10 lecture slides - Lecture TEN ISI, NICS, and...

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Lecture TEN ISI, NICS, and Developmental States
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I. Neoliberalism vs. The State • 1970s: Role of the state questioned shortcomings of ISI state not autonomous; captured/inFuenced by interest groups - class - urban bias - rent-seeking • 1980s: Neoliberalism “rolls back the state” Washington consensus on economic policy prescribed for developing countries - “one size ±ts all” structural adjusment - poverty reduction assumed to follow growth - shift from ISI to EOI • NICs debate: East Asian NICs held up as “proof positive”
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ISI (encore) • Objectives: escape PCED and falling terms of trade change position in IDL accelerate industrialization nurture indigenous capitalist class • Ideology State seen as agent of economic and social transformation Post-War Keynesian economic ideas inFuential
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The ‘product Cycle’ 1. Light manufacturing : consumer goods, textiles, soap 2. Heavy industry : steel, machinery, automobiles 3. High-tech/knowledge-based : electronics, communications, computers
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ISI strategies How States supported “infant” national Industries • Imposed tariffs, quotas, licensing, content regulations (to block competing imports) • Provided infrastructure and subsidies • Allowed foreign Frms to set up ‘branch plants’ only • Raised capital by taxing agr. sector (marketing boards) and taking out loans • Direct state investment
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• Q: What does an ISI-protected entrepreneur still need? start up capital equipment inputs labor marketing and distribution
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Countries that had signifcant ISI phases pre-1970 Mexico* (6.5% growth) Brazil Chile Argentina Turkey Egypt* India* (4.5% growth) Ghana Kenya Cote d’Ivoire Botswana Malaysia Taiwan* South Korea* * accompanied or preceded by land reform
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ISI’s Undoing poor economies of scale : many faced small domestic markets did not increase/change exports for most (i.e. IDL remained intact) cost of imports : balance of payments did not improve; some got worse lack of backwards linkages (e.g. the truth behind Brazil’s Puma ) lack of competition --> inefFciency capital intensive --> low employment, created segmented labor markets, deepened rural/urban divide
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Urban bias : neglect of agricultural sector and rural
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10 lecture slides - Lecture TEN ISI, NICS, and...

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