What are elements of the Self-Sufficiency Model?
* Self sufficiency or balanced growth
* Most of the 20th century was most popular of development alternatives
* Two most populous countries- China and India adopted this strategy, as did African and Eastern European countries
* According to the model a co
What are problems with the Self-Sufficiency Model?
* Inefficiency and large bureaucracy
INEFFICIENCY:
* Protects inefficient industries
* Businesses can sell all they make at high gov controlled prices so they are not motivated to improve quality or lower production costs
* Companies who aren't pressured
Case Study: India for the Self-Sufficiency Model?
* Used many barriers to trade
* To import goods, foreign companies had to have a license
* Process long, several dozen gov. companies had to approve of it
* Once a company had a license, gov. restricted quantity it could sell
* Gov. imposed heavy taxes on
What are elements of the International Trade Approach (Rostow's Development Model)?
* Calls for a country to identify its distinctive or unique economic assets
* What animal, vegetable, or mineral resources does the country have in abundance that other countries will buy
* Products manufactured and distributed at a higher quality and a l
What are problems of the International Trade Approach (Rostow's Development Model)?
UNEVEN RESOURCE DISTRIBUTION
* Arabian Peninsula, some countries had increased petroleum others did not
* LDC selling one product suffered b/c the price of their leading product didn't rise as rapidly as the cost of the products they needed to buy
* Zambi
Case Study: Persian Gulf States International Trade Approach (Rostow's Development Model)?
* Arabian Peninsula: Saudi Arabia, Kuwait, Bahrain, Oman, United Arab Emirates
* Went from most LDC to one of the wealthiest countries, due to petroleum
* Use petroleum revenues to fund large-scale projects
* Diffusion of consumer goods: TV, motorcycles,
Case Study: Four Asian Dragons International Trade Approach (Rostow's Development Model)?
* South Korea, Singapore, Taiwan, Hong Kong (British colony at the time)
* Singapore and Hong Kong have few natural resources
* Both have large cities surrounded by little rural land
* Adoption of international trade approach influenced by Japan's success
Which of the two models for development has shown the most success?
Rostow's Development Model/ International Trade Approach
TRUE OR FALSE:
The WTO was formed by countries which conduct the majority of international trade.
True
TRUE OR FALSE:
The WTO seeks to increase import quotas and reduce import and export tariffs.
* False
* The WTO seeks to reduce or eliminate international trade restrictions on quotas on imports and tariffs on both imports and exports.
TRUE OR FALSE:
Though it can hear accusations, the WTO cannot order remedies.
* False
* The WTO is authorized to rule on the validity of the charges and order remedies.
TRUE OR FALSE:
The WTO seeks to eliminate restrictions on the flow of money between countries.
* True
Why have each of the following groups been critical of the WTO: Liberals?
* charge that the WTO is antidemocratic, because decisions made behind closed doors promote the interest of large corporations rather than the poor
Why have each of the following groups been critical of the WTO: Conservatives
* charge that the WTO compromises the power and sovereignty of individual countries because it can order changes in taxes and laws that if considers unfair trading practices
What are the two principal ways in which LDCs obtain money to finance development?
* Loans from banks
* Loans from international organizations
Identify the two main sources, both controlled by MDCs, of loans for LDCs.
* International Monetary Fund (IMF)
* World Bank
What is the THEORY behind using loans for infrastructure projects in LDCs?
* Theory is that new roads and dams will make conditions more favorable for domestic and foreign businesses to open or expand
* New or expanded businesses are attracted to an area because improved infrastructure will contribute additional taxes that the L
In PRACTICE, what has usually happened when loans have been used for these infrastructure projects?
* Many infrastructures projects are expensive failures
* Billions in aid have been used, stolen, or spent on armaments by recipient nations
VOCAB:
What are structural adjustment programs?
* includes economic goals, strategies for achieving the objectives, and external financing requirements
Why do LDCs enact structural adjustment programs, even though they may be unpopular with the citizens of their countries?
* By placing priority on reducing government spending and inflation, structural adjustment programs require cuts in health, education, and social services that benefit the poor
* Unemployment may rise, workers in state enterprises and the civil service ma
VOCAB:
What is a transnational corporation?
* A company that conducts research, operates factories, and sells products in many countries, not just where its headquarters or shareholders are located
List the five countries in which most transnational corporations are headquartered.
* United States
* Japan
* France
* Germany
* United Kingdom
VOCAB:
Foreign Direct Investment
Investment made by a foreign company in the economy of another country
The flow of money in transnational corporations is not balanced. This is true in TWO ways. Explain.
* Only 1/3 of foreign investment went from a MDC to a LDC in 2004, whereas the other 2/3's went from one MDC to another MDC
* FDI (foreign direct investment) is not evenly distributed among LDCs, nearly 1/2 of all FDI destined for LDCs went to China in 20
Who is making the primary investments in South America? in Asia?
* IBRD (International Bank for Reconstruction and Development) loaned about $400 billion primarily to Latin America and Europe
* IDA (International Development Association) loaned $150 billion primarily to Asia and Africa