Global Inequality-Theory and Factors

SEMINAR ON GLOBAL DEVELOPMENT, ECONOMIC & SOCIAL ISSUES(UHP 6013)

PREPARED BY:MOHD FARID BIN MD YUNOS (MB123034)NADZIRAH BINTI HOSEN (MB133015)RABIATUL ADAWIYAH BINTI ABD KHALIL (MB133011)YEOH WEI CHERNG (ME131053)

FACTORS THAT CONTRIBUTE TO GLOBAL AND DOMESTIC INEQUALITIES

• Introduction• Dependency theory• Dependency theory and global inequality• Factors that contribute to domestic and global

inequalities.• Case Studies• Conclusion

content

The emergence of global inequality as a theme implies a horizon that is global and adopts human equality as a norm. Equality as a general sensibility arose with liberalism and socialism. (Franklin, 1997)

As a theme global inequality goes back by and large to the mid-twentieth century. As a global sensibility it is part of the postwar era shaped by the United Nations and the adoption of the Universal Declaration of Human Rights. UN agencies such as the UNDP, UNRISD, UNICEF and UNESCO have done much to monitor world-scale inequality. (Nederveen, 2002)

Global inequality evokes what has been termed the ‘second great transformation’, the transformation from national market capitalism to global capitalism.

Inequality is generally used to refer to income. However, income inequality is not a comprehensive way to look at inequality. In fact, there are other aspects such as financial and land assets, or health and education, which should be taken into account. It may be argued that investigating income inequality is nonetheless quite effective because it is strictly correlated with other inequalities in areas such as land and education. (World Bank, 2000)

Points of triangle able to represent the relationship between globalization, growth & inequality.

Inequality is related to dependency theory in term of socio-economic transformation in a region (third world country in relation with developed country).

INTRODUCTION

DEPENDENCY THEORYDependency Theory Argument: There are different kind of states in the world that performs different functions in the world economy

CC – Centre of the Centre: The richest most & powerful country - US, UK, FrancePC – Periphery of the Centre: Industrialized wealthy country – Canada, Japan CP – Centre of the Periphery: Still developing but they have fair amount of wealth – India, BrazilPP – Periphery of the Periphery: Poorest country – Cambodia

CC PC

CP PP

RichPoorThe rich corporate with one another

Metropolis or core nations Capitalist classSatellite or peripheral countries Working class

Dependency Theory Marxism

exploit exploit

SIMILARITY

DEPENDENCY THEORYDependency Theory

Centre(Domination)Peripheral(Dependent)

Depend on• Create job opportunities• Purchase goods with lower price• Improve technology and knowledge

• Natural resources being exploit• Loss control over their own market• Purchase goods with higher price• Slow improvement on technology and knowledge

Developed CountryDeveloping / Less Developed

MetropolisRural

RuralRural

Rural

• Capital • Technology & Facilities• Knowledge & Equipment

Depend on

Output Output

Introduced by Karl Marx

More disadvantage rather than advantage

More advantage rather than disadvantage

DEPENDENCY THEORY & GLOBAL INEQUALITYDEPENDENCY THEORY AND ITS RELATION TO GLOBAL INEQUALITY Argument on International system characteristics based on dependency theory:

a. International division of labour between or of these countries• Centre dominate the industry, technology, research capital and intensive industries• While the periphery produce cheap labors and resource extraction occurs in this regionb. Class distinction• Each of these different types of countries around the world has clear division between the rich and the poor - this rich people are the political, elite – all the rich corporate with one another to ensure they stay in power and increase their wealth - they collaborate with each other to maintain the system the way it is.c. Global capitalism• all of these structures - the labour , class distinction occur in wider global distinction - liberal economy dominate theories of finance - which serve the interest of the core countries - multinational corporations & banks in this system are instruments of rich people in the core countries - international institutions like the world bank - international monetary - all serve the rich countries and people of the world

Why are so many countries in the world are not developing?• International system preventing them from doing so • International system is exploitative - characterize by the dominant of some countries over others

DEPENDENCY THEORY AND ITS RELATION TO GLOBAL INEQUALITY• All serve the interest of the wealthy - they don’t serve the interest of developing countries - they don’t promote development or equal opportunities instead the system promote dominance and exploitation - so from dependency perspective - how can state developed in this kind of system that actually designed to prevent them from developing • And dependency theory call this underdevelopment - as a result the system promote underdevelopment of countries around the world and that is why it is not seen countries develop in the way that traditional economic theory describes.

DEPENDENCY THEORY & GLOBAL INEQUALITY

•Unemployment rates are a measurement of economic insecurity.•Since 1995, unemployment is up over the last 10 years in every developing region.

•Number of people in a group exceeds the carrying capacity of the region occupied by group.•Relationship human population & environment.

•The structure of the global economy is particularly unfavourable to developing countries, where tax revenues and other benefits often fall short of what is necessary and appropriate.•The interests of richer countries also predominate in ownership and control of new knowledge. •Rights and opportunities over vital sectors including information technology and pharmaceuticals are concentrated in the richer economies.

•Laid foundation for economic gap between rich and poor.•Colonial powers exploited resources of the local peoples and enslaved, massacred and subjugated the population•Local populations were forced out of their fertile lands •Taxes were imposed on colonies to be paid in cash which was difficult for traditional farmers to get.

Colonialism and its legacies Structure of world economyUnemployment or having poor jobOverpopul ation

Factors that contribute to inequality

MAIN FACTORS OF GLOBAL AND DOMESTIC INEQUALITYGLOBAL FACTORS

DOMESTIC FACTORSinfluenced/causing

GLOBAL FACTORS

DOMESTIC FACTORS

Case Study (BRAZIL)

•5th larg est cou ntry in the worl d•203 milli on by July 201 1•22 peo ple per km²•2/3 of pop ulati on are und er age 30

POPULATION

•18.8 3 birt hs per 100 0 pop ulati on •6.35 deat h per 100 0 pop ulati on •Ave rag e life exp ecta ncy is 72.6 year s

BIRTH & DEATH RATE

•60% of the pop ulati on lives in pov erty (hu ge ineq ualit ies) •Ave rag e inco me per capi ta was €2,2 37 •Ove r 40 milli on live on less than €1 per dayLIVELIHOOD

Brazil’s main function was to export its raw materials and unprocessed agricultural products to Portugal and other Western countries (Europe and US). Brazil had little control over the price paid for these product and for this reason the economy fluctuated as the price of these commodities went up and down. These large changes in Brazilian economic growth made it hard to plan for investment in infrastructure, education and health care. After World War 2, instead of exporting cheap raw material and importing expensive manufactured goods, Brazil invested in home grown manufactured goods and put high taxes on imported manufactured products to keep them out of the markets (Imports Substitution Scheme). However the import substitution scheme it cost a lot of money which Brazil borrowed from international banks (increase debts). The world reduce their demand for Brazil products and make it hard for them to repay their debts.

Classic Colonial Trade Pattern Neo - colonialismCase Study (BRAZIL)

From Economic point of view :

Brazil has been a very divided society where the gap between the poor and rich has been much wider than in European countries. Portuguese imported huge numbers of African slaves to work on the sugar and coffee plantations. The African slave was abolished and their descendants continued to be poor, uneducated, unskilled labourers. The wealth and land of Brazil was in the hand of a very small minority of colonists (Portuguese descendants). As a result, today ,black Brazilian are more likely to be poorer and uneducated than white Brazilian European descended Brazilian. This big gap between rich and poor led to a lot of political unrest as people in Brazil demanded changes. Then, for the 20th century Brazil was ruled by a military dictatorship due to the political unrest caused by this huge inequality.

Case Study (BRAZIL)

From social point of view :

Thus, based on above statement and case study, the critiques of dependency theory can be leveled within a nation (Domestic) as well as internationally (Global). How to eliminate DEPENDENCY THEORY ??? Under-developed regions need to isolate from Metropolis or the capitalist states. Then, they will have gain independence.

CONCLUSION

CORE“Metropolis”

Industrial Goods

Food, Raw Materials

PERIPHERY “Satellites”

REFERENCES

Ahmad Shukri Mohd Nain dan Rosman Md. Yusoff (2003), Konsep, Teori, Dimensi & Isu Pembangunan, Universiti Teknologi Malaysia Skudai, Johor Yves Keller, Inequality and Economic Growth in Brazil, Bachelor’s Thesis, Department of Economics in University of Zurich Franklin, J (ed) (1997) Equality (London: Institute for Public Policy Research). Nederveen Pieterse, J (2002b), Globalization, kitsch and conflict: Technologies Of Work, War And Politic, Review of International Political Economy, 9 (1), pp 1–36. World Bank (2000) A Better World for All (Washington, DC: World Bank).

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