Final Study Guide - 1 Big push A transformational approach...

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1. Big push · A transformational approach to development that targets many different factors that contributes to poverty, instead of smaller, marginal changes. Jeffrey Sachs is a big proponent of the idea and started the Millennium Villages Project to collect evidence on whether or not targeting many areas of poverty at one time work · “You can’t do anything until you can do everything” à idea behind the big push theory · Outlined by Paul Rosenstein-Rodan in 1943, says that even the simplest activity requires a network of other activities and that individual firms cannot organize such a large network, so the state or some other giant agency must step in · Sachs argues that if public investment and foreign aid are big enough, they will boost household incomes, spurring savings and boosting local investment · Big push inspired the Millennium Villages Project, which has had mixed results; critics (Easterly) argue that the trials were not random, the changes follow national trends, and is not a long enough experiment to know if, when the money stops flowing, change is sustainable · Significance : if there is evidence that transformational development works, then the international community needs to focus on contributing larger donations for a limited amount of time to eliminate poverty instead of giving smaller amounts to affect marginal changes 2. Bretton Woods System -This is from week 8. -The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid-20th century (1944 so while WWII was still going on, they deliberated for the first time) -After WWII when they set up the IMF and World Bank. -It was to make sure nothing like WWII would happen again because of a huge collapse. -The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge temporary imbalances of payments. -System came to an end in 1971 when the US terminated convertibility of the US dollar to gold. 3. Closure of the Suez Canal -This was talked about during week 7. -The canal was used as a passage to the west indies so you didn’t have to go all the way around Africa. -The Suez Canal is considered to be the shortest link between the east and the west due to its unique geographic location; it is an important international navigation canal linking between the Mediterranean sea at Port said and the red sea at Suez -It made trade much cheaper because it cut transportation time which means cheaper transportation costs. -It closed as part of the 6 day war. -It was closed from the 6 day war until june 5, 1975 -When the canal closed, trade dropped, because the costs went up.
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