Global Citizenship | The process of economic development

Understanding the Process of Economic Development

Welcome to this crucial chapter! Economic development might sound like a complicated financial topic, but it is fundamentally about improving people's lives. It’s about ensuring that citizens worldwide have better health, better education, and a reasonable quality of life.

In this section, we will break down how we measure a country's success, the role of global trade, and how the movement of people (migration) both helps and hinders progress. Understanding this is key to being an effective global citizen!

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1. Measuring Development: Wealth, Health, and Education

When we talk about a country being 'developed' or 'developing', how do we actually measure that? We need more than just money! The global standard uses a tool called the Human Development Index (HDI).

What is the Human Development Index (HDI)?

The HDI is a composite (combined) measure used by the UN to rank countries.

Think of the HDI as a country's report card. It doesn't just look at their financial grade; it checks their effort in three key subjects:

1. A Long and Healthy Life (Measured by Life Expectancy at birth).
2. Knowledge (Measured by Education levels, such as average years of schooling).
3. A Decent Standard of Living (Measured by Gross National Income per capita—the average income per person).

Using the HDI, countries are grouped into three categories (as required by your syllabus):

• High HDI Countries (e.g., Norway, Switzerland): High life expectancy, high education attainment, very high incomes.
• Medium HDI Countries (e.g., Vietnam, South Africa): Life expectancy and schooling are moderate, and incomes are growing but still lower.
• Low HDI Countries (e.g., Niger, Sierra Leone): Low life expectancy, often linked to poor healthcare access, low schooling rates, and very low incomes.

Global Disparities (The Gaps Between Countries)

The differences between these HDI groups highlight global disparities (huge, unequal differences). These disparities are clear in three major areas:

a) Wealth Disparities

In High HDI countries, the average income is vastly higher than in Low HDI countries. This wealth disparity means High HDI countries can afford better infrastructure (roads, power), advanced technology, and well-funded public services.

b) Education Disparities

In Low HDI countries, children often start school later, leave school earlier, and the quality of teaching and resources is lower. This creates a cycle of poverty, as lower education leads to lower-skilled jobs and lower income.

Did you know? Access to basic literacy and numeracy is a key indicator of development, helping citizens participate fully in economic life.

c) Health Disparities

Health disparities are perhaps the most tragic gap. Low HDI nations have high rates of infant mortality, shorter average life spans, and less access to clean water, sanitation, and essential medicines. For example, access to a simple vaccine or basic hospital care might be routine in a High HDI country, but life-saving luxury in a Low HDI country.

New Emerging Economies

A positive trend in economic development is the rise of Emerging Economies. These are countries that are rapidly developing their industry and trade, often moving quickly from Low to Medium or High HDI status.

• They usually experience rapid urbanization (people moving to cities).
• They have rapidly growing middle classes.
• Key examples often include the BRICS nations (Brazil, Russia, India, China, South Africa).

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2. The Role of Trade in Economic Development

Trade—the buying and selling of goods and services across borders—is a massive driver of economic development. However, how that trade is structured determines who benefits. We need to distinguish between two main types of trade:

a) Free Trade

Free Trade means international trade without barriers, such as tariffs (taxes on imports) or quotas (limits on imports). The idea is that everyone benefits because goods are produced where they are cheapest (efficiency).

• Opportunity (The Positive View): Free trade opens up huge global markets for developing countries. They can sell their goods anywhere, potentially leading to faster economic growth.
• Challenge (The Negative View): Free trade often favours richer, industrialized countries. Developing countries, which usually produce raw materials or simple goods, struggle to compete with the high-tech, heavily subsidized industries of developed nations. This can keep developing countries dependent on selling cheap primary products.

b) Fair Trade

Fair Trade is an approach to trade that aims to ensure that producers in developing countries receive fair prices for their products, along with decent working conditions and sustainable local development.

Analogy: If Free Trade is a wild competition where the strongest team wins everything, Fair Trade is a partnership where the stronger team guarantees the weaker team a decent, living wage, regardless of market fluctuations.

The key roles of Fair Trade in development:

1. Guaranteed Minimum Prices: This protects farmers (for example, coffee growers) from global price crashes, giving them stability.
2. Ethical Conditions: It ensures no child labour, safe environments, and gender equality.
3. Social Premium: An extra sum of money is paid back to the community for investment in local services like schools or healthcare.

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3. International Migration and Development

International Migration—when people move from their home country to live in another—is strongly linked to economic development. People usually move internationally seeking better jobs, higher wages, or better opportunities (economic migrants).

The Concept of Remittances

One of the single most important economic impacts of migration is the flow of remittances.

Remittances: These are transfers of money made by a migrant worker back to their family in their home (source) country.

• Example: A Filipino migrant worker in Saudi Arabia sends $500 home every month to their parents.

Remittances are often a larger source of income for developing countries than foreign aid! This money directly helps families pay for food, education, and healthcare, boosting the local economy from the ground up.

Development Challenges and Opportunities

Migration creates both major challenges and crucial opportunities for the countries involved:

Impact on the Source Country (Where Migrants Leave From)

Challenge: Brain Drain
This happens when the most highly skilled and educated people (doctors, engineers, teachers) leave the country to work abroad. This loss of talent severely limits the source country's ability to develop its own services and economy.

Opportunity: Financial Boost
The flow of remittances provides foreign currency, increases family incomes, and helps reduce poverty. It acts as a safety net for many developing economies.

Impact on the Host Country (Where Migrants Arrive)

Challenge: Pressure on Services
A large influx of migrants can place significant strain on public services, such as schools, hospitals, housing, and transport, especially if the infrastructure is already struggling.

Opportunity: Filling Labour Gaps
Migrants often take jobs that the local population is unwilling or unable to fill (e.g., agricultural labour, specific highly skilled IT roles, or healthcare positions). This labour input is essential for the host country’s economy to function and grow. They also pay taxes and contribute to the consumer economy.