Comparative Politics Notes Part 8 - I got a 4.0 in this course

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Political Science
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November 4, 2013 Domestic Strategy • Import Substitution Industrialization (ISI) • Invest in domestic industry • High Barriers to trade • Main Goal • Use domestic consumption to support international production • Improve quality of production • Main Problem • Source of Funding Models of Development for the Third World Structural Adjustment and the East Asian Alternative Developmental (Statist) Model - 1950s-1970s • Import Substitution Industrialization Domestic consumption supports international production • • Very heavy state ownership of industry • Need for Capital and Cooperation • Further you move into development of the market, the bigger your scale of production must be (Gerschenkron) • Heavy Spending on Social Services (education to unemployment etc..) • Helps population cope with economic transformation Achilles Heal of the Developmental Model • Foreign Debt • Countries used commercial banks to fund industry • Compare to Credit Moblier (France) and Universal Banks (Germany) Commercial Banks vs. Industrial Banks Short term loans Long term loans Floating interest rates Fixed interest rates Oil Shock • OPEC Oil Embargo • Rise in oil oil prices • Between Nov 1973 and April 1974, prices quadrupled • Therefore, Third World’s loans quadrupled as well • Shock of oil prices greater for Third World • Cost of loans rises with oil prices
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