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Ch. 9—Development

http://show.mappingworlds.com/world/. Ch. 9—Development . KI 4: Why do LDCs face obstacles to development?. Self-Sufficiency. LDCs must either choose to emphasize international trade, or become self-sufficient

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Ch. 9—Development

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  1. http://show.mappingworlds.com/world/ Ch. 9—Development KI 4: Why do LDCs face obstacles to development?

  2. Self-Sufficiency • LDCs must either choose to emphasize international trade, or become self-sufficient • Self-sufficiency focuses on spreading investment evenly across all sectors of the economy • Focuses on sharing the benefits and reducing poverty rather than creating wealthy consumers • Allows for growth of local businesses because governments can prevent imports from opposing markets • Write the examples from India here in your notes (pg. 294)

  3. Issues with Self-Sufficiency • Protection of inefficient businesses—when there is no competition for businesses, no incentive to improve quality, decrease prices, or increase production • Need for large bureaucracy—must have a large and complex administrative system to control the rules and regulations; also encouraged illegal import/export practices that turned a large profit because goods could be sold at inflated prices

  4. International Trade • Countries must identify a unique economic asset • What Animal, vegetable, mineral resource can they sell to other countries? • Can they manufacture a product and distribute it more efficiently than other countries? • Rostow’s Development Model • W.W. Rostow proposed this approach in 1950s • 5 stage model • Each country is in at least 1 stage

  5. Rostow’s Development Model • Stage 1: The Traditional Society • Not yet started process, high % of people in agriculture • Stage 2: The preconditions for takeoff • Elite group initiates innovative economic activities, country starts to invest in new technology (water supplies, transportation systems) • Stage 3: the takeoff • Rapid growth in limited activities (textiles, food products) • Stage 4: the drive to maturity • Modern technology diffuses to wide range of industries, workers become more skilled • Stage 5: the age of mass consumption • Economy shifts from production heavy (steel, energy etc.) to consumer goods (cars, refrigerators, etc.)

  6. Examples of International Trade Approach • 4 Asian Dragons: South Korea, Singapore, Taiwan, Hong-Kong • Singapore and Hong Kong were British colonies until 1965 and 1997—have almost no natural resources, comprise large cities, and very little rural land • South Korea and Taiwan were occupied by Japan until after WWII • All 4 promoted development in similar fashion to Japan—concentrate on handful of manufactured products, low labor costs allows bigger profit on sales to MDCs • MAP

  7. Examples of International Trade Approach • Petroleum-Rich Arabian Peninsula States • Take notes here (pg. 296)

  8. Problems with International Trade • Uneven Resource Distribution • Depend on prices of the world market… if the prices of a country’s chosen commodity decrease, the country is left with few options • Increase dependence on MDCs • To improve one or two industries, LDCs may have to cut back on things like food production, forcing them to use the new funds they have generated to buy goods from MDCs • Market decline • Recent economic recession caused limited population and market growth in MDCs (lowered their buying power from LDCs)

  9. World Trade Organization (WTO) • Established in 1995 by countries from around the world • Works to reduce barriers to international trade—negotiates reduction or elimination of restrictions placed by governments, also enforces trade agreements between countries • Some critics argue that it caters to large corporations rather than the smaller businesses that actually need help • Critics also argue that WTO violates the sovereignty of countries because they can force changes in tax laws

  10. FDI • Investments made by a foreign company in the economy of another country • Has grown $130 Billion in 1990 to $1.5 Trillion in 2000 • Only 1/4th of investments went from MDCs to LDCs (most is from MDC to MDC) • China received 1/3 of all FDI destined for LDCs • Transnational Corporations are major sources of FDI

  11. Financing Development • Two major lenders to LDCs are the World Bank and International Monetary Fund (IMF) • To receive funding, LDCs must have a structural adjustment program—including economic goals, planned strategies • Fair Trade—proposed as a variation of the international trade model; create standards for Workers and Producers (trying to protect workers and small businesses)

  12. Core and Periphery (MDCs and LDCs)

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