S-14 Developing countries PrePost version

S-14 Developing countries PrePost version - Chapter 14...

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Chapter 14 Trade Policies for Developing Countries Development Economics
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Figure 14.1 - Growth Rates, 1990-2003, and Levels of Income Per Capita, 2003
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Stages of Economic Development World Bank Classifications Low Income 2000 GNI $755 or less Lower Middle Income $756 - $2995 Upper Middle Income $2996 - $9,265 High Income $9266 or more Rostow Five-stage Model Traditional Society Lacks capability to significantly increase productivity Preconditions for Take-off Transition Take-off Infrastructure to sustain development Drive to Maturity Economy seeks to extend modern technology to all fronts of economic activity High Mass Consumption
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Employment in Industrial Sectors - U.S. as percentage of Total Labor Force Employment in Industrial Sectors – U.S. As percentage of Total Labor Force
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Trade Policy Alternatives for a Developing Country (page 298) 1. Focus on exporting primary products 2. Attempt to raise the world prices of primary products that are exported 3. Protect and encourage new industries that produce products sold into the local market 4. Encourage new industries that produce products that are exported
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Is the deck stacked against less developed economies? Are they victims of globalization? Relative price of primary goods is depressed- Engel’s law – As per capita income rises, demand shifts toward “luxuries”. The relative price of foods declines. Synthetic substitutes: rubber polyester fibers Forces that raise prices- Nature’s limits – As population expands, food becomes relatively scarce and prices of primary products rise. Thomas Malthus – 1798. Essay on Population . There is a natural tendency for population to increase more rapidly than the means of subsistence. Relatively slow productivity growth.
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Why did United States, Canada, Australia make it, and Argentina and Brazil are still “developing nations”? How did Japan and the Asian Tigers (South Korea, Taiwan, Singapore, Hong Kong) do it, while Ethiopia, Egypt, Bangladesh struggle? Is China a special case? Will you bet on: Vietnam ( population 84 million, GDP-PPP per capita $3100) or Nigeria (population 75 million, GDP-PPP per capita - $1000) over the next 5 years?
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There are many paths to development We can look at groups of countries: Latin America South East Asia Transition Economies Arab oil producing nations Africa
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“Effective performance entails the creation of open- access societies – the essential requirement for the dynamic market that Adam Smith envisioned” Douglass C. North British America: British and Dutch colonists brought their property-rights structure.
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This note was uploaded on 09/21/2009 for the course B 290 taught by Professor Narg during the Spring '09 term at Washington University in St. Louis.

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S-14 Developing countries PrePost version - Chapter 14...

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