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INTERNATIONAL RELATIONS 2013–2014 Update Tenth Edition Joshua S. Goldstein Jon C. Pevehouse Chapter Thirteen: International Development.

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Presentation on theme: "INTERNATIONAL RELATIONS 2013–2014 Update Tenth Edition Joshua S. Goldstein Jon C. Pevehouse Chapter Thirteen: International Development."— Presentation transcript:

1 INTERNATIONAL RELATIONS 2013–2014 Update Tenth Edition Joshua S. Goldstein Jon C. Pevehouse Chapter Thirteen: International Development

2 Chinese house whose owners would not sell, 2012.

3 13.1 Experiences Newly industrializing countries The Chinese experience India takes off Other experiments

4 MyLab Media Simulations. International Development: You Are the Minister of Trade and Finance ms_2011/minister_trade/player.html Please log into MyPoliSciLab with your username and password before accessing this link.


6 Newly Industrializing Countries Most successful Strategies and special conditions of each Similarities and differences among them Other South East Asian countries tried to follow in footsteps


8 The Chinese Experience “Iron rice bowl” policy Mao succeeded by Deng Xiaoping Economic growth of 1990s Situation in early twenty-first century Not clear what lessons China’s success has for rest of global South

9 Singapore is one of the “four tigers” (with Hong Kong, Taiwan, and South Korea). Even after the setback of a 1997 financial crisis, their growth has made them prosperous by the standards of the global South. Other countries are trying to emulate the success of these NICs. But no single, simple lesson applicable to other states emerges from the NICs. A TIGER

10 China’s rapid economic growth has raised incomes dramatically, especially for a growing middle class. These successes followed China’s opening to the world economy and adoption of market-oriented reforms. However, as exports slow down in a global recession, China must develop its domestic market and consumer spending rather than relying so heavily on exports to fuel growth. Here, 700,000 Chinese consumers do their part as they mob the Shanghai auto show in 2011, hoping to get in on China’s growing infatuation with that ultimate big-ticket consumer item, the automobile. CAR CULTURE


12 India Takes Off Robust growth Economy based loosely on socialism and state control 1991 collapse of Soviet Union Sought help from IMF, World Bank Niche in world economy is in service and information sectors Question of future success with democratic government in place

13 India has grown rapidly in recent years, using its large, well- educated, English-speaking population to generate export revenues in the service sector—software companies, call centers serving American customers, and professional services in such areas as accounting, architecture, engineering, and medicine. This radiologist in Bangalore, India’s technology capital, reads body scans from a U.S. hospital sent via the Internet and discusses the results by phone with the patient’s doctor in Connecticut, 2004. AT YOUR SERVICE


15 Other Experiments Mixed success Indonesia, Philippines, Malaysia, Thailand, Vietnam Not as successful Latin America Africa Middle East


17 Globalization is creating winners and losers while sharpening income disparities. Debt, currency crises, IMF conditionality, and the privatization of state-owned enterprises are among the sources of upheaval and poverty in many poor countries. After lethal factory fires, these garment workers protest unsafe working conditions in export-oriented factories in Bangladesh, 2013. GLOBALIZE THIS

18 13.1 Experiences Q: Which Asian country was thrown into a severe economic crisis by the collapse of the Soviet Union? A)Indonesia B)Thailand C)India D)Bangladesh

19 Experiences Answer: C) India

20 True/False: The leading success story in economic development is China.

21 Experiences Answer: True

22 13.2 Lessons Import substitution and export-led growth Concentrating capital for manufacturing Corruption

23 Import Substitution and Export-Led Growth Import substitution Export-led growth

24 Concentrating Capital for Manufacturing Manufacturing emerges Invest in manufacturing Trade off Problem compounded Growing disparity Capital can come from foreign investment or loans Role of microcredit Perspective and prescriptions Authoritarianism and democracy Democracy has not accompanied economic development Fastest-growing states Authoritarianism leads to economic development

25 Foreign investment, international debt, and domestic inequality all can help concentrate the necessary capital for manufacturing. In recent years, microcredit—very small loans made directly to very poor people— provides a way to use capital more diffusely. This woman in Recife, Brazil, runs her own convenience store in 2010 with help from a microloan. CAPITAL INVESTMENT

26 Corruption Important negative factor in economic development Centers on government as central actor in economic development Negotiations on foreign investment - another player added (corrupt official) to share the benefits Not limited to the global South, but effects are worse Transparency International, Berlin-based NGO published annual surveys showing most corrupt countries

27 Corruption is a major impediment to economic development in both rich and poor countries but is more devastating to economies in the global South and to transitional former communist economies. In India, widespread corruption has held back economic development and equality for years. These Delhi supporters of hunger-striking anti-corruption activist Anna Hazare hold a “key” to corrupt officials’ Swiss bank locker, 2012. CLEAN IT UP!

28 13.2 Lessons Q: Among the most corrupt countries in the world in 2012, according to Transparency International, were ___________. A)Nigeria and Indonesia B)Burma and Somalia C)Brazil and Chile D)Pakistan and India

29 Answer: B) Burma and Somalia

30 True/False: A major obstacle to development throughout the global South is corporate disinterest in developing economies

31 Answer: False

32 13.3 North-South Capital Flows Foreign investment North-South debt IMF conditionally The South in international economic regimes

33 MyLab Media Video: Fair Trade Coffee 35_fair_trade_coffee.html Please log into MyPoliSciLab with your username and password before accessing this link.

34 Foreign investment is an important source of capital for economic development in the global South. The relationship of foreign investors and host countries transcends economics and draws in culture, politics, and identity. These Japanese executives visit their Honda factory in India, where Honda has invested $400 million, in 2008. FOREIGN INVESTORS

35 Foreign Investment Investment in capital goods by foreigners Many governments in global South fear loss of control MNCs invest in a country because of some advantage of doing business there Technology transfer Brain drain

36 North-South Debt Borrowing money Advantages Disadvantages Default, renegotiate, refinance, restructure Concessionary loans Debt crisis in 1970s and 1980s Debt renegotiations Calls for debt forgiveness


38 IMF Conditionality “Credit rating” Conditions attached to loans Conditions tend to follow formula Painful for locals

39 IMF conditionality agreements often call for reducing subsidies for food, transportation, and other basic needs. In Egypt, bread prices are heavily subsidized, forcing the government to use hard currency to import wheat. But public resistance to bread price increases is so strong that the government has not brought itself to cut the subsidy. Here, bread is delivered in Cairo during opposition protests in 2011. MIRACLE OF LOAVES

40 The South in Economic Regimes WTO New International Economic Order (NIEO) UN Conference on Trade and Development (UNCTAD)

41 Prime Minister of Turkey, Recep Tayyip Erdogan

42 13.3 North-South Capital Flows Q: Despite the perception that an international debt crisis was “over” in 2001, which country in effect defaulted on its debts? A)Mexico B)Brazil C)Argentina D)North Korea

43 Answer: C) Argentina

44 True/False: The IMF makes loans to states in the South conditional on economic and governmental reforms. These conditionality agreements often necessitate politically unpopular measures such as cutting food subsidies.

45 Answer: True

46 13.4 Foreign Assistance Patterns of foreign assistance Types of foreign assistance The politics of foreign assistance The impact of foreign assistance © 2010 Joshua S. Goldstein and Jon C. Pevehouse

47 Patterns of Foreign Assistance Majority of foreign assistance comes from governments in the North Development Assistance Committee (DAC) Bilateral or multilateral aid UN programs


49 Types of Foreign Assistance Types of aid U.S. State Department U.S. Peace Corps Handout model Oxfam model

50 Governments provide more than $50 billion annually in foreign assistance and private donors more than $10 billion in additional aid. In the West, the United States gives among the least amount of foreign aid as a percentage of GDP, despite recent increases. Here, a U.S. Peace Corps volunteer works in Panama, 2001. HELPING OUT

51 The Oxfam model of foreign assistance emphasizes support for local groups that can stimulate self-sustaining economic development at a local level. A mutually beneficial North-South partnership is the global goal of such projects. These women show off a mill they purchased with microcredit from an Oxfam- affiliated group in Gambia, 2001. PARTNER IN DEVELOPMENT

52 The Politics of Foreign Assistance Foreign assistance Short-term relief More organized and better coordinated now

53 Actress Selena Gomez launches the UNICEF Trick-or-Treat drive, 2009.

54 The Impact of Foreign Assistance There is a very real threat of danger in providing inappropriate foreign assistance. The giving and receiving of foreign assistance is political.

55 Sometimes foreign assistance contributes goods to developing economies with little understanding of local needs or long-term strategies. Here, free supplies including cartons of mouthwash are delivered by the U.S. ambassador and the captain of a U.S. Navy ship participating in Project Handclasp, 1989. MOUTHWASH FOR MAURITANIA

56 13.4 Foreign Assistance Q: What are some key purposes of development assistance? A)Capitalist, humanitarian, and egalitarian B)Egalitarian, political, and environmental C)Capitalist, humanitarian, and creation of future economic advantage for the receiver D)Political, humanitarian, the creation of future economic advantage for the giver

57 Answer: D) Political, humanitarian, the creation of future economic advantage for the giver

58 True/False: Foreign aid is usually utilized for political leverage and promotes the export of products from the donor state

59 Foreign Assistance Answer: True

60 Chapter Discussion Question Why are hunger and malnutrition rampant in the global South? Cite specific causes. Further, what role has increasing urbanization played in this context? And why have women been disproportionately impacted by malnutrition and hunger?

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