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2-3 The Developing World

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

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2-3 The Developing World

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  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

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