PSCI 152 Study Guide - Midterm Guide: Oil Reserves, Capital Outflow, Uruguay Round
12 Dec 2016
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Industrialization spreads backwards from intermediate inputs to capital goods as backward linkages multiplied. Regulation of fdi: imposed performance requirements promote a specific economic objective. Ex: if trying to promote backward linkages, required affiliate to purchase a certain percentage of its inputs from domestic suppliers. Backward linkages requiring domestic production at more points in supply chain. Ex: threshold in auto industry in brazil increased over time for the amount of parts of a car that had to be produced domestically. Household responsibility system encouraged farmers to lease land from their agricultural commune. Government also changed state-set prices to more accurately reflect the supply and demand for agricultural commodities. Enterprise responsibility system encouraged enterprises to manage themselves like profit-oriented firms: enterprises required to acquire their inputs from and to sell their output in markets at market-determined prices rather than state-set prices. Open door policy liberalized foreign direct investment and trade. Attracted foreign direct investment by creating special economic.
