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17 Dec 2010

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-economic policy
-country reduces its foreign dependency through local production of industrial products
-adopted in many Latin American countries
-associated with dependency theory
-state-induced industrialization through government spending
Industrialization and protected national companies until they were developed
Enough to compete in global market; they then when on to adopt free market
Policies in other countries to open their markets to local products and prevent
Them from adopting same development strategies which led to developed
x }v]]}vÁZ}µvÇ[}µo]}vÆ]Ç]vP]Ç
x It results from an increase in birthes and decrease in mortality rates
x Over-population tends to lead to poverty as a majority of the population can not sustain
x This is especially true in developing countries like India where half of the children are
x The more people there are the more raw materials are required to sustain them
x Developing nations consume more than their land can support
x Significance: over-population puts a country under a huge strain to sustain it and can
lead to environmental degradation and loss of resource base.
x Poverty Reduction Strategy Papers
x Prepared by member states through domestic stakeholders +World Bank + IMF
x Updated every three years with annual reports
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promote growth and reduce poverty
x Signifiance: introdµ]}v}(WZ^W[}Pv]Ì by IMF + world Bank as an approach to
country-based strategy for poverty reduction
x Critics argue that PRSP criteria are used to impose neo-liberal policies that tend to
increase poverty rather than decreasing it
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-also called Export Substitution Industrialization
-economic policy used to speed-up industrialization by exporting foods that the country
Has a comparative advantage in
-usually an exchange where domestic markets are open to foreign companies in exchange
For market access in other countries
-includes; reduced tariff barriers, floating exchange rate (devaluation of currency
Facilitates exports) and government support
-EOI characteristic of economic development of the Asian Tigers (Hong Kong, South
Korea, Taiwan and Singapore) after WWII
-significance - EOI increases market sensitivity to external forces and is responsible for
the damage done by the 1998 economic crisis to the countries who used the
policy; it is also criticized for lack of product diversity making economies
x Over-consumption can lead to environmental degradation and eventual los of resource base
Bretton Woods
x A 1944 agreement made in Bretton Woods, New Hampshire
x Helped establish a fixed exchange rate in terms of gold for major currencies
x The IMF was also established at this time
x Four major institutions where formed
o GATT t regulate international trade
x Now known as WTO
o UN t forum through which international decisions were to be made
o World Bank and IMF
x Lead to formation of international financial institutions (IFIs) for the development of finace and
x Significance t idea behind the conference was to encourage open markets
*East Asian Miracle
x Refers to the economic success of Hong Kong, Singapore, Taiwan and South Korea
x These countries are newly industrialized and have gone through high growth rates and
x All four countries have become advanced economies with high income economies.
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x Significance: the East Asian Mirical is seen as an inspiration for developing countries
who seek the smae economic success and international acceptance and a platform for
other developing countries
*Debt Crisis
World Bank
x Fact: one of the institutions created at the Breton Woods conference in 1944
x Strict adherence to economic orthodoxy and the Washington Consensus
x Criticisms
o Tools of US policy
o Lack of accountability/transparency
o Neoliberal vision for development
o Uneven representation
x Banks plans based on poverty reduction strategies
x Significance t the World Bank develops strategies unique to each country by analysing the
countries financial and economic situation
Developmental State
- hard state
-state-led macroeconomic planning in East Asia in the late twentieth century
-model of capitalism; state is more independent political power and control over the
-characterized by; strong state intervention, extensive regulation and planning
-a development state intervenes more directly in economy to promote growth of new
industries and to reduce disruption from shifts in investments and profits
-fact: In Japan, little government ownership of industry but private sector is guided and
restricted by unelected government elites; who have the freedom to plan the
economy without being influenced by the Corporate-class or working class.
-Significance - In states late to industrialize, the state was the drive to industrialize and
took on the development functions and produce a different kind of business-
government relationships.
*Lost Decade
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