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FInal review terms.docx

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Political Science
R Rice

Import substitution industrialization (ISI) A strategy of individual development based on manufacturing goods domestically that was previously imported. Merits - Politically popular (job creation, consumer subsidies) - Improvements in social and economic indicators - Form of economic independence/self-sufficiency - Established a manufacturing base Limits - Sectorial disparities - Inefficient productions – not able to compete without protection - Disappointing industrial employment results - Small domestic markets limited growth - Heavily dependent on loans LA and Africa. Longer ISI resulted in more economic crisis Export Oriented Industrialization (EOI) An industrialization strategy that is heavily tied to exporting manufactured goods. - By diversifying their economics into manufacturing for export, as well as for domestic consumption, many of the East Asian economies managed to avoid the economic pitfalls faced by LA and Africa. East Asian Miracle The economics take off of South Korea, Taiwan, hongkong, and Singapore in 1980s When much of the Global South went into economic declines. Unlike LA and Africa debt crisis and struggles East Asia has grown phenomenally Reasons for success - Developmental state or strong state intervention or statecraft - Relative income equality (larger domestic markets) - High educational level (technically skilled workforce) - Successful agrarian reform (agricultural surplus used for industrialization - Switched to EOI (more capital for investment, didn’t have to borrow) - Semi or soft authoritarian (contained conflict) - Skilled bureaucracy (worked with big business in their countries) - Relatively work civil society (unchallenged by labor/peasant groups) - Confucian culture (Hard work, honesty, cooperation, social harmony) The Developmental State 1 A state that intervenes actively in the economy in order to guide or promote particular development goals, such as growth and equity - East Asian countries have grown through the free market, but also with a significant state role. Ex) Japan, Singapore, Taiwan. - Similar to neoliberal or free-market of economic competition to secure growth. Private entrepreneurs are primarily responsible for promoting economics activities. Unlike free-market capitalism, the developmental state rejects the idea of the invisible hand as the regulator of the marketplace and gives the government a central role in economic development - Government decides national priorities and assists industry (individuals driven by self interest not trustworthy to do this) - Economics growth and equity are viewed as essential for development: investment in education, health, housing, infrastructure and agriculture. (Industrialization should not mean neglecting age or rural sector) - For more extensive and direct government economic intervention than in the West, targeting either whole economic sectors (such as agriculture particular companies. In all of the East Asian tigers, the state played an important role, guiding the private sector toward targeted economic activities and stimulating growth in areas that the government wished to expand. - Labor-intensive, low skill manufacturing, -> capital intensive, highly skilled manufacturing. Statism - A capitalist economic system that involves excessive state intervention in economic matters - While much of the economic activity remains in the hands of the private sector, statist governments tend to nationalize strategically important enterprises, such as railroads, airlines, petroleum industries power plants and telephone companies and to invest in or protect industries that fail to attract sufficient private capital Characterized by Nationalization: government takeover of privately owned industries Protectionism state policies to protect infant industries from international competition through tax breaks, retraction on import. Limitations - State-owned enterprises are often poorly run and overstaffed. First many state owned enterprise are frequently overstaffed an poorly run results in inefficient, expensive operation, as well as political pressure to sell at a low price = low money. - Encourage inefficiency in private sector through protectionist policies protection (e.g., tax breaks, tariffs on imports, import quotes) are commonly used globally, but need to be scaled back as infant industries grow so that firms have incentives to become more productive and internationally competitive. In LA and Africa, protectionism was maintained. - Combination of money losing state-owned industries and private sector subsidies bankrupted much Third World government and put them i
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