Test 2 Flashcards
(40 cards)
Economies of scale
a proportionate saving in costs gained by an increased level of production
Dual economy
when you have a class of small elites, non-existent middle class, and everyone else in poverty (no consumers)
Vertical trade
when a society has to export and sell is raw materials and they import finished goods (haven’t industrialized)
export commodity concentration
when a society has only one thing to sell (overly dependent and leaves them vulnerable to market trends)
trade partner concentration
over reliant on selling to 1 or 2 countries
heavy multinational corporation penetration
believe that they may disrupt by coming into the country, out compete local businesses, align with elites, and screw over everyone else
Inequality points
Inequality discourages political participation of poor people which in turn diminishes access to edu, healthcare, and economic growth and development
Inequality prevents impartial institutions
Enables rich to get richer and the poor to stay poor
The debate between inequality and globalization:
One side states globalization is beneficial because it decreases poverty
The opposition states it just allows the rich to be richer and the poor to be poorer
Factors in europe’s economic success
Freedom of expression (encouraged people to have their own ideas and surpassed societies that were authoritarian) Social values (equality and openness leads to growth) Functioning of a free market and institutionalized property rights (rights to private property protected under the market system) (allowed property to be inherited so the business could grow and allowed businesses to designate an heir if the business’ head died) Separation of the secular from the religious (prosper when religion is less restrictive)
Inequality between rural and urban areas
It is said that rural areas are decreasing and decaying. There is a growing income gap between rural and urban areas
Inequality within poor countries
It is said that the are lacking a large enough middle gap between the rich and poor.
Gender inequality
Countries that have the least amount of globalization are said to have the biggest gap of inequality
In general, it shows that women are setting themselves up to surpass men in the future, but still, overall, women’s pay lags behind mens
6 dimensions of poverty
Hunger (about inadequate food supplies)
Psychological dimensions (characterized by sense of powerlessness and shame)
Inadequate infrastructure (poor people usually lack access to roads, electricity, etc.)
Low levels of literacy (education often unavailable)
Health problems (poor people generally suffer from illness)
Inadequate income
strategies to close the gap
Education and family planning (education usually leads to less children, leads to healthier people)
Democracy (democratic economies can be pressured to reduce inequalities)
Gov’t policies and free trade (can implement affirmative action programs to diminish inequalities)
Reduce corruption (poorest countries are invariably the most corrupt ones)
Pay attention to women (societies that reward women for being involved in gov’t programs etc benefit from talents from them)
Improve agriculture (poverty and inequality are reinforced by the inability to produce insufficient food)
Think small (volunteering for soup kitchens etc and giving small loans to small entrepreneurs to close gap between rich and poor)
Remittances and foreign aid (economic globalization offered greater benefits to poor countries than official development assistance did and then foreign aid declined sharply)
Green Revolution
Rising food prices have already pushed over 40 million people into extreme poverty
Green Revolution: concentrated on producing more food from the same amount of land by proved plant breeding, greater use of fertilizers, and irrigation
Causes:
Drought, export bans, stagnant agricultural productivity, high fuel prices that raise the cost of production and transportation, a relatively weak dollar, and a widespread waste of food due to inadequate storage facilities
People have started to concentrate on producing biofuels because of rising petroleum prices
Factors impacting development
History of society (was it colonized?) Social cohesion (no trust leads to no contracts being signed) Natural resources (need something to sell) Capital (infrastructure for communication and need investors to start businesses) Human services (need healthy and educated workforce) Population (low- labor shortage, high- too many people, not enough jobs)
Liberal economics perspective
Focus: to reduce poverty, produce efficiently and grow economically - economies of scale INDUSTRIALIZE
Major arguments: Free trade (go to cheap labor areas and allow investors and corporations to cross country lines), we need to lift everyone and then poverty will decrease
Problems: over-population
Dependency perspective
Focus: don’t let in multinational corporations and let local businesses catch up
Explanations of poverty: blames global capitalism
Industrialize and stabilize prices
Problems: maldistribution of wealth and power, favors already industrialized economies
Participatory development perspective
Focus: raising quality of life, meet basic needs, people who will benefit must participate
Use labor intensive rural development (USE APPROPRIATE TECHNOLOGY)
Criticisms: won’t produce ongoing growth
Grameen Bank
Considers credit as a human right
Women receive most loans
Loans provided to produce income-generating activities
Loans based on trust
Poor have knowledge and skills, not poor bc they’re dumb
Work in groups of 5 people and share responsibilities
Borrowers join groups voluntarily
Groups receive training in management
Bank stagg implement the core principles
Modernization theory
poor countries can change their status if they increase their economic growth, and adapt to new ideas
How the IMF responded to the global economic crisis; primary source of IMF financial resources
The IMF strengthened its lending capacity and approved a major overhaul of its financial support mechanisms, with additional reforms in response to the global economic crisis
Member quotas are the primary source of IMF financial resources. A member’s quota broadly reflects its size and position in the world economy.
World Bank’s original goal and how it has evolved
Original goal was to funnel loans to emerging economies and reboot europe’s economy
Since changed to just reducing poverty in general
The world bank is trying to win the US over by revamping the system. He is trying to raise funding for projects by really focusing on private investors
IMF
Promote stability of international financial system
Promote international monetary cooperation
Facilitate expansion of international trade
Assist in the establishment of a multilateral system of payments
Make resources available to members experiencing debt payment difficulties
Do surveillance and give policy advice based on that
Give loans to in-debt and developing countries
World Bank
Poverty reduction
Goals: end extreme poverty and foster income growth in bottom 40% of every country
Wanting to stay a contender, so signing on with private investors
