Unit Four Flashcards
What did Walt Rostov create?
Stages of economic growth which has five categories that countries can be placed in.
What are the five categories of economic growth?
Traditional Society, Pre-conditions for Takeoff, Economic Takeoff, Drive to Maturity, High mass consumption
What is traditional society?
- Subsistence (survive on what you produce) economy - output not traded or recorded
- Existence of barter (I have eggs you have beef lets trade)
- High levels of agriculture and labor intensive agriculture
What is Pre - Conditions for take off?
- Development of mining industry
- Increase in capital use in agriculture
- Necessity of external funding
- Some growth in savings and investment
Eg. Suriname or Togo today
Use of capital equipment can help increase productivity and generate small surplus which can be traded
- Advancement in technology, machinery, mining, etc.
What is Economic takeoff?
- Increasing industrialization
- Further growth in savings and investment
- Some regional growth
- Number employed in agriculture declines
- Agriculture moves from subsistence to commercial
Increasing urbanization
Eg. Bolivia, Vietnam, Argentina, Bulgaria
At this stage, industrial growth may be linked to primary industries. The level of tech required will be low
*Europe took off during this stage at an early time setting them ahead
What is drive to maturity?
- Growth becomes self-sustaining - wealth generation enables further investment in value adding industry and development
- Industry more diversified
- Increase in levels of technology utilized
- About 50-60 years after take off
- Canada 1950s and 60s
Eg. Malasica, poland
As the economy matures technology plays a big role in developing high value added products
What is high mass consumption?
- High output levels
- Mass consumption of consumer durables
- High protection of employment in service sector
Eg. Canada 1950’s to present
Eg. Singapore, south Korea
Service industry dominates the economy - banking, insurance, finance, marketing, entertainment, leisure and so on
What type of correlation is between the five stages of economic growth and demographic transition model
Strong
What are theories failure to thrive?
Landlocked countries, Guns germ and steel
What are the disadvantages of landlocked countries?
Trade affected
- Must pay other countries money to import/export things through other countries
- Relationships with coastal countries is important, this will impact if they let you trade through
- Depend on neighbours infrastructure, what if they are too poor to have a port of railway, what if in a civil war
Need more resources and infrastructure to adapt to the harsher difference in weather
What is the background to the Guns, Germs, and Steel Theory?
Europe was the first place to develop sophisticated civilizations, and “won the race”
In order to become a civilization must go from hunting and gathering to farming
- Gives you a surplus of food to do other things ie. start military
You need high car and vegetation so that it is able to be stored for during the winter
- Climate must be dry
Native animals that allowed domestication
Europe had all these things which allowed them to be successful
What are the guns?
argues Europe has a landmass oriented east-west which enables trade, food ideas, and land cultivation. Transmission of knowledge was easy as the conditions were similar across the landmass.
- The first places to get soldier classes
- Can learn other things when not farming
What is the germs?
fact europeans had all of the docile animals they live in close quarters with lead to them catching diseases from them
- European settlers then were immune to things such as smallpox
- Concurred communities across the world knowing they wouldn’t be immune
What is the steel?
the absence of natural resources can further develop. - - Forced Europe to discover coal which led to them being able to make things like steel and steam.
This was all by luck
What is balkanization?
The fact that countries are so bulknize forces places to develop
They have competition from immediate neighbours meant that governments couldn’t afford to suppress economic and technical progress for lon; if they didn’t correct their mistakes they were out competed and or conquered relatively quickly
Conflict can force development and bureaucracy
Summarize Gun, germs, and steel
Agriculture gave the guns
European native animals gave germs
Climate and lack of resource gave steel
What did WW1 cause?
spurred Canada development, caused people to move off the farms and into factories
Lack of what types of development can cause a country to be unable to grow and develop?
Intellectual
Political
Economic
Religious
Cultural
Why does gender inequality impact development?
Some places in the Arab world have the lowest development of freedom, many women just started driving cars and working
As gender inequality decreases development increases
Strong correlation between high GDP and low gender inequality
Why is liberal democracy seen as the best ideology?
Individuals all equal, these countries have prospered the most. Globalization lifts everyone.
What is colonialism?
the establishment of a colony in one territory through political power from another territory and the subsequent maintenance, expansion and exploitation of that colony
What is the world of empires?
Many other european countries established their own colonies
- European powers developed immense empires (france and great britain)
- Europe took over first as they developed fastest
- Europe small, lacked resources needed them from elsewhere lead to colonization
- US took over cuba and Japan took control in Korea and CHina
What took place in the Britan conference of 1884?
European powers met
Work together to colonize africa
Must work to civilize
Introduce education, christianity, their way of life
Banned slavery in europe (but not in africa)
Carved up Africa with no concern to ethnic or tribal differences.
Groups that were in war were now apart of the same country
Scramble for africa
What was the mercantile system?
Eg. Britain colonized Kenya
Anything /resources from Kenya must go back to britain (mother country) make products and manufacture them and sell them back to Kenya
Due to industrialization Britain had manufacture sites and factories
Rubber
Exploitation
What is concession companies ?
Run by government
British East India Company
Had own military
Government sanctioned company
What are impacts of colonialism?
Land Tenure
Introduced private ownership
Only a few people owned a great deal of land
78% of white people own land and make up 8% of the population
Plantations
Best land went to concession companies owned by europeans
Popular for coffee, cotton, sugar
Mass quantities
Cash crops
Crops that are just meant to make money
No food security
Can’t survive on tea, coffee, chocolate
Lack the ability to provide food for self
What happened in the 1960s with African countries?
they began gaining independence, people didn’t know what they were doing and maintained cash crops, and were not able to support food for the population
Colonialism did not look at the needs of africans. Farming system was undermined making them unable to feed themselves.
What is environmental degradation ?
Mining forestry, agriculture paid little attention to environment protection
Foreign political systems
Dictators came out of the colony role and after independce took contorl
What happened in belief Congo?
Heart of africa
Extracting rubber
Gad to smeer self with the latex and pull it off their body
Strict with money spending
Soldiers chop off people hands and feet as “proof” they used the bullets
Present day → brutality still exists today → neo colonialism
What is divide and rule?
The conscious effort of an imperialist power to create and or turn to its own advantage the ethnic, linguistic, cultural, tribal, or religious differences within the population of a subjugated colony
Eg. Rwanda machetee genocide
Two existing difference give benefits creates conflict → they are too busy fighting each other to look at the colonizer
What happened with de colonization?
Pressure on europe to de colonize and give back land
Not a smooth transition
Lots of trauma
What is Neo colonialism?
The way that we still control countries that were once colonized through economics (debt)
What are fiscal traps?
Debt european countries had in africa stayed in africa when they gave back independence
Started off with tremendous debt
What is obvious debt?
Debt that is incurred illegally
Dictator take on debt and spend on himself (yachts, etc)
list impacts of colonialism?
Cultural impact → carving up africa
Lasting trauma
Cash crops (commodities) = food insecurity today
Slave trade
Dictators → political leaders - military
Debt
Mercantilism → goes back to mother country
What was the marshal plan? - assistance for development
US developed
After WW2 → US gave $ to europe
To help and assist europe rebuild (didn’t want them to fall under the soviet union and communism)
“Development assistance”
what was Bretton woods conference? - assistance for development
Stabilize currency
Establish policies to help prevent an even like WW2 again
Created world bank → most western developed countries can put money in to help develop other country
Put a percent based on your GDP
Rise of America
IMF → make sure that people are using the money properly to get back on track
Criticism: targets of the anti-globalization movement
Looked at as leftovers of colonialism
Neocolonialism
What was the DEBT crisis in 1970s?
2 big oil shocks due to military and political reasons
Oct 1973 (organization of Arab Petroleum) → Oil embargo
Cut production on purpose
US was supporting Israel war making arab countries upset
Could not get gas
Gas price shot up dramatically
What does this do
Caused arab countries to make lots of $
Put the lots money into commercial banks, who need to lend it out to make money
Started pushing loans onto newly independent states (Jamaica, Sub Saharan Africa)
What happened in the 1980s?
Massive inflation turned into a recession
US efforts to stop inflation by tightening the $ supply and increased federal interest rate
Dollar interest rate shot up sharpley even to 20%
Hurting the developing world
This slowed the economy down but slowed the inflation problem
Why was there a decline for the developing world?
The highly in debt countries faced payment issues when interest rates increased
Mexico said they can service our debt anymore
Countries said we can’t pay → lead to economic collapse
US says lets help
What is the IMF
Give developing countries short term loan
Offer to loan these countries money
Got these countries to do things or give up things in return
Took advantage
If you didn’t play ball CIA close behind
“Structural Adjustments”
Countries don’t want to default
What happens if you enter the IMF and World bank?
Provide a rescue package however require conditionalities
Eg. You must deregulate industries, privatization, trade liberalization (get rid of import duties), to stimulate private industry
Theoretical background strategy → Neoclassical development economics
Assumes private sector will will grow strongly, once macroeconomic instability and government intervention are removed
What were the restrictions of the IMF?
Restriction - Purpose - Reality for citizen
Reduce value of currency - Make exports more attractive - All imports become more $
Increase exports - Earn foreign dollars- Accelerate economic issues
Restrict social spending - Direct spending to paying off debt - No new schools, hospitals gets
Reduce trade barriers- Open country to global market- Harms your local industry can’t compete with foreign subsidized goods
What is the removal of local subsidies?
Cheaper in Jamaica to get US powdered milk than Jamaican fresh milk
Forces Jamaica to buy from US forever
What happened with privatization and Bolivia?
Bolivia had to take on IMF and world bank
One of their conditions was to privatize the water system
Not allowed to collect rainwater
What is imperialism?
spreading your influence and control around the world
IMF and world bank was viewed as an extension of imperialism
A way for the west to keep other countries under control
What happened in the 1995 WTO?
World Trade organization
International institutions used to help us all cooperate together
Set rules around global trade
Make sure it is smooth and peaceful
If signed on their rules become a part of a country’s domestic legal system
What happened with WTO and Jamaica?
When the British left Jamaica they offered that they would buy Jamaican bananas
Del Monte and … lobbied the US to bring this to the WTO
Ruled in favour that the British can’t only buy from Jamaica
Jamica can’t compete
Nicerguaga has unbelievably low conditions and cheap costs
What is neoliberalism?
the belief that markets and businesses should decided everything, let them run free
What happened with the Washington consensus?
Economic policies and recommendations for developing countries
Agreement between the IMF, world bank , and US department of treasury
Shared neoliberal view → free market
Will result in economic growth that will trickle down
What regonomics - 4 pillars?
Reduce government spending
Reduce income tax especially corporate tax
Reduce government regulations
Tighten money supply
What happened due to the 4 pillars?
At this time higher Gini Index (more inequality)
Rich got richer fast
US policy spread through other countries cause their gini coefficient to rise
What is the rise of the pink tide?
Latin americans shifted their views
Turned to the pink tie
Left wing politicians cam to light as a push back to western
What is neoliberalism and the pushback?
Neoliberalism → if we can grow the economy everyone will benefit
Pushback: the idea that there is such divide between the rich and poor
Rich will get richer
The very poor will not benefit
Key words that link to Neoliberalism
Economic ideology
Political doctrine
The idea that those who have money should be free to do what they want with it
Market society
Belief in market forces
Rejection of government intervention in markets, unless it is for a business to help them flourish
The market is an information processor more powerful than any human being
Free market
Intervene for business → to further economic prospects to make money
Unintended consequences of neoliberal market
Little regulation
Little concern for labour rights, human rights,
Who can do it the cheapest
Corners will be cut
Ranaplasa → building collapsed
Why are sweat shops potentially seen as good?
Without sweatshops the alternative is often worse
Sweatshops safety net → temp short term relief
Stepping stone for women
Manufacturing sector shrinks as the
Keep factories in developing world, but ask for more → safer environment and equipment
Economic growth leads to development and supply hospitals, education, doctors
