Globalisation, World Economy and Development Disparities
What this domain tests
The exam asks you to explain how global economic integration produces uneven development, and to judge development indicators and strategies. You need concepts from trade and production networks, plus a critical stance on how development is measured.
Core rules and concepts
- Dimensions of globalisation: trade liberalisation, foreign direct investment, containerisation and falling logistics costs, ICT-enabled coordination, and the rise of global value chains (GVCs). Governance matters: the WTO, bilateral trade agreements, and regional blocs.
- Value-chain logic: the smile curve shows value added concentrated in design and branding at one end and marketing and after-sales services at the other, with assembly capturing little. Upgrading (process, product, functional) is the pathway for producer regions; lead firms control the chain.
- Measuring development: GDP per capita is a crude average; the Human Development Index combines income, life expectancy and education; the Multidimensional Poverty Index counts overlapping deprivations; the Gini coefficient captures inequality. Purchasing power parity adjusts for price differences. Each measure has blind spots: HDI ignores within-country distribution, PPP can mask non-traded goods.
- Dependency and modernisation theories: modernisation stresses stages and diffusion; dependency and world-systems theory stress structural asymmetry between core, semi-periphery and periphery. Neither fully predicts outcomes - use them as perspectives.
- Strategies: import substitution (protectionist, historically mixed), export-oriented industrialisation (East Asian model), fair trade and certification, microfinance, debt relief, and South–South cooperation.
- Germany's position: export-oriented, integrated into European supply chains, exposed to trade shocks and to competition in automotive and machinery.
Worked example with reasoning
Task: assess whether a country's rising GDP per capita proves successful development. Reasoning: check the composition of growth (which sectors, which regions), distribution (Gini, poverty headcount), whether growth is extractive or diversified, employment quality, and environmental costs. Compare the HDI trend and the MPI. Conclusion: rising GDP is a necessary but insufficient indicator; success requires distributional and structural evidence. This chain shows the exam the difference between a claim and a substantiated judgement.
Traps that cost marks
- Treating globalisation as uniform across sectors and regions.
- Comparing GDP per capita across countries without PPP adjustment.
- Using a single indicator as proof of development.
- Presenting modernisation or dependency theory as established truth.
- Ignoring the environmental dimension of resource-intensive growth.