Non Allied And Neutral Countries Economics Essay

Plans to assist advance development in these “ Third World ” states were foremost conceived at the Bretton Woods conference in 1944. Representatives of 44 states met in Bretton Woods, N.H to speak about postwar fiscal agreements. It was at this meeting that the International Bank for Reconstruction and Development ( World Bank ) and International Monetary Fund were developed. The World Bank consisted of five divisions the International Bank for Reconstruction and Development ( IBRD ; its chief constituent ) , the International Development Association ( IDA ) , the International Finance Corporation ( IFC ) , the Multilateral Investment Guarantee Agency ( MIGA ) , and the International Center for Settlement of Investment Disputes ( ICSID ) ( ) . The two chief divisions associated with development were the IFC and IDA. The IFC did its portion by imparting money to private concern in developing states. With fresh capital, the hope was that these concerns would be able to bring forth goods, which could so be purchased by the states people and in-turn create a stable economic system within the underdeveloped state. The intent of the IDA was to assist out the Bankss poorest states by supplying involvement free loans. As seen in the category movie “ Life and Debt, ” Jamaica was able to travel to the World Bank and inquire for a loan when they ‘re state was forced to come up with money that was n’t available. This loan petition was most likely handled by the IDA. Another establishment that was created was the International Monetary Fund. With more than 180 states as members, the intent of the IMF was to assist guarantee the smooth international purchasing and merchandising of currency. The IMF met this demand by stabilising currency-exchange rates and by supplying advice and proficient aid to its barrowing states. Member states do their portion by lending runing financess and receive voting rights based on their engagement in international trade and national income.

There are many footings that are associated with states that have non reached an industrial province. Developing states, 3rd universe, and planetary South are some footings that can be used in depicting these states ( category notes ) . Bing a state that is labeled by one of these footings can be tough. If you were a developed state would you desire to acquire involved economically with a state with lifestyle associated with these footings. This is why its it so hard for the developing states to acquire involved with the universe economic system because of their repute and the colored judgement that comes with it.

Short Answer Question # 2

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

One of the chief indexs of development in a state is its Gross Domestic Product or GDP. Gross Domestic Product is measures the sum of goods and services produced in a specific state or part. GDP has become one of the chief statistics used by bookmans to mensurate a states development, nevertheless, some say that GDP is an inaccurate measuring and that it has created some jobs as the chief index for development. GDP includes goods and services that do non include a states economic wealth and, on the other manus, excludes things that do. Harmonizing to, GDP excludes three chief classs.

The first class that has been excluded by GDP is household production. Statisticss say that most people spend more than 17 % more clip making domestic work than paid work. That means that most of the people in these underdeveloped states are excessively busy making work around the house. That includes activities such as house cleansing, cookery, and caring for their kids. Are we to state that because these people spend more clip caring for their households they are to be penalized for it with a lessening in GDP? Another job associated with GDP is the sum of voluntary work that may happen in a state. What was one time done by a paid professional and accounted for in GDP, could hold now been done voluntarily. Therefore, societies with widespread voluntary work may will hold a lower GDP but have a good economic wellbeing. Another large signifier of income that is overlooked by GDP is the informal economic system within these developing states. Informal economic system includes any direct sale activities such as uneven occupations, street trading, and most of all the black market. This merchandising of goods and services frequently goes tax-exempt and live therefore is non included into a states GDP. Overall GDP overlooks many signifiers of income, which can ensue in a misunderstanding of a states economic wellbeing.

There are other facets of development that can besides being affected by a states ‘ GDP. It is believed that the people are the existent economic thrust to a state, as a consequence, the Human Development Index was created. The HDI is a combination of different statistics to assist judge the development of the people within a certain state. These statistics include life anticipation, instruction, and GDP. Therefore, the HDI of a state can be underestimated if its ‘ GDP is wrong. The HDI besides helped present the Gender Development Index ( GDI ) . The GDI is a step of the accomplishment of work forces and adult females within a state and besides takes into history the inequality. GDI has a direct relationship to HDI, hence, if the accomplishment of work forces and adult females goes down or one genders achievement becomes progressively higher than the other, HDI will travel down. The following measure in human development comes in the signifier of the Gender Empowerment Measure ( GEM ) . This statistic is now related to GDI in that it takes the capablenesss achieved by the work forces and adult females and shows how they apply them to mundane life. GEM focuses on if the genders become active economically and politically within their state. Because these signifiers of human development are intertwined, and GDP is included in HDI, a miscalculated GDP could ensue in a snowball consequence doing all the Numberss to be skewed.

The measuring of Gross Domestic Product has a negative consequence on most developing states. GDP overlooks the presence of family production, voluntary work, and the informal economic system within a state ; which causes GDP to frequently be underestimate and the worth of a state seem much less.

Short Answer Question # 4

Third World states grew at a rate of 4.7 per centum during the sixtiess. The growing rate of the East Asiatic NICs was 7 to 10 per centum. These freshly industrialised states of East Asian included South Korea, Taiwan, Hong Kong, and Singapore. These states managed to carry through the ends of the development undertaking and raise their life criterions politically, economically and socially. However, they besides showed how development enterprises can be really selective and how other states may non hold the same success if the same way is followed.

One of the first stairss these states took towards bettering their economic system was by having a healthy sum of foreign investing. A good sum of this capital was directed towards developing installations to fabricate exports such as fabrics, places, electronics, and other dress. Foreign investors were drawn to the inexpensive yet efficient labour that was available in the Asiatic NICs, which allowed concerns to maintain coming. These states offered a comparative advantage through their low-wage but comparatively skilled and educated work force. As a child it seemed as if every plaything or electronic that was being used was branded with the grade ‘MADE IN TAIWAN ‘ or ‘MADE IN HONG KONG. ‘ Throughout the sixtiess and 70s, the East Asiatic NICs continued to turn into the industrialised world powers we see today.

Though the East Asiatic states had great success following the development undertaking, the consequence was non the same for other states in the Third World. The fabrication subdivision in GDP was highly low in states such as Africa and Latin America. By 1972, the Oraganisation for Economic Co-operation and Development realized that one size did non suit all and that, “ the steps designed to assist developing states as a group have non been effectual for the least developed states ” ( Development and Social Change: A Global Perspective ) . It was clear that different states required a program to cover specifically with their jobs. It seemed to be excessively tough for the Eastern European Countries to follow the same way as those states that had engagement with a western power. The states that had one time been colonized had custodies on experiences on how a state should be run. These antecedently colonized states besides received assistance in the signifier of export treating zones or free trade zones as seen in the picture “ Life and Debt ” . These zones where specifically designed to make occupations and give the people of the state the chance to gain an income by bring forthing goods for the investment state. Eastern European states did non hold that luxury. They, like other fighting Third World states, focused on an agricultural based economic system that proved to be non as successful.

Every Third universe state is traveling to react otherwise to the development enterprises. The way taken by the East Asiatic NICs may non be suited for another developing state. The East Asiatic way worked for the NICs because they had a work force that could back up the labour needed to fabricate ‘money doing ‘ exports. Again, traveling back to the film “ Life and Debt ” , the Jamaican workers were replaced by Asiatics whom were able to acquire the occupation done and run into the quotas set by the investment state. I believe that every Third World state is given the same chance to develop and it is up to them to utilize the resources provided by the universe powers to do a alteration. However, some Third World states have dug themselves excessively deep of a hole. In the instance in Africa, a monolithic debt load has accumulated in the effort to develop and foreign assistance could merely sabotage Africa ‘s domestic merchandises at this clip ( category notes ) . It seems the more these dead states try to contend toward development, the more they slip toward increasing debt and a permanency as a Third World county.


There are three chief theories in development: modernisation theory, dependence theory and universe systems theory. The two theories that seem to collide ideals the most are the modernisation theory and dependence theory. At the terminal of WW II the universe was divided into three chief divisions: Capitalism in the United States, Communism in the Soviet Union, and freshly independent states that became known as the Third World. The United States began surveies on these Third World states, trusting to advance development through their eyes alternatively of communist Soviet Union. Through these surveies emerged a new staff of life of American political scientists who together developed the footing for a modernisation theory of development. The dependence theory, nevertheless, was created from a Third World position. It was designed with the developing state in head and non through an already developed states eyes. Both theories have different positions on the right way to development.

In hunt for a footing for its theory, the modernisation theory became a loanblend of the functionalist theory and the evolutionary theory ( So, Alvin. Chapter 2: The Modernization Perspective ) . Most members in the modernisation school had antecedently studied the functionalist theory, hence, it became the hallmark of the modernisation theory. The other facet, evolutionary theory, supported the thought that Third World states must germinate from a traditional to a modern society through engineering and establishments. One of the chief strengths of the modernisation theory was that is was developed by the most powerful states at that clip, the United States. The United States had grown to go one of the most powerful states in the universe economically, socially, and politically. Although the spread between the rich and hapless in the United States is still great, the hapless are still better off today so they were back in the early 1900s. The failing that ties along with that subject is that the United States assumed that the Third World states had some signifier of stableness and are traveling through the same jobs that the United States faced in their early development phase, which is non the instance. The authoritiess in 3rd universe states are frequently corrupt and non needfully looking out for the best involvement of the people. Therefore, what may hold worked for the United States could non work in the Third World states who are faced with different and more utmost jobs. Another strength that goes along with the modernisation theory is that it has worked before with the East Asia NICs. States such as Hong Kong and South Korea grew throughout the sixtiess and 70s by fabrication and exporting foreign goods. With the success that Eastern Asian had utilizing the theory it ‘s difficult non think that it could work in other Third World Countries. Another job that could happen with foreign engagement, nevertheless, is that the Third World states could go excessively dependent on developed states to supply them with work. Equally long as developing states are traveling to fabricate merchandises at a inexpensive labour cost, developed states are traveling to maintain working them for their ain net income. The modernisation theory has worked in the yesteryear, nevertheless, non all state of affairss are the same and it can do Third World states to go excessively dependent on the nucleus states.

The dependence theory is based around a wholly different construct. The dependence theory was foremost developed in Latin America after the clang of the plan U.N. Economic Commission for Latin America ( So, Alvin. Chapter 5: The Dependency Perspective ) . In the 1960s Latin American faced a tough clip of economic stagnancy along with a crisis of Orthodox Marxism. Revolutionists turned to the thoughts of neo-Marxism as a to establish their dependence theory. Unlike Orthodox Marxism, neo-Marxism saw the development issues through a Third World states perspective. This was one of the chief strengths that went along with the dependence theory. It realized that each states state of affairs is traveling to be different and besides takes into history the historical context of that state. Where modernisation says to throw away tradition, dependence says to travel with what has worked for your state in the yesteryear. Another strength is that it allows for states to believe of development on a more long-run graduated table. Alternatively of leaping from the fabrication of one exploited good to another, you can go more dependent on the goods and services that your ain state can bring forth which can let the Third World states to develop and stabilise based on their ain best involvement and non merely working to delight the West. However, go forthing an undeveloped state to develop by themselves, could hold really negative effects. Everything is worse in the 3rd universe. The authoritiess are more corrupt, the hapless are poorer, and there is a deficiency, if any, of substructure. It seems as if they are set up to neglect if left on their ain. A negative facet that goes along with that thought is, what happens when western influence is removed? If Nike decides to open up a mill in Thailand, they do n’t merely put up the mill and allow it be run by the people of Thailand. The mill is managed by the West. Policies in the workplace are enforced by the West. A mill ran by a Third World state may detect a immense lessening in efficiency, due to miss of experience and finally consequence in them non being able to vie in the universe market. Dependency theory allows for the Third World state to develop themselves based on their conditions, nevertheless, some of these states are so developing that self -stabilization may look impossible.

These two opposing theories have offered thoughts to assist more current development state of affairss. The World Bank offers loans to the Third World states who need the economic aid. However, you still have to pay them back with involvement. A state who supports dependence theory than has to utilize that money toward constructing on their ain and happening a manner to do that money back. A current illustration of modernisation theory would be the current war in Iraq. The United States sent military forces overseas to fling of the traditional life style of the Iraqi people and assist travel them toward modernisation. The thoughts of dependence and modernisation theory can be utile in covering with current development issues.

There is an on traveling argument on the right way to development. You could take to follow the policies set by the dependence theory. Peripheral states break off from nucleus states to develop independence and let for a socialist revolution to strike hard of the old peripheral elites. Or you could make up one’s mind that the modernisation theory is the best path to take and have assistance from the West and let for an international division of labour. Both theories have their positives and negatives yet both are making for the same end of Third World development.

Mention Page

McMichael, Philip. ( 2008 ) . Development and Social Change: A Global Perspective. United States of America. SAGE Publications.