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    Ipe08 Ipe08 Presentation Transcript

    • February 6, 2012
    • North-South Economic Relations: The Main Issues
      • The origins of inequality
      • The role of international regimes in preserving or increasing that inequality
      • The role of commodity and raw materials trade in preserving or increasing inequality
      • Import substitution vs. export-led growth as strategies for industrial growth in the Third World
    • Consequences of Poverty
      • Lack of access to food, shelter, and education
      • Feelings of helplessness and insecurity
      • Low self-esteem
      Garbage dump harvesting in Phnom Penh, Cambodia
    • Gross National Income per Capita, Purchasing Power Parity Method, 1980-2006, in Dollars, in High-, Middle-, and Low-Income Countries Source: World Bank, World Development Indicators 2008 , online data.
    • Hobson’s Theory of Economic Imperialism Unequal Distribution of Income Capitalism Surplus production Overseas outlets imperialism war John Hobson
    • Lenin’s Theory of Imperialism Unequal Distribution of Income Capitalism Surplus capital Overseas outlets imperialism war Revolution - Vladimir I. Lenin
    • Declining Terms of Trade Theory
      • Developing countries (LDCs) depend upon exports of raw materials and agricultural commodities
      • Prices of LDC exports decline over time relative to price of their imports (mostly manufactured goods)
      • Until LDCs diversify their economies, they will remain poor
      Raul Prebisch
    • Prices of Exports Prices of Imports
      • Why do they decline?
      • Competition among LDCs for export markets
      • High population growth rates in LDCs
      • Low bargaining power of LDC unions
      • Oligopolistic markets for IC goods
    • Sir Arthur Lewis
    • Policies Recommended by Raul Prebisch
      • Industrialization through Import Substitution
      • Regional Integration
      • Increased South-South Trade and Investment Flows
      • Population Control
    • Import Substitution
      • High tariff barriers on imports of manufactured goods to encourage domestic manufacturing (“infant industries”)
      • Tariff barriers are supposed to be reduced when domestic manufacturers become internationally competitive
      • Regional integration (helps to deal with limits imposed by small internal markets)
    • Examples
      • Dairy Farming in Jamaica
      • Corporacion Venezolana de Guayana in Venezuela
      • Posco (steel manufacturing) in Korea
      • Bohemia (beer) in Mexico
      • Early automobile industry in Japan
      1936 Toyota Model AA Sedan
    • Why Import Substitution Bogs Down
      • Inward FDI displaces domestic manufacturers
      • Country develops trade deficit because exports are not competitive while both domestic and MNC firms import expensive inputs for assembly plants and light manufacturing
      • Government often turns to subsidies and state enterprises to encourage deepening of manufacturing
      This is called the “deepening of import substitution”
    • Examples of Crises of Import Substitution
      • Mexico
      • India
      • Brazil
      • Korea
      • Taiwan
      See chapters 4-7 of Episode 2 in The Commanding Heights documentary.
    • Export-Led Growth
      • Initial period of import substitution
      • Reduce tariffs on inputs for manufacturing
      • Adopt new incentives for exports:
        • export processing zones
        • new trade-oriented infrastructure
        • subsidies for exporting firms
        • export performance requirements for MNCs
    • Examples
      • Japan
      • Korea
      • Taiwan
      • Hong Kong
      • Singapore
      • Chile
      • China
      • India
    • Per Capita Income in the Four Asian Tigers, 1975-2006 Sources: World Development Indicators 2008 ; and (for Taiwan only) Taiwan Economic Statistics 6 (May 2008). The data for Taiwan are GNP per capita; for the others GDP per capita at purchasing power parity.
    • Per Capita Income in China and India, 1980-2006 Source: World Development Indicators 2008.
    • The Millennium Development Goals
      • Eradicate extreme poverty and hunger
      • Achieve universal primary education
      • Promote gender equality and empower women
      • Reduce child mortality
      • Improve maternal health
      • Combat HIV/AIDS, malaria, and other diseases
      • Ensure environmental sustainability
      • Develop a global partnership for development
      Source: http://www.un.org/millenniumgoals /
    • Ending Extreme Poverty Videos
      • Global Poverty Project video
      • Hans Rosling at the State Department video
      • Hans Rosling washing machine video