Chapter 11 - Dilemmas of Development

Question 1

What is a developing country?

Answer 1

A country with lower standards of living than wealthy nations

Question 2

Is CHI a developing country? (3)

Answer 2

1) until recently a developing country
2) now largest national economy
3) however aver. living standard still a below traditional developed countries

Question 3

What are 2 measures of development?

Answer 3

1) GDP per capita

2) Human Development Index (life expextancy, literacy, education, per capita income)

Question 4

What are 2 Challenges to Economic Development?

Answer 4

1) Colonial Legacy

2) Division of Labour

Question 5

What is the Dependency School of Underdevelopment? (3)

Answer 5

1) Cardoso
2) former colonies oirented to serving dominant states at cost of own econ wellbeing
3) only elites in developing countries gain

Question 6

What is a failure of the Dependency School of Underdevelopment?

Answer 6

Fails to explain econ rise of CHI, INDI, S.KOR, TAI, MEX, and BRA as they embraced econ liberalization
–> Cardoso change mind

Question 7

What factor is significant in assessing colonialism’s impact? (3)

Answer 7

1) Acemoglu
2) Where many colonisers settled –> laws and pol institutions facilitating growth (US and AUSTRL)
3) Where few colonisers settled –> legal arrangements maximizing short term profit and exploitation (S.AMER, CAR, AFR)

Question 8

Indicators that colonial legacy is not the full answer to lack of econ development? (3)

Answer 8

1) Iran: never colonized but still suffer development issues
2) S.AMER: independent in 1820-30’s but still development issues
3) USA, CAN, S.KOR: colonized but still econ growth

Question 9

How does division of labour stunt development? (3)

Answer 9

1) developed countries protect domestic agriculture industry
2) Technological innovations improving productivity are more prevalent in manufacturing
3) Resource Curse

Question 10

Why is the resource curse bad? (3)

Answer 10

1) Wealth Shock (other goods less competitive) (Sachs)
2) Dutch Disease (exports increase XR –> less comp.)
3) Political aspect (rev goes to suppression (Ross) and more likely to initiate MID) (Colgan)

Question 11

What are 3 Market-Controlling Trade Strategies?

Answer 11

1) Import-Subsituting Industrialization (tariffs + subsidies)
2) International Commodity Cartals
3) International Commodity Agreements

Question 12

What are 2 Market-Accepting Trade Strategies?

Answer 12

1) Export-Led Growth

2) Beijing Consensus (authoritarianism and regulate pace of econ integration)

Question 13

2 Forms of Financial Flows?

Answer 13

1) Private

2) Official

Question 14

5 Types of Private Financial Flows

Answer 14

1) Foreign Direct Investment
2) International Bank Loans
3) International Portfolio Investment
4) International Bonds
5) Remittances

Question 15

Is FDI good for development? (2)

Answer 15

1) Yes: but only in developed countries which are better at absorbing tech brough (Li and Liu)
2) No: problems with child labour and regulation shopping

Question 16

2 Types of Official FInancial Flows

Answer 16

1) Official Development Assistance

2) Financial Flows from Official Creditors

Question 17

What are 3 problems with ODA?

Answer 17

1) Conditionalities attached
2) Tied aid (undignifying)
3) Budget Support (untied aid scares donors)

Question 18

Who sees ODA as useful and why? (2)

Answer 18

1) Sachs

2) ODA provides extra capital to escape proverty trap wherein no money for investment/growth

Question 19

Who argues ODA could be improved and how? (2)

Answer 19

1) Easterly

2) tailored programs ensuring feedback and accountability on effectiveness of national/international officials

Question 20

Problems with Financial flows from official creditors (like IMF)? (2)

Answer 20

1) IMF stabilization programs will lead to govt spending cuts stunting growth
2) Moral Hazard (sense of security leads to reckless spending) (Meltzer)

Question 21

What is an example of Kindleberger’s theory and what is it? (2)

Answer 21

1) Hegemonic Stability Theory (stability and sustain power)

2) US creating Bretton Woods system, Dollar as world’s trade currency, and Washington Consensus

Question 22

What are 2 challenges to Kindleberger’s theory?

Answer 22

1) US Hegemony led to 2008 financial crisis

2) Marxists argue US should no longer make rules since no longer absolute hegemon

Question 23

What are indications of a post-western world? (3)

Answer 23

1) BRICS
2) Asian Infrastructure Development Bank (AIIB)
3) G-20

Question 24

How does Realism project BRICS’ success? (2)

Answer 24

1) No common threat (INDI-US has good relations)
2) Conflict of interests between MS (INDI-CHI border)

–> Negative

Question 25

How does Liberalism project BRICS’ success? (1)

Answer 25

The domestic regimes are too different (only BRA, INDI and S.AFR are democracies)

–> Negative

Question 26

How does Constructivism project BRICS’ success? (1)

Answer 26

Leaders do not share ideas about proper role of govt in econ, value of international arrangements and common threats/opportunities

–> Negative

Question 27

What are the 3 objectives of CHI’s BRI?

Answer 27

1) Economic (trade routest to CHI)
2) Political (influence pol systems and public opinion)
3) strategic (create allies and undermine western hegemony)

Question 28

What does Mahbubani argue?

Answer 28

UNSC and IOs should be reformed to reflect new Asian power growth - better than forcing new institutions