GLOBAL DIVIDE

- Is about the different factor that affects the improvements/advancements/developments on the living standards of
different places all around the globe
- There’s a division even during the PRE-WORLD WAR 1 or WORLD WAR 1 because of imperialism & colonialism
- Emergence of multilateral institutions/organizations to help countries who are exploited/poor to build their
confidence and on their own

Global Divide
- Connotes disparities (differences/divisions) in INCOME & LIVING CONDITIONS between the advanced and developing
states
Two divisions of Global Divide

(blue: Global North; red: Global South)

1. Global North
- Rich and industrialized countries
- These countries are basically rich countries where they experienced advancements in modern technology & all
services are accessible.

2. Global South
- Poor and developing countries
- These countries are left behind. Even access to basic social services is a matter of privilege. Many places remain
stricken by underdevelopment, poverty, and inequality.
GDP per capita (Gross Domestic Product per capita)
- Under World Bank
- The average income per person
- This measure of income is a useful way for comparing levels of development.
 Increase in GDP is caused by increase in national productivity.
 In terms of development, using GDP per capita approach was about following the path of rich industrialized
countries.
 INCOME INEQUALITY (shared wealth of the poor and rich individuals in the form of taxes)
- a measure of how the wealth in the economy is distributed among the population
 Economic growth is a plus for poverty alleviation, but only when inequality is constant.
 Income inequality is an important part because it tells about the conditions in the society.
 Income inequality is also a constraint on development.

POVERTY
- Defined as an extremely low level of income

Two types of poverty:

1. Absolute poverty
- Refers to income below minimum level required for physical survival (1 dollar per day/50 pesos)

2. Moderate poverty
- Is typically an income of 2 dollars per day, a level in which basic needs are barely met but survival is not
actually threatened
Human Development Index (HDI)
- One measure of development is called HDI and looks at the three indicators:
1. Income (GDP per capita per country)
2. Education (literacy/knowledge)
3. Life Expectancy (the average period that a person may expect to live)
HDI of the Philippines
 According to the United Nations Development Programme, in 2015 the Philippines ranks 116 th, two notches
below its 2014 rank as 114th of the 188 countries included.
- Life expectancy: 68.3 years
- Years of schooling: 11.7 years
- Income: 8,395 US Dollars or 406, 108.12 Pesos per year (33842.3433 per month)
 Think of your own answer: What factors explain the status of the PH in each of the three development indicators?
STAGES OF GROWTH (Rostow, 1999)
1. Traditional Society
- Traditional community, culture, and beliefs
- Conservative society
- Trade is only local
- Not advanced technology
- Agriculture
- Example: PH during Spanish time

2. Transitional Society
- Aspirational citizenry
- Vision with future or modernization
- Commercialization: exports or trade between provinces, not local

3. During take-off
- High level of social change
- Freedom, democracy, human rights
- High level of entrepreneurship
- Industrialization/Modernization: 50%

4. Mature Society
- Strong urbanized society
- With investors
- Industrialization/Modernization: 75%

5. High Mass Consumer Society

- High level of change of technology
- Center of innovations/service industry

Competing Perspectives on Global Divide

1. Modernization Theory
- This theory argues that societies undergo stages of growth and move from traditional to modern one.
- Traditionalism Modernization
- Poor countries must follow the path of advanced countries to development.
- Once key foundations of modernity are in place, these countries will “take-off” toward prosperity and
a modern, high consumption consumer economy.

2. Dependency Theory
- It argues that the root culture of poverty and underdevelopment is imperialism as well as dependency of poor
nations on the rich nations.
- It is a counterargument to the modernization theory.
- According to the dependency scholars, industrial capitalism brings exploitation.
- The local economies are distorted in that they serve mostly the needs of advanced countries but not the needs
of local populations.
- Poor societies are not born but made.
- They believed that modernization theory is ethnocentric.
- Dependency scholars advocate protectionist economic policies one is import substitution industrialization
 3. Neo-liberal Theory
- The intellectual basis of this theory comes from the neo-classical economics, which combines arguments
supportive of free market with scientifically inclined school of economics.
- They suggest the little role of the state in managing the economy.
- This theory was the backbone of the US “Reaganomics” (from Ronald Reagan; tax reduction, reducing of gov’t
spending, increasing of military capabilities, & different reforms) and was a driving policy of Margaret Thatcher
in the UK.
- For economists within this mainstream school, the culprits are the paternalistic politics (an infringement on the
personal freedom and autonomy of a person (or class of persons) with a beneficent or protective intent ) that favor
cronyism(the practice of partiality in awarding jobs and other advantages to friends or trusted colleagues, especially in
politics and between politicians and supportive organizations) , corruption, and bloated bureaucracies; command
economies; fatalistic attitudes, institutions, and technology.
- The policies prescribed by neo-liberalism and advanced by the IMF have been called the Washington
Consensus

4. World System Theory

- The argument of dependency thinkers that the cause of underdevelopment and poverty is external
intervention continues in world system theory, developed by Immanuel Wallerstein.
- He describes the modern world system as being composed of different:
 Core centers of power – Dutch capitalists, United Kingdom, and US
 Semi-peripheral countries – serve as a middleman to core countries’ interests
 Periphery – which consists of the poorest countries
- They disagree that the key actors in the modern world include multinational corporations, international
financial institutions, global media, and technology and trade but believed that the core nations allowed these
countries into the semi-periphery to facilitate capitalist expansion into new peripheral markets.

GLOBALIZATION and the GLOBAL SOUTH

- Walden Bello¸ a Filipino political economist, argues that the new globalizing structure does not eliminate the
traditional geopolitics of power between rich and poor state.
- Globalization clearly remains a process led by a few states, mostly in North America, Japan, and the European
Union.
- According to the World Bank, three countries (China , Brazil, and India) are now among the top ten economies of
the world.
- China and the other BRICS countries (Brazil, Russia, India, China, and South Africa) want to renegotiate
international economic integration and trade.