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GGR345H5 Chapter Notes -Free Trade, Demand Curve, Economic Globalization

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Gabrielle Sauter

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Ch. 10: market led development
Markets and Free Trade
-market based approaches are based on the premise that most equitable and efficient way of
distributing resources (such as food, land, housing, services, and labor) is the market.
-tgis means that the price of a good, or the wage levels of a worker, will be determined by the
relationship between supply and demand
-if the supply goes up then price will go down. Supply goes down then prices go down
-deman goes up, price goes up. Demand goes down, then prices go down
-shifts in the supply curve may occur, for example, because of technological changes or fluctuations in
input costs
-shifts in the demand curve may occur if income goes up (family may now be more willing to pay for
certain things)
-same thing for wages
-demand is the number of workers wanted
-supply is number of workers wanting the job.
-the wage is where the two curve cross
-often termed laissez-faire
-calls for reduced govt. intervention in economic affairs, free trade, and a division of labor
-David Ricardo who developed the concept of ‘comparative advantage’
- He argued that if countries specialized in producing the goods in which their resource base
gave them an advantage relative to other countries, then overall production would increase
-free trade was vital to allow all nations to have access to the goods that they required
to progress and weren’t producing themselves by specializing
Development as an international prject in the postwar world
-In the post- world war II period, ‘big D Development’ became the focus of international policy in the
first world.
-using the model of European or US economic dev. as the basis of dev. interventions in the south. Meant
a focus on industrialization, urbanization, and greater use of scientific principles in agricultural
production (all together generally termed modernization
-Northern centric approach
-while the states role was viewed as very important, aid and support from Western nations clearly relied
on Southern govts generally following a capitalist, rather than communist, development path.
-During the Cold War, aid was used as a way for the West and the Soviet Union to gain support from
Southern Countries
-the grouping of ideas promoting greater market freedoms and a limited role for the state was termed
-according to neoliberal ideas: the states role is to favor strong individual private property rights, the
rule of law, and the institutions of freely functioning markets and free trade.
Debt Crisis
-neoliberal policies had begun to be implemented in Chile and parts of the Global North in the 1970s,
but it was in the 1980s that processes of neoliberalization became more prominent in most parts of the
Global South (and later in the transitional economies of Eastern Europe. THE CATALYST of these
processes was the ‘debt crisis’ which unfolded following the Mexican government’s announcement in
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