November 4 class notes

November 4 class notes - November 4, 2010 Why Did ISI End?...

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November 4, 2010 Why Did ISI End? (Part 2) I. East Asia, Aid, and the Washington Consensus a. Export-led Industrialization b. The Washington Consensus II. Is the Dependency Theory even right? - ISI problem: it became increasingly difficult to pay it back - ISI problems plus the problems of the inflation rate led to more problems - Graph of South Korea and Singapore - At the end of the day, the way we make money is when people buy things o The question is, who has money to buy things? - So, you borrow from the rich countries - The US in the 1950s funded some 80% of the South Korean economy - 2 things happening: o Post WWII, there is a rapid effort to reestablished the global economy o You don’t have a lot of people running firms, so firms are going to collapse - Infant industry o You have to funnel money in to firms in the short term to give them support so they don’t collapse when they make mistakes o Subsides o Lowering interest rates o Protect from imports - Social Spending Ties - If you have to compete with the rest of the world, then the firm
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November 4 class notes - November 4, 2010 Why Did ISI End?...

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