POLS1005 Chapter Notes - Chapter 10: World Politics, Free Trade, Oligopoly
[Week 8]
World Politics – Frieden Lake Schultz
Development: Causes of the Wealth and Poverty of Nations
IF EVERYONE WANTS DEVELOPMENT, WHY IS IT SO HARD TO ACHIEVE?
• Less developed countries (LDCs): countries at a relatively low level of economic
development
• Steps to improve a nation’s developmental prospects sometimes threaten the interests of
certain actors at home or abroad
• We can identify three prominent approaches that explain why such a universally accepted
goal appears to be so difficult to attain:
- Geographic factors
- Domestic factors – such as a nation’s political economy
- Domestic institutions
Geographic Location
One view is that the geographic realities of some countries impede their growth
• The fact that the world’s tropical regions are generally poor, while its temperate regions are
generally rich suggests that geography and climate affect development, directly or indirectly
• Geographic factors cannot be the whole story, as there is a great deal of variation among
countries within the same regions
• While the climate and geography of a nations shape its development, they do so by the way of
their impact on the people, social structures, politics and policies of the nation
Domestic Factors
Within developing nations, there are interests, interactions, and institutions that speed or
impede economic growth
• It is crucial to recognize that a government’s policies have a powerful impact on economic
growth because they can either encourage or retard it
• A very important policy that governments can undertake to boost development is to provide
public goods that contribute to economic growth and prosperity
- One such public good is the economic infrastructure
• Infrastructure: basic structures necessary for social activity, such as transportation and
telecommunications networks, and power and water supply
- Also includes such economic institutions as financial and monetary systems, which
permit people to carry out payments and investments easily
- A social infrastructure too – public health and sanitation, education, urban planning
– can encourage growth and development by allowing citizens to focus their efforts
on economic activity in a productive way
• Another crucial function for government is to ensure the security of property
- Secure property rights – means that a property owner can be confident that his/her
material goods will not be seized arbitrarily
• Long-term economic growth requires a stable and reliable environment within which people
can make economic plans for the future
• A government that invests in education and public health, creates an efficient economic
infrastructure, and ensures a stable monetary and financial system can do a great deal to
facilitate economic growth
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• What ultimately determines the character of government policies toward development is not
just the interests in play but also the nature of their interactions: how politicians, social
groups, and public bargain, fight, cooperate, and negotiate their way toward an outcome
• Hostility and conflict among ethnic or regional groups can impede both political stability and
effective national government policies if rivalries between groups overcome a concern for the
common group
• Whether important social actors interact in a cooperate manner spur development also
depends on domestic political institutions – these institutions affect the influence of those
pressing for the public interest and for the goals of specific groups
• Countries with more democratic political institutions appear to provide more public goods
than do authoritarian political systems – more basic education, more public health, more
equitable and efficient distributions of land
Domestic Institutions
How and why have certain societies developed institutions that are conducive to economic
growth, while others have not?
• Elites in these societies can create political institutions that are strongly biased against
popular participation and that serve to retard broad-based participation in economic growth
• This perspective helps explain the surprising fact that many regions that are extremely rich in
natural resources are developmental disasters
• One such idea is that the government of a country with a natural resource that can be easily
and lucratively exploited may have few reasons to encourage productive activities other than
those associated with the resource
• In addition, the effortless inflow of money to the government may provide a fertile ground
for corrupt practices
• In contrast, the government of a country with a few natural resources, if it wants economic
growth, has little choice but to undertake measures that will make the economy more
productive
• The broader point is that geographic and other inherent features of a country are important for
subsequent development inasmuch as they have a substantial impact on the kinds of interests
and institutions that arise on their basis
ARE RICH COUNTRIES RESPONSIBLE FOR THE PROBLEMS OF THE
DEVELOPING WORLD?
• Rich and poor nations have many shared interests
• Economic growth in the developing world can create enormous opportunities for wealthy
countries:
- Rich-country corporations can profit from investing in and selling to developing
nations
- Poor countries can benefit form the capital, technology, and expertise that such
corporations bring
• LDC exports provide cheap goods for industrial-country consumers while they make money
for the exporters
• Banks from the industrialized world are eager to make loans to developing countries, in part
because poor countries are short of capital are willing to pay higher interest rates that can be
earned elsewhere
• Agreements over the desirability of cooperation coexists with disagreement over how to
distribute the benefits of cooperation
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Document Summary
Development: causes of the wealth and poverty of nations. Domestic factors such as a nation"s political economy. Within developing nations, there are interests, interactions, and institutions that speed or impede economic growth. One such public good is the economic infrastructure. Infrastructure: basic structures necessary for social activity, such as transportation and telecommunications networks, and power and water supply. Also includes such economic institutions as financial and monetary systems, which permit people to carry out payments and investments easily. A social infrastructure too public health and sanitation, education, urban planning. Can encourage growth and development by allowing citizens to focus their efforts on economic activity in a productive way: another crucial function for government is to ensure the security of property. In addition, the effortless inflow of money to the government may provide a fertile ground for corrupt practices. Are rich countries responsible for the problems of the.
