IDSB01H3 Study Guide - North American Free Trade Agreement, International Monetary Fund, Final Good

International Development Studies
Course Code
Ryan Isakson

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Broad themes:
Be able to explain what political economy is, how it differs from
conventional economics, and why it is relevant to the study of
international development
o The study of how humans interact with one another
and nature in the production and distribution of G&S
o i.e. social provisioning
o vision in political economy
Vision in political economy: yes economic
activity does take place in business/markets but it also says economic
activity can take place elsewhere *public sphere, core sphere (church help
groups, aid groups, members of congregation), business sphere. Social
context underlays all of these three parts.
Economies function within social context, but also within
environmental context.
o Economic provisioning takes place in multiple sites
Business, gov, and core (HH, community, etc.)
o Forms of provisioning are contingent upon the social context
Politics, culture, and history
o Economic activities are constrained by natural limits
Be able to list internal and external barriers to development
o Some examples of possible internal barriers that tend to block change and thus
thwart economic growth and development are (a) inequalities in the existing
distribution of land ownership; for most countries, wealth distribution is intimately
related to the nature and power of class relations in society and control over
economic resources and the political sphere, as well; (b) the level and efficiency of
infrastructural development (roads, electricity, water, communication services, port
facilities and so on); (c) the role and level of development of organized banking and
lending activities and of equity (stock) and other financial markets and financial
intermediaries; (d) an ineffective or underdeveloped educational system, including
both relatively low levels of general literacy and an imbalance between allocations
of financing to lower and higher education; (e) prevailing ideological concepts and
their impact on thinking and behaviour, including the influence of religious thinking,
the accepted role of women and ethnic or religious minorities, the prevailing
economic orthodoxy, and so on; (f) the initial endowment of natural resources of a
nation; (g) the role of the state, that is, the power and nature of the influence of
government, including the degree of political freedom and the strength of
democratic processes; (h) the extent and importance of political corruption and
patronage and the impact of these on public policies and on economic behaviour of
those governed; (i) the existence of substantial ‘market failures’, in which market
signals are not fully, completely, or accurately transmitted to economic agents, thus
distorting resource allocation, production decisions, spending patterns, and so on.
o Examples of possible external barriers to development include (a) multinational or
transformational corporation; (b) the international division of labour and the
prevailing patterns of international trade (e.g., primary commodity exporting
countries versus manufactured-good exporting countries), including the operation
of the organized institutional structure of the international trade system, the effects
of the World Trade Organization’s negotiations and of regional trading

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arrangements, such ‘as the European Union (EU) or the North American Free Trade
Agreement (NAFTA); (c) the functioning of international financial institutions,
including not only the international private commercial banks, but also the World
Bank and the International Monetary Fund (IMF); (d) the influence of the
geopolitical and strategic interests of larger economic powers vis-`a-vis smaller and
weaker economic entities; and (e) the economic policies (on interest rates, for
example, or on tariffs or non-tariff barriers) of more developed nations on the
global economic system, and so on.
Be able to explain the different measures of economic development (e.g. GDP, GNI, HDI).
What, specifically, does each one measure? What are the relative strengths and limitations of
each measure? What adjustments are commonly made to income-based measures?
o Two common measures of development
Income Measures
Gross Domestic Product (GDP): The market value of all final goods
and services produced w/in a country
Gross National Income (GNI): The total income accruing to the
residents of a country
o Adjustments for both include: population size (per capita),
price changes over time (“real” income from base year),
purchasing power parity (PPP income)
Human Development Index (HDI): people centered development.
uses proxies to measure three capabilities: sen did so
o Health (life expectancy), education (literacy and school
enrollment), and standard of living (gdp per capita)
A.k. sen: development as freedom
o Development is expanding “capabilities” (the ability to do what
you want or achieve a desired state of being…focuses on what
people can do not what they have).
o Limitations of gdp and gni as measures of development: averages, doesn’t account
for inequality gaps; if use gdp only does not account for other things, just because
more production does not mean people better off; simply focused upon what is
produced in market, not accounting for other economic provisioning (market
sphere, but also core sphere such as production in household when providing for
children, making garden....); environment sustainability or environment depletion.
Does not include informal sector (babysitting) or illegal sector
o Limitations for HDI as measure of development: Far stretch, on one hand strong
attempt to try to measure capabilities but still falls short. Does not account for any
sort of discrimination, i.e. history discrimination. Australia might do well at ranking
overall but has very small discriminatory average. Other i.e women might be
educated but gender norms say they cannot work outside home/study certain
subjects. Does not account for some discriminatory measures. Better than just
looking at income per capita, trying to take into account education etc... and Explicit
strengths and weaknesses: on class slides
Not solely focused upon econ production
Accounts for multiple dimensions of dev
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