REMINDER

Reading this material is of no pressure.

Read whenever able and available.

Find time to have academic

information but make time to read
and do precautionary measures for
public safety and health. (AG 2020)
The Global
Economy
LESSON OUTLINE
LESSON 3
• Food Security
LESSON 4
• The North-South Divide
• Global Inequality
LESSON 5
• Global Stratification
• Theories of Global Stratification
The fight against the Global Poverty has lead the
different nations on interdependence. This is basically
manifested through trading; helping other countries by
giving what is lacking to them but gaining something
in return (whatever is abundant to them).

Strengthening the interdependence between countries

has lead to the rise of the Global Economy. The rise of
the global economy has introduced efficiency (refer to
previous discussion) which has resulted to massive
production. The said massive production has brought
massive destruction of our natural resources (which we
gain our basic human needs). One of these important
important basic needs is food. With the reduction,
depletion or destruction of our natural resources, it
may pose a threat to our food security. (AG 2020)
Lesson 3: Global Food Security
Global food security means delivering
sufficient food to the entire world
population. Therefore, it is a priority
of all countries, developed or less
developed. This also means the
sustainability of society such as
population growth, climate change,
water scarcity and agriculture.
Challenges to Food Security
1. Environmental Degradation (refer to
previous discussion)
• Destruction of natural habitats, particularly
through deforestation
• Industrial fishing; destruction of marine life and
ecosystem
• Declined rapid pace of biodiversity and usable
farmland
• Decline in the availability of fresh water due to
soil desertification
2. Global warming **
3. Population growth**
**global warming

Pollution through toxic chemicals had a long term

impact on the environment. The use of persistent
organic pollutants (POPs) has led to significant
industrial pollution. Greenhouse gases trap
sunlight and heat in the earth’s atmosphere
contribute greatly to global warming. In turn, this
process causes the melting of land-based and
glacial ice with potentially catastrophic effects;
the possibility of substantial flooding, a
reduction in the alkalinity of the oceans and
destruction of existing ecosystems.
**population growth

Population growth (increase) intensify

the demands and consumption
resulting to an increase in the
dependence to our natural resources
to satisfy our basic human needs (AG
2020)
Possible solutions to Food Security
1. Sustainable Development (refer to
previous discussion) **
2. The World Economic Forum **
**sustainable development
Sustainable development suggests the idea
of maintaining the improvement enjoyed
today (together). The United Nations tries
to address the issue on global food security
by means of interdependence between and
among their nations. Second to the UN’s 17
SDGs is ending hunger, achieving food
security and improved nutrition, and
promoting sustainable agriculture.
** the world economic
forum
The World Economic Forum (2010) also
addressed the issue at hand through the New
Vision for Agriculture (NVA) in 2009 wherein
public-private partnership were established. It
has mobilized over $10 billion that reached
smallholder farmers. The Forum’s initiatives
were launched to established cooperation and
encourage exchange of knowledge among
farmers , government, civil society and the
private sector in both regional and national
level.
 LESSON 4:
The North-South Divide
and
Global Economic Inequality
4.1. The North-South Divide
• The concept of a gap between the
Global North and the Global South in
terms of development and wealth (
www.rgs.org/schools)
• a socio-economic and political
categorization of countries.
History of the divide
The idea of categorizing countries by their economic
and developmental status began during the Cold War
with the classifications of East and West. The Soviet
Union and China represented the East, and the United
States and their allies represented the West. The term
"Third World" was coined by states hoping to navigate
between the two poles of the Cold War, and ultimately
gave birth to the Non-Aligned Movement. These
countries were generally less economically developed
than their First- and Second-World counterparts. As
some Second World countries joined the First World,
and others joined the Third World, a new and simpler
classification was needed. The First World became the
"North" and the Third World became the "South
 The North-South Divide
Global North Global South
• United States, Canada, • Africa, Latin America
Western Europe. Outermost
Developing Asia,
Regions of the European
Union Including Middle East
• Developed parts of Asia,
Australia and new Zealand
• Home to all G8 and to four of
the five permanent members
of UN Security Council
• G8: France, Germany, Italy,
UK, US, Japan, Canada,
Russia
 Classification of the countries
1. Most Developed Countries (MDCs): the
richest of the industrialized and democratic
nations of the world.
2. Less Developed Countries (LDCs):
countries with little industrial development,
little wealth, and high population growth.
3. Least Developed Countries (LLDCs):
very low per capital income, low literacy
rates, and very little in the way of
manufacturing industries.
 Classification of the countries
In the 1980s, the Brandt Line** was
developed as a way of showing the how the
world was geographically split into
relatively richer and poorer nations.
According to this model:
• Richer countries are almost all located in the
Northern Hemisphere, with the exception of
Australia and New Zealand.
• Poorer countries are mostly located in tropical
regions and in the Southern Hemisphere.
 Classification of the countries
However, over time it was realized that
this view was too simplistic. Countries
such as Argentina, Malaysia and
Botswana all have above global
average GDP (PPP) per capita, yet still
appear in the ‘Global South’.
Conversely, countries such as Ukraine
appear to be now amongst a poorer
set of countries by the same measure.
** Brandt Line
a divisionary line which simply
separates the rich countries in the
North from the poor countries in the
South. It encircles the world at latitude
of 30°N. It crosses North and Central
America, North of Africa and India, and
then it goes down towards the South,
placing Australia and New Zealand
above the line
 The gap between the ‘North’ and ‘South’

Despite very significant development gains

globally which have raised many millions of
people out of absolute poverty, there is
substantial evidence that inequality between the
world’s richest and poorest countries is widening.
In 1820 western Europe's per capita income was
three times bigger than Africa’s but by 2000 it
was thirteen times as big. In addition, in 2013,
Oxfam reported that the richest 85 people in the
world owned the same amount of wealth as the
poorest half of the world’s population.
 The gap between the ‘North’ and ‘South’

Today the world is much more complex than the

Brandt Line depicts as many poorer countries have
experienced significant economic and social
development. However, inequality within countries
has also been growing and some commentators
now talk of a ‘Global North’ and a ‘Global South’
referring respectively to richer or poorer
communities which are found both within and
between countries. For example, whilst India is still
home to the largest concentration of poor people in
a single nation it also has a very sizable middle
class and a very rich elite.
 The gap between the ‘North’ and ‘South’

There are many causes for these inequalities

including the availability of natural resources;
different levels of health and education; the
nature of a country’s economy and its
industrial sectors; international trading policies
and access to markets; how countries are
governed and international relationships
between countries; conflict within and between
countries; and a country’s vulnerability to
natural hazards and climate change.
 Three(3) main reasons why our world is so
unequal today
1. Colonialism
• Today’s North-South gap traces its roots
to the colonization of the Southern
world regions by Europe over the past
several centuries. This colonization
occurred at different times in different
parts of the world, as did decolonization.
• Control by one power over a dependent
area or people.
 Three(3) main reasons why our world is so
unequal today
2. Trade
• What you are spending to bring goods
into your country is a greater sum that
what you are making by selling
products in the global economy.
• You are loosing money.
•  Southern countries suffered from this.
 Three(3) main reasons why our world is so
unequal today
3. Debt
• Their products were loosing money in
the global economy, so they needed
to increase production.
• The only way they could do this was
to borrow money from the rich
northern countries. This put them in
debt.
4.2. Global Economic Inequality
The world is full of inequalities. There's
racial inequality, gender inequality,
health, education, political inequality,
and of course, economic inequality.
Some people are rich, and some
people are poor, and it can seem
pretty impossible to fix.
4.2. Global Economic Inequality
Globalization and inequality are closely
related. We can see how different nations
are divided between the North and the
South, developed and less developed, the
core and the periphery. These differences
mainly affect one key aspect of inequality
in the contemporary world – global
economic inequality. There were two types
of economic inequality – wealth
inequality and income inequality.
Wealth Inequality
Wealth refers to the net worth of a
country. It takes into account all the
assets of a nation (natural, physical
and human) less liabilities. In other
words, wealth is the abundance of
resources in a specific country. This
means that wealth inequality speaks
about distribution of assets.
Income Inequality
Income is the new earnings that are
constantly being added to that pile of
a country’s wealth. When we talk of
income inequality , we mean that
new earnings are being distributed; it
values the flow of goods and services,
not a stock of assets
** difference between wealth and
income inequality
Wealth Inequality – distribution of wealth
(added to the country’s assets; there is no
widely recognized monetary measure that
sums up these assets

Income Inequality – distribution of income

(not added to the country’s pile of wealth; it
cannot be determined because of its
continuous flow); can be measured by using
Gross Domestic Product
Let's look at both types of inequality at
the global level. Global wealth today is
estimated at about 260 trillion dollars,
and is not distributed equally. One study
shows that North America and Europe,
while they have less than 20% of the
world's population, have 67% of the
world's wealth. China, which has more
people than North America and Europe
combined, has only about 8% of the
wealth. India and Africa together make up
almost 30% of the population, but only
share about 2% of the world's wealth.
We are learning economics, so we will focus on
income inequality. For instance, there are ten
people representatives on the planet, and they're
lined up according to income; Poorest to richest
and we are to divide 100 dollar.

Group A, poorest 20% - 1dollar

Group B, second poorest 20%, - 2 dollar
Group C, middle class 20%, - 4 dollar
Group D, rich 20% - 10 dollar
Group E, richest 20% - 83 dollar

This is with respect to the kind or nature of the

works they are doing.
Branko Milanovic, an economist that
specializes in inequality, explained all this
by describing an economic big bang -
"At first, countries' incomes were all
bunched together, but with the Industrial
Revolution the differences exploded. It
pushed some countries forward onto the
path to higher incomes while others
stayed where they had been for millennia."
The Industrial Revolution created a lot
of inequality between countries but
today globalization and international
trade are accelerating it. Most
economists agree that globalization
has helped the world's poorest people,
but it's also helped the rich a lot more.
 LESSON 5:

Global Stratification
and its Theories
5.1 Global Stratification
For the sake of clarity and simplicity, the
best way to understand global stratification
is to think of the world composed of three
categories of nations, based on their degree
of wealth or poverty, their level of
industrialization and economic
development, and related factors; literally,
global stratification means grouping or
dividing the nations based on the
mentioned criteria (AG 2020)
First typologies
1. The First World – generally the
western, capitalist democracies of North
America and Europe and certain other
nations (Australia, New Zealand, Japan).
2. The Second World – the nations
belonging to the Soviet Union
3. The Third World – all the remaining
nations, almost all of them from Central
and South America, Africa, and Asia.
Second typologies
1. Developed – superior nations
2. Developing – under progress nations
3. Underdeveloped – inferior nations

Third typologies
1. Wealthy (or high-income)
nations
2. Middle-income nations
3. Poor (or low-income) nations
Third typologies
This classification has the advantage of being
based on the most important economic
difference among the nations of the world: how
much income and wealth they have. At the risk
of being somewhat simplistic, the other
important differences among the world’s
nations all stem from their degree of wealth or
poverty. These three categories of nations (with
the middle category divided into upper middle
and lower middle). The world is indeed stratified
to a very great degree.
5.1 Global Stratification (HOW?)
1. Wealthy Nations
2. Middle-Income Nations
3. Poor Nations

Note: With global stratification, the world

is divided into many categories (from the
first to third typologies). Now, the above
mentioned will explain how they were
being grouped or stratified. (AG 2020)
Wealthy Nations
The wealthy nations are the most industrialized
nations, and they consist primarily of the nations of
North America and Western Europe; Australia, Japan,
and New Zealand; and certain other nations in the
Middle East and Asia. Many of them were the first
nations to become industrialized starting in the 19th
century, when the Industrial Revolution began, and their
early industrialization certainly contributed to the great
wealth they enjoy today. Yet it is also true that many
Western European nations were also wealthy before the
Industrial Revolution due to the fact that they had
colonial powers and acquired wealth from the resources
of the lands that they colonized.
Although wealthy nations constitute only about one-
fifth of the world’s population, they hold about four-
fifths of the world’s entire wealth. They are the
leading nations in industry, high finance, and
information technology. Although each of the world’s
wealthy nations is internally stratified to a greater or
lesser degree, these nations as a group live a much
more comfortable existence than middle-income
nations and, especially, poor nations. People in
wealthy nations are more educated and healthier, and
they enjoy longer lives. At the same time, wealthy
nations use up more than their fair share of the
world’s natural resources, and their high level of
industrialization causes them to pollute and otherwise
contribute to climate change to a far greater degree
than is true of nations in the other two categories.
Middle-Income Nations
Middle-income nations are generally
less industrialized than wealthy
nations but more industrialized
than poor nations. They consist
primarily of nations in Central and
South America, Eastern Europe, and
parts of Africa and Asia and constitute
about one-third of the world’s
population.
There is much variation in income and wealth within
the middle-income category, even within the same
continent. In South America, for example, the gross
national income per capita in Chile, adjusted to U.S.
dollars, is $13,270 (2008 figures), compared to only
$4,140 in Bolivia (Population Reference Bureau,
2010).Population Reference Bureau. (2010). 2010
world population data sheet. Washington, DC: Author.
Thus many international organizations and scholars
find it useful to further divide middle-income nations
into upper-middle-income nations and lower-middle-
income nations. Not surprisingly, many more people
in the latter nations live in dire economic
circumstances than those in the former nations. In
Bolivia, for example, 30% of the population lives on
less than $2 per day, compared to only 5% in Chile.
Poor Nations
Poor nations are certainly the least
industrialized and most
agricultural of all the world’s
countries. This category consists
primarily of nations in Africa and parts
of Asia and constitutes roughly half of
the world’s population.
By any standard, people in these nations live a
desperate existence in the most miserable
conditions possible. They suffer from AIDS and other
deadly diseases, live on the edge of starvation, and
lack indoor plumbing, electricity, and other modern
conveniences that most Americans take for granted.
Most of us have seen unforgettable photos or video
of African children with stick-thin limbs and
distended stomachs symptomatic of severe
malnutrition. We revisit their plight in a later section
on the consequences of global stratification.
5.2 Theories of Global Stratification (WHY?)
THEORY MAJOR ASSUMPTION
Wealthy nations became wealthy because early on
they were able to develop the necessary beliefs,
values, and practices for trade, industrialization, and
rapid economic growth to occur.
MODERNIZATION
Poor nations remained poor because they failed to
develop these beliefs, values, and practices; instead,
they continued to follow traditional beliefs and
practices that stymied industrial development and
modernization.
The poverty of poor nations stems from their
colonization by European nations, which exploited the
poor nations’ resources and either enslaved their
populations or used them as cheap labor. The
DEPENDENCY
colonized nations were thus unable to develop a
professional and business class that would have
enabled them to enter the industrial age and to
otherwise develop their economies.
5.2.1. Modernization Theory
According to this theory, rich nations became
wealthy because early on they were able to
develop the “correct” beliefs, values, and
practices—in short, the correct culture—for
trade, industrialization, and rapid economic
growth to occur. These cultural traits include a
willingness to work hard, to abandon tradition in
favor of new ways of thinking and doing things,
and to adopt a future orientation rather than
one focused on maintaining present conditions.
(McClelland, 1967; Rostow, 1990)
Modernization Theory
This theory frames global stratification
as a function of technological and
cultural differences between nations.
And it specifically pinpoints two
historical events that contributed to
Western Europe developing at a faster
rate than much of the rest of the
world; Columbian Exchange and
Industrial Revolution
Columbian Exchange
This refers to the spread of goods, technology,
education, and diseases between the Americas
and Europe after Columbus’s so-called
discovery of the Americas. This exchange
worked out pretty well for the European
countries. They gained agricultural staples like
potatoes and tomatoes, which contributed to
population growth, and provided new
opportunities for trade, while also
strengthening the power of the merchant class.
But the Columbian Exchange worked
out much less well for Native
Americans, whose populations were
ravaged by the diseases brought from
Europe. It’s estimated that in the 150
years following Columbus’ first trip,
over 80% of the Native American
population died due to diseases such
as smallpox and measles.
Industrial Revolution (18-19th century)
This is when new technologies like steam power
and mechanization allowed countries to replace
human labor with machines and increase
productivity. The Industrial Revolution at first
only benefited the wealthy in Western countries.
But industrial technology was so productive that
it gradually began to improve standards of living
for everyone. Countries that industrialized in the
18th and 19th century saw massive
improvements in their standards of living. And
countries that didn’t industrialize lagged behind.
 So why didn’t the Industrial
Revolution take hold
everywhere?
Well, modernization theory argues that
the tension between tradition and
technological change is the
biggest barrier to growth. A society
that’s more steeped in family systems
and traditions may be less willing to
adopt new technologies, and the new
social systems that often accompany
them.
 Why did Europe
modernize?
Max Weber (1904-1958), one of the founders of
sociology, wrote that Western Europe was able
to do this because the Protestant Reformation
diminished the traditional distrust of the
Catholic Church for material success and social
and economic change. The new Protestant
ethic that Western Europeans adopted stressed
the importance of hard work and material
success in one’s lifetime rather than the
Church’s traditional emphasis on rewards in an
afterlife.
The Protestant Reformation primed
Europe to take on a progress-oriented
way of life, in which financial success
was a sign of personal virtue, and
individualism replaced communalism.
This is the perfect breeding ground for
modernization.
Four Stages of Modernization
Introduced by Walt Rostow’s

1. The Traditional Stage

2. The Take-off Stage
3. The Drive to Technological Maturity
4. High Mass Consumption
1. Traditional Stage
Refers to stage where societies that are
structured around small, local
communities with production typically
getting done in family settings.
Because these societies have limited
resources and technology, most of their
time is spent laboring to produce food,
which creates a strict social hierarchy.
Tradition rules how a society functions.
2. Take-off Stage
People begin to move beyond doing
what’s always been done, a society
moves into. Here, people begin to use
their individual talents to produce
things beyond the necessities, and this
innovation creates new markets for
trade. In turn, greater individualism
takes hold, and social status is more
closely linked with material wealth.
 3. The Drive to Technological Maturity
Technological growth of the earlier periods
begins to bear fruit, in the form of
population growth, reductions in absolute
poverty levels, and more diverse job
opportunities. Nations in this phase
typically begin to push for social change
along with economic change, like
implementing basic schooling for everyone,
and developing more democratic political
systems.
4. High Mass Consumption
When your country is big enough that
production becomes more about wants
than needs. Many of these countries
put social support systems in place to
insure that all of their citizens have
access to basic necessities.
5.2.2. Dependency Theory
Rather than focusing on what poor
countries are doing wrong, this theory
focuses on how poor countries have
been wronged by richer nations. This
model stems from the paradigm of
conflict theory, and it argues that the
prospects of both wealthy and poor
countries are inextricably linked.
Whereas modernization theory attributes global
stratification to the “wrong” cultural values and
practices in poor nations, dependency theory blames
global stratification on the exploitation of these nations
by wealthy nations. According to this view, poor
nations never got the chance to pursue economic
growth because early on they were conquered and
colonized by European ones. The European nations
stole the poor nations’ resources and either enslaved
their populations or used them as cheap labor. They
installed their own governments and often prevented
the local populace from getting a good education.
As a result, the colonized nations were unable to
develop a professional and business class that
would have enabled them to enter the industrial
age and to otherwise develop their economies.
Along the way, wealthy nations sold their own
goods to colonized nations and forced them to run
up enormous debt that continues to amount today.
Because dependency theory implies that poor
nations remain poor because of lack of opportunity
owing to exploitation by wealthy nations, it falls
into the conflict perspective on stratification.
Furthermore, this theory argues that in
a world of finite resources, we can’t
understand why rich nations are rich
without realizing that those riches
came at the expense of another
country being poor.
The Modern World-Systems Theory
• The history of colonialization is what
inspired American sociologist Immanuel
Wallerstein’s model of what he called
the Capitalist World Economy.
• The world systems theory is established
on a three-level hierarchy consisting of
core, periphery, and semi-
periphery areas
Core countries
• The industrialized capitalist countries on which
periphery and semi-periphery countries depend.
• They control and profit the most from the global
market, thus making them “core” of the world
system.
• Usually recognized as wealthy nations with a variety
of resources and are favorable location compared to
other states.
• Have strong state institutions, a powerful military
and global political alliances.
Ex. US, Canada, Australia, European Union, South
Korea and Japan
Periphery countries
• Periphery countries are those that are less developed than the
semi-periphery and core countries.
• The usually receive a disproportionately small share of global
wealth.
• Have weak state institutions and are dependent on more
developed countries.
• These countries are usually behind because of obstacles such as
lack of technology, unstable government, and poor education and
health systems.
• In some instances, the exploitation of periphery countries’
agriculture, cheap labor, and natural resources aid core countries
in remaining dominant as explained by Dependency Theory.
Ex. Afghanistan, Uganda, Syrian Arab Republic, and Philippines.
(American Sociological Review, 2000)
Semi-periphery countries
• The industrializing, mostly capitalist countries which are
positioned between the periphery and core countries.
• Have organizational characteristics of both core and
periphery countries, and are often geographically located
between core and peripheral regions as well as between
two or more competing core regions.
• They play a major role in mediating economic, political, and
social activities that link core and peripheral areas.
• They allow for the possibility of innovative technology,
reforms in social and organizational structure, and
dominance over peripheral nations.
Ex. China, Taiwan, Singapore, Mexico, and Brazil
That’s it for today. Thank you for reading.
Proceed in making your homework.
Please see the attached word file.

Doing such homework is of no pressure.

Continue to be informed in your
academics and with the precautionary
measures for public health. Keep safe
everyone 