Human Geo 10.3 Questions

Question 1

Developing countries face what 2 fundamental obstacles in trying to encourage development?

Answer 1

1. Adopting policies that successfully promote and sustain development
2. Finding funds to pay for development.

Question 2

What is the self-sufficiency path to development?

Answer 2

Countries encourage domestic production of goods, discourage foreign ownership of businesses/resources, & protect business from international competition.

Question 3

What are key elements of the self-sufficiency path (4)?

Answer 3

1. 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).
2. 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.
3. Equal Investment: Spread equally across all sectors of the economy.
4. Equal income: Countryside incomes keep pace with city ones, and reducing poverty takes precedence over encouraging a few people to become wealthy consumers.

Question 4

What is the international trade path to development?

Answer 4

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.

Question 5

Who is Rostow and what are the first 2 steps of his model?

Answer 5

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.

Question 6

What are the last 3 steps to Rostow’s model?

Answer 6

3. 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.
4. Drive to maturity: Modern tech diffuses to a wide variety of industries, which then experience rapid growth. Workers become more specialized.
5. Age of mass consumption: Economy shifts from production of heavy industry (steel/energy) to consumer goods (vehicles/refrigerators).

Question 7

What is the WTO and what do critics say about them?

Answer 7

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.

Question 8

In what 2 ways does the WTO reduce barriers to international trade?

Answer 8

1. 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.
2. WTO enforces agreements (ruling on charges, ordering actions to stop, protecting intellectual property online).

Question 9

What is the 1st group of countries that chose the international trade approach when most developing countries were following the self-sufficiency path?

Answer 9

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.

Question 10

What is the 2nd group of countries that chose the international trade approach when most developing countries were following the self-sufficiency path?

Answer 10

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.

Question 11

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?

Answer 11

1. Other countries’ success: Developed Europe/US were joined by Japan/South Korea in the late 20th.
2. Resource riches: Developing countries contain great raw materials that developed countries seek. Their scale could generate needed funds for development.
3. 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.

Question 12

What are 4 shortcomings of the self-sufficiency path?

Answer 12

1. 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.
2. Lack of competitiveness: companies protected from international competition weren’t pressured to improve tech/sustainability/keep up with environmental protection
3. Corruption: A large bureaucracy administered rules and processed documents for permits (more abuse/cruelty).
4. Black market: Ambitious businessmen found that illegally importing goods and selling them was more rewarding than producing goods.

Question 13

After it gained independence from Britain in 1947, India was a leading self-sufficient example. What are some ways that India controlled imports (4)?

Answer 13

1. Licenses: Most foreign companies had to go thru a long, cumbersome process (going through many gov’t agencies) of securing a license.
2. Import limits: A company with an import license was restricted on how much it could actually import into India
3. Taxes: Heavy taxes on imported goods raised prices.
4. Nonconvertible currency: Indian $ couldn’t be converted

Question 14

What are 3 examples of the ways that India controlled its own companies?

Answer 14

1. Permits: A business needed gov’t permission to sell a new product, modernize a factory, expand production, set prices, hire workers, etc.
2. Subsidies: An unprofitable business received gov’t subsidies (elimination of debts or cheap electricity).
3. Government ownership: The gov’t owned businesses from power/transportation to insurance companies (latter of which is privately owned in most countries).

Question 15

Give an example of how with increased competition in international trade, India improved the quality of their products:

Answer 15

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.

Question 16

Describe uneven flows and distribution of FDI:

Answer 16

Investment doesn’t flow equally around the world (only 1/3 went to developing countries and 2/3 to developed countries), and isn’t evenly distributed among developing countries (in 2016, 1/3 went to China, and another 1/3 went to Singapore, Brazil, Russia, & Mexico).

Question 17

What are 2 major lenders to developing countries?

Answer 17

International Money Fund (IMF) and World Bank. The IMF provides loans to countries with balance-of-payments problems, and help them rebuild international reserves, stabilize currency, and pay for imports. The IMF doesn’t lend for specific projects, and its funding is based on each country’s relative size in world economy.

Question 18

What are the 2 components of World Bank?

Answer 18

1. International Bank for Reconstruction & Development (IBRD), which provides loans to countries to reform administration and legal institutions, implementing transportation/social service projects. They lend money raised from sales of bonds to private investors.
2. International Development Association (IDA), which provides support for countries that are too risky for IBRD loans, and lends money from gov’t contributions.

Question 19

How were World Bank and IMF concieved?

Answer 19

At a 1944 UN conference in New Hampshire to promote economic development/stability after WWII and to prevent another Great Depression (‘30s). IMF & World Bank became specialized agencies in 1945 (when the UN was established). Annually, 14% of all loans are made to India.

Question 20

What is a prominent example of microfinance?

Answer 20

Grameen Bank (1977, Bangladesh), which specializes in loans to women, and 2/3 of the artisans providing fair trade handcrafted products are women. Muhammad Yunus, its founder, was awarded the Nobel Peace Prize. It has made several 100,000 loans to women in Bangladesh and its neighbors, and only 1% of borrowers have failed to make their weekly loan repayments.

Question 21

What is a theory about developing countries and infrastructure?

Answer 21

Developing countries borrow money to build new infrastructure (which will make conditions more favorable for domestic and foreign businesses). New or expanded businesses are attracted to an area bc improved infrastructure will contribute additional taxes that the country will use to repay loans and improve living conditions. Some countries haven’t been able to repay their loans, and debt exceeds annual income in many countries, so infrastructure & financial stability stops or becomes damaged if others refuse to give more loans.

Question 22

The World Bank has proven this theory to be incorrect because it has judged 1/2 its Africa projects to be failures, based on what 3 common reasons?

Answer 22

1. Projects don’t function as intended due to faulty engineering
2. Recipient nations squander or spend aid on armaments, or the aid is stolen thru graft and corruption.
3. New infrastructure doesn’t attract other investment.

Question 23

What are the 2 approaches/strategies for fighting economic downturns?

Answer 23

1. Stimulus Strategy: In a downturn, gov’t should spend more money than they collect in taxes, put people to work building infrastructure projects, and then people/businesses will be in a better position to pay off debt and taxes when the economy recovers.
2. Austerity Strategy: Gov’t should sharply reduce taxes so people and businesses can revive the economy by spending their savings, and gov’t spending should be sharply cut to keep from swelling debt.

Question 24

Explain support for stimulus and austrity strategies in countries around the world:

Answer 24

In the US, the stimulus strategy was initially employed by Bush & Obama to help the country recover from 2008. After the Tea Party candidates’ success in 2010, austerity became popular. European countries are divided and this has led to difficulties (maybe demise of euro?) The IMF, World Bank, and developed countries fear that granting, canceling, & refinancing debts freely will perpetuate bad habits, so in order to apply for debt relief, a struggling developing country must adopt an austerity program.

Question 25

What are 7 examples of some reforms required with the structural adjustment program?

Answer 25

1. Spending only what it can afford
2. Directing benefits to the poor, not just the elite
3. Diverting investment from military to health/education
4. Investing scarce resources where they will have the most impact.
5. Encouraging a more productive private sector.
6. Reforming the gov’t (making civil service more efficient, accountability in fiscal management, better rues, letting the public know more info).

Question 26

Critics say poverty worsens under SAP because it places priority on reducing gov’t spending/inflation. According to them, what can SAP lead to (4)?

Answer 26

1. Cuts in health, education, & social services for the poor.
2. Higher unemployment
3. Loss of jobs in state enterprises and civil service.
4. Less support for those most in need (poor, pregnant, young, elderly).

Question 27

Explain both sides of the argument surrounding SAP:

Answer 27

1. SAP punishes earth’s poorest people for actions they didn’t commit. Their economic pain AND a sense that international trade leaves poorer states vulnerable to exploitation has led some to consider self-sufficiency.
2. International organizations say the poor suffers more when a country doesn’t have reforms. Economic growth benefits the poor in the long run.
   Anyway…..IMF and World bank encourage innovative programs to reduce poverty and consult more with average citizens (including a safety net to help the poor)