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by: Erica Kugler

Development PSC 204- Dr. Chyzh

Erica Kugler
GPA 4.0
International Relations
Dr. Chyzh

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About this Document

Notes over Development: Poor and Wealthy Nations
International Relations
Dr. Chyzh
Class Notes
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This 6 page Class Notes was uploaded by Erica Kugler on Friday March 27, 2015. The Class Notes belongs to PSC 204- Dr. Chyzh at University of Alabama - Tuscaloosa taught by Dr. Chyzh in Spring2015. Since its upload, it has received 139 views. For similar materials see International Relations in Political Science at University of Alabama - Tuscaloosa.

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Date Created: 03/27/15
Development Wealth and Poverty of Nations f Everyone Wants Development Why Is It So Hard to Achieve 0 Three factors explain lack of development for Less Developed Countries LDCs 0 Geography 0 Domestic Factors nation s political economy 0 Domestic institutions GeographyGeographic Locationn 0 Three geographic disadvantages to development 0 landlocked countries gt lack of access to maritime trade 0 diseaseridden regions gt sickweak population less productivity 0 desolate areas gt lack of resources 0 Climate and development 0 Tropical regions are usually poor 0 Temperate regions are usually rich 0 Different development levels among countries of same climate or geography shows that other factors like political decisions impact a country s development 0 Geography is important but it is not deterministic of a country s development Global Wealthy Distribution o Wealth is concentrated in countries that are the most developed 0 Divide between the Northern and Southern Hemispheres 0 Northern Hemisphere contains more of the world s wealth Country Pairs 0 We can examine development by looking at similar pairs of countries 0 Zambia and Botswana I Both landlocked I Both gained independence in 1960s 0 At time of independence Zambia was economically better off 0 At time of independence Botswana was economically worse off I Now Botswana is developing and Zambia s development has slowed 0 Burma and Thailand I Burma s economy was growing at the time of its independence but its current economy and development has stagnated I Thailand s economy was inefficient at time of its independence but its current economy is thriving I Thailand is developing faster than Burma 0 North Korea and South Korea I North Korea economically closed off little development I South Korea economically open export oriented industrialization developed Domestic Factors 0 Domestic factors have most influence on a country s economic growth and development 0 Government policies can impact economic growth by either encouraging it or impeding it o Governments can affect development by providing public goods like infrastructure 0 Infrastructure basic structures necessary for social activity 0 Three types of infrastructure I Physical roads airports ports etc I Economic financial systems etc I Social public health education etc o Governments must also do two things protect and provide 0 Protect property rights ensure the security of property I Reassure people that their property and material goods from production will not be arbitrarily seized 0 Provide public goods through credible commitments I Commit to provide public goods people are more likely to take advantage of economic opportunities 0 Why aren t some governments willing to provide these goods 0 They lack expertise 0 Lack of resources 0 Their interests run counter to social welfare I Ex wealthy farmers do not want policies that favor poor farmers because those farmers would become their competition I Ex agricultural owners do not want policies that favor urbanization and industrialization because those things will put the agricultural owners out of business 0 Development policies that are controlled by the elite can serve to benefit small groups within society while harming a majority of society 0 Interactions between interests also determine development 0 Which interests have most access to policymakers and are thus able to influence policy decisions 0 Collective action problem hard to mobilize large groups I Therefore broad social interests are harder to organize than narrow interests 0 Civil war or ethnicreligious factions can impede growth 0 Existence of a shared national goal can facilitate growth Domestic Institutions 0 Institutions influence a group s ability to press for implementation of certain interests 0 Representative institutions favor broad interests and economic growth over narrow interests 0 Democratic political institutions provide more public goods than authoritarian political institutions 0 Domestic institutions can influence development 0 We can look at the types of economic activities of North and South America early in their development I South laborintensive and plantation agriculture social inequalities influenced who could vote I North smallscale farming little socialeconomic inequalities voting expanded to landholders and nonlandholders 0 Resource endowments on a country can produce groups and institutions with contradicting interests 0 States can also be struck with the resource curse 0 Resource curse states wnatural resources usually have stuntedno development 0 Countries wabundant resources are usually ruled by a small group of political elites that make it hard for the public to have control of how those resources are manage I Elites use the resources for their own interests and to get money 0 States that are blessed with a natural resource have little incentive to develop other industries gt risks corruption Are Rich Countries Responsible 0 Relationships between rich and poor nations can be cooperative o All countries benefit from international trading financial and monetary systems I Breakdown of those things would be harmful for all countries regardless of economic status 0 Foreign investment in developing countries is profitable for both the country and the investor 0 Exports by developing countries allows developed countries to buy cheap goods and the developing countries get exportprofit 0 However the interests of developed and developing countries may conflict 0 Wage conflict I LDCs like companies from developed countries to relocate to their country Companies like the low wages they pay to workers but the LDCs want to improve the status of their citizens and will push for development policies that raise wages Did Colonialism Hamper Development o The effects of colonization depend on whether the interests of the colonized and the colonial power were similar 0 If their interests were similar then the infrastructure spurred development 0 If their interests were dissimilar they engaged in predatory policies hurt development 0 Areas of colonizer settlement made the colonizers more willing to develop those regions so that their settlements would thrive 0 Areas without colonizer settlement meant that the colonizer had little incentive to develop those areas 0 Interests of the colonies were behind the interests of the colonizermother country 0 Resource exploitation and extraction by the colonizer was usually bad for development in the colony 0 Theory of settler mortality and economic development 0 Areas of high mortality rates of colonial settlers are more underdeveloped today than other places Is the International Economy Biased against LDCs o LDCs have deteriorating terms of trade 0 They export primary products whose prices fluctuate I Primary products raw materials and agricultural products 0 Advanced economies export manufactured goods whose prices are determined by oligopolistic firms I Oligopolistic market is dominated by a few economically elite firms 0 They make sure prices go up not down so that they get profit 0 LDCs get less for what they sell and they pay more for what they buy 0 Terms of trade relations bwn a country s export prices and import prices I TofT for LDCs disadvantageous Are International Institutions Biased Against LDCs o LDCs are politically weak against developed countries so developed countries dominate trade interactions 0 Trade control by developed countries can be voluntary or involuntary I Voluntary purposefully construct trade agreements to fulfill the interests of developed countries I Involuntary lawsregulations already in place in developed states can harm LDCs ability to trade if they don t follow those laws 0 Developed countries can gain easy access to LDC markets while LDCs have harder time gaining access to markets of developed countries 0 Developed countries can impose trade protection barriers against cheap foreign products to protect their own industries hurts the LDC exporter 0 International political factors can hurt development 0 Ex Agricultural subsidies to US cotton farmers impacts cotton producers in LDCs I Subsidy allows US farmers to produce more cotton which increases the supply of cotton and lowers the price of cotton worldwide This price decrease is bad for cotton producers in LDCs as they will get less profit 0 International institutions can promote interests of wealthy countries at the expense of the poor since most members of key international economic instructions IMF World Bank are developed and wealthy Development Policies and Development Politics o Importsubstitution industrialization ISI 0 ISI policies to encourage domestic industrial development to reduce a countries dependence on imports gain greater economic selfsufficiency I Goal use more domesticlocal products than foreign products I Goal have states move away from primary production and focus on industry 0 Produce for domestic market rather than for export I S involves 0 Trade barriers to protect domestic producers 0 Government subsidies to producers and incentives for foreign investors 0 Government provision of industrial services State Owned Enterprises 0 However many of the industries that S stimulated were largely inefficient 0 Not selling products to other countries and small domestic market lost profit ExportOriented Industrialization o Exportoriented industrialization EOI o EOI policies to increase production for export I Encouraged producers to produce goods for foreign consumers I Tools of EOI Tax breaks lowcost loans and weak currencies I Ex South Korea s EOI Policies Turn Toward Globalization 0 Debt crisis of early1980s hurt S countries more than EOI countries o In exchange for debt restructuring LDCs implemented the Washington consensus 0 Washington consensus marketoriented policies proglobalization 0 Goal switch from economic nationalism to economic openness I Provisions 0 Trade liberalization gt remove trade barriers to importsexports 0 Make product prices lower and more competitive on market 0 Privatization gt sell off gov t owned enterprises to private investors 0 Private ownership increase efficiency of the enterprise 0 Fiscal conservatism gt avoid future debt and high inflation o Openness gt allow foreign investment Attempts to Remedy the Bias of International Institutions o LDCs attempted to counter the global power imbalance of by creating organizations 0 NonAligned Movement group of recently independent countries that didn t align wUS nor USSR during Cold War 0 G77 gt coalition of developing countries in UN 0 New International Economic Order I Reorganization of international economy s management so that it is more favorable to developing countries 0 LDCs had much more influence in commodity cartels o Commodity cartel association of producers of commodities that raise the world price of a good by restricting its supply I Ex Organization of Petroleum Exporting Countries OPEC Is Foreign Aid the Answer 0 Foreign aid likely won t help underdevelopment 0 Amounts of aid are small and unlikely to grow 0 Aid does not solve the basic problems of LDCs I Lots of aid gets misused by LDC gov t I Aid can give out along geopoliticalmilitary interests of developed countries Globalization and its Discontents o Bigger push toward globalization in the past two decades 0 Globalization of LDCs has its problems and critics o Contagion of crises gt currency crisis of one country and can affect many other countries 0 Winners and Losers gt globalization has benefits and costs I Benefits larger market export profit I Costs integrated economies can amplify the impact of crises o Increases inequality I Unequal economic growth among countries I Divide between rich and poor within countries


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