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International Development

International Development. PO 325: International Politics. International Development. Economic Development – Combination of Capital Accumulation, Rising Per Capita Incomes, Increases in Skills and Technology

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International Development

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  1. International Development PO 325: International Politics

  2. International Development • Economic Development – Combination of Capital Accumulation, Rising Per Capita Incomes, Increases in Skills and Technology • Development in South Much Slower Than in North, Despite Some Gains in 1960s-1970s (Some Exceptions)

  3. International Development • How Can Development Be Stimulated? • Capitalism: North-South Gap is a Stage of Growth; If the Third World is Tied (via Trade) to Developed States, They Will Develop Self-Sustaining Growth Cycles (“Trickle-Down”) • Socialism: More Equitable Distribution of Wealth is Necessary for Development; Helping South Won’t Slow the Efficiency of Capitalism

  4. Strategies of Development • Third World Countries Have Generally Relied Upon International Trade to Develop via the Accumulation of Capital Surpluses, as Autarky is Too Slow. • However, Protectionism is at the Heart of Even the Most Liberal Trade Strategies They Implement

  5. Strategies of Development • Import Substitution Industrialization (ISI) • Development of Local Industries to Produce Items Formerly Imported (Self-Sufficiency) • Industries Receive Tariff Protection/Subsidies To Foster Development Via Trade Surplus • However, It Runs Counter to the Comparative Advantage Principle, and it Apparently Works Only at Very Early Stages of Development

  6. Strategies of Development • Export-Oriented (Led) Growth (EOG) • Used By Newly Industrializing Countries (NICs) – Has Helped Them Achieve Capital Accumulation and Economic Growth • Seeks to Develop Industries That Can Compete in Specific Niches in The World Economy • Based on Comparative Advantage; States Focus Resources on CA Product, Export it To Generate Currency Reserve, and Obtain With it Other Commodities that Are Produced More Cheaply Elsewhere

  7. The Relative Success of Strategies • ISI: Has Been Implemented by States Such as Brazil • After Initial Burst of Growth, However, The Economies of these States Have Stagnated (Why?)

  8. The Relative Success of Strategies • EOG: Has Worked Extremely Well For Some States (“Four Tigers”), But May Not Be Suitable For All • The Peculiar Situations of These States May Have Played a Role in the Success of EOG • Two are City-States (Hong Kong/Singapore) Which Were Existing Financial Centers (FDI Was Existing Comp. Advantage) • Two are International Conflict “Hot Spots” (Taiwan and South Korea); Security Maintained by US, and Government Intrusiveness is the Norm

  9. Why is Development Hard to Attain? • Development Seems Predicated on Shift From Periphery to Semi-Periphery or, rather, a Shift From Material Supplier to Manufacturer of Materials (is Continued Stagnation Inevitable?)

  10. Why is Development Hard to Attain? • Competitive Manufacturing Sector Dependant Upon Reserve of Start-Up Capital (Often Unavailable) • Can Be Gained Via FDI, But Not All Are Attractive or Stable Enough • Can Use International Loans, But Doing So Can Create Enormous Debt (Cancellation) • Can Reallocate Domestic Capital (Inc. Taxation), But Causes Failure of Domestic Programs and Societal Dislocation • Important Question: Is Authoritarianism More Conducive to Growth than Democracy?

  11. Authoritarianism and Development - The Chinese Case • 1949: Maoist Revolution Completed • 1950s: “Great Leap Forward” (Industrialization Through Forced Central Planning; Dismal Failure) • 1960s: Cultural Revolution – Political Upheaval; Economic Stagnation Continues • Late 1970s: Deng Opens Free Economic Zones in South; Shift From Centralization toward Private Ownership

  12. Authoritarianism and Development - The Chinese Case • 1980s: Other Areas Open Up Economically; FDI Via MNCs Encouraged by Government • 1989: Tiananmen Square – Crackdown on Political Freedom, But Investment Returns Quickly • 1990s: Growth Intentionally Slowed During Recession Through Devaluation, But Still Relatively High

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