Chapter 16 Some Critical Issues for the Twenty-First Century Copyright © 2009 Pearson Addison-Wesley All rights reserved Critical Issues of the 21st Century • Global Interdependence • Global Environment • Crisis in Sub-Saharan Africa • Transition in Eastern Europe • Democracy & Global Conflict Copyright © 2009 Pearson AddisonWesley All rights reserved 16-2 Global Interdependence International Trade: • Flow of manufactured goods and armaments from MDCs to LDCs (70% or world trade) • Flow of natural resources and cash crops from LDCs to MDCs (30% of world trade) Copyright © 2009 Pearson AddisonWesley All rights reserved 16-3 Global Interdependence Copyright © 2009 Pearson AddisonWesley All rights reserved 16-4 Global Interdependence • In MDCs, recession reduces the demand for imports from LDCs • In LDCs, reduced export earnings lowers the demand for imports from MDCs, resulting in a global recession • Each $1 billion exports in the U.S supports 25,200 jobs in LDCs Copyright © 2009 Pearson AddisonWesley All rights reserved 16-5 Global Interdependence International Finance: • Flow of FDI from MNCs into LDCs (the “global factory”) • Flow of ODA from MDC governments to LDC governments • Flow of loans from banks & IMF/World Bank to LDCs • Flow of debt-service payment from LDCs to MDCs • Flow of funds due to TOT decline from LDCs to MDCs • Flow of resident capital from LDCs to MDCs Copyright © 2009 Pearson AddisonWesley All rights reserved 16-6 Global Interdependence Human Capital: • Flow of people from politically, socially, and economically repressed LDCs to MDCs – Legal immigration: The Brain Drain – Illegal immigration Copyright © 2009 Pearson AddisonWesley All rights reserved 16-7 Global Interdependence • Reduce the debt and debt-service burden • Create new LDC funding: tax resident capital outflow and MNCs • Establish new international institutions to stabilize global economic relations • Reform IMF and World Bank policies Copyright © 2009 Pearson AddisonWesley All rights reserved 16-8 Global Environment The Greenhouse Effect and Global Warming: • Excessive per capita energy fossil fuel consumption due to affluence • Rapid deforestation due to poverty, falling primary-commodity export prices, and commercial land development • Rapid desertification due to soil erosion, land over-use, and lack of fertilization Copyright © 2009 Pearson AddisonWesley All rights reserved 16-9 Global Environment The Rio Summit’s Agenda 21: • Alleviate poverty and improve environmental capital • Invest in R&D to reduce soil erosion • Improve family planning through female education and employment • Prevent the destruction of the rain forest • Protect the natural habitats and biodiversity • Invest in alternative energy to reduce pollution Copyright © 2009 Pearson AddisonWesley All rights reserved 16-10 Global Environment Copyright © 2009 Pearson AddisonWesley All rights reserved 16-11 Global Environment Copyright © 2009 Pearson AddisonWesley All rights reserved 16-12 Energy Consumption Per Capita Copyright © 2009 Pearson AddisonWesley All rights reserved 16-13 Crisis in Africa • Decline in the standard of living • Rapid population growth, but slow economic growth • Social and political oppression and human rights violations • HIV-infection and death from AIDS (20 million HIV-positive in 1997 of which million were women) Copyright © 2009 Pearson AddisonWesley All rights reserved 16-14 Transition in Eastern Europe • Sharp decline in the GDP • High and rising inflation • Increased poverty: 14 million (4%) in 1988 to 119 million (32%) in 1994 • Increased crimes and social injustice • Diversion of funds from LDC development ($100 billion per year) Copyright © 2009 Pearson AddisonWesley All rights reserved 16-15 Democracy & Global Conflict • Help LDC people remove non-democratic governments and repressive regimes (e.g., Iran, Syria) • Solve international conflict that makes the oppressed resort to violence and terror (Iraq & Afghanistan wars; ArabIsraeli land dispute) • Eradicate poverty and prejudice: one world, one people Copyright © 2009 Pearson AddisonWesley All rights reserved 16-16 ... consumption due to affluence • Rapid deforestation due to poverty, falling primary-commodity export prices, and commercial land development • Rapid desertification due to soil erosion, land over-use,... Afghanistan wars; ArabIsraeli land dispute) • Eradicate poverty and prejudice: one world, one people Copyright © 2009 Pearson AddisonWesley All rights reserved 16- 16 ... reduce pollution Copyright © 2009 Pearson AddisonWesley All rights reserved 16- 10 Global Environment Copyright © 2009 Pearson AddisonWesley All rights reserved 16- 11 Global Environment Copyright