geogreview - Final examination review notes A Country...

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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? Japan was a late-traditional economy without many natural resources at its disposal. In order to create a  modern economy, it was necessary to lower consumption as much as possible so that as much as  possible could be invested in growing the economy. The only governments able to suppress  consumption in these circumstances are strong authoritarians First, 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. Second, the very  high savings rate and suppressed consumption that fueled the high growth rate were accomplished by  cartelizing industry. Third, the necessary adjunct to the control of domestic production is control over  imports. India was a fractured and fissiparous place when the British arrived in the mid-eighteenth  century. India was a colony of another country for generations. basing development on foreign direct  investment, was closed by the attitude of the Indian government itself, which restricted investment in  Indian companies and limited the ability of foreign investors to create businesses through direct  investment. Thus, India could not develop either through internal capital formation or through foreign  direct investment. Overregulation,   high tariffs and import quotas  to prevent FX from flowing out  and  export subsidies  to bring it in. This hurt businesses that needed to import parts from abroad and  also hurt living standards.  Anti-monopoly controls  were also in place, preventing businesses from  growing too large for fear that small businesses would be displaced 2. In which respects does Japan’s current economic development resemble its development in the nineteenth century? Supresses comsumption, job security, So standards of living are forced down in order to make rapid  industrialization possible. This can be done by very high personal tax rates, by high consumer prices,  by lowering wages or by straight rationing.  3. What are the upsides and downsides of the Developmental State strategy? The basic idea was that the government should not leave the market to its own devices. The basic resources of the economy would still be in private hands, as in the Washington Consensus model, so as to preserve the profit incentive, but the state would not play the hands-off role prescribed by the Consensus. Developmental State, keeps the private sector and the profit incentive as the mixed economy model
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This note was uploaded on 09/22/2008 for the course GEOG 20 taught by Professor Acker during the Spring '08 term at Berkeley.

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geogreview - Final examination review notes A Country...

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