International Pol Exam 2 Week 7

Front 1

You might be a developing state, if…

Back 1

-Rapid population growth.
-Lack of infrastructure.
-Illiteracy
-Political instability.
-Poverty
-Inequality

Front 2

Why so many kids?

Back 2

-cope with high mortality rates
-Previous barriers: medicine! And food production.
-Incentives: cheap workforce; social safety net.

Front 3

Pre-Colonial Economies

Back 3

-Production: food and low tech manufactured stuff.
-Markets: internal
-Level of Interdependence/specialization: low

Front 4

Colonial Economies

Back 4

-Production: cash crops and natural resources.
-Markets: the colonial state.
-Level of Interdependence: higher
-Imperial Economy Roles: supplier of raw goods, market for manufactured goods.
-Declines in Production: manufactured goods; food.

Front 5

The Negative Impact of De-Colonization

Back 5

-Cut off from markets.
-Lack of stable political culture.
-Severe social inequality—no middle class.
-Emergence of ethnic conflict.
-No manufacturing.
-Inability to feed self

Front 6

Developing Countries and the Global Economy

Back 6

Part of the solution: money, markets, technology.
Part of the problem: need for profit, fear of competition.

Front 7

Comparative Advantage

Back 7

Developed: Labor OR Land; AND capital
Developing: land or labor
Land or Labor???: labor

Front 8

Labor Needs

Back 8

Natural Resource Extraction: small, and highly skilled.
Land Cultivation: peasants

Front 9

Import Substitution

Back 9

-What are you making: high tech manufactured products.
-For whom: domestic market.
-Examples: US (keep out Brit imports); India
-Advantages: domestic production of manufactured goods; most direct route.
-Problems: establishing reputation; low quality of stuff; tariffs; conflict with developed countries; higher consumer costs; no domestic market.

Front 10

Are Tariffs/Quotas a Good Idea?

Back 10

-For: less attractive to move jobs overseas; encourage development of domestic industry; gov’t revenue.
-Against: increases cost of living; stifles innovation; promotes crime/smuggling/black marketeering.

Front 11

Export Promotion

Back 11

-What are you making: low-tech manufactured goods.
-For whom: developed world.
-Examples: China
-Advantages: leveraging your comparative advantage.
-Problems: competition with other developing countries; growing labor costs; must at some point shift to import substitution; vulnerability to crises in developed world.

Front 12

Debt Relief

Back 12

-Pros: creates disposable interest income;
-Cons: hits the bottom line; no guarantee the created income will be spent responsibly; “moral hazard”.

Front 13

Government Privatization

Back 13

-What can be privatized?: real estate; public companies; utilities; state parks; roads, pension plans, schools, etc.
-Pluses: raising revenue; reduces payroll and maintenance.
-Minuses: one-shot deal; increases costs to the public; undermines the state.

Front 14

Nationalization/Command Economy/“Socialism”

Back 14

-Definition: government control/ownership of the economy.
-Pluses: overcomes market failures;
-Minuses:

Front 15

The Bottom Line

Back 15

-Development difficult because of the reliance on the outside world—global economic crises hurt developing states even if good policies followed.
-The later you start, the harder it is, because of more intense competition, greater difficulty of finding a niche in the global market.
-No “one size fits all” solution. Every state finds its own path to development.
-World populated by highly competitive developed economies.
-Developing countries lack resources to attract investment.
-Weak, corrupt internal governance a huge obstacle to development.