Transcript CHAPTER 13 International Development

CHAPTER 13
International
Development
INTERNATIONAL RELATIONS
Seventh Edition
Joshua S. Goldstein
Pearson Education, Inc. © 2006
What is Economic
Development?
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Capital accumulation
Rising per capita incomes
Increasing skills in a
population
New technological styles
Related social and economic
changes
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Newly Industrialized
Countries (NICs)
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Despite the poverty in the “South,”
there are some success stories
NICs export light manufactured
goods
Most successful: Four Tigers
Thailand
Malaysia
Israel
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Per Capita GDP of
South Korea, China,
and Ghana
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China
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After Mao, Deng Xiaoping
encouraged “free economic zones”
MNCs shift production to China
every year because China’s labor
force is vast, low-paid, and
disciplined
For more than a decade, China
has experienced growth rates of
nearly 10 % each year
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Lessons
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Export-led growth: NICs used this,
but it does not work for everyone
Import substitution: Raising tariffs
to protect new industries may work
in short term, but countries find it
hard to change policy over long
term
Concentrating capital for
manufacturing
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North-South
Business Relations
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Foreign investment
Joint ventures
Favorable regulatory environments
Labor supply considerations
Technology transfer
Brain drain
The green revolution
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North-South Debt
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Borrowing is an alternative to
foreign investment
Debt service
Default
Debt renegotiation
Lenders try to extract as much as
they can
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Debt in the Global South,
2004
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Foreign Assistance
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Most assistance comes from “north”
90% of government assistance comes from
the Development Assistance Committee
(DAC)
Required: 0.7% of GNP to be given in
foreign aid
Only Norway, Sweden, Denmark, the
Netherlands, and Luxembourg meet the
target
The United States gives the lowest
percentage of GNP of rich countries, but
gives most in total economic aid given
Multilateral and bilateral aid
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Who’s Helping?
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Three Different
Models
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The Disaster Relief model
The Missionary model
The Oxfam model
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