Barrington

							        Comparative Politics: Structures and Choices
                                   Chapter 3
                                    By Lowell Barrington




              Economic Class, Development,
                   and Globalization


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                        Quotations
►   “It’s the Economy, Stupid!”
          – Bill Clinton’s 1992 campaign for U.S. presidency

►   “There is no such thing as a purely economic issue.”
        – Milton Friedman, Economist’s Protest

►   “A proudly democratic India that grows at 6 percent per year
    . . . should be congratulated for having succeeded better
    than a brutal anti-democratic China which grows at 10
    percent per year. There is more to life than GDP.”
         – The Economist, March 5, 2005
      Learning Objectives
► Define key terms such as class and globalization
► Describe the social and cultural changes that
  accompany economic development
► Discuss globalization, its role in economic development,
  and whether it helps or hurts the world’s poor
► Describe the class structures, level of economic
  development, and degree of globalization in the ten
  Topic in Countries cases
► Explain the arguments that globalization (1) strengthens
  states, (2) weakens states, or (3) has mixed effects
          Economic Structure
► How   do economic structures influence
  political outcomes?
► Three themes:
   Class
   Economic Development
   Economic Globalization
        Theme One:
 Class and Class Structure
                 Key Terms
►Political   economy   ►Workingclass
►Class               ►Middle class
►Mode of production ►Upper class
►Means of production ►Underclass
►Bourgeoisie         ►Median income
►Proletariat
   Class and Class Structure
► Class   Structure
   Portions of a population that fall into different
    classes in a particular country
   Example: Industrialized countries tends to have
    a relatively large middle class

► Class   Consciousness
   Awareness of belonging to a class, sense of
    solidarity with members of this class, and
    recognition of relationships between classes
   Generally in decline, esp. in the West
   Think and Discuss:
  The “Applying Concepts” box on
   page 66 presents a number of
 criteria that can serve as possible
measures of class. Which ones are
the most compelling to you? Why?
     Think and Discuss:
      If class structure is related to
   inequality, how can some countries
(including the United States) have such
 a large middle class and yet such high
     levels of wealth concentration?
      Think and Discuss:
 To what extent is one’s class in the United
States determined at birth by the class of the
             individual’s family?
  To what extent is class the result of effort?
How representative is the United States on this
 point, compared with other countries around
                 the world?
    Country        2009 est            2009 est          Kearney Index
                   GDP per capita      GNP (per          Economic
                   (economic           capita)           globalization
                   development)

    U.K.           $35, 165            $41,370           12
    Germany        $40,670             $42,450           22
    France         $41,051             $42,620           25
    Russia         $8,684              $9,340            62
    China          $3,744              $3,650            66
    India          $1,134              $1,180            71
    Mexico         $8,143              $8,960            49
    Brazil         $8,121              $8,040            67
    Nigeria        $1,118              $1,190            57
    Iran           $4,540              $4,120            72

Source: AT Kearney Index 2007; World Bank 2009; see also
http://www.imf.org/external/pubs/ft/weo/2010/02/weodata/co.htm for IMF data
multiple years
          Topic in Countries
      in the United Kingdom, Germany,
► Class
 and France
   The UK: Visible class differences; more identify
    as working class than in the United States
   Germany: Large middle class; less inequality
    than in the UK
   France: Low levels of inequality, even by
    European standards
          Topic in Countries
      in the Russian Federation, China,
► Class
 and India
   Russia: Small middle class; small but visible
    upper class (“new Russians”) since 1990s
   China: Noticeable economic inequality; urban
    areas much wealthier than rural; small but
    growing middle class
   India: Large lower class underclass; significant
    inequality; middle class small compared to
    those of EDCs but continuing to grow
          Topic in Countries
► Class   in Mexico, Brazil, Nigeria, and
 Iran
   Mexico: Visible middle class; sharp divisions
    between wealthiest and poorest
   Brazil: Emerging middle class, but severe
    economic inequality
   Nigeria: Vast majority of population lives in
    extreme poverty; very small middle class
   Iran: Middle class, particularly in urban
    areas; large and class-conscious working
    class and underclass
     Theme Two:
Economic Development
            Key Terms
►Economic           ►Prosperity
development         ►GDP    per capita
►Economic growth    ►Purchasing power
►Gross domestic     parity (PPP)
product (GDP)       ►Finished products
►Informal economy
   Economic Development
► Economic   Growth and Prosperity
  GDP, GDP per capita, and GDP per capita-PPP
  Also need to consider economic inequality

► Development:    Types of Countries
  Economically developed countries (EDCs)
  Lesser developed countries (LDCs)
  Least developed of the lesser developed
   countries (LLDCs)
  Newly industrialized countries (NICs)
Table 3.1 Categories (and Labels)
         of Development
 CITS and Emerging Markets
►   Countries in transition (CITs)
     The post-Communist states
     Some see them as justifying their own
      development category
► Emerging     markets
     The LDCs and CITs most desirable to foreign
      investors
     Include the “Topic in Country” cases of Brazil,
      China, India, Mexico, and Russia
    Economic Development
► The   “Resource Curse”
   The tendency for developing countries to focus
    on extracting only certain valuable resources
    while ignoring broader economic development
   Seen in many oil producing countries, including
    Nigeria
Fig. 3.1 The Vicious Circle of the
        "Resource Curse"
         Think and Discuss:
British philosophy professor Leif Wenar has argued
that:
  1) natural resources belong to a country’s entire
    population;
  2) consequently, “resource curse” practices amount to
    theft;
  3) purchasing “resource curse” commodities is equivalent
    to buying stolen property; and thus
  4) Western governments should work to ensure that
    “resource curse” countries’ populations share in the
    wealth from the commodity.

Do you agree or disagree? Why?
        Topic in Countries
► EconomicDevelopment in the United
 Kingdom, Germany, and France
  The UK: Highly developed economically; most
   prosperous TIC case
  Germany: Comparatively late and rapid
   industrialization; impressive post-WWII growth
  France: “Dirigiste state”; GDP per capita similar
   to Germany and UK
        Topic in Countries
► EconomicDevelopment in the Russian
 Federation, China, and India
  Russia: Economic collapse in late Soviet and
   early post-Soviet periods, dependent on high
   price of oil for GDP growth
  China: Significant growth since 1970s; per
   capita statistics well behind those of EDCs
  India: Variable growth since independent, but
   recent growth rates are impressive
      In Theory and Practice
   China and Modernization Theory
► Modernization    Theory
   Modernization theory contends that economic
    development follows stages, LDCs can use EDCs
    as a model, and economic development has
    social and political consequences.
   Theory is supported by development in the
    NICs in recent decades
► Theory predicts future consequences,
 including democratization, for China
         Topic in Countries
► Economic  Development in Mexico,
 Brazil, Nigeria, and Iran
  Mexico: Emerging market; success tied to oil
   prices; north more prosperous than south
  Brazil: Rapid growth post-WWII, then downturn;
   debt crisis in the 1980s
  Nigeria: Per capita, one of the poorest countries in
   the world; vulnerable to oil price fluctuations
  Iran: High birthrate not matched by economic
   development; struggles due to Iran-Iraq War in
   1980s
       In Theory and Practice
 Nigeria and Dependency Theory
► Nigeria   and Dependency Theory
   Dependency theory is a challenge to
    modernization theory
   It contends that LDCs are kept poor by EDCs
    through LDCs’ dependence on EDCs
   Predicts continuation of poverty, corruption, and
    fragile democracy (at best) in LDCs
► Appears to Work Well in Explaining the
 Case of Nigeria
     Theme Three:
 Economic Globalization
           Key Terms

►Globalization     ►Imports
►Foreign direct    ►Exports
investment (FDI)
   Table 3.2 2007 A.T. Kearney/Foreign Policy
              Globalization Rankings
       (of Seventy-two Countries Ranked)




AT Kearney Index measures countries on four
dimensions: Political engagement; technological
connectivity; personal contact and economic integration.
         Topic in Countries
             in the United Kingdom,
► Globalization
 Germany, and France
   The UK: Less economically globalized (esp. less
    global trade) than one would think
   Germany: Like UK, trade is limited and
    concentrated with other European Union states
   France: Similar patterns to UK and Germany;
    state working to encourage (and manage)
    globalization and its effects on France
         Topic in Countries
              in the Russian
► Globalization
 Federation, China, and India
   Russia: Limited globalization; hindered by
    corruption and weak “rule of law”
   China: Relatively high levels of economic
    globalization; has yet to encourage “political
    globalization”
   India: Low levels of economic globalization, but
    command of English among many in the
    population makes increased globalization likely
         Topic in Countries
► Globalization   in Mexico, Brazil, Nigeria,
 and Iran
   Mexico: Generally low levels of
    globalization; north more economically
    integrated with U.S. than south
   Brazil: Significant trade barriers limit
    economic globalization
   Nigeria: Economically globalized because of
    oil-related FDI
   Iran: Scored lowest in globalization of the 72
    countries ranked by A.T. Kearney
        In Theory and Practice
    Mexico and the “Race to the
             Bottom”
► The   “Race to the Bottom”
   Weak state theories contend that globalization
    limits states’ abilities to tax, spend, and regulate
   Result is a “race to the bottom” to attract
    multinational corporations
► Mixed results in the case of Mexico and
 its adoption of NAFTA in 1994
        Comparative Exercise
Globalization and Government Spending
► Hypothesis,   Variables, and Cases
   Strong state theories: Contend that despite
    increasing globalization, governments have
    maintained and have often enhanced their
    ability to tax, spend, and regulate
   State strength measured by gov’t spending/
    GDP; globalization measured by FDI as % of
    GDP and imports+exports as % of GDP
   Looks at six of the TIC cases from 1995 to 2002
       Comparative Exercise
Globalization and Government Spending

► Results
   Patterns consistent with neither strong state
    theories nor weak state theories
   More to the story of government spending than
    globalization of the state’s economy