Lesson 8 - Global Divide

Global Divide
GE TCW
[ The Contemporary World ]
Introduction
• Since 1945 – there were high levels of economic growth
and unprecedented official development policies
• Facilitated by international institutions for:

– Trade (GATT)
– Finance (IMF)
– Multilateral development cooperation (World Bank)
Einführung
• But while the world is getting smaller because of economic
globalization, societies are not necessarily growing closer to
each other
• There is wide gap in income and living standards
• Perennial problems:
– Underdevelopment, inequality and poverty
Introduction
• The Global Divide
– Refers to the disparity in income and living conditions

between the industrialized Global North and the developing
Global South
Einführung
Learning Outcomes
• At the end of this lesson, learners are expected to:
1. Discuss the dimensions of the global divide;

2. Explain competing perspectives on the global divide; and
3. Evaluate the impact of globalization on the global divide
Contemporary Global Divide
• Global Divide – linked with the concept of development
• In the past, development was equated with income and

growth
– For example, in comparing levels of development, the World Bank

ranks countries in terms of per capita income
• This measure of income is a useful way for comparing levels
of development
– It provides the widely used measure of how countries are

improving (or deteriorating) based on this development aspect
• However, today, to determine how many people benefit
from economic growth, one must look at other factors
other than income and growth
– Other factor: income distribution
– Income inequality is a measure of how the wealth in the economy

is distributed among the population
– Income inequality is important in part because it tells about the

conditions in the society: the privileged wealthy lead luxurious
lives while some people live in poverty
– Income inequality is also a constraint on development

Human Development Index
• To broaden the development debate beyond income
poverty, the Human Development Report introduced the
HDI. This index measures countries’ achievements in terms
of:
1. a long and healthy life, measured by life expectancy at birth;
2. knowledge, measured by adult literacy rate and the combined
primary, secondary, and tertiary gross enrollment ratio; and
3. a decent standard of living, measured by GDP per capita in
purchasing power parity (PPP) (in US dollars)
Philippine HDI
According to the United Nations
Development Programme, in 2015
the Philippines ranks 116th, two
notches below its 2014 rank as 114th,
of the 188 countries included in the
Human Development Report. The
country’s life expectancy at birth is
68.3 years, expected years of
schooling is 11.7, mean years of
schooling is 9.3, and gross national
income per capita is 8,395 US dollars.
Competing Perspectives on Global Divide
1. Modernization Theory
2. Dependency Theory
3. Neoliberalism
1. Modernization Theory
– argues that societies undergo stages of growth and move from

being a traditional society to a modern one
– holds that poor societies remain poor because they cling to

traditional attitudes, technologies, and institutions
• Rostow’s Evolutionary Ladder of Development
5 The age of high mass

consumption
4 The drive to maturity: economic and
cultural factors lead to increasing prosperity
for all
3 Take-off: high economic growth and

investment in infrastructure begins
2 Pre-conditions for take-off: the West
assists development through aid and
industrial investment
1 Traditional society: poverty, primary
production and traditional values
2. Dependency Theory
– criticizes that Western liberal capitalism leads in exploitation
– holds that poor societies are not born but made, as local
economies are distorted in that they serve mostly the needs of
advanced countries instead of local populations
“Endo”, Globalization and the South
“End all forms of contractualization”.
These posters express denunciation
of contractual labor as a form of
employment practice in the
Philippines. “Endo”, or end of
contract, exists when employers hire
workers and then terminate their
contracts after five months to avoid
regularizing them. Endo is a labor
flexibilization practice designed to
attract investors through cheap
labor costs.
– Why have poor nations been unable to resist exploitation?
– These nations have been dominated by rich nations through

neocolonial practices, which include aid dependency as well as
the influence of multinational corporations on economic policies
• Another theory that’s related to dependency theory is

World-System Theory, which
– argues that countries are poor because of their position in the

global capitalist system
– holds that one can’t understand the fate of a single country,

without understanding how it fits into the overall system
• World-System Theory
– All countries belong to a world system where each of them has a
role to play
– And unless this system changes, one could never expect the
problem on global divide to be addressed fully
3. Neoliberal Theory
– Just as modernization theory was losing its prominence in

academic circles, many countries were rediscovering the ideals of
free trade and free markets
– The intellectual basis for neo-liberal theory comes from neo-

classical economics, which combines arguments supportive of free
market
– Neo-liberal scholars suggest little role for the government in

managing the economy
– They advocate reduced government spending, and encourage

free market to attract foreign investment and technology
– Neo-liberal policy prescriptions: (1) privatization, (2)

deregulation, and (3) market liberalization
Imports in Local Stores
Because of market liberalization, it is
common to find imported goods in
Philippine stores. Consumers
primarily benefit from trade because
they get to enjoy greater variety of
goods at a lower price. But as
imports compete with locally
produced goods, Filipino enterprises
are hard-pressed in face of stiff
competition because of market
openness.
Globalization and the Global South
• Scholars point to the impact of globalization on global
divide:
– According to Walden Bello, the new globalizing structure does not

erase the disparity between the rich and poor nations
– Income gap continues to grow between and within countries,

even within the rich countries themselves
• Composing roughly 85% of world population, the Global
South contributes only around 25%
• Development: former Southern states (e.g. BRICS) are now

important economic actors, Northern states continue to
play dominant roles
• Southern states now challenge that economic “hegemony”
of the Global North
– China supports Brazil and India in opposing against pro-North

policies like agricultural protectionism and liberalization in trade
and services
• Aside from states, the global civil society also challenges

“neo-liberal” globalization
• Apart from Southern states, there are also other actors
helping to address the global divide
• The global civil society expresses itself through numerous

demands, demonstrations, movements and networks

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Global Divide

• Facilitated by international institutions for:

• There is wide gap in income and living standards

– Refers to the disparity in income and living conditions

1. Discuss the dimensions of the global divide;

• In the past, development was equated with income and

– For example, in comparing levels of development, the World Bank

– It provides the widely used measure of how countries are

– Other factor: income distribution

– Income inequality is a measure of how the wealth in the economy

– Income inequality is important in part because it tells about the

– Income inequality is also a constraint on development

– argues that societies undergo stages of growth and move from

– holds that poor societies remain poor because they cling to

5 The age of high mass

3 Take-off: high economic growth and

– criticizes that Western liberal capitalism leads in exploitation

– Why have poor nations been unable to resist exploitation?

– These nations have been dominated by rich nations through

• Another theory that’s related to dependency theory is

– argues that countries are poor because of their position in the

– holds that one can’t understand the fate of a single country,

– Just as modernization theory was losing its prominence in

– The intellectual basis for neo-liberal theory comes from neo-

– Neo-liberal scholars suggest little role for the government in

– They advocate reduced government spending, and encourage

– Neo-liberal policy prescriptions: (1) privatization, (2)

– According to Walden Bello, the new globalizing structure does not

– Income gap continues to grow between and within countries,

• Development: former Southern states (e.g. BRICS) are now

– China supports Brazil and India in opposing against pro-North

• Aside from states, the global civil society also challenges

• The global civil society expresses itself through numerous

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