Chapter 9 outline.docx

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University of California - Los Angeles
Political Science
Leslie Johns

World Politics Chapter 9 – Development: Wealth and Poverty of Nations – Outline I. Introduction a. Although everyone in poor countries prefers more development to less, individuals and groups within countries may have conflicting interests with respect to development policy i. The pursuit of private interests by powerful groups can impede the adoption of measures that would spur economic growth b. Domestic social and political institutions can have a major impact on how these conflicts of interest affect development i. They can either empower or overcome special interest groups that stand in the way of development ii. They can either facilitate or impede the ability of actors to cooperate to promote government policies conducive to economic growth c. At the international level, rich and poor nations generally have a common interest in accelerating the economic growth of the developing world i. However, there have ben many instances of rich countries supporting policies and institutions that disfavor less developed countries d. Successful economic growth requires that a country overcome both the domestic obstacles posed by interests and institutions that are detrimental to development, and the international impediments created by conflicts of interest with wealthy nations, which can draw on superior reserves of economic and political power II. If Everyone Wants Development, Why Is It So Hard to Achieve? a. Less developed countries (LDCs) – countries at a relatively low level of economic development b. Geographic Location i. Tropical nations 1. Less conducive to industrialization ii. Landlocked countries iii. Regions with diseases hard to cure iv. However, there is a great deal of variation among countries within the same regions 1. Climate has an effect, but they impact indirectly 2. Other factors must explain the difference c. Domestic Factors i. Interests, interactions, and institutions that can help or hurt growth ii. Government policies have a powerful impact on growth iii. Policy to boost development: provide public goods that contribute to growth 1. Infrastructure – basic structures necessary for social activity, such as transportation and telecommunications networks, and power and water supply 2. Also institutions such as financial and monetary systems 3. Social infrastructure includes public health, sanitation, education iv. Ensure the security of property 1. Improvements in production ability are hard if property rights are not safe 2. Secure rights – property owner can be confident that his or her material goods will not be seized arbitrarily 3. Not necessarily money, in poor countries this applies most to farmers v. People need a credible commitment that the government will abide its promises to provide goods and protect property vi. Some countries lack the technical expertise to manage modern growth vii. In some societies, there is an interest to go against development 1. Pursuing own interests can harm economy 2. Rich land owners like not having property rights protected so they can encroach on land 3. Owners of labor intensive plantations or mines have little incentive to modernize viii. Sub-Sahara Africa 1. Development policy benefits small groups and harms masses 2. Draining funds from countryside (80 to 90 percent of population) to fund cities where urban elite live 3. Depletion of farm sector has consequences since it is the most meaningful industry in such countries ix. Interests are not the only important factors, interactions also must be considered 1. Hostility and conflict of regional groups can impede political stability and national policies 2. Larger group, more difficult collective action is 3. Special interest groups have an advantage in influencing policy 4. Common national goals can sometimes influence growth a. E.g. competition with China and North Korea in Taiwan and South Korea x. Institutions 1. More representative means more receptive 2. Most systems in Africa have an undemocratic nature where a narrow urban elite dominates government d. Domestic Institutions i. Comparison of North and South America 1. Colonized by Europeans at the same time 2. Arguments made that early economy activities in regions had a lasting impact on societal evolution 3. Latin America interest in agriculture and labor intensive mining which creates highly unequal societies a. Reflected by undemocratic government 4. Equality seen in early North America with development of farming class a. Inequality in plantations of the South ii. Fact: many regions that are resource rich are development disasters 1. Government of a country with an abundant natural resource can be exploited easily and has little incentive to do any productive activity not related to that resource 2. Countries with less natural resources are forced to undertake measures in increasing productivity 3. E.g. Zambia and copper wealth resulted in country’s lacking ability to produce anything other than raw materials III. Are Rich Countries Responsible for the Problems of the Developing World? a. Developed and developing countries have interest in common, but also potential conflict of interest i. Growth in the developing world is an interest to both rich and poor countries ii. Both rich and poor can profit from foreign investment/lending iii. LDC exports are cheap and good for rich consumers iv. All benefit from a successful management of international economic affairs v. Interests may clash 1. Agreements over the desirability of cooperation comes with disagreement of how to distribute benefits of cooperation 2. MNCs like coming in and utilizing resources, division occurs over profit sharing 3. LDCs like taking loans, but not paying debts b. Did Colonialism Hamper Development? i. Justified as being in the interests of both powers and colonized ii. Many examples show the benefit of colonialism through profits and improved infrastructure in colonized region iii. Interests between groups frequently in conflict though 1. Imperial powers believed colonies interests were second to those of motherland 2. Trading policy limited interaction with motherland, lacking potential for development 3. Congo and Belgium a. Property of King Leopold b. Used indigenous people to collect resources for his personal gain and that was it iv. Two categories of countries and regions of colonial world 1. Countries where settlers could live easily with little fear a. Institutions set up, enforced rule of law, and encouraged investment b. Successful following colonial era 2. Countries where settlers had predatory policies and higher mortality rate a. Intent to transfer resources rapidly b. Institutions were detrimental to investment and development 3. Settlers mortality rates from the 1600s to 1800s were correlated to underdevelopment today 4. Colonialism favorable where interests of colonial powers and people dominated 5. When interests were again local population, colonialism was detrimental c. Is the International Economy Biased Against LDCs? i. Raul Prebisch proposal 1. LDCs produced mostly raw materials and agricultural products while rich countries produced manufactured goods 2. Makes trade work fundamentally against the interests of LDCs in development 3. Prices of LDCs’ products tended to decline over time relative to prices of rich countries’ products 4. Why? LDCs sold primary products – raw materials and agricultural products, typically unprocessed or only slightly processed a. Primary sectors are distinguished from secondary sectors (industry) and tertiary sectors (services) b. Primary products are very abundant so there is a stiff price competition 5. Meanwhile, manufactured products were mostly controlled by firms that were oligopolistic – characterizing an industry whose markets are dominated by a few firms 6. Terms of trade – relationship between a country’s export prices and its import prices 7. LDCs were getting less for what they sold and paid more for what they bought d. Are International Institutions Biased Against LDCs? i. Many believe there are international political factors that hurt development in LDCs ii. Greater power of rich countries can influence trade and finance that can potentially work against LDCs 1. Rich countries often pursue their own interests that can harm poor countries 2. Safeguarding their interests creates problems for the poor 3. E.g. farm industry and subsidize domestic producers 4. E.g. American cotton; government pays farmers extra to produce cotton, artificially increasing world supply and lowering market price iii. LDCs have not been successful in getting their farmers greater
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