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Final notes.2 - Geography 20 Globalization Spring term 2008...

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Geography 20:  Globalization Spring term 2008 Final examination review notes A.   Country studies 1.  Why was it possible for Japan to industrialize through internal capital formation but  impossible for India to do so? industrialization did not come about through the free market but through government management of the economy, and in all likelihood could not have come about nearly as quickly as it did without government control; of course, the price was paid by the Japanese consumer, who put up with a much lower standard of living. Second, the very high savings rate and suppressed consumption that fueled the high growth rate were accomplished by cartelizing industry—that is, by organizing cooperation rather than competition among the big producers, enabling them to divide the market through mutual agreement on prices and production, which let them charge higher prices than they could have under conditions of competition. Third, the necessary adjunct to the control of domestic production is control over imports. There would be no point in having internal cartels maintaining high prices if foreign imports could undercut those prices. The terms of the treaty Japan had entered into with the US did not permit high tariffs, so Japan became adept at using non-tariff barriers, such as inspection requirements, permit requirements, delays, no distribution channels for foreign goods available inside Japan and so forth. The upshot was that foreign products were successfully excluded, prices were fixed for domestic products and Japanese consumers had to pay very high prices, transferring wealth from the consumers to the producers. Fourth, Japan relied on a few key export industries to get foreign exchange and enable it to purchase the things from abroad, like advanced warships from English shipyards, that it could not manufacture at home. 2.  In which respects does Japan’s current economic development resemble its  development in the nineteenth century? - 3.  What are the upsides and downsides of the Developmental State strategy? - protected industries can afford to be inefficient and noncompetitive 4.  What parts of the Japanese social compact compensated its people for the high taxes  and high prices that characterized its development? -Japanese economy isn’t based on creative destruction. Creative destruction means bankruptcies, doors closing, people losing their jobs. That’s not what the Japanese social compact is all about. But the absence of creative destruction means keeping the 1
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deadwood afloat, keeping these arthritic old businesses open when they ought to be retired. 5.  Why is Japan unlikely to be a leader in Internet marketing and distribution?
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