Global Development and Political Economy: Key Concepts and Theories

Key words

. Counter cyclical movement: a trend that moves in the opposite direction of the economy's normal pattern. · Self-determination of nations: a notion derived from liberal nationalism in which a nation or imagined community has the right to form its own political structure. . Geopolitical: relating to politics, especially international relations, as influenced by geographical factors. . Subsidy: a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low. . Protectionism: the theory or practice of shielding a country's domestic industries from foreign competition by taxing imports.Topics Global developmentHow to measure development

Measuring Development

. Gross Domestic Product (GDP): measures the size of an economy, and it measures the value of total final output of goods and services produced by that economy in a certain period. . Gross national income (GINI coefficient): a statistical measure of economic inequality in a population. . Human Development Index (HDI): measures each country's social and economic development by focusing on the following four factors: mean years of schooling, expected years of schooling, life expectancy at birth, GNI per capita (household income, healthcare, education). · Per capita: average per person. · The development equation = people, environments, resources, institutions, communities - Together with the increasingly complex and multifaceted interconnections that exist between them. · Development is a vice to empower a country · Development benefits: the relationship between tourism and development. Brings both benefits and costs to host countries (creates jobs vs environmental/social damage). · Land grabbing: very large-scale land acquisitions, either buying or leasing. · Global south: LICs. "poor countries" more useful/indicative term, reflects the need to implement progressive and effective poverty reduction strategies.Bridging the north and south divide

Modernisation Theory

Modernisation theory: Countries move through a series of stages (improving education, investing in technology, developing industries). Starting off poor and traditional, and then gradually becoming more modern, industrialized, and economically developed - much like how Western countries developed over time. Belief that other countries should adopt Western-style institutions and economic practices to achieve the same level of progress.

How to Measure Development

- If development is meant to be truly universal then we cannot measure it by local means, as it can have detrimental effects in different places. - Cannot be measures because it means different things in different places/to different socal groups (e.g. western world = capitalism vs soviet union = communism).

What is Development?

- Development and underdevelopment are not black and white. Cannot easily be defined. - Development economists reduce development to an ascending line. Normally showing a positive relation between a form of wealth measurement (per capita GDP). - Development/underdevelopment = different results of the expansion of the capitalist system. e.g. Latin America's underdevelopment: result of its centuries-long participation in the process of world capitalist development. Only hope for development in dependentcountries-radical social change.

Problems with the Concept and Practices of "Development"

- Ignores the impact of colonialism, neo-colonialism (controlling a country ... ) and the structure of global capitalism. - Reinforces negative stereotypes - Creates uniformity - Produces power imbalance and hierarchy. Contradictory, promotes uniformity, however clear hierarchy (western world). - Development in all forms (social, political, economic) may produce negative outcomes even when successful (e.g. inflation, result of rising demand in products- hightened consumption due to rising incomes from growing economy).

Development is Uneven

- creates and reinforces material differences within/across societies. - Development/positive change from one social perspective can feel very different from another. - Radical/inclusive understanding: it happens in diverse ways. Doesn't always benefit everyone equally-some groups may gain, while others may lose. - Potentially many ways to achieve 'development', but, much more radically, different social groups can create many alternative 'developments. - Development is vague. Its meaning is unclear since it depends on where and by whom it is used. - Clashing narratives/chaos is not hindrance- offers a much-needed nuance/complexity to development theory and practice.

Development as Linear

- Linear: development happens in a specific direction, the outcome is the same, it produces uniformity. - A linear view of development is inherited from modernisation theory and reinforces a Eurocentric world-historic view. - This forces LICs to emulate the capitalist institutions of the global North to become 'developed'. - Black and white definition, no in between. - Development is non-linear. We can define development to reflect diverse social changes across societies.

Development and Political Economy

Political economy: how governments influence the economy and how economic forces shape political decisions (who gets what, how, and why). E.g. Why some countries are rich and others poor. Political economy (the way in which we order society and the production of wealth), relations of production and reproduction (how we survive):

• Who owns what? (structures of property and ownership)
• Who (people not countries) does what? (social/global division of labour)
• Who gets what? (distribution, income, wage/profit relation)
• What do they do with it? (consumption, savings, investment)

Transforming society (changing political structures) isn't just about the economy-it's also about what we believe is fair, just, and right.

Capitalism

Capitalism: an economic system in which a country's trade, industry, and profits are controlled by private companies, instead of by the people whose time and labour powers those companies. - Capitalism isn't just about property and rational choices, can't be reduced to purely economic terms -it grew out of long-term social and historical changes that made it almost certain to develop. - In terms of capitalism workers are not just people-they are seen as tools or resources in the economy, valued for how much they can produce. People's skills and time are viewed as "human capital," (skills, knowledge, experience, health, and abilities) or resources that help produce economic value.

Exploitation of the "Free" Market (Marxist)

Under capitalism, workers are "free" to sell their labour, but because they lack ownership of the means of survival, they're economically coerced into working (have no choice) -and it's through this system that capitalists extract profit from unpaid labour (produce more value than they're paid- surplus-value), making exploitation a core, hidden feature of the system.

Critiques of Capitalism

- Capital grows by itself, without needing labour (capital from the past grows faster than the economy/people's wages) = increases inequality over time. - Development: overcoming the inequality and exploitation that capitalism produces-resolving class conflict and giving people real control over their lives and work. If inequality keeps growing, and the system is tilted in favour of capital owners, how can development happen? Real development would need structural change, not just economic growth. - capitalist growth often depends on worker exploitation (to increase profits, wages must go down). Overall, the capitalist system is designed to produce inequality- "development" in this system impossible.

Methodological Nationalism

Methodological nationalism: looking at problems only within the boundaries of a single country - Focusing only on the national level ignores how global systems (like international markets or multinational corporations) shape local realities. Local action is not enough-because real power and decision-making lie at the global level, especially with capital (big corporations, global markets, financial systems).

Political Economy and Global Capitalism for the Developing World

The global political economy is structured in ways that prioritize profit over human needs (e.g. the 2008 food crisis) . - Turned necessities (food) into commodities for profit- serious consequences for people in poorer countries. - Power in the global economy is concentrated in wealthy, financialized systems, while the Global South remains vulnerable to decisions made far beyond their control. - Under capitalism, even essential resources are subject to market forces, often at the expense of social stability and human well-being. Persistent global economic crises-driven by capitalist dynamics-might push developing countries to rethink their dependence on global markets and to explore alternative, more self-reliant strategies. e.g. support their own farmers, control trade to serve national needs, neighboring countries provide financial aid instead of depending on Western-dominated institutions- IMF /World Bank.

Bretton Woods Institutions

Bretton Woods Conference (1944)- aimed to rebuild/stabilise global economy after WWII. Resulted in creation IMF and the World Bank.

The IMF (International Monetary Fund)

The IMF (International Monetary Fund): An international organisation that helps stabilise global economies by giving financial support and advice to countries in crisis.

Main Goals of the IMF

• Ensure global financial stability
• Help countries with balance of payments problems
• Promote international trade and economic growth

Main Services of the IMF

• Provides emergency loans to countries with financial problems
• Monitors economies ( "surveillance")
• Offers advice and training on managing economies

IMF Members

190+ countries (almost every country in the world)

IMF Funding

Funded by member countries' contributions (quotas)

Criticisms of the IMF

1. Western dominance & lack of fairness - Criticism: Rich countries (US, Europe) have more power/decision-making control. Developing countries have limited influence, even though they are the ones most affected by the policies. IMF
2. Conditional lending / Austerity policies - IMF especially: Loans often come with strict conditions (cutting public spending, privatising services). developing countries Can harm poor populations - e.g., reduced healthcare, education, food subsidies. Funding focus:
3. One-size-fits-all approach - Criticism: Policies often ignore the unique needs of individual countries. Can worsen problems instead of solving them (e.g., rapid liberalisation hurting local industries).
4. Debt burden - World Bank & IMF loans add to national debt. Countries get stuck in debt cycles, spending more on repayments than on social services.

The World Bank

The World Bank: An international organisation that gives loans and advice to developing countries to help reduce poverty and support development.

Main Goals of the World Bank

• Reduce poverty
• Promote economic growth
• Improve living standards

Main Services of the World Bank

• Provides low-interest loans, grants, and technical help
• Funds projects (building schools, roads, hospitals)

World Bank Funding

Gets money from rich countries and by selling bonds

Alternative: New Development Bank (NDB)

Alternative: New Development Bank (NDB), 2015: international bank- fund infrastructure/sustainable development projects in developing countries.

Main Goals of the NDB

• Provide an alternative to the World Bank and
• Promote economic cooperation among other
• Transport, energy, water, urban development
• Green and renewable energy projects

Key Features of the NDB

• Tries to offer loans with fewer political conditions
• All founding members have equal voting