Poli 260 - Week 11 (Lecture)

Poli 260 - Week 11 (Lecture) - Poli 260 Week 11 Notes...

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Poli 260 Week 11 Notes Understand economic policies in the developing world from the 1950’s onward. - Inward turn: why did developing countries (DC’s) reject trade/open economies from 1950’s on? What policies did they use? - Return to global economy: why did DC’s open their economies from 1980’s on? Prior to decolonization (1945-1965) - Non-Western economies were part of global trade networks o Primary goal was Exporters of commodities/primary goods (e.g. Tea from China) Exported labour (e.g. South Asians in Caribbean) - But economic growth/standard of living in Asia and Arica was low : Africa/Asia fell behind, and badly o Unequal terms of trade: imperial preferences/coercion Major problem – growing gap between wealth of the West and Asia/Africa Terms of trade are unequal – left them at a disadvantage o Colonial extraction: primary commodities exported, manufactured goods imported balance of trade was unfavorable Situation developing countries were in (Logic of Comparative Advantage) - What they had (abundant factors of production) o Land – to make primary goods (mostly agricultural) o Labour (inexpensive) – for labor-intensive products - What they didn’t have (scarce factors of production) o Capital – technology/machine tools etc. Did not have a developed industry for machinery as they focused on exporting commodities/labour o What should they do (according to CA)? - Solution: export primary goods/labor-intensive goods, import capital-intensive goods that these economies make o Specialize and do what you’re best at, then buy the rest from everyone else - How do you do this? o Expand (participate in) free trade and specialize in agriculture-labour intensive goods - They didn’t do this. Why ? Why DC’s didn’t follow the leader - Bretton Woods: Great Depression showed Western economies needed…(summary in Frieden, 300) o A way to manage world economic order with the US being the main supporter o 3 main components: Role of hegemon (US) in global economy to provide capital: IO’s to manage crises/avoid another Depression Commitment to free trade – what led to Depression was economies put up trade barriers, want to avoid this Importance of state spending (G in Depression) – cannot let the economy function without a certain amount of government spending; expand safety net (if not, there will be great domestic unrest) - DC’s took somewhat different lessons o Not so hot on free trade – hurt us in the past so we’re not going to engage in it once we get independent o Suspicion of hegemon – not going to exchange independent status (after imperial repression) and suffer the same thing with hegemon (US) o But – faith in state spending for spurring development Two reasons for suspicion about free trade - Colonialism: o Exposure to global economy had negative impact on growth o Adverse terms of trade (remember Leopold/Congo) - Socialism (Frieden, 321-338) o Had a resistance to colonialism (which was associated with free trade)
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Poli 260 - Week 11 (Lecture) - Poli 260 Week 11 Notes...

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