Countries support other regimes but still have

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countries, support other regimes but still have economic growth The modernization theory explaining the difference between democracy and economic growth Determining Actors: the state vs the market? Emphasis on the strong state intervention in economy — KeynesianRooted in specific concepts in the 30s, after the great Depression. A new policy, promoted by the state/government — looking into the strong state intervention in the economy. Dependency Theory:Inward looking industrialization The Developmental State:outward looking industrialization Neoliberalism:strong emphasis on the market Dependency Theory: Is Keynesian Strong state intervention in the economy The way to achieve development is industrialization, exploiting trade relations How can low income countries help high income countries? There is a power battle in trade relations, often with the high income countries exploiting low income resources Alternative Explanation: Why did dependency theory become popular in the 1960s? Eurocentric developmental model did not necessarily fit into the diverse local contexts 14
Monday, January 13, 2020Underdevelopment cannot be solved based on the economic stages (blaming traditional economy) Sustained power imbalance in global capitalism = subordination of former colonies (colonial legacies) Raw materials are produced by low income countries, those who can produce manufactured goods, you can sell at a high price so high income countries can produce goods. Alternative Explanation of Underdevelopment International Division of Labour that perpetuates unequal trade relations (underdevelopment) They look at this unequal trade imbalance Developing countries: main exporters of primary commodities with low value Developed countries: main exporters of manufactured products with high value Those who can produce high value goods, gain more. Domination and subordination in the global capitalist system Dependency Theory: Solutions Cutting offthe trade imbalance Protectionist industrialization — the goal with industrialization, at the same time you have to protect the local interests/industries. — You have to cut offimports, so the strategy you would impose tariffrestrictions. Reinvesting in your own economy — clarifying key sectors Currency — currency exchange is important, You have to buy machines from outside countries, but if the currency is weak the machine will be very expensive. Strong state intervention in economy Keynesian view of development Birth of Dependency Theory: Paul Prebisch — The Economic Commission for Latin America (ECLA) Outcomes of Dependency: 15
Monday, January 13, 2020Outcomes: Negative trade balance Chronic shortage of capital, balance of payment crisis (debt crisis) Solution: Industrialize through Import Substitution Industrialization (ISI) January 15/20 Determinants of Development Modernization Theory: Industrialization with democracy (liberal values) Stages of economic growth — (teleological view) Geopolitical concerns (decolonization, cold war)

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