Economic: Dealing With Poverty (Edexcel A Level Politics): Revision Note

The north-south divide

• The global north - south divide is a way of examining patterns of social, economic and political inequalities seen in the world

  • This divide makes the generalisation that most of the wealthier nation-states are found in the northern hemisphere of the planet

• Disparities in wealth impact many aspects of daily life, including:

  • employment and income

  • political stability

  • access to technology

  • health

  • educational opportunities

• Southern hemisphere states tend to have less power and influence in global politics compared with the northern hemisphere states

  • This disparity is often linked to a colonial history of exploitation

• The North-South Divide is a world systems theory

  • These theories are global models of human, economic and political interactions

  • The components of a world-system are typically referred to as cores, peripheries and semi-peripheries

Components of a world system

Other measurements of world-systems theory

Dependency theory 

• Colonialism established significant power imbalances globally

  • The legacy of these exploitative relationships continues to shape global politics today

• Although globalisation has brought interconnectedness, powerful states continue to dominate many economically focused intergovernmental organisations

• Historically, economically developed states relied heavily on exporting one or two raw materials for processing in more economically developed nation states

• This persists today

  • For example Botswana is reliant on the sale of uncut diamonds, which make up 80% of its exports

  • In recent years demand for natural diamonds has fallen dramatically, causing an economic crisis 

• Dependency theorists believe that globalisation exploits periphery states

  • Structural changes to global governance is the best pathway toward development and poverty reduction 

Orthodox views

• This model is based on a Western approach to development leading to poverty reduction.

  • The focus is on economic growth 

  • Industrialisation and manufacturing should be prioritised 

  • Free market relationships should be built with other states 

  • Consumer consumption is promoted

  • It advocates external expertise and assistance from global governance bodies

    • For example from the IMF or World Bank

Alternate measurements of poverty 

• Rather than only measuring a nation state’s total wealth and wealth in relation to other states, other indicators can be considered which may give a more accurate picture of poverty

• These can include:

  • Anyone living on less than US$3 a day is considered to be living in extreme poverty

• Other factors beyond the wealth of the state give a better picture of how people live their lives and if they are living in poverty

  • For example, the United Nations Global Dimension Poverty Index considers multiple factors, including nutrition, years of schooling, child mortality, housing, drinking water, and access to electricity and sanitation

Classical economic development theory

• Adam Smith, an 18th-century economist, declared that free markets driven by states, competing against each other without much government interference, lead to improved productivity, innovation and wealth

• Although poverty reduction and economic development strategies are more diverse today some of these principles are seen today

  • Free markets are often associated with globalisation and economic growth

  • Many intergovernmental organisations, including the WTO, IMF and World Bank promote free trade

Structural theory

• This theory proposes that poverty and lack of economic development can be attributed to the need for structural change

  • Structural change is needed to release periphery states from their subordinate relationship with other states

  • Less economically developed states must develop their own manufacturing industry and move away from supplying raw materials to core states

  • Governments must develop infrastructure and prioritise the interests of their own states by challenging existing global economic structures

• Structural theory has informed the types of project supported by global governance institutions

  • For example, Justin Lin, former chief economist of the World Bank, has advocated for global governance institutions to have a renewed focus on supporting states to develop manufacturing and infrastructure to achieve economic equality

Neo-classical development theory

• Neoclassical growth theory explains that a steady economic growth rate depends on labour, capital and technology.

  • Technological change is crucial for sustaining long-term economic growth

• United Nations Sustainable Development Goal 9 emphasises the importance of industry, Innovation and Infrastructure in relation to sustainable development