development

neo-liberal, Hayek

the chicago school of economics is the birthplace of \____ economics, as well as school to F.A. \___ (an austrian economist who challenged the Keynesian system)

government, big, high, protectionist

what was wrong with the keynesian model? the \___ was too \___
- once the system was functioning, the govt could back off and the system could function on its own, but government kept becoming more powerful (\___ spending & taxes, inflation, \____ system)

laissez-faire, deregulation, interest rate

what was wanted instead of keynesian economics? the government needed to shrink
- back to \___-\___ economics
- \___, reduction in government spending/taxes, reduced tariffs, raising \___ \___ (encourage investment, reduce inflation), privatization

john Williamson, discipline, tax

\___ \____: British economist that worked at a think-tank that came up with the 10 reforms, some including
- fiscal \___, \___ reforms, liberalizing interest rates, competitive exchange rate, deregulation, privatization, property rights

washington consesus, market oriented, IMF, World Bank

the \___ \___ was designed as a \___-\___ model for economic development \= all about trade and investment
- called this b/c of the role of DC based institution (\___, \___, US Treasury) that promoted it

latin america, one size fits all

the washington consesus was original developed for \___ \___ in the 80s on how it should run its economics. it was NOT a \___ \___ \___ \___ model, although many see it as a system that can be applied globally

reaganomics, government, down

neo-liberal policies domestically (\____): removing \___ from economics, encouraging private industries/competition, fiscal responsibility, lower taxes

result? brought inflation and employment \___

tariff, non tariff, capital controls

neo-liberal policies abroad: promotion of liberal theory of trade, reduced barriers to trade (through \___ and \___-\___ barriers), reducing \___ \___

Non-tariff barriers, national security

\___-\___ \____: bans or quotas serves to stipend the flow of goods coming out

why? \___ \___, lack of standard (e.g. Kinder eggs from the FDA)

neo-liberals

\____ say not all countries are rich b/c the policies that were implemented, if not working, means something is wrong with the execution, not the system

dependency, marxist

\___ theory: A \___ approach developed in Latin America that challenged the neo-liberal viewpoints (argues that the neo-liberal ideas benefit that wealthy countries, disadvantage the poor)

politically, economically, industrialize,

the role of colonialism on dependency theory:
- if you are Not strong \___, you are not strong \___
- You don't \___ overnight, some colonies provide under the same pattern that was in colonialism
- Higher powers are happy to negotiate and trade because they still need those resources (this traps smaller powers into dependency on the former colonial powers that continue to buy their resources that keep them afloat)

Neo-Colonialism, indirect, liberals

\___-\___: the control of less developed countries by developed countries through \___ means
- "the practice of using economic imperialism... to influence a developing country... That typically results in a relationship of dependence, subservience, or financial obligation towards the neocolonialist nation"
- Difficult to leave and expand on, but \___ say this can be altered and states can break free...

Open economy, investment, capital, unattractive

the liberal response to dependency theory: \___ \___ \= \___ \= \___ transfer \= further development
- Political instability, corruption can make states \___ (money will be mismanaged) -\> this is where the idea of not an issue of theory, rather the issue of the state itself

Newly Industrialized Countries, exploited

\___ \___ __: Countries that were colonies or under the hand of imperialism (\___) and yet, have found ways to open their economies in which development has occurred that has changes their development standard
- better example to developing countries than the US

Primary products, Raw materials

\___ \___: goods that are available from cultivating raw materials without a manufacturing process.
- Significant include agriculture, fishing, mining, and forestry

\___ \___: materials or substances used in primary production or manufacturing of goods \** all natural resources

competition, Terms of Trade

problem with use of primary products/raw materials for underdeveloped states to catch up:
- a lot of \___
- vunerable to shifts in global demand (thus prices)
- mercy at the \___ \___ \___: primary products do not make a lot of money; if this is all your producing, you will stagnate

Industrialization,

western emulation & its problems:

1. \___ began in the West, taking them about 100 years
- you can only emulate the West to a degree and is not going to work without skipping some steps... aka borrowing money but it needed to be repaid

2. Foreign Direct Investment
\-

competition, Terms of Trade

problem with use of primary products/raw materials for underdeveloped states to catch up:
- a lot of \___
- vunerable to shifts in global demand (thus prices)
- mercy at the \___ \___ \___: primary products do not make a lot of money; if this is all your producing, you will stagnate

\___ \___ \___: a development strategy that is applied notoriously to Latin America that is a state-led, development focused, protectionist goal was to increase self-sufficiency

structuralist, dependency, short term

ISI was:
- a \___ approach that dependency theories would promote
- trying to reserve \___ by emphasizing the development of their own industry
- Intended to be \___ \___ strategy

manufactured, primary

latin america has a history of reliance on developed powers, and they realized that more money comes in selling \___ goods than \___ goods -\> they needed to produce them themselves to develop the industry

High Trade Barriers, foreign direct investments, spending

ISI in practice (latin america):
- high \___ \___
- prohibitions of \___ \___ \___ (capital controls)
- artificially high currency (Helps the domestic consumers because they thus have greater \___ power)

corruption, agriculture

role of latin american governments in driving ISI
- the govt can steer development in the way they want (slippery slope for \___)
- Government can transfer capital to those industries... means it's also coming from agriculture
- Implement price controls (specifically on agriculture/food), feedings workers for cheap -\> good for government, bad for \___

Comparative Advantage, Agricultural

problems of ISI (latin america):
- \___ \___: latin america tried to make everything, but were unprepared -\> inefficient use of their resources
- \___ goods: Made them uncompetitive on the international market, setting food prices so low it was unsustainable and less food production
- Competitiveness: Aren't and can't even compete on the international market

The Lost Decade, exports, interest rates, rising

\___ \___ \___ (1973-1987):
- 1973 oil crisis (How to offset rising oil prices? Increase \___)
- 1980s neo-liberal reforms in the US (Raising \___ \___ to help with inflation domestically, but Latin America took out loans that became really expensive)
- Inflation & Unemployment \___

infant, noncompetitive

ISI was intended to protect \___ industries so they can mature, and then compete on the global market/ Latin America kept them protected, but that rendered them \____. When trouble came, Latin America could not offset rising import prices with an increase

Asia, trade, protectionism

\___ was successful with ISI because they industrialized, diversified, and traded

- State-guided, protectionist, used ISI BUT... market-oriented, pursued comparative advantage, and development driven
- The end goal to \___ and be competitive in international markets
- Not truly a free market due to the degree of \____

low, tariffs, vertically, Asian Tigers

ISI in practice (asia):
- Artificially \___ currency
- High trade barriers (Utilized \___ to protect themselves from importing because they wanted to make money selling, not make money buying)
- re-investment plan (Applied profits to a new industry, Developed \___ and continued reinvesting money into new, more advanced industries)
- Government guided (\___ \___, Japan, China)

WTO, interdependence, Crony Capitalism

problems of ISI (asia):
- Over reliance on a few developed powers (aka the US, we can only buy sm)
- \___ policies (Found themselves in trouble because of their protectionist policies in place)
- Vulnerability (\___; Dependent on the availability of the markets and other countries)
- \___ \___ (authoritarianism, saw favoritism and corruption which can result in mismanagement of funds, reduced competition -\> inefficiency)

Thailand, interdependency, IMF, World Bank

Asian Financial Crisis (1997-1998)
- "Asian Contagion": The problem started in \___ - risky real estate investments and lending investments
- in 1996, the bottom fell out and they couldn't sustain their peg to the US dollar -\> pulling currency off
- in 1997, complete loss of control, currency value was too high, stock market collapsed
- Multiple countries were hurt by this due to their \___
- \___ and \__ \___ begin to try and stabilize the economy (one-size-fits-all model imposed)

Spain, Portugal, Britain, Japan

Dependency theory points to the legacy of exploitation in colonization... but both Latin America and Asia were colonized, so what made the difference?

Differences in who colonized the countries (\___ and \___ colonized Latin America) but \___ and \___ colonized the Asian countries and left a robust infrastructure behind)

Industrialization, foreign direct investment, poverty, race to the bottom, specialization

western emulation & its problems:

1. \___ began in the West, taking them about 100 years
- you can only emulate the West to a degree w/o skipping steps; borrowing money can help get you started but you have to repay it back at some point

2. \___ \___ \___
- gives access to capital
- has to be done correctly, or the foreign company will own the process and thus get the profit and will no longer be domestic -\> vulnerability
- what sells this? \___

3. \___ \___ \__ \___
- if you are selling poverty, you can't lose it or you become unattractive

4. \____ (comparative advantage)
- help build economies

competiton, terms of trade

problem with use of primary products/raw materials for underdeveloped states to catch up:
- a lot of \___
- vulnerable to shifts in global demand (thus prices)
- mercy at the \___ \___ \___: primary products do not make a lot of money; if this is all your producing, you will stagnate