3.10 - Globalisation & Development
The relationship between globalisation and development
Globalisation involves the increasing interconnectedness of countries through trade, technology, and cultural exchange. This process has a close link with development, which refers to the economic advancement in a country or region that leads to improvements in people's quality of life.
How globalisation influences development
Globalisation and development share an interdependent relationship. As societies become more globalised, they often achieve higher levels of development through better access to markets, technology, and ideas. For example, enhanced global connections can boost trade and investment, leading to economic growth. In turn, more developed countries tend to drive globalisation further by hosting transnational corporations (TNCs) and investing in information technology that facilitates worldwide communication.
Understanding the development gap
The development gap describes the difference in wealth and living standards between the richest and poorest countries or regions. Globalisation can both narrow and widen this gap. Studying changes in the development gap helps reveal globalisation's varying impacts across the world. For instance, some regions benefit from new opportunities, while others remain excluded, highlighting inequalities.
Types of development indicators
Development indicators are tools used to measure and compare levels of progress in different countries. These indicators are typically quantitative, allowing for easy ranking and comparison between nations.
Single indicators
Single indicators focus on just one aspect of development, providing a precise way to compare countries in specific areas. They are straightforward but limited in scope, as they do not capture the full picture of development.
Composite indicators
Composite indicators combine data from multiple sources to produce a single score. This approach gives a broader overview of development by integrating various factors, making it useful for understanding overall progress in a place.
Economic development
Economic development reflects a country's financial strength and employment patterns. Countries with higher economic development often experience and contribute more to globalisation, such as by attracting TNC headquarters or investing in global communication technologies.
Challenges in measuring economic development
Measuring economic development can be tricky in countries where a large portion of the workforce operates in the informal sector – economic activities that are not officially recorded, such as street vending or unregulated work. This leads to incomplete data, making indicators less reliable.
Key indicators of economic development
| Indicator | Description | Type |
|---|---|---|
| GDP per capita (US$) | The total value of goods and services produced within a country's borders in a year, divided by the population size. | Single |
| GNI per capita (US$) | The total value of goods and services produced by a country, including income from overseas investments, divided by the population size. | Single |
| Economic sector balance | The proportion of the population employed in primary (e.g., farming), secondary (e.g., manufacturing), tertiary (e.g., services), and quaternary (e.g., research) industries. | Composite |
These indicators show how wealth creation and job distribution contribute to a country's global integration. For example, a shift towards tertiary and quaternary sectors often indicates higher development and greater globalisation.
Social development
Social development focuses on improvements in people's well-being, education, health, and equality. Globalisation can accelerate social development by spreading ideas, such as through global movements promoting gender equality via knowledge sharing.
Why composite indicators are common for social development
Social development involves many interconnected factors, so composite indicators are often used to combine them into a single measure. This provides a more comprehensive view than single indicators alone.
Key indicators of social development
| Indicator | Description | Type |
|---|---|---|
| Human Development Index (HDI) | A United Nations measure that combines life expectancy, mean years of schooling, expected years of schooling, and GNI per capita into a single score to assess overall development. It ranges from 0 to 1, with 1 indicating the highest development. By including GNI, it links wealth to quality of life. | Composite |
| Gender Inequality Index | A measure of societal loss due to gender inequality, combining maternal mortality rate, adolescent birth rate, female secondary education levels, female labour force participation, and female representation in parliament. It ranges from 0 to 1, with 1 indicating the highest inequality. | Composite |
These indicators highlight how globalisation can promote social progress, such as by enabling the global exchange of ideas on equality.
Environmental development
Environmental development assesses how well a country preserves its natural resources and minimises ecological harm. Measuring this is challenging because countries prioritise different environmental aspects based on their local habitats, making global comparisons difficult.
Features of environmental indicators
Unlike other development measures, lower scores are often desirable in environmental indicators, as they indicate minimal negative impact. For example, a low score on pollution measures shows better air quality.
Key indicators of environmental development
| Indicator | Description | Type |
|---|---|---|
| Air Quality Index | Combines data on air pollutants like particulates and nitrogen dioxide emissions to create a single score. Lower scores indicate better air quality, but the index may lack data from rural areas. | Composite |
| Ecological footprints | Measures resource use, such as water consumption and car ownership per household, to estimate how many planets would be needed if everyone lived like that population. | Composite |
Globalisation can exacerbate environmental issues in rapidly developing areas, but these indicators help track progress towards sustainability.
Economic winners and losers from globalisation
Globalisation generates opportunities for wealth but also increases inequality. This creates economic 'winners' — those who benefit from new markets and technologies — and 'losers' — those left behind, such as workers affected by deindustrialisation.
Forms of economic inequality
Inequality appears in various ways, including unequal access to opportunities, income differences, and varying resilience to economic changes. For instance, billionaires often control TNCs that thrive on globalisation, while many in least developed countries remain detached from its benefits. Deindustrialisation in developed economies has displaced workers, widening gaps.
Measuring economic inequality
The Gini coefficient measures income inequality within a country or region, ranging from 0 (perfect equality) to 1 (complete inequality). It is based on income distribution and can be used to create Lorenz curves — graphs that visually compare inequality across places. Gini coefficients have generally increased over time, showing rising inequality within countries due to globalisation.
Environmental winners and losers from globalisation
Globalisation affects the environment unevenly, with some countries better equipped to manage issues than others. This creates environmental 'winners' — places that can mitigate harm — and 'losers' — areas suffering degradation.
Inequality in managing environmental issues
Countries vary in their ability to address global problems like climate change, which has gained attention through globalisation, compared to local issues like habitat preservation. Rural areas often lose out, as they are detached from globalisation and face land degradation.
Urban environmental challenges
Rapid urbanisation driven by globalisation leads to problems like air pollution and urban sprawl — the expansion of cities into natural areas. This affects city dwellers and surrounding ecosystems.
Regional progress and changes in the development gap
All world regions have seen economic growth since 1970, but the pace varies, reflecting globalisation's uneven impact.
Variations in economic growth
Asia and emerging economies have grown rapidly, with South Asia experiencing a 549% GDP increase between 2000 and 2021, compared to 149% in Europe and Central Asia. This suggests globalisation has influenced some regions more profoundly.
Wealth distribution and the development gap
In fast-growing economies, policies often allow the rich to accumulate wealth quickly, widening internal gaps. In contrast, developed countries use mechanisms like progressive taxation and welfare to redistribute wealth more evenly. Overall, the gap between countries has narrowed, but within countries, it has widened. For example, in China in 2015, the top 10% of earners earned 42% of wealth, while the bottom 50% earned around 14%.
Changes in poverty levels
- Absolute poverty - This is poverty lacking basic human needs. It has decreased globally due to globalisation's economic boosts.
- Relative poverty - This is poverty where living is below the average standard. It has increased, as wealth disparities grow.