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Week 6 Notes (Part 1)

by: Alexandra Notetaker

Week 6 Notes (Part 1) POS160

Alexandra Notetaker
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Development and Poverty
Global Politics
Dr. Reed M. Wood
Class Notes
pos, 160, political science, Global Studies, Politics, study, notes, Lecture Notes
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This 4 page Class Notes was uploaded by Alexandra Notetaker on Tuesday September 27, 2016. The Class Notes belongs to POS160 at Arizona State University taught by Dr. Reed M. Wood in Fall 2016. Since its upload, it has received 8 views. For similar materials see Global Politics in Political Science at Arizona State University.


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Date Created: 09/27/16
POS160 POVERTY AND DEVELOPMENT  RealitiesofGlobal Economy  Billionslive in conditionsofpoverty  Developmentexperienceswidelyvary  Often enormousdividesbetweenwealthyandpoor (acrossandwithincountries)  BUT theygrow moreslowlythan developed countries  Development:  Socialandeconomicimprovementsin states  KeyIndicators:  Wealth(GDPper capita)  Infantmortality  Lifeexpectancy  Inequality  CentralQuestion:  Whyhave some countriesdevelopedsuccessfully,while othershaven’t?  Three generalfactors:  Geographiclocation  Domesticeconomicfactors  Domesticinstitutions  GeographicalLocation  Mayinfluence developmentandwealth:  Jungles,deserts,andswamps=unproductive  Someplaceshave resourcesothersdon’t  Someplaceshave lotsofdisease,naturaldisastersetc.  Geography:Keep in mind  Wide variationsamong countriesin thesame region.  Burma-Thailand  Iran-Afghanistan  Albania-Italy  Bolivia-Argentina  Botswana-Zimbabwe  Mustlookatadditionalfactors  The Resource Curse  Resourcesdon’toften benefitcountriesaswe mightexpect  In absence ofstabilityandstrong economicandpoliticalinstitutions,lucrative resources can be detrimental  i.e.BloodDiamondResourceCurse  DomesticFactors  Governmentpolicieshave apowerfulimpacton economicgrowth  Increasedevelopmentbyproviding publicgoods  PublicGoods:  Non-excludable  Requirecollective action  Orahegemon  Infrastructure:aprincipleexample ofpublicgood:  Physical(roads,airports,ports)  Bring trade  EconomicInstitutions(financial systems)  Bring stabilityandinvestment  Social(publichealth,education)  Helpwith development  PublicGoods  Infrastructure isan aspectofdevelopment  Alsopromote development:  Roads,tech,education jobs,boosproduction,adpromote investment  Moreinfrastructure more economicgrowth  Whynotbuildyourwaytoprosperity?  Long-terminvestment:paystomorrow butcostlytoday  Leadersandcitizensfocuson theshort-termsolutions  Whysave for tomorrow when you can spendtoday?  Specialinterestsoften trumppubicgood  If/Where roadsarebuiltisapoliticaldecision  Moreschoolsv.more malls  Statesmustraise/borrowmoneytopayfor it  Moneycomesfrominvestment,loans,andforeign aid  BUT theyarehardertogetwhen poor  Blame therich  Colonialismandexploitation partlytoblame  Recall:Muchofcurrentdeveloping worldwascolonizedbetween 1700s-1960s  Resourcesexploitedbycolonialpowers  Negative impactofdevelopment  Colonialism  In rare instances,colonialismhelpedstimulate growthin poor countries  Where interestscoincided  Colonialpower builtinfrastructure  Mostimperialpowersexploitedcolony  Createdadependentrelationship between colony(Periphery)andimperialstates (metropole)  Dependency  Resourcesextractedin colony,processedin metropole  Techandknowledgestayedin metropole  Productsresoldin coloniesandforeign markets  Muchlargershare ofprofitstometropole  Indigenouspeoplehadlittle/NOinput  @independence,statesleftwith littleinfrastructure  Few skilledworkers,educated citizens,or professionalbureaucrats  Weak institutions  Conditions@independence continuedtoinfluencemanycountries  Liberalization  Liberaltheorysuggeststhatcooperation benefitsall  Potentialsource ofdevelopment  Tradeandinvestmentcan bring countriesoutofpoverty  Theyjustneedtocooperate,theoretically  Cooperation  Richandpoor nationscan cooperate  Bothbenefitfromint’ltrade andfinancialsystems  Where interestsoverlap=mutuallybeneficial  BUT interestsmayconflict  Self–interest  Wealthycountries“builtthe system”=morepower  Wealthyneedscome first  Racing tothebottom  Raising wagestoworkersharmsMNC“bottomline”  MCNlookfor cheaplabor  Race tothebottom  MNCpresence stifle localcapital  Localfactoryownerscan’tcompetewith MNC  Workersandstatesbeholden toMNC  Subjecttoexplanation  Biasin thesystem  Theory(Prebisch) that the int’ltraderelationswork againstpoor states  LDCsmainlysellprimaryproducts(agro,raw materials)  Competitive nature ofmarketsforce pricesofgoodstodecrease  Lotsofproducers=decreasedemandanddecreasedwagesandprofits  Poorstatesstaypoor while providing cheapgoodstorichstates  Manufacturedgoodscontrolledbyfew large oligopolisticfirms  Firmscontrolmarkets  Manipulate price ofresource  Constrain supplyofmanufacturedproducts  Termsoftrade=badtoLDCs  Saleprice ofresourceslow  Price ofmanufacturedgoodhigh  Poorcountries“sell”low and“buy”high  Alternatives  ArgumentledLDCstoprotecthomemarketsandreduce reliance on foreign goods  Manygov’tsencouragedrapiddomesticandindustrialdevelopments  Attempttoproduce industrialgoodsathome  Sub.Manufacturedproductmade athomefor foreignmade goods  Reducereliance on foreignmanufacturedgoods  ThestrategyodcalledImport-Substitution Industrialization(ISI)  Import-Substitution Industrialization(ISI)  ManyLDCsfollow broadoutline ofimport-sub:  Tradebarriersprotectdomesticmanufacturers  Gov’tincentivesdraw investorsintomodern industrialsector  Gov’tprovisionsofindustrialservices  Gov’tsubsidiestolocalindustry  By1970smostlarge developedcountriesfollowing ISIwere self-sufficient  By1980s=insufficientandlostsupport  LDCsimporting moreforeign goodsb/cdomesticindustrycouldnotkeepup  Domesticmarketstoosmalltobe profitable/efficient  Goodsoflow qualityb/c lack ofcompetition  Price increaseb/cdomesticproduction =expensive andforeign importsare heavilytaxed  ISIunfairnesstowardsagriculturemayhurt farmers  ExportOrientedIndustrialization  EOIEastAsian approach  breakstoexporters,low-costloans,andweakcurrencyhelpmake productsartificiallycheap  SoundlikeChinatoday?  1970sS.Koreaexports=$385Mil  1979S.Koreaexports=$15Bil  Today,S.Korea=one ofthe world’smajoreconomies  Turn towardGlobalization  Debtcrisisin 1980s= fatal blow toISI  ISI statescouldnotkeep up  Under pressure toreformtoeconomicsystems  Esp.when neededloansfromWB/IMF  1990s:LDCsturn towardglobalization  Notthesaviortheyhadhoped:  Sweat shops,exploitations,environmentaldestruction  Yet,globalization/liberalization seemstoremain thepreference for moststates


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