chapter 3

FIG. 5

G195

Exploitation colonies: colonies, which used other people to get rich

Settlement colonies: colonies Europeans went to live (for a new life, job)
 

G204

Political system: tells you how a country/state is managed.

Centrally-governed country: laws are the same for everything à education, crime, tax, etc.

G205

Sometimes a number of smaller states unite and form a federation.

Famous example: USA with 50 states

§3.3 - Booming India

Globalization in India

• China and India have both a huge population, in both countries economy is growing fast because of globalization. India & China are two of the world’s emerging countries
• Wages in both countries are much lower than in western countries. India is a low-waged economy. Those countries are very attractive for companies in US, West Europe & Japan. Outscoring = to send out work to another company
• India is attractive for the IT sector, companies that work in information and communication technology. IT sector in India is booming with an annual growth of 25-30%.

Hard work and discipline

• Reasons why India is popular with IT companies:
• Many well-educated Indian people speak English as well as their native language. (because of the colonial history)
• Indian IT workers do their work well and are cheap.
• For decades, India & China had a closed economy, with the emphasis on self-subsistence à changed after 1990 à both countries now free market economy à welcomes foreign countries. China is known as the ‘factory of the world’. India is becoming the ‘office of the world’.
• 2005: special economic zones (SEZ’s) were selected. Companies in theses zones have freedom and pay almost no tax. India wants to copy this too.

FIG 12!

G190

Globalization/internationalization: the never-ending international movement of people, money, goods and information.

Driving power behind globalization is economy.

G191

Multinational = a company that operates in different countries

• They specialize in the production of goods (computers, medicines, cars, televisions, cigarettes, shoes, soft drinks, detergents)
• 65000 multinationals
• Before they start working they look at economic and political factors.

Economic factors: wage level & education of workers

Political factors: laws, taxes, regulations & willingness of the government to cooperate.

§3.4 – India Shinig?

The elephant is rising

• India is at the beginning of a major metamorphosis. They’re taking their first steps to becoming a developed country.
• Most modern metropolis is Mumbai. (=India’s equivalent of Shanghai). Offices and flats are replacing the slums. Around 50 million Indians belong to a wealthy middle class (fig 16).
• Majority is poor, 1 in 4 people live below the poverty line of 1 dollar a day.

70% live in countryside & work in subsistence agriculture.

In the slums they live in poverty without electricity, clean drinking water or good medical care, many are unemployed or earn some money in the informal sector.

Dual economy = economy with modern, developed part and a traditional, less advanced part. (dual = two)

Population growth versus economic growth

• Population growth à poverty. Everyday 45000 babies are born in India.
• Indian women have 2,9 children on average.
• Reasons why Indians want a lot of children:
  • Can bring money
  • To look after them
  • Religious duty (they prefer sons)
  • Daughters are useful à you lose them when the get married à costs a lot because need to provide dowry when they marry.
• Government thinks increasing wealth will have an effect on family size. When people have a job and income they usually want 1 of 2 children.

G110

Absolute number: whole numbers

Relative numbers: in percentages

Birth/death rate = number of births/deaths per year

Easier to compare regions with relative numbers

G111

Demographic transition = long-term changes in population size because of births & deaths.

Fast population growth = population explosion. (look GG)

G112

Population chart/population pyramid is a bar chart that shows the age structure of a population (look in GG). Statistics are in relative or absolute numbers. (fig. 7.8)

G113

Pyramid = fast growth = high birth rate (poor countries) = stage 1 and 2

Grenade = slow growth = low birth rate (rich countries) = stage 4

Onion = shrinking = birth rate falling, death surplus = stage 4 and 5

G201

Development cooperation = developing countries getting aid from rich countries

2 types:

1st depends on the kind of aid: financial, food, technological or in the form of goods

- Sustainable development aid (for improvements; to train doctors or build roads and water pipelines)

- Emergency aid provided during famines, natural disasters & wars to help people stay alive

2nd depends on who gives the aid: private organisations or governments

- Joint venture = companies that work with company in developing country or with the national government.

- Bilateral aid = donor country (gives aid) & recipient country (gets aid).

Multilateral aid:  group of rich countries gives aid to a developing country.

§3.5 – Emerging countries

How big is an economy?

• Size of country’s economy you can describe using GDP (gross domestic product).

GDP = total value of all the goods & services that a country produces in 1 year.

• 1st look at exchange rates à convert GDP of all countries into $ or €.

Exchange rate = value of 1 country’s currency in terms of another country’s currency.

• Look at purchasing power by comparing prices in different countries.
• Calculating GDP on basis of purchasing power à situation in developing countries looks better (costs less to live).

Exchange rate = value of 1 country’s currency in terms of another country’s currency.

• Look at purchasing power by comparing prices in different countries.
• Calculating GDP on basis of purchasing power à situation in developing countries looks better (costs less to live).

What are emerging countries?

• Nowadays much more difficult to divide the world because many developing countries have rapid growth
• Fig. 23.

Emerging countries: not yet developed countries, which are growing really fast.

A country must fulfil 2 conditions to be an ‘emerging country’;

• Extremely fast growing economy (5-10% per year) à because they are benefiting from the globalization of the world economy.
• GDP is still small, 2/3 of world’s population lives in China & India but they only earn 8% of the world’s economy.

The Big Three – but for how much longer?

• US = biggest economy in the world. Japan and Germany are in 2nd and 3rd place. EU is one of the world’s three great economic powers (together with US & Japan)
• China is moving up to the 2nd place; the prognosis is that it will take the 1st place from the US around 2040. By that time India will be in the 3rd place.
• 4 fastest developing countries: Brazil, Russia, India & China (BRIC countries)

(Figures in book)

G173

Important development indicator: income of population

à Gross National Product (GNP) = all the money that all the people earn together in 1 country.

GNP per head: total GNP/ number of people

Another indicator:

Gross Domestic Product (GDP) = all the production in a country expressed in money.

GNP includes all the earnings of the population of a country including of the ones who live there and work abroad.

2 disadvantages of average GNP per head:

• Some countries have just small groups that are rich but the rest are poor à average doesn’t tell you much about actual conditions.
• Not all regions in a country are equally rich or poor.

G198

Globalization is increasing international flow of goods, money and information.

The movement of money is a direct result of global trade.

G203

To improve world trade you must stop tariff barriers between countries.

Countries outside the EU are protected by a tariff barrier: The Common External Tariff

EU, Japan & NAFTA are economic power blocs because they produce all sorts of goods and services and the market is big.

à power blocs are good for the people who live in the country but not for the people outside the country.