ECO100Y1 Lecture : 7 X-factors to improve the economy
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
R&D
Economic power will shift east to China and India, more share of world economic growth.
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Anne Krueger-economic strategies of 50-[óìU]vµ]o]Ì]}v(]v]u}-substitution. First stage
of economic development.- P}À[]vÀ}oÀuvU]vustrialization first
2nd stage-market reform, agricultural sector is modernized and trade replaces import-substitution and
protectionism
Mandelson-how does Europe stand on trade
-state of Africa is a scar on the conscience of the world, make 2005 a breakZ}µPZÇ(}ZÁ}o[
poor
-supports development triad- trade, aid and debt relief, with emphasis on trade
-pro-growth in Europe, want poverty reduction, wants free trade
-(v[uP]ÁvUP}ÁZÁ]oo}voǵo](Z]vry 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
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-other developing countries will lose their markets(Sri Lanka, Bangladesh)-switch in export levels
www.notesolution.com
-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
Bhagwati
-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
living
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- íõôìvîìììUZ]v[P}ÁZÀPíì9U/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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