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G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
G&P - Chapter 13 - International Development
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G&P - Chapter 13 - International Development


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  • 1. International Development
    International Relations 9/e
    Goldstein and Pevehouse
    Pearson Education, Inc.
    publishing as Longman © 2010
  • 2. Experiences
    Economic development
    Refers to the combined processes of capital accumulation, rising per capita incomes (with falling birth rates), increasing skills in the population, adoption of new technological styles, and other related social and economic changes.
    Measure used to trace the successes and failures of the South.
    Focus on countries so lessons can be learned from successes and failures in individual countries
    In the new century, growth has accelerated in the South and now outpaces the North. Uneven growth, however.
  • 3. Quiz #11 12-1-10
    Who are “tigers” of East Asia? Why are they called this? How were each of these states able to accumulate capital?
    Answer the following questions for both India and China? What has been the dominant type of economy?  How have they integrated into the global market?  Did they or do they have a comparative advantage?  What is their primary industry?  How are basic needs (hunger, shelter, water, medicine) compared to average in the global south?
    What have we learned from these cases about international development in the Global South? How have growth rates been affected in the largest countries in the Middle East and Latin America?
  • 4. The Newly Industrializing Countries
    Before China took off, a handful of poor states called newly industrializing countries (NICS) achieved
    Self-sustaining capital accumulation
    Impressive economic growth
    They were semiperiphery states.
    Light exported goods
    Most successful were the “four tigers” or “four dragons” of East Asia: Korea, Taiwan, Hong Kong, and Singapore.
    Varied profiles
    Unclear whether general lessons can be learned from their success
  • 5. The Chinese Experience
    China has 1.3 billion people.
    Fastest-growing economy in past two decades
    Between the communist victory of 1949 and the Cultural Revolution of the 1960s, Chinese economic policy was controlled by the state through central planning and state ownership.
    Iron rice bowl
  • 6. The Chinese Experience
    Deng Xiaoping instituted new economic reforms.
    Free economic zones: open to foreign investment and run on capitalist principles.
    Social problems, inflation, and corruption
    Tianamen Square 1989
    Policy of combining economic reform with political orthodoxy continued
    Asian financial crisis
  • 7. India Takes Off
    India also a large country with many people and recent robust growth.
    Exceeded 7 percent from 1996-2008
    Economy was based loosely on socialism and state control of large, unprofitable industries for decades.
    Developed niche in service and information sectors
    Unlike China, India has a democratic government (although a factious one).
    Implications for the rapidity of certain changes and how they were initiated
    Infant mortality and fertility rate
  • 8. India Takes Off
    India relied on the identity principle
    China relied on the dominance principle
    Competing theories of economic development: do authoritarian governments help development and should democracy wait until a later stage?
    If India continues to succeed, however, then clearly authoritarian government is not a precondition.
  • 9. Other Experiments
    Other sizable third world states have pursued various development strategies, with mixed successes and failures.
    Best results have come from Asia
    Indonesia, Malaysia, and Thailand
    Bangladesh and Pakistan
    Latin America
    Brazil and Mexico
    Nigeria, Ethiopia, Democratic Congo
    Middle East
  • 10. Figure 13.5
  • 11. Lessons
    Common themes occur throughout the largest developing countries:
    Concentration of capital
  • 12. Import Substitution and Export-Led Growth
    One way to try to create a trade surplus is through import substitution
    the development of local industries to produce items that a country has been importing.
    Against the principle of comparative advantage
    Not proven effective in most cases
  • 13. Import Substitution and Export-Led Growth
    Export-led growth is a strategy used by the NICs that seeks to develop industries that can compete in specific niches in the world economy.
    These industries may receive special treatment, such as subsidies and protected access to local markets.
    Exports from these industries generate hard currency and create a favorable trade balance.
  • 14. Import Substitution and Export-Led Growth
    Because of both terms of trade and price fluctuations, states have looked to exporting manufactured goods, rather than raw materials, as the key to export-led growth
    Third world nations need to be selective in developing export-oriented industrial strategies.
  • 15. Concentrating Capital for Manufacturing
    Manufacturing emerges as a key factor in both export-led growth and self-sustaining industrialization.
    Third world countries wish to increase their own manufacturing base and change the global division of labor.
    Difficulty in doing so: capital
    So they must concentrate what surplus their economies produce.
    This money then cannot be spent subsidizing food prices or building better schools.
    Political price must often be paid in short term for reducing public consumption, even in industrialized states.
    Poor states have limited margin for reducing consumption without causing extreme hardship.
  • 16. Authoritarianism and Democracy
    In reality, democracy has not accompanied economic development in a systematic or general way.
    Fastest growing states have been authoritarian states, not democracies.
    Some have suggested that a strong state facilitates capital accumulation.
    But the theory that authoritarianism leads to economic development does not hold up.
    Absence of political stability; economic development in some
    Latin America – wave of civilian governments replacing military ones and an increase in economic development.
  • 17. Corruption
    Corruption is an important negative in terms of economic development
    Has a deeper effect in poor countries
    There is simply less surplus to keep economic growth going.
    Also in third world countries incomes are often so low that corrupt officials are more tempted to accept payments.
    Collective action problem for states and MNCs in the global North.
  • 18. North-South Capital Flows
    Capital from the global North moves to the South and potentially spurs growth there in several forms:
    Foreign investment
    Foreign aid
  • 19. Foreign Investment
    Foreign investment – investment in capital goods by foreigners (mostly MNCs) – is one way to get accumulation started.
    Crucial to the success of China
    Foreign investors own the facilities
    Can usually take profits from the operation out of the country
    Host government can charge fees and taxes or lease land or drilling rights.
    Some fear from global South regarding this activity
    When looking to invest, what do MNC’s look for?
  • 20. North-South Debt
    Borrowing money
    Alternative to foreign investment
    If accumulation succeeds, it produces surplus and state can repay the loan and have profit left over.
    Borrowing has several advantages
    Keeps control in the hands of the state
    Does not impose painful sacrifices on local citizens, at least in the short term
    Borrowing has disadvantages as well
    Borrower must service the debt – constant drain
    May require new borrowing to service the debt
    Developing countries have not yet solved the debt problem
    South still owes over 2 trillion dollars in foreign debt
  • 21. IMF Conditionality
    The International Monetary Fund (IMF) and the World Bank have a large supply of capital from their member states.
    Plays an important role in funding early stages of accumulation in developing countries and in helping them get through short periods of great difficulty.
    IMF conditionality agreement
    Condition that certain government policies are adopted
    Implementation of these conditions is referred to as a structural adjustment program.
    Agreements are often politically unpopular in global South.
  • 22. Foreign Assistance
    Foreign assistance (or overseas development assistance) is money or other aid made available to third world states to help them speed up economic development or simply meet basic humanitarian needs.
    Foreign assistance is the second major source of money for third world development.
    Different kinds of development have different purposes:
    Future economic advantages for the giver (donor)
  • 23. Patterns of Foreign Assistance
    The majority of foreign assistance comes from governments in the North.
    Private donations provide a smaller amount.
    Development Assistance Committee (DAC)
    Bilateral aid
    Multilateral aid
  • 24. Patterns of Foreign Assistance: Types of Aid
    UN Programs
    Have three advantages in promoting economic development:
    UN perceived as a friend of the global South
    UN workers may be more likely to make appropriate decisions because of their backgrounds
    UN can organize its assistance on a global scale
    Major disadvantage
    They are funded largely through voluntary contributions by rich states.
  • 25. The Disaster Relief Model
    Type of assistance given when poor people are afflicted by famine, drought, earthquakes, flooding, or other such natural disasters.
    Disaster relief is the provision of short-term relief to such people in the form of food, water, shelter, clothing, and other essentials.
    International norms regarding states’ legal obligations to assist others in time of natural disaster and to accept such assistance if needed are changing.
  • 26. The Handout Model
    Helpful, but not without problems.
    Handouts provide short-term help and do not create sustained local economic development.
    Sometimes racist or paternalistic; tend to be exploitive
    Example: U.S. and food aid to Africa
    Bush administration had good idea: buy food locally in Africa, save lots of money, and get aid to the hungry faster, BUT
    U.S. agribusiness and the shipping companies and the U.S. charities got mad. This was money out of THEIR pockets (Iron Triangle of Food Aid).
    Harms long-term recovery by flooding areas with grain and hurting local farmers
    Harmful example: Nomadic herders of Lake Turkana – Why did the help offered fail?
  • 27. The Oxfam Model
    Private charitable group created the model.
    One of seven groups worldwide descended from the Oxford Committee for Famine Relief, founded in 1942
    Relies on local communities to determine the needs of their own people to carry out development projects.
    Attempts to reconceptualize development assistance to focus on long-term development through a bottom-up basic needs strategy.
    Has only been tested on a small scale.
  • 28. Confronting the North-South Gap
    All three models of development assistance have contributions to make.
    Global South needs help.
    Global North needs to become aware of the problem and attempt to address it.
  • 29. Confronting the North-South Gap
    Integrated global economy brings the two hemispheres together.
    Information revolution puts images of third world poverty on TV sets.
    Growing role of UN brings North and South together.
    Security relations and political economy have made the issues of the global South more prominent to the global North.