Human Geo 10.3 Questions Flashcards
Developing countries face what 2 fundamental obstacles in trying to encourage development?
- Adopting policies that successfully promote and sustain development
- Finding funds to pay for development.
What is the self-sufficiency path to development?
Countries encourage domestic production of goods, discourage foreign ownership of businesses/resources, & protect business from international competition.
What are key elements of the self-sufficiency path (4)?
- Import Limits: Barriers limit imports (ex. tariffs/taxes on imported goods, fixing quotas to limit them, and requiring licenses to restrict the # of legal importers).
- Insulation: Businesses succeed through isolation from competition with large international corporations. Insulation from impacts of decisions made by businesses in developed countries encourages a business.
- Equal Investment: Spread equally across all sectors of the economy.
- Equal income: Countryside incomes keep pace with city ones, and reducing poverty takes precedence over encouraging a few people to become wealthy consumers.
What is the international trade path to development?
Countries open themselves to foreign investment and international markets. For most of the 20th century, self-sufficiency was popular, but international trade became more popular in the late 20th. It calls for a country to identify its unique economic assets (resources, products, etc.). A country can develop economically by concentrating $ on expansion of its local industries. The funds from sales can finance other development.
Who is Rostow and what are the first 2 steps of his model?
A pioneering advocate of international trade. He proposed a development model in the ’50s (every state is in 1 stage):
1. Traditional society: Hasn’t started development. High % engaged in agriculture and most wealth allocated to “nonproductive” activities.
2. Preconditions for takeoff: An elite group initiates economic activities, and the country starts to invest in new tech/infrastructure. Support from international funding sources & more stimulates productivity.
What are the last 3 steps to Rostow’s model?
- Takeoff: Rapid growth is generated in a limited number of economic activities (textiles/food products). These few industries become productive, but other sectors of the economy remain traditional.
- Drive to maturity: Modern tech diffuses to a wide variety of industries, which then experience rapid growth. Workers become more specialized.
- Age of mass consumption: Economy shifts from production of heavy industry (steel/energy) to consumer goods (vehicles/refrigerators).
What is the WTO and what do critics say about them?
To promote international trade, countries representing 97% of world trade established the WTO in 1995. Protestors gather in streets outside their meetings, and say that they’re anti-democratic (care more about large corporations rather than the poor). They say it can challenge the power/sovereignty of individual countries.
In what 2 ways does the WTO reduce barriers to international trade?
- Through WTO, countries negotiate reduction or elimination of international trade restrictions on manufactured foods (gov’t subsidies for exports, quotas for imports, tariffs). Restrictions on international money movement are also reduced.
- WTO enforces agreements (ruling on charges, ordering actions to stop, protecting intellectual property online).
What is the 1st group of countries that chose the international trade approach when most developing countries were following the self-sufficiency path?
The Four Dragons: South Korea, Taiwan, Singapore, & Hong Kong (the latter 2 were British colonies until 1965; cities surrounded by not much land and no natural resources). The 4 dragons concentrated on producing a handful of manufactured goods (esp. clothing/electronics). Low labor costs let them sell these products inexpensively in developed countries.
What is the 2nd group of countries that chose the international trade approach when most developing countries were following the self-sufficiency path?
Petroleum-rich Arabian Peninsula States: Saudi Arabia, Kuwait, Bahrain, Oman, & UAE. Transformed overnight into some of the wealthiest countries due to escalating petroleum prices in the ’70s. They used revenues to finance large-scale projects. Their aluminum, steel, & petrochemical factories competed on world markets. Diffusion of consumer goods has further changed these countries, and their supermarkets are stocked with food imported from Europe & USA.
In the late 20th and early 21st, trade increased faster than wealth. Optimism about the benefits of the international trade path was based on what 3 observations?
- Other countries’ success: Developed Europe/US were joined by Japan/South Korea in the late 20th.
- Resource riches: Developing countries contain great raw materials that developed countries seek. Their scale could generate needed funds for development.
- International competitiveness: International trade countries benefit from exposure to consumers in other countries, and change strategies to fit them. Concern for international competitiveness can filter through other sectors of the economy.
What are 4 shortcomings of the self-sufficiency path?
- Inefficient industries: Businesses could sell at high gov’t-controlled prices to consumers on long waiting lists, and had little incentive to improve quality/production/costs.
- Lack of competitiveness: companies protected from international competition weren’t pressured to improve tech/sustainability/keep up with environmental protection
- Corruption: A large bureaucracy administered rules and processed documents for permits (more abuse/cruelty).
- Black market: Ambitious businessmen found that illegally importing goods and selling them was more rewarding than producing goods.
After it gained independence from Britain in 1947, India was a leading self-sufficient example. What are some ways that India controlled imports (4)?
- Licenses: Most foreign companies had to go thru a long, cumbersome process (going through many gov’t agencies) of securing a license.
- Import limits: A company with an import license was restricted on how much it could actually import into India
- Taxes: Heavy taxes on imported goods raised prices.
- Nonconvertible currency: Indian $ couldn’t be converted
What are 3 examples of the ways that India controlled its own companies?
- Permits: A business needed gov’t permission to sell a new product, modernize a factory, expand production, set prices, hire workers, etc.
- Subsidies: An unprofitable business received gov’t subsidies (elimination of debts or cheap electricity).
- Government ownership: The gov’t owned businesses from power/transportation to insurance companies (latter of which is privately owned in most countries).
Give an example of how with increased competition in international trade, India improved the quality of their products:
During self-sufficiency, Maruti dominated India’s auto industry and sold cars that would be out-of-date in other countries, but in the international trade era, the gov’t sold Maruti to the Japanese Suzuki). Under self-sufficiency, India’s GDP per capita increased modestly, but after converting to international trade, increased much more.