Pathways to Economic Development Flashcards
What is the ISI?
Import Substitution Industrialization
What is the main purpose of the ISI?
To build industrial capacities within a country, rather than importing a product
Why was the ISI created?
- Due to the need of autonomy & domestic pressures
- For protection against multinational corporations
- To protect infant industries
- To seek diversification of production
How do states play a big role within ISI?
- By deciding which goods should be produced
- By allocating subsidies
- By instituting other trade barriers
Which are some drawbacks for ISI?
- Protecting inefficient industries
- Indiscriminate protectionism
- Competitive protectionism
Which is a need of the ISI?
International loans
In the terms “Washington Consensus,” what is understood by the term “Washington”?
- US Congress
- The Fed
- The US Executive
- Think Tanks
- Financial institutions
Which are the 10 articles of the Washington Consensus?
- Fiscal deficit
- Public expenditure priorities
- Tax reform
- Interest rates
- Exchange rates
- Trade policy
- Foreign direct investment
- Privatization
- Deregulation
- Property rights
In the Washington Consensus, what is understood by 1. Fiscal deficit?
Government must reduce deficit
In the Washington Consensus, what is understood by 2. Public expenditure priorities?
Cutting off unnecessary subsidies & increasing investment in human capital & building infrastructure
In the Washington Consensus, what is understood by 3. Tax reform?
Keeping taxes low & building a broad tax base
In the Washington Consensus, what is understood by 4. Interest rates?
Market-determined, positive rates that encourage savings
In the Washington Consensus, what is understood by 5. Exchange rates?
Value of a currency in comparison to another currency
In the Washington Consensus, what is understood by 6. Trade policy?
Liberalizing imports
In the Washington Consensus, what is understood by 7. Foreign direct investment?
Dismantling of barriers so as to import skills, know-how & capital
