CH 10: Development

Question 1

Development

Answer 1

• originated with Industrial Revolution
• idea that technology can improve lives of people
• focus on three factors: economic well-being, technology, and production/social wellfare

Question 2

Economic Wellbeing

Answer 2

• began in 1960s. measured through gross national product (GNP)
• a measure of the total value of officially recorded goods and services produced by residents of a country in a given year (includes goods and services inside and outside)
  
  • broader than gross domestic product (GDP) - only within country
• Gross national income (GNI) : calculation of (monetary value of products in country and investments) - (income payments to other countries)

Question 3

Shortcomings of GNI

Answer 3

• does not account for informal economy, ex) drug trade
• distribution of wealth ex) UAE billionaires control 40% of wealth
• only measures outputs, doesn’t consider resource used or pollution

Question 4

Productivity

Answer 4

• production over course of year / total pop. in labor force
  ex) US - 83735 in 2016, but China was 5325
• more production = more technology in production

Question 5

Dependency Ratio

Answer 5

size of working pop. vs older/younger/those not contributing to economy
- proportion of dependents in population to every 100 working age
- oldest and youngest ratios

Question 6

Walt Rostow’s Model

Answer 6

• grew out of decolonization in 1960s
• concerned how new independent countries would survive
• five stages
  
  • traditional (farming)
  • preconditions to takeoff (new leadership_
    
    • takeouff (industrial revolution, sustained growth)
  • drive to maturity (tech diffuses, specialization, int. trade)
  • high mass consumption (high incomes, widespread production, enter service sector)

Question 7

Rostow’s Model Limitations and Criticism

Answer 7

• no context for development ie. dependent on just their country or others
• considerations that influence decisions, cultural and political differences
• treats countries as individual and autonomous units
• people thought of world as two economic realms, developed and less developed
• eventually countries not developed called “developing” which is misleading

Question 8

Neocolonialism

Answer 8

• continuation of colonial relationships after formal colonialism ends
• continuing ability of former colonial powers control economies of lower income countries
• goods and capital continue to flow toward former colonizers

Question 9

Structuralist Theories

Answer 9

• barriers of development due to colonialism
• economic arrangements shape potential development
• wealth disparity, wealth concentration
• less wealthy countries face different barriers than western Europe in Rostow’s model

Question 10

Dependency Theory

Answer 10

• political and economic relationships between countries control and limit economic development potential of lower income areas
  ex) colonialism created political and economic structures making colonies dependent
• based on idea that economic prosperity is difficult in areas used to be dominated by external powers
• relationship persists after independence

Question 11

Dollarization

Answer 11

• adopting U.S. currency
• 40+ peg value of currency to US
• 10 countries underwent dollarization
  ex) El Salvador
• con: surrender aspects of policymaking that affect local economy
  pro: stabilization of country’s currency due to dollar stability

Question 12

Transnational Corporations

Answer 12

• powerful corporations with global reach
• can shape development through investment
• manufacturing corps. influence production networks

Question 13

Commodity Chain

Answer 13

• series of links connecting places of production and distribution involved in creating final product
• every link adds value and produces wealth at each step
• break of bulk locations

Question 14

Foreign Aid

Answer 14

• can be catalyst for development
• US and China highest in dollars, not % of GNI
• Marshall Plan (US -> Europe)
• establish relationships
• stop problems from impacting donor
• gain access to markets
• political control
• can harm by undermining domestic production

Question 15

World Bank and IMF

Answer 15

• postwar relief
• promote economic reconstruction, free trade, stability
• source of development funds for poor countries and newly independent countries
• US and Europe biggest donors and influence

Question 16

Third World Debt Crisis

Answer 16

• 1970s global economy downturn
• harder for countries to pay off debt

Question 17

Structural Adjustment Loans

Answer 17

• borrower countries must implement economic and gov. reforms
• privatize gov entities, foreign trade, reduce tariffs, encourage foreign investment
• called Washington Consensus

Question 18

Neoliberism

Answer 18

• variant of neoclassical idea that gov. intervention into markets is inefficient and bad
• economic control gov. -> private sector

Question 19

China Banks

Answer 19

• top 4 banks (assets) are Chinese
• owned by government
• provide as much dev. financing to poor countries as World Bank
• focus on environmentally bad projects