Summary
additional summary about development strategies
- Course
- Institution
This is a handy additional summary about development strategies.
[Show more]
Seller
Follow
seminckursula
Reviews received
Content preview
State- led development modelsEarly theories of state led development
1. Keynesian thought
- Emphasis on full employment and demand-driven growth (low demand = high
unemployment)
- Role of state is to stimulate economic growth, not to leave economy activities in the
hands of the market
- Strategy: Fiscal expenditure and taxation measures to stimulate aggregate demand
- Examples: Public works infrastructure to generate employment and state-run central
banks to lower interest rate (make borrowing cheaper)
2. Albert Hirschman
- Problem of underdevelopment is lack of entrepreneurial skills and managerial
knowledge (investment across industries not suitable for developing countries)
- State must protect and invest in a small number of strategic sectors (high capacity to
generate supply and demand for other sectors)
- Role of the state: to foster unbalanced growth by picking winners and losers through
sectoral intervention
- Example: Investment in steel high demand for iron construction and automotive
3. Structuralism in Latin America
- Prebisch and Singer
- Declining terms of trade between cheap primary goods and expensive manufactured
imported goods
- Strategy: Block imports in the name of industrialization (ISI model)
- Progressive taxation and nationalization of strategic industries
, A knowledge-based asset approach to
development
- Economic development as a move from a set of assets based on primary products (raw
materials, commodities) exploited by unskilled labour towards assets based on
knowledge exploited by skilled labour
- Human and physical capital from rent-seeking, commerce and agriculture into
manufacturing
- Knowledge-based assets: a set of skills that allow producers to sell and distribute their
products at above market prices
- Perfect knowledge impossible to achieve = firm specific and proprietary to earn
technological rents
Features of non-industrialized economies
- Too few knowledge-based assets lack of competitiveness among countries despite
their comparative advantage
- Technology difficult to acquire and managerial expertise absent
- Model of comparative advantage does not hold anymore!
o latecomers = poor + lower wage vs. industrialized = higher productivity
o Industrialization by subsidizing learning rather than cutting wages
o Example: Martial law in Korea and Taiwan BUT interventionist, institutional
solutions also put forward
Key strategies of NICs
1. Getting the prices wrong
- Economic engineers’ job was to make manufacturing profitable
o Rest are price takers; goal was to circumvent prevailing market prices
o Strategy: Get the price wrong while reinforcing the principle of reciprocity
o Ex 1: Cotton textile industry protected from competition under condition of fulfilling X
targets
o Example 2: Right to sell under tariff protection in domestic markets in automobile was
tied to ’localization of parts and components of manufacture’
2. RCM
- 1950s onwards systematization of how subsidies were allocated (except in Argentina)
o Corruption was managed by letting owners of capital go bankrupt and ensuring
production capacity is intact
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller seminckursula. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.25. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
77254 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now