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POLB90H3 Study Guide - Final Guide: Poverty Reduction Strategy Paper, Indira Gandhi, Structural Adjustment

Political Science
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R Rice
Study Guide

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POLB90 - Comparative Development in International Perspective
Study Guide Final Exam
Import Substitution Industrialization (ISI)
- A strategy of industrial development based on manufacturing goods domestically that
were previously imported
- Pros
o Increase in domestic employment (reduces dependence on non-intensive labour
o Restricts imports (so local companies are used more)
o Economic resilience (like recessions)
o Less long distance transportation of goods (cuts down on fuel emissions and
greenhouse gas)
- Cons
o The industries that are created become obsolete because they aren’t exposed to
globally competitive industries (rivals)
o Less growth
Export Oriented Industrialization (EOI)
- An industrialization strategy that is heavily tied to exporting manufactured goods
- Aims to speed up the industrialization process of a country by exporting goods for which
the nation has a comparative advantage
- Pros
o Wider markets
o Able to focus on developing only a few products
- Cons
o Increases market sensitivity
o Lack of product diversity (may make economies unstable)
- Countries such as China, South Korea and Taiwan have implemented successful export
led growth
East Asian Miracle
- 1960s - 1990s
- Tawian, South Korea, Singapore and Hong Kong achieved rapid growth in production of
several decades
- Because of this, they have become influential participants in international markets
- Some have argued that there is little to be learned from this success story, while others
(mainly the World bank and neoliberal economists) believe that the main lesson is that
free markets, free trade and an export-oriented development strategy is the key to
economic success
- It has now been accepted that the success of the NICs was largely a result of the crucial
role played by the state
- Second generation: Thailand, Malaysia, Indonesia and China?
- Reasons for East Asian Success:
o Developmental state
o Relative income inequality

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o High educational levels
o Successful agrarian reform
o Switched to EOI
o Semi-authoritarianism
o Skilled bureaucracy
o Relatively weak civil society
o Confucian culture
Developmental State
- Refers to state-led macroeconomic planning in East Asia in the late twentieth century
- In this model of capitalism, the state has more independent, or autonomous political
power as well as more control over the economy
- A developmental state has strong state intervention and extensive regulation and
- Emphasizes the role of the state in politics or supports the use of the state to achieve
Economic, military or social goals
Sustainable Development
- Development that meets the needs of the present generation without compromising the
ability of future generations to meet their own needs
- Thus, economic growth that fails to protect its environment is not true development
because it cannot be sustained
- An example of this is the Indira Gandhi project:
o In the short run, it has raised output and incomes, however unless major changes
are made in the drainage systems, the irrigation will poison the soil and crop
yields will fall
o For this to be a genuinely successful example of economic development the canal
project would have to provide for the long run productivity of the land
- Mainstream View: sustainable development can be promoted by better resource
management and by using market mechanisms
- Alternative View: sustainable development can be achieved through local, participatory
processes of environmental management
- Radical View: the pressure exerted on the environment already exceeds global ecological
carrying capacity, thus dramatic action is needed now
Poverty and Environment
- Poverty
o Income distribution is an important part of economic growth
o The mainstream view is that economic growth has brought an increased inequality
between the rich and the poor (at least in the early stages)
o Overtime, the gap has widened in some poor countries and narrowed in others
o In the 1970’s the World Bank president, Robert S. McNamara and his associates
directed attention to the needs of the “absolute poor”. Dudley Seers and other
independent economists called for a strategy that focused on “basic needs”.

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o Poverty, rather than GDP became the target
o The basic needs of each person were thought to include: sufficient nutritious food,
shelter from the elements, decent clothing, protection from disease and
elementary education. This way of thinking considered development as whether
these basic needs were being met, not on whether the average GDP was growing
- Environment
o Economic growth has taken a major toll on the natural environment in both rich
and poor countries
o It has been associated with water pollution and water scarcity, air pollution,
problems of solid and toxic wastes, soil degradation and desertification,
deforestation, loss of biodiversity, ozone depletion, other atmospheric changes
and global warming
o Because of this, people have claimed that economic growth and development are
incompatible with environmental preservation, if we are to maintain a healthy
environment, we must cut back on economic growth
Participatory Development
- Seeks to include the various stakeholders (local populations) in the proposing, planning,
implementation and monitoring of development projects
- It has taken a variety of forms since it first emerged in the 1970s
- It was considered a very important part of the “basic needs” approach to development
- Benefits:
o While they may have startup costs, they will be more sustainable in the long run
o Better at addressing local needs and more relevant to local populations
- Criticisms
o Slow (a project may take longer if one has to work with and compromise with
local communities)
o Higher startup costs that traditional development
o Reaches a smaller group
NGOs and Development
- NGOs are Non-governmental organizations; private organizations that promote the
interests of the poor, protect the environment, provide basic social services or undertake
community development
- Strengths:
1) No strings Attached Agenda
o They are not looking for votes/ have political autonomy, so the local economy
may trust them more than a political party
2) Strong Grassroots Link
o NGOs work closely with communities to develop programs that fit local needs
and concerns
3) Participatory Methodologies and Tools
o NGOs maximize interactive learning technologies (ie: role playing, mapping,
preference ranking)
4) Innovation
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