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Poli 150 notes Nov 14

Poli 150 notes Nov 14 - The Global Economy and Development...

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11/14/07 The Global Economy and Development To What extent should developing nations engage the global economy as a means to development? Neoliberal (focuses on internal problems) Government failures, property rights, corruption Global Trade and finance as efficient, lead to growth But some dispute trade-growth link, at least for some types of countries (Garrett, Rodnik); and volatility of capital flows. Structural (external problems) Concerns about market failures “Dependency theory” (Marxist)-stuck in a situation of dependence on rich countries, developing countries should develop internally first, then engage the global economy. Worries about bias in int’l institutions (WTO, IMF, World Bank) Mid-1980’s/1990’s: Washington Consensus Prescribed economic liberalization to deal with debt crises and to generate growth (Asian examples of export led growth)-get rid of things that hinder economic globalization. Structural adjustment Linked with IMF loans, pressure from US government (conditionality of loan) A move toward neo-liberal economic reform Historical Comparisons High Levels of capital market openness before WW1 But a more limited scope (fewer countries involved) than today. And greater velocity and volatility today.
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Developed nations: relatively closed financial markets in the 1950’s and 1960’s; gradual opening in the 1970’s. Developing nations; relatively closed financial markets until the 1980’s; removal of many restrictions in the 1990’s.
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