7 X-factors to improve the economy

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3 Aug 2010
April 1, 2009
Shifting R&D and computing in IT sector-in the world about a trillion is spent on R&D. In US, have 1/3 of
a trillion. Now China is spending more on R&D than Japan, China had 0 R&D 10 years ago. Taiwan has
more high-tech researchers than Britain, spends more on R&D than Canada or Britain.
-chips and circuitry-in US and other industrial countries
-semi-conductors-Asian countries
-Samsung spent more than R&D 2007 than IBM
China and India and other emerging countries are challenging japan, Taiwan and US in innovation and
Economic power will shift east to China and India, more share of world economic growth.
Anne Krueger-economic strategies of 50-[óìU]vµ]o]}v(]v]u}-substitution. First stage
of economic development.- P}À[]vÀ}oÀuvU]vustrialization first
2nd stage-market reform, agricultural sector is modernized and trade replaces import-substitution and
Mandelson-how does Europe stand on trade
-state of Africa is a scar on the conscience of the world, make 2005 a breakZ}µPZÇ(}ZÁ}o[
-supports development triad- trade, aid and debt relief, with emphasis on trade
-pro-growth in Europe, want poverty reduction, wants free trade
-(v[uP]ÁvUP}ÁZÁ]oo}vµo](Z]vry capacity to trade,
international trade will only succeed if there is necessary capacities in developing countries such as:
good government, sufficient overhead capital, basic education and health for the labor force,
investment by domestic and foreign companies
-if the features are there, then trade will lead to economic growth and poverty reduction
2 trade models
-strategic trade-infant industry trade model of import substitution (Japan)
-basic trade-market force trade through comparative advantage (Singapore)
Mandelson supports free trade through market forces-In India, international trade has improved
through market forces, has lifted 300 million people out of poverty in the last 15 years
-south south (developing and developing)trade has some of the greatest trade barriers
-China leads the way in strategic trade
-agriculture and textiles (labor intensive) industries, Industrial countries have the greatest trade barriers
to trade
-Multi-fiber agreement tquotas have been removed, China is likely going to be the lead exporter of
-other developing countries will lose their markets(Sri Lanka, Bangladesh)-switch in export levels
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-Last year, Europe promised to remove all agricultural subsidies, the EU agricultural sector will remove
them as well, highly unlikely, US protects cotton
-In Africa, 70% of population is on land, raise productivity in agriculture by investing, shift labor force to
industry, may not be enough jobs
-Only way to reduce poverty, allow countries to pursue change, shift countries priority from agriculture
to industry, leaves opportunity cost of the informal sector
-engage in a south south trade-developing countries trade with each other more
-improve governments-too much government intervention, assist in transition to industry
-can make a breakthrough in 2005, trade, development and poverty reduction, increase development to
reduce poverty
-free trade
-globalization-integration of national economies into the international economy through
a) trade
b) foreign direct investment
c) international flow of workers
d) international flow of technology
People Against Globalisation:
Those that are opposed to capitalism-expansion of capitalism is bad, rich people get higher standard of
Social ills-child labor in developing countries
Support for millennium goal
-poverty has existed for decades, tried to reduce poverty by foreign aid
Pearson Report-recommended foreign aid as 0.75% of GDP by industrial countries
Growth and poverty reduction work together-economic growth reduces poverty
-changes in Bangkok, in micro-electrics plant, workers used to come on foot, as they got higher incomes,
workers came on motorcycles, now workers drive cars to the plant
-ec0onomic growth through trade improves gains from trade and less poverty
-miserizing growth-Bangladesh has comparative advantage in Juice, foreign demand is highly inelastic,
the world price of juice fell, terms of trade went against Bangladesh
-specialize, have more exports, if world price falls, industry is worse off, terms of trade decrease
-export growth can lead to worse circumstances than before
Kraay-China and India- íõôìvîìììUZ]v[P}ÁZÀPíì9U/v]-6%, asian development has
measured poverty reduction, in 1978, 28% of the population was in poverty, in 1990, it was 9% in China
-In India, 1977, 51% of the population was in poverty, 2000, 26% in poverty
-high growth rates, created more jobs
-Africa-1970 11% of the poverty of the world was in Africa, in Asia-76%
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