Topic 3: Globalisation and Economic Development Flashcards Preview

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Flashcards in Topic 3: Globalisation and Economic Development Deck (6)
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1

a) countries' different development paths shaped by (6)

Initial conditions
Resource endowments
*Access to technology*
Quality of institutions
*Policy interventions*
Accidents of history

2

a) how countries determine inward or outward trade strategy

setting tariff levels
their reliance on non-tariff barriers (such as quantitative restrictions)
policies on export promotion (like export subsidies and export taxes)
changes in trade policy (unilateral, minilateral or multilateral)
exchange rate policies

3

a) outward orientation underpinned by

neoclassical economics
views globalisation as source of enrichment

4

a) inward orinetation underpinned by

structuralist philosophy (developing countries "different")
views globalisation as a potential source of impoverishment

5

b) case for outward orientation underpinned by

static gains from resource allocation ( reaping welfare gains by specialising in the production of those goods with the lowest opportunity cost and trading the surplus of production over domestic demand,
dynamic gains from specialisation (shift outwards the PPF by augmenting the availability of resources for production through increasing the productivity of resources and their quantity.)

6

c) Case for inward orientation

> Prebisch-Singer Hypothesis
(exporting low value products won't generate enough forex to pay for essential imports)
> Export instability
(D&S for primary products inelastic, markets susceptible to shocks -> price instability -> earnings instability)
> Pervasive infant industries