2-3 The Developing World

1. 2-3 The Developing World A struggle between tradition and a modern economy

2. World Economic Patterns • First global trading networks stretch across Islamic world in 1300 from Mediterranean to Southeast Asia • After Europeans gain access to their own routes to Asia power begins to shift • In the late 1800’s during the age of Imperialism Europe/US gains complete control and create a new trading pattern

3. The Imperialist Pattern • Africa, Asia, Latin America encouraged to grow cash crops for sale in world market as well as raw materials • The Europeans/US then sell manufactured goods to these areas

4. Fundamental Problem • Creates a state of dependency for less developed areas • These nations were still economically dependent after losing colony status post WWII • Cash Crop mentality leads to reliance on single product for economy which puts them at the mercy of the supply/demand curves of the world market. • Local economies based on crafts are crushed as well due to the competition of manufactured goods.

5. Goals of Modernization • Many developing nations have set up political and economic goals to join the modern world • These goals have proved hard to reach • Often reached with Mixed Success

6. Major Goals • Political Stability • Difficult because of artificial borders and outside interference • Economic Diversity • These nations want to move away from single cash crop and develop economies with multiple crops and manufactured goods • Tariffs used to end dependence on foreign products • Privatization of industry to produce better products • Education and Services • Improve literacy so workforce can compete in modern world • Work on Services such as medical care, housing and water/sewage systems

7. Loans and Debt • In order to develop infrastructure, that is necessary for creating an industrial nation, many countries needed to borrow money from wealthier nations. • Many borrowed in 1970’s when oil was high • Middle East gives money to Western banks->Banks loan to developing nations for profit later-> in 1980’s interest rates rise-> Borrowers can’t pay back loans->Creates Debt Crisis

8. Problems Created by Debt Crisis • Even with deals worked out to ease crisis it is difficult for debtor nations • Can not afford to work on basic services or new industry because most of income is used to repay loans • Any slowdown only makes things worse because their economy is still not modernized • Some debt has been given extensions, but loans are now harder to obtain and may require economic reforms for the nation

9. Problems of Development • Overpopulation- Now over 6 billion with ¾ in developing world with no slow down in sight • Created by old world practices and modern healthcare • Leads to policies such as China’s one child policy • Urbanization- city populations have exploded in the developing world • Puts a strain on nations trying to provide services • Cultural Change- Fewer ties to family and community • Many feel this leads to crime and drug abuse • All of these problems create a wider gap between developing and developed nations