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Economic Development

Economic Development. Funding and Barriers. NICs. Look up general background info and economic info on CIA World Factbook. NIC Development Funding. Foreign Aid – money from MDCs to build LDC infrastructure Not a loan – don’t have to pay it back

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Economic Development

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  1. Economic Development Funding and Barriers

  2. NICs

  3. Look up general background info and economic info on CIA World Factbook

  4. NIC Development Funding • Foreign Aid– money from MDCs to build LDC infrastructure • Not a loan – don’t have to pay it back • Foreign Direct Investment – money from private investors or investment firms in other countries • Looking to make a profit • Development Loans– international development loans from organizations like the World Bank • Given to NICs to fund major projects that can charge fees (like utilities) • Loans paid back through fees • Criticism – LDCs cannot pay back loans, projects didn’t develop as they intended

  5. Global Finance Organizations • IMF = International Monetary Fund • 188 member countries • Created after WWII to rebuild countries • Help with international trade • Overseeing exchange rates • Loans to developing countries • CONS • Loans come with specific requirements for the type of development and financial policies

  6. Global Finance Organizations • World Bank • International bank that lends money to developing countries • Similar to IMF, started after WWII to help countries rebuild • CONS • Development happens too quickly without regard for specific circumstances of the developing countries • Western perspective of “development” • Represents 186 countries but is run by a small group of powerful countries • U.S., Japan, China, Germany, France, UK

  7. Global Finance Organizations • WTO = World Trade Organization • Established in 1995 to help negotiate and regulate trade between countries • Fewer barriers to trade between member organizations (globalization!) • 153 member countries • CONS • Accused of widening the gap between rich and poor countries • High trade protections of agricultural products in rich countries while poor countries are encourage to open their doors • Ignores environmental and labor concerns of developing countries

  8. Push for Change • LDCs can’t pay back loans without taking much needed money from education, health programs, and other social services • Movement to cancel or forgive loans to LDCs http://www.one.org/us/ http://www.one.org/us/shareworthy/bono-at-ted/

  9. NIC Case Study:India’s Jump to Services • Focus on manufacturing until 1990s • Globalization: India had comparative advantages over other NICs • Due to British schools during colonial period • High number of educated workers • Speak English

  10. NIC Case Study:China’s Demand for Energy • Industrial development • New wealth of Chinese people = huge demand for energy • Coal has been primary domestic source • Oil also in demand – China invests in oil exploration in politically sensitive LDCs like Sudan • Increased pollution in China

  11. Asian Tigers • Industrial economies of Asia that are rapidly growing

  12. Asian Tigers: Two Types

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