies are mitigated.
As countries compete against each another, one country becomes dominant. The Hegemonic power is the most dominant economic and military power within the world-system.
The world system changes very slowly. Appelbaum and Chambliss (1997:174-5) contend that a given phrase of market arrangements, class structure, interstate system, and core-periphery relations may last for a century or more. Eventually, however, each phase of capitalist expansion ends. The hegemonic power loses its position and a scramble for power follows.
The world system is currently in its fourth phase in which the United States is the hegemonic power. Before U.S. dominance, Great Britain controlled the system for about 130 years. Before Britain, the Dutch ruled the world system for about 180 years. Before the Dutch, the Italians controlled the world system for about 220 years.
World-system theory is a historical theory. It explores time frames that last for decades or even centuries. The NIDL examines the global economy today. The NIDL argues that the division of labor, which characterizes industrial societies, now covers the entire planet. Low-income countries provide cheap labor for firms based in high-income countries.
Maquilas:Maquilas (also known as maquiladoras or twin-plants) are labor intensive assembly plants found outside the core. They employ thousands of people in developing countries. Component parts are exported to the location of the maquila. Local labor assembles them. Then, the finished product is sent back to the country of origin (see Stoddard, 1987:17). |
Three recent developments in the global economy make the NIDL possible. Forbel et al (1980:12) offers three explanations that promote the continued internationalization of the world capitalist economy.
1. The first is the existence of a large pool of labor that is desperate for work and who will, there for, perform any kind of "donkey" (idea from Pareto) labor anytime of the day or night. Furthermore, since there is such an abundance of labor, as individual workers become burned out, there are plenty of other laborers to replace them(1980:13).
2. The second reason for the development of the NIDL is that the division of the labor process has reach a point where each particular job can be done with a minimum of skills and experience. Therefore, costs of training workers are held to a minimum.
3. The third reason is that because of improvements in transportation and communication, goods can be produced any where in the world. Furthermore, commodity production is increasingly subdivided into fragments that can be assigned to whatever part of the world that can provide the most profitable combination of capital and labor (Forbel et al., 1980:14).
Most recently, theorists have attempted to understand production from the perspective of a global economy rather than national economies. While the core secures much of the profit, this is not always the case. Global production can be directed and profits reaped by corporations based in non-core countries. On the other hand, cheap-labor is sometimes available in wealthy countries and/or cheap labor can move to wealthy countries from poor countries (Appelbaum & Chambliss, 1997:175).
A commodity chain simply refers to a network of labor and production processes whose result is a finished product (Appelbaum & Chambliss, 1997:175). It can be seen as links in a chain that begin with raw material and end with a produce delivered to a consumer.
Women are the employees of choice in the maquiladora. The reason is simple. They are the most exploitable. Women in the maquiladora are exploited three ways (see Linda Lim, 1985).
1. Patriarchy
The oldest form of exploitation is patriarchy. It refers to the unequal relationship between men and women.
2. Capitalism
All workers in the capitalist world experience exploitation in the unequal relationship between workers and owners (or managers).
3. Imperialism
There is an unequal relationship between the first-world and third-world as well.
Women who work in the maquilas are triply exploited. One might imply, there for, that they experience incredible suffering. This assumption, however, is probably misplaced. According to Lim (1983:85), "exploitation and liberation may go hand and hand." One might argue that women employed in the maquiladora finally have an alternative to marriage. Their employment might represent empowerment.
NICs are countries with rapidly growing economies. They are found in Latin America and East Asia. NICs refer to countries like Taiwan, South Korea, and Singapore. Other countries are showing signs of joining the NICs such as Malaysia, Thailand, China and Indonesia. They are countries that were once a part of the periphery, but are now firmly part of the semiperiphery. Japan has made it to the core (Appelbaum & Chambliss, 1997:178).
One might ask: Why do some countries modernize while others remain poor?
There are some unusual circumstances.
- The successful NICs were not subject to the kind of economic, social, and political exploitation by industrial powers like the countries in Latin America and Africa experienced.
- They benefited from a long period of economic growth in the world economy from the 1950s to the mid-1970s that provided huge markets in Europe and North America for clothing, footwear, and electronics.
- This period coincided with the height of the cold war. The U.S. and its allies poured substantial resources into East Asia.
Many have argued that culture explains the success of the East Asian NICs.
- They experience cultural homogeneity
- Their Confucian culture emphasizes respect for elders and superiors.
- They show a willingness to sacrifice for today for greater rewards tomorrow.
These cultural traits make Asian workers loyal to their companies and very hard workers (Appelbaum & Chambliss, 1997:178-9).
While there may be some merit to this theory, it is probably overstated. South Korea, for example, is infamous for the street battles that happen regularly occur between government officials and students.
1. Governments Act to Maintain Stability
Governments act to ensure social stability while keeping wages low. They may outlaw trade unions, ban strikes, jail union leaders and generally support the repression of workers (Appelbaum and Chambliss, 1997:179).
2. Governments Act to Direct Economic Development
- Governments provide cheap loans and tax breaks to businesses that invest in industries favored by the government.
- Governments may force businesses to invest their profits in economic growth at home rather then abroad.
- Governments might actually own key industries (Appelbaum and Chambliss, 1997:179).
3. Governments Invest Heavily in Social Programs
Governments invest heavily in social programs such as low-cost housing and universal education. As a result workers do not need high wages to pay for housing which, in turn, makes the countries more competitive in the global market workers (Appelbaum and Chambliss, 1997:179).
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