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| When countries grow, the rich often become richer and the poor more destitute in the process of change; simultaneous existence of modern and traditional economies |
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| Human Development includes: |
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| productivity, equity, sustainability, and empowerment |
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| accorded a strong role to the state in promoting development (50's and 60's) |
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State intervention was critical to promoting development; orchestrate growth process; without interventionist state, markets would not spontaneously generate growth
PAUL BARAN: center defines the rules/periphery were pawns in the international pursuit of profit. rich extracted resources from the poor; local elites formed alliances with foreign capitalists, preventing more growth |
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Definition
economists who believed that the particular structure of developing economies warranted a different policy approach; balancing hand of the state
RAUL PREBISH: periphery countries traded primary products for more advanced products-->declining terms of trade |
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| Neoclassical/Chicago School/Orthodox |
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| market is at the center of the development equation; ensure that economic agents face accurate price incentives without interference; state-led activity has a poor performance record |
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| Institutionalist tradition |
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| strong role to non market institutions; rather than relying solely on price signals, other forms of organization may intervene-->legal social political systems |
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| Monopoly over mines and land accorded to a "manager" or cacique with a share of output owed in return |
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| the share of output owed to the spanish crown under the encomienda system |
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| the feudal hacienda estates in Latin America (fazenda in Brazil) |
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| small parcels of land that peasants farmed (subsistence farming) |
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| Golden Age of primary product exports |
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Definition
| late 1800s to early 1900s, primary products were needed as the rest of the world industrialized; invested entirely in a few products, rather than industrialized |
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| the distorted pattern of development precariously predicated on a hot commodity; international resources are drawn in, overvaluing the exchange rate and encouraging investment in the commodity; boom and bust |
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Definition
| as income increases there is a weak increase in the demand for primary products; leads to declining terms of trade |
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Definition
price of primary goods falls relative to manufactured goods; fewer exports, unable to afford manufactured goods
export more and more in order to import the same level |
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| backward/forward linkages |
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| capital needed for production; related industries or products that use a good |
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| government forced communities to provide workers for the labor intensive harvest during labor shortages |
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| private enterprise's failure to produce sustainable growth...provided the rationale for state intervention |
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Definition
| emphasized growth and redistribution of income to the neglect of internal and external constraint; accumulate debt while favoring certain industries; inflation, deficits, and external imbalances were ignored |
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Definition
1) state owned enterprises
2) high tariffs
3) other tools, targeted lending, multinational support; passive monetary policy (overvalue currency) |
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Definition
| form state-owned firms; form missed economic enterprises; require government purchases from national firms; require firms to establish joint ventures; pressure foreign firms to increase local content |
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| ISI international instruments |
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Definition
| tariffs; quotas on imports; exchange rate overvaluation; exchange rationing; import licenses (goods critical to industrialization process) |
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Term
| ISI-fiscal and monetary policy |
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Definition
| subsidies for cheap inputs such as electricity; subsidies for public transportation; tax breaks in production; preferential interest rates; accommodating monetary policy |
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