DEVELOPMENT ECONOMICS

CHAPTER ONE

      

1.1      INTRODUCTION

      The gap between the developing countries and the developed countries cannot be underemphasized; it is widely seen and noticeable. In this work, I bring together three countries: The Bahamas, Chile which are both in the Caribbean and Ireland which is a European country. Using headings like historical background, size and income level, physical and human resources, ethnic and religious composition, relative importance of public and private sectors, industrial sectors, external dependence and political structures, power and interest group to compare the three countries in order to check whether it has any involvement in why a country is developed or not.

  HISTORICAL BACKGROUND

 THE BAHAMAS

                 As early as 300 to 400 AD, people who came from what is now Cuba (there was no country named Cuba at that time) lived on The Islands Of The Bahamas and relied on the ocean for food. From around 900-1500 AD the Lucayan people settled here. They enjoyed a peaceful way of life and had developed viable political, social and religious systems.

        In 1492, Christopher Columbus made landfall in the New World on the island of San Salvador. Inspired by the surrounding shallow sea, he described them as islands of the “baja mar” (shallow sea), which has become The Islands Of The Bahamas. When he arrived, there were about 40,000 Lucayans. Their peaceful nature made the Lucayans easy targets for enslavement however, and within 25 years, all of the Lucayans were wiped out due to the diseases, hardships and slavery they endured. English Puritans known as “Eleutheran Adventurers” arrived there in 1649 in search of religious freedom. Instead, they found food shortages. Captain William Sayles sailed to the American colonies for help and received supplies from the Massachusetts Bay Colony. Upon his return, the settlers thanked them by shipping them brasileto wood. The proceeds helped purchase land for what later became Harvard University.

        From 1861 to 1865, The Islands of the Bahamas benefited greatly from the U.S. Civil War. Britain’s textile industry depended on Southern cotton; however, the Union blockaded British ships from reaching Southern ports. So blockade runners from Charleston met British ships here and traded cotton for British goods. Upon their return, they sold their shipment for huge profits. The end of the Civil War marked the end of prosperity. In 1919, the United States passed the 18th amendment prohibiting alcohol. The colonial government expanded Prince George Wharf in Nassau to accommodate the flow of alcohol. When Prohibition ended in 1934 so did the enormous revenues. Combined with the collapse of the sponge harvesting industry, it economically devastated The Bahamas. On July 10, 1973, The Bahamas became a free and sovereign country, ending 325 years of peaceful British rule. However, The Bahamas is a member of the Commonwealth of Nations and they celebrate July 10th as Bahamian Independence Day

CHILE

      The first human beings arrived in Chile about 12,000 BC. At first people lived by hunting and farming but in North Chile they were farming by 2,500 BC. However agriculture began much later in Southern Chile.

          The Incas conquered northern Chile in the 15th century but they were themselves conquered by the Spanish in 1533. However in the South were a people called the Araucanians. In 1540 a Spaniard called Pedro de Valdivia invaded southern Chile and he founded Santiago in 1540. However in 1553 the Mapuche, known to the Spaniards as Araucanians rebelled led by men called Lautro and Caupolican. They sacked the Spanish settlements except for Concepcion and la Serena.The Spaniards managed to regain control but the Araucanians continued to resist Spanish rule until the 19th century and there was frequent strife between them and the Spaniards.Despite that by the end of the 17th century the population of Chile was about 100,000 and by the end of the 18th century it was nearly 500,000 most of whom were mestizos or people of mixed race.

        In 1808 Napoleon occupied Spain and deposed the king Ferdinand VII. He made his own brother, Joseph, king of Spain. So in Chile the leading citizens elected a junta in September 1810. They claimed they were ruling on behalf of the deposed king Ferdinand but they introduced a number of reforms and moved towards independence. However Peru remained loyal to Spain and went to war with Chile to bring her to heel. In October 1814 a royalist army defeated the Chileans and occupied Santiago. Meanwhile Napoleon had abdicated and the Spanish king had been restored. The king then clamped down on Chile and introduced a repressive regime, which simply alienated the people. A man named Jose de San Martin led an army which defeated the royalists at Chabuco on 12 February 1817. Chile became formally independent from Spain on 12 February 1818.However the early years of independent Chile were troubled by political instability.

IRELAND

       The Republic of Ireland is the second largest British isle, covering 27,136 square miles and bordered to the northwest by Northern Ireland; in the past it went by the Irish Free State (1922-1937) and Eire (1937-1949). Eire is still used by many persons as their name of choice for Ireland, also causing some confusion outside the country's borders. The capital city is Dublin, containing one-third of the Irish Republic's population. During the second half of the twentieth century, the presence of so many fine higher education institutions in Dublin led to the renovation or restoration of many neighborhoods that had been reduced to slums. The predominant religion is Catholic. Ireland's 26 counties have been free of British rule since 1922, which has resulted in some educational changes, including great emphasis on the Irish language, literature, customs, and history. Ireland's history began during the Mesolithic Era. Hunters from faraway British Isles and likely even southwest Europe first settled this island west of present-day Great Britain. The country began to show signs of civilized development in the Neolithic period about 4000 to 2000 B.C. A communal people, the language of these Pre-Celtic people has been lost. Ireland was greatly influenced by the Celts and Romans.

2   SIZE AND INCOME LEVEL

   THE BAHAMAS

            The Bahamas has a population of 0.4 million and the average household net adjusted disposable income per capita is lower than that of the OECD and it has a GDP per capita of USD 31,300

CHILE

       Chile  has a population of 17.6 million, the average household net adjusted disposable income per capita is lower than the OECD of USD 30 563 a year.

IRELAND

        The average household net adjusted disposable income per capita is USD 25 439 lower than the OECD average of USD 30 563 a year and it has a population of 4.6 million with a GDP per capita of USD 71, 354.

          CHAPTER TWO

3   HUMAN AND PHYSICAL RESOURCES

  THE BAHAMAS

         The natural resources of Bahamas include salt, aragonite, timber and arable land. Aragonite is one of two naturally occurring crystalline forms of calcium carbonate and is present due to the coral on islands. The islands have a relatively small area of arable land, making up around 0.5 percents of the total landmass. Timber production is likewise restricted to small areas throughout the island chain. When first settled,  the Bahamas island chain relied principally on agriculture and fishing as its primary economic activities. As populations grew, however, the lack of natural resources on the islands began to become apparent. In the modern era, the Bahamas has diversified into the tourism, financial services and shipping industries, and the economy is highly dependent on money brought in from outside the islands for local services.

       The Bahamas is an island country located in the western Atlantic Ocean. As of 2014, only about 30 of its islands are inhabited. The largest Bahamian island is Andros, located 120 miles southeast of Florida. Politically considered a single island, Andros has a total area greater than all the other 700 Bahamian islands combined. To the north of Andros is the island of Grand Bahama, home to the country's second-largest city, Freeport. In the far south is the island of Great Inagua, the second-largest island in the country. Nassau is the capital and largest city of the Bahamas and is located on New Providence. New Providence, which is one of the smallest of the major islands, is home to almost 70 percent of the country's population.

    The land on the Bahamas has a foundation of fossil coral and is primarily either rocky or mangrove swamp. Low scrub covers much of the surface area. Only a few freshwater lakes and a single river, located on Andros Island, are found in the Bahamas.

      The Bahamas has a 95 per cent adult literacy rate and most of the population speaks English as a first language (2006). In 2007 a labour force survey classified 29 per cent of the labour force as professionals or senior officials and managers.

CHILE

       Chile’s relief is for the most part mountainous, with the Andes range dominating the landscape. Because of the country’s extreme length it has a wide variety of climates, from the coastal desert beginning in the tropical north to the cold subantarctic southern tip. Chile is also a land of extreme natural events: volcanic eruptions, violent earthquakes, and tsunamis originating along major faults of the ocean floor periodically beset the country. Fierce winter storms and flash floods alternate with severe summer droughts.

       Much of northern Chile is desert; the central part of the country is a temperate region where the bulk of the population lives and where the larger cities, including Santiago, are located. South-central Chile, with a lake and forest region, is temperate, humid, and suitable for grain cultivation; and the southernmost third of the country, cut by deep fjords, is an inhospitable region—cold, wet, windy, and limited in resources. The economy of Chile is based on primary economic activities: agricultural production; copper, iron, and nitrate mining; and the exploitation of sea resources. Chile did not, however, depend as heavily on agriculture and mining as did many Latin American countries, but rather developed an economy based on manufacturing as well. Thus, Chile has become one of the more urbanized Latin American societies, with a burgeoning middle class. Chile has also had a history of retaining representative democratic government. Except for a military junta that held power from September 1973 to March 1990, the country has been relatively free of the coups and constitutional suspensions common to many of its neighbours.

      Chile is one of five OECD countries that reported no anticipated change in public employment levels as a result of planned reforms. Data are unavailable regarding recent restructuring measures. Employment in the general government sector (excluding public corporations) as a percentage of the labour force, 9.4% in 2010, is substantially less than the OECD average of 15.1%. Similarly, compensation of public employees as a percentage of GDP, 8.7% in 2010, is below the OECD average of 11.3%.

IRELAND

     The primary natural resources of the Republic of Ireland include natural gas, petroleum, peat, copper, lead, dolomite, barite, limestone, gypsum, silver and zinc. Key industries based on these and other natural resources include fishing, mining, and various forms of agriculture and fish farming. The Department of Communications, Energy and Natural Resources is charged with the legislative protection of the Republic of Ireland's natural resources. Primary raw material industries in Ireland include those involving steel, lead, zinc, silver, aluminum, barite, and gypsum mining processing. Heavy industry relying on these materials is centered around key port cities such as Dublin, Cork , and Belfast (the latter in Northern Ireland).

    Ireland's experience with state-sponsored renewable energy projects dates from 1925, and the Ardnacrusha project. Other new and renewable energy projects include hydroelectric, solar, and wind power initiatives, including one of the country's first wind farms at Bellacorick in 1992.

Ireland has human resources of 2.22 million

4    ETHNIC AND RELIGIOUS COMPOSITION

THE BAHAMAS

      Most of the Bahamas ' population is of African descent, although there's a decent number of ethnic Europeans , making up nearly 15% of the population. There is also a small, but distinct "mestizo" or Hispanic population on the islands. The ethnic Africans in the Bahamas are not necessarily a single ethnic group as most of the people on the islands today are descended from slaves so their ancestors come from all parts of Africa. Most of these slaves arrived to the Bahamas from Bermuda and the United States (after the American Revolutionary War, British supporters moved themselves and their slaves to the Bahamas) so their actual origin is unknown, but most likely the people today are primarily of West African descent. Today these people share a culture, but their ethnic make-up may be very different from individual to individuals

      Just over two thirds of the Bahamas' population is Protestant with Baptists making up a third of the total population. Another 14% is Roman Catholic and another 15% adhere to other forms of Christianity.

CHILE

      Nearly everyone in Chile is either wholly European or a combination of European and Amerindian. Of these groups, the Spanish ethnicity is the most common among them, although Italian and other European groups are also included. About 5% of the population claims to be wholly Mapuche, which is a group that held off Spanish advances for hundreds of years and still dominates regions in the south.The Mapuche aren't necessarily an ethnic group, but they cling to a single identity as they all share a common language, history, and culture. Despite not truly being a single ethnic group, the Mapuche are all related ethnically to some degree. On a smaller scale the Mapuche can be divided into numerous smaller groups, primarily divided in geographic terms, including the Pichunches , Huilliches, Moluche , and the Nguluche among others.

      Most of the Chileans are Roman Catholic, tallying about 70% of the total population. About half of the remaining population is Evangelical Christian and the other 15% adheres to numerous religions or follows none.

IRELAND

       Nearly everyone living in Ireland is ethnically Irish. This ethnicity is based on a Celtic history, but the people today also have significant traces of Norman, Flemish, and Anglo roots among various other ethnic groups. The closest relatives to the Irish are the Scots, Welsh, and oddly the Basques, a Celtic group in present-day Spain.

     The overwhelming majority of Ireland’s population is Catholic. A few adherents to Protestantism are also present, most notably in the counties adjoining Northern Ireland, but these people are a significant minority, even in their own counties

5    RELATIVE IMPORTANCE OF PUBLIC AND PRIVATE SECTORS

THE BAHAMAS

       As a tourism-dependent economy, the Bahamas is reliant on regular tourist arrivals, and this renders the country vulnerable to shocks in key tourism source markets, particularly the US. According to the World Travel and Tourism Council, the outlook for the sector is positive, with forecast sustained growth in the local tourism industry of 2.6% annually in the period to 2022, and a related contribution to employment growth, with employment in the sector forecast to increase by around 23% between 2011 and 2022. However, the industry is changing, and in order to realize these forecasts the country needs to maintain an advantage in the sector over global competitors, which are steadily improving their tourism offerings. The Bahamas is a small archipelagic island state with an open economy. Its economy has been largely dominated by two services sectors that account for roughly two-thirds of GDP and employ most of the labour force, namely tourism (and tourism-related construction) and financial services. Industrial production, manufacturing and agriculture are limited by the country’s modest geographical area and factor endowment.

     The Bahamas will continue to benefit from the openness of its economy. It is expected that the government will seek to attract visitors and investment from non-traditional, fast-growing markets in Latin America and Asia. Tourist arrivals from North American remain dominant because of the proximity of that market, while efforts to diversify economic activity have had only a weak impact, as tourism (particularly from the US) continues to dominate investment flows and government policymaking. Plans to open up the electricity industry to greater private-sector involvement, and the partial reversal of a moratorium on offshore oil drilling, signal a pragmatic approach to policymaking. Annual inflation averaged just over 2% between 2000 and 2013. The Bahamian dollar has been pegged to the US dollar at parity since 1973, and there is a strong commitment to maintenance of the peg. After contracting by an average of over 3% a year in 2008-09 on the back of the global financial crisis, the Bahamian economy has since picked up, albeit weakly. Growth averaged just over 1% in 2010-13.  

CHILE

      During the Lagos administration (2000-2006) were applied several reforms that supported the economic growth. This administration took advantage of a favourable economic environment and was able to set up diverse free trade agreements with the United States and the European Union. Unfortunately, some public officials were involved in cases of corruption. Among these cases existed some emblematic ones such as MOP-GATE, ChileDeportes and InsulsaLongeuira. Later on Bachelet (2006-2010) continue with the reforms made my Lagos and Aylwin. Her special emphasis was setting up a system of Social Protection that " (…) directed to the Chilean society towards a real Social State of Law” (Concerta2, 2010, p. 3). One of the most important institutional change fostered by Bachelet was the civil participation, topic that was not prioritized by La Concertación previously (Silva, 2007, pp. 89-90).She was committed to strengthening the role of society in the government, an elemental condition for the correctly running of the democracy(Checa, Lagos, &Cabalin, 2011, p. 39).Unfortunately, cases of corruption did not disappear, during these period cases such as EFE, Patrimonio Piñera and La Polar, draw the attention in media. It is important to emphasyze that during Bachelet’s first term in office, a recurrent policy issue was the pension system.The citizens perceived that private interests had powerful influence on the public decision-making.

     The relative importance of the micro, small and medium enterprise increased in the Chilean economy between 2000 and 2015 and the government supported them across different programs of undertaking.One of them was “Chile Emprende”, which was oriented to support the search of business opportunities for entrepreneurs who came outside Santiago de Chile (Goic, 2011, p. 11).It also was created “Prochile” in order to improve access to international markets of inputs and goods.

IRELAND

        The economy of Ireland is a modern knowledge economy , focusing on services and high-tech industries and dependent on trade, industry and investment. In terms of GDP per capita , Ireland is ranked as one of the wealthiest countries in the OECD and the EU-27 at 5th in the OECD-28 rankings as of 2008.

      In terms of GNP per capita, Ireland ranks only slightly above the OECD average, despite significant growth in recent years, at 10th in the OECD-28 rankings. GDP (national output) is significantly greater than GNP (national income) due to the repatriation of profits and royalty payments by multinational firms based in Ireland. Its private and public sectors relative importance has always been a noticeable fact and the government has funded it to the best of their effort

CHAPTER THREE

 6   INDUSTRIAL STRUCTURE

THE BAHAMAS

      In order to lessen the economy's dependency on tourism, the government has followed a policy of diversification since the 1970s, emphasizing development in the industrial and agricultural sectors. Success, however, has been limited. The nation experienced setbacks in the early 1980s with the closing of steel and cement plants and oil refineries. Because industries locating in the Bahamas tended to be capital intensive, the industrial sector's share of the labor force was estimated at just 6 percent in 1979. Industry's share of GDP was estimated at about 10 percent in the mid-1980s. The agricultural sector (including fishing) also employed only about 6 percent of the labor force in the early 1980s. Despite various programs to boost production, the World Bank estimated that agriculture in the Bahamas accounted for less than 5 percent of GDP in 1986. The nation's banking and finance sector experienced significant growth in the 1970s and 1980s. This sector contributed approximately 7 percent to GDP in the mid-1980s but employed only about 3,000 Bahamians

CHILE

       Chile's economy is dominated by the industrial and service sectors, which together contribute to 96% of the GDP. Chile’s key activity sectors are mining (copper, coal and nitrate), manufactured products (agro-food processing, chemicals, wood) and agriculture (fishing, viticulture and fruit). The agricultural sector contributes to nearly 4% of the GDP and the industrial sector to around one-third, while the significance of the service sector has increased, now contributing 63.2% of the GDP. Approximately 9% of the population works in the agricultural sector, 24% in the industry sector and 67% in the service sector. Tourism is on the rise with an estimated 5.64 million visitors in 2016 (26% increase compared to 2015). Finally, Chile has also started investing in renewable energy, which will make up 20% of the country's total energy by 2020. The Chilean economy faces three main challenges: overcoming its traditional dependence on the price of copper, as copper production represents 50% of the country's exports; developing a self-sufficient food supply, as agriculture currently produces less than half of domestic needs; and increasing its productivity, especially in the mining sector.

        Agriculture and livestock farming are the main activities of the central and southern parts of the country. Fruit and vegetable exports have reached historic records, thanks to a deliberate strategy implemented in the 1990s targeting the European, North-American and Asian markets. Chile’s location in the Southern Hemisphere means that it is able to offer out-of-season fruits to the countries of the Northern Hemisphere.

IRELAND

      Ireland’s major industrial sectors include: Agriculture, Beverages, Chemicals and Fertilizers, Clothing, Construction, Electronics and Data Processing, Food Processing, Machinery, Pharmaceuticals, Textiles, Tourism.

7   EXTERNAL DEPENDENCE

THE BAHAMAS

     The Bahamas is largely an import service economy . There are about 110 U.S.-affiliated businesses operating in The Bahamas, and most are associated with tourism and banking . With few domestic resources and little industry, The Bahamas imports nearly all its food and manufactured goods from the United States. American goods and services tend to be favored by Bahamians due to cultural similarities and heavy exposure to American advertising. It is also associated with Mexico, Singapore, south Korea, Taiwan, Columbia, China, etc. Though it has no boundaries.

CHILE

    Chile has a very open economy, highly dependent on international trade, which represents 56% of the country's GDP (WTO, 2016). Chile has signed Free Trade Agreements (FTAs) with several important economies, notably the European Union, the United States, China and South Korea. Its comparative economic advantages (revenue from mining, competitive and counter-seasonal agriculture sector) have given it access to the large markets of North America, Europe and the Asia-Pacific (and recently also to other South American countries, especially Brazil).

       Chile's top three trading partners are China, the United States and Japan. The country mainly exports copper (50% of its exports), fruits and fish products (which record the highest increase). Chile's main suppliers are the United States, China and Brazil. Imports involve mainly fuels, minerals and oil, machinery, vehicles, electric equipment and electronics. Services account for 13% of exports and 17% of imports.

IRELAND

Britain is far and away Ireland’s biggest trading partner, accounting for 50 per cent of exports from the Republic. Ireland is virtually entirely dependent upon its larger neighbour for energy, importing 90 per cent of its oil and more than 90 per cent of its gas from the UK. Its also a bit dependent on its trade with the US, Belgium, Israel, etc

8  POLITICAL STRUCTURE, POWER AND INTEREST GROUP

THE BAHAMAS

       The politics of the Bahamas takes place within a framework of parliamentary democracy, with a Prime Minister as the head of government. The Bahamas is an independent country and a member of the Commonwealth of Nations. As a former British colony, its political and legal traditions closely follow those of the United Kingdom. Queen Elizabeth II is the head of state, but executive power is exercised by the cabinet. Legislative power is vested in the two chambers of parliament . The Judiciary is independent of the executive and the legislature and jurisprudence is based on English common law. The multi-party system is dominated by the Progressive Liberal Party and the Free National Movement. The constitution protects freedom of speech, press , worship ,movement , and association

CHILE

   Chile’s government is a representative democratic republic , whereby the President of Chile is both head of state and head of government, and of a formal multi-party system that in practice behaves like a two-party one, due to binomialism . Executive power is exercised by the government. Legislative power is vested in both the government and the two chambers of the National Congress. The judiciary is independent of the executive and the legislature of Chile. The Constitution of Chile was approved in a national plebiscite in September 1980, under the military government of dictator Augusto Pinochet . It entered into force in March 1981. After Pinochet left power in 1988, saying this country was ready to keep going along with a plebiscite, the Constitution was amended to ease provisions for future amendments to the Constitution. In September 2005, President Ricardo Lagos signed into law several constitutional amendments passed by Congress. These include eliminating the positions of appointed senators and senators for life , granting the President authority to remove the commanders-in-chief of the armed forces, and reducing the presidential term from six to four years while also disabling immediate re-election . The Economist Intelligence Unit has rated Chile as "flawed democracy” in 2016.

          Major interest groups include, Student federation’s at all major universities, Roman Catholic Church, Workers' United Center of Chile trade unionists from Chile's five largest labor confederations.

IRELAND

     Ireland is a parliamentary, representative democratic republic and a member state of the European Union. While the head of state is the popularly elected President of Ireland , it is a largely ceremonial position with real political power being vested in the indirectly elected Taoiseach (leader of government) who is the head of the government. Executive power is exercised by the government which consists of no more than 15 cabinet ministers, inclusive of the Taoiseach and Tánaiste (deputy leader of government). Legislative power is vested in the Oireachtas , the bicameral national parliament, which consists of DáilÉireann , Seanad Éireann and the President of Ireland. The judiciary is independent of the executive and the legislature. The head of the judiciary is the Chief Justice who presides over the Supreme Court. The Economist Intelligence Unit has rated Ireland as "full democracy " in 2016.

       Interest groups include, ISPCC, ISPCA, Trocaire, Amnesty international, Greenpeace, Focus Ireland, INOU (Irish National Organisation of the Unemployed), Oxfam, Pavee point, etc.

               

CHAPTER FOUR

4.1   CONCLUSION

          Based on what we have seen so far, we can see to a large extent that Ireland is very much well developed than The Bahamas and Chile. This could be said to be so as a result of where it is located or how long they stayed under colonization or maybe how well exposed they are to good things of life.

          It could also be as a result of political structures or how they have been ruled in the past, or even possibly how their industries are structured and what and who they depend on. It could also be as a result of how naturally endowed they are or the religion they are affiliated with or even their ethnic groups; where they origin from and who they deal with.