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CHAPTER 19 DEVELOPING COUNTRIES 19

CHAPTER 19 DEVELOPING COUNTRIES 19 . I. ECONOMIC DEVELOPMENT.

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CHAPTER 19 DEVELOPING COUNTRIES 19

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  1. CHAPTER 19 DEVELOPING COUNTRIES 19

  2. I. ECONOMIC DEVELOPMENT • When the Peace Corps was founded in 1961 by President John F. Kennedy, it drew most of its volunteers from recent college graduates. In the 1990s volunteers were, on average, older and had more experience in specialized fields.

  3. A. INTEREST IN ECONOMIC DEVELOPMENT 1. The international community has humanitarian, economic, and political concern for the developing countries. 2. Many people in developing countries starve to death or die from diseases related to inadequate diets and health conditions. 3. Assistance to developing countries helps assure industrial nations of a stable supply of certain raw materials.

  4. A. INTEREST IN ECONOMIC DEVELOPMENT continued 4. Developing nations are markets for the products of industrial nations. 5. The gap between industrialized and developing countries contributes to revolution, social upheaval, and even war. 6. The majority of developing nations are in Africa and Asia.

  5. B. OBSTACLES TO DEVELOPMENT 1 Population growth is one obstacle to development, as high crude birthrate combines with increasing life expectancy. 2. Limited natural resources, which includes unproductive land and harsh climates, is another obstacle. 3. The lack of education and technology is an economic development obstacle. 4. Religion might keep some people from being interested in economic growth.

  6. B. OBSTACLES TO DEVELOPMENTcontinued 5. External debt is money borrowed from foreign banks and governments that some nations may never be able to repay. 6. Capital flight is the legal or illegal export of a nation’s currency and foreign exchange. 7. Corruption at any level of government is an obstacle to economic development. 8. War’s aftermath can linger for decades.

  7. C. INTERNATIONAL AGENCIES 1. The International Monetary Fund (IMF) helps all nations on monetary and fiscal policies and supports developing nations with loans. 2. The World Bank is an important international lending and development agency that makes loans and provides financial assistance and advice to developing nations.

  8. II. A FRAMEWORK FOR DEVELOPMENT • Protective tariffs may serve one part of a country and be a burden on another. When, during the term of John Quincy Adams, the Congress protected northern industries by passing a high-tariff bill, the South, which had to import manufactured goods, called it the “Tariff of Abominations.”

  9. A. Stages of Economic Development 1. Primitive equilibrium is a stage in which there is no formal economic organization. 2. Breaking with primitive equilibrium is a transition period that comes after exposure to outside forces. 3. Takeoff means more rapid growth after overcoming the barriers of primitive equilibrium.

  10. A. Stages of Economic Development continued 4. Semi development means that the makeup of the country’s economy changes as industry, per capita income, transportation, communications, medicine, law, and other services grow. 5. Development means there is an emphasis on services and more public goods.

  11. B. PRIORITIES FOR INDUSTRIALIZED NATIONS 1. Reducing trade barriers could increase export earnings for developing nations by as much as $50 billion. 2. Reforming macroeconomic policy could reduce budget deficits, stabilize inflation, lower interest rates, and stabilize foreign currency fluctuations. 3. Industrialized countries need to increase financial support to developing countries. 4. By supporting policy reform in developing countries a more favorable business climate among all nations can be attained.

  12. C. PRIORITIES FOR THE DEVELOPING COUNTRIES 1. They should invest in people: education, family planning, nutrition, and basic health care. 2. They must improve the climate for free enterprise by removing regulations that restrict the free development of markets. 3. They need to open economies to international trade because trade barriers hold down a country’s standard of living. 4. They should revise macroeconomic policies: curbing inflation, reducing borrowing, decreasing deficits, and allowing market incentives.

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