ins3003 exam 2

cooperate, vulnerability

pros of economic globalization:
- The more interconnected we are the more likely we are to \___
- Any state can participate, and thus can benefit

cons of economic globalization:
- Critics of globalization see it as a \___
- not everybody gains even if they participate

poverty, wealth, technology

the north-south gap: the idea that the global north and global south are separated by economic \___, first appeared in the 1960s
- there is a huge discrepancy in \___ and \____ (north being the majority)

Extreme Poverty, South Asia

\___ \___: anyone who lives below the international poverty line and survives on less than $1.90/day; deprived of basic human needs and often do not have access to service aids
- Who is most impacted? Women, children, elderly, disabilities, indigenous populations, refugees, and IDPS
- 85% of the world's impoverished live in Sub-Saharan Africa & \___ \___

private consumption, exports, accumulated wealth

GDP \= (\___ \___ + gross investment + government spending + \___) - imports

GDP per capital: gdp/\# of people

these are not always accurate measures to economic health, as it omits \___ \___ (very present in the North)

GINI Coefficient, Human Development Index

\___ \___: measures income inequality (lower the % the better, where we see income inequality we also see poverty)

\___ \___ \___: designed on the people and their quality of life; looks at Gross National Income per Capita, Gross Enrollment Ratio (portion of children that attend school), adult literacy rates, life expectancy (higher the % the better)

discrepancies between GDP and HDI get states into trouble

Humanitarian, Development, Millennium Challenge Corporation

\___ aid is short term, meeting the need for specific crises (natural disasters). \__ aid is long term
does foreign aid work?

YES:
- Humanitarian aid helps when people desperately need dire help
- "good will"
- Development helps with education, healthcare, infrastructure, investments in public health; can get a country going

NO:
- intended people may not even get the resources
- \___ \___ \___: goal was to make sure the countries that were given money to have anti-corruption system in place
- can suppress local economy, or sometimes just not enough

partnership

in order to allow a country to be successfully economically, don't just give the country the food, give them the seeds. give them what they need to succeed (e.g. access to markets)

instead of donor-recipient approach, it is a \___

manufacturing

having resources can be great as it can boost an underdeveloped economy (bringing in revenue/other capital -\> allows countries to pursue economic growth in other areas (specifically \___)

market, reliant, industrial

having resources can also be a curse...
- Resource based countries are tied to the \___ and their fluctuations -\> not a lot of stability
- Mercy of other countries demands -\> a decline in demand can be killer, stiff markets drown out a market
- Become too dependent on advanced economies as a consumer
- Might become complacent or overly \___ on their resources and then don't go into \___ development (thus, no path for development)

cash crops, Haiti, exports, low

\___ \___: A crop produced for its commercial value rather than for use by the grower.
- Countries using cash crops are vulnerable b/c of climate, natural disasters (e.g. \___ and bananas)
- When times of crisis hit (famine one year, even if there is an economic boost the next), cash crops are only used for \___, thus the people aren't being fed -\> \___ quality of living

OPEC, down, up

oil should be a countries ticket to economic prosperity, but faces many problems that prevent this.
- nothing to fall back on
- Competition with the developed powers/advanced economies and __
- Standard of living, quality of life goes \___; levels of malnourishment tend to go __.

resource cursed, managed

oil is \___ \___ (abundance of natural resources that creates political and/or economic disruption). are resources the problem? no, it's how the resources are \___

poorer, poor governance, neoliberal economist

\___ states the \___ or weaker the country is when it discovers oil, the more likely oil will be a curse.
- Will likely: increase the risk of conflict, create greater inequality, inhibit democracy, contribute to corruption
- Who's to blame? \___ \___. The money, the resource are there but the people are not becoming better off
- Much like \___ \___: colonial legacy is not holding countries back, but the people aren't doing well

government, citizens, foreign

shaxon also states that the resource course affect
- individuals: the \___, individuals within the government, industrialists, key figures
- Systematic: includes the \___ (realize if you abide by laws, you will not benefit)
- Global: \___ individuals, companies, governments (Done through tax havens, offering special deals and privileges, kickbacks, looking the other way, ect.)

zero sum, conflict

resources are \___-\___, and the resource curse tends to increase the risk of \___

finance the war, sanctions

Blood Diamonds in Angola

Angola has a civil war from 1975-2002 -\> became a proxy war for the US and SU during the Cold War. Lots of money from the blood diamonds that wasn't being used to help people, build infrastructure/stable institutions, health care, education... what was it being used for? To \___ \___ \___. The UN then placed \___ on Angolan diamonds

Nigeria, Iraq, zero-sum

Oil in \___ and \___ were both \___-\___ conflicts that revolves around the distribution of oil revenues and resources, mostly the pipelines

Dutch Disease, manufacturing, , petrol currency, domestic

"\___ \___": The direct relationships between the exploitation of one's resources and a corresponding decline in \___
- These countries are already industrialized that shift focus to a resources and thus has a detrimental impact on their industrial sector
- Very few resources have this appeal except for oil (\___ \___: when oil drives up the value)
- Hurts \___ businesses, suffocates sectors that offer greater employment, draws local investment dollars and workers away from manufacturing towards a specific resource

Commodity, tax revenues

\___ Price Fluctuation: Prevent stable economic growth and \___ \___ (when they are high, states face pressure to use those resources to fund development and consumption that are neglected when revenues fall)

borrowing

Debt Accumulation
- Need to borrow money, can leverage their resources for credit during periods of high demand (gives them \___ power)
- If states find themselves in decline, they're going to also be in huge debt and have less credit;

Corruption, acquisition

\___
- The state decides who/what is worthy of the money being accumulated; a competition over limited state resources and for \___

legitimacy, transparency

Taxation (or lack thereof)
- Resource-rich countries don't necessarily have to tax their populations because of the substantial revenues they derive from their resources
- No taxes... isn't that a good thing? Taxes help generate the modern bureaucracy, establish \___ and centralize power (connection that establishes a right to rule). Also forces greater accountability and \___

Norway, industrialize, corruption, dependency

Resources can be great when managed properly (e.g. \___)
- Can and used to bringing in revenue -\> \___ -\> diversify industry -\> development and success

When countries become dependent on resources, or a single source -\> \___ and mismanagement -\> increased \___ and crises that require foreign aid/intervention -\> sending them backwards

corruption, authoritarian

The management of the system are curses when combined with \___ and all powerful (\___) governments

globalization

\___: The increasing scale, extent, variety, speed, and magnitude of international cross-border social, economic, military, political, and cultural interactions (the US played a critical role in this process)

friedman

thomas \___: "the world is flat"; theorized globalization has 3 eras

Colonialism, power, large, medium

globalization 1.0:
- Age of Mercantilism and \___ (1492-1800)
- They were after wealth, and with wealth comes \___ and usually this is done by their exports instead of imports
- "shrank the world from \___ to \___"

Pax Britannica, BEIC, medium, small

globalization 2.0:
- \___ \___ (1800-WWII)
- Global markets, multinational trading, MNCs \= more complicated (E.g. the \___, the world largest MNC, had complete complete monopoly on trade in India, had it's own military, Britain's largest employer
- "shrank the world from \___ to \___"

Pax Americana, small, tiny

Globalization 3.0:
- \___ \___ (WWII - now)
- Age of the Internet
- "shrank the world from \___ to \___"

Comparative Advantage, riccardo, cheapest

\___ \__ (David \___): ability to produce goods at the lowest cost. promotes efficiency, specialization and free trade.

benefits? If countries all specialize in what we can produce at the most cost effective and efficiency rate, then this should increase global output and should be available at the \___ rate possibly

GDP, trade

dependency:
- the higher the share of \___, the greater the dependency
- the colonies still provided the resources through \___ dependency with the greater powers/foreign states
- something that can help countries get going OR can manipulate weaker economic actors
- every country has a degree of trade dependency (not one country has everything it needs)

dependency, market volatility

risk of trade (1): vulnerability
- import/export \___ and \___ \___
- consider the negative impact of major economic slumps (2008, COVID-19) on countries that are heavily dependent in imports for basic goods or exports to drive their economies

comparative advantage

risk of trade (2): \___ \___
- people who go all for specialization, after shifts in industrialization or shifts in transition's to only make what they specialize in, those who lost their jobs or do not know the specialized subject suffer

trade deficit

risk of trade (3): \___ \___
- import more than you export
- the US is top dawg

currency, money markets

In International Trade we have agreed that something that value in which \___ can be equated to that commodity
- silver and gold standards
- \___ \___ (forex)
- trade agreements (EU - Euro)

appreciating, depreciating, appreciating

currency fluctuates w/ supply and demand
- Rising/strong currency (\___)
- decline/weak currency (\___)

this can an impact on the export market, as it will not be as competitive if your dollar is \___

Reserve Currencies

\___ \___: Holding foreign currencies in the world to try and stabilize their economies

Britiain, gold, gold standard

classical gold standard

early 1800s: tax britannica
- \___ had economic hegemony that expanded trade globally
- this raised the question on how to overcome the currency issue, leading to utilizing \___

late 1800s: multiple countries across the world were locked into the \___ \___
- operated by the Bank of England
- facilitated global trade and expansion of the global economy

WWI, great depression, gold

\___ impacted trade, but global trade was renewed after

\___ \___ brought an end to the gold standard... why?
- rigidity flaw of the system
- locked within a fixed rate that wouldn't change
- reserve kept getting lower and lower, people realized the system was about to collapse and be worthless
- paper would lose value, leading people to exchange paper money for \___

US Gold Reserve Act, unconstituional

\___ \___ \___ \___ (1934):
- under FDR as an attempt to stabilize the economy by nationalizing gold (this was \___)
- made it illegal to have/export gold

international, cheaper, commodity

the US Gold Reserve Act devalued the $ of gold by 69% to fix the peg that would help the US to sell goods in the \___ market

- lower value currency made our goods \___ and gave up a competitive edge
- money is backed by gold, which went from a currency to a \___

RESULT: US held the majority of the world's supply of gold

beggar thy neighbor, tariffs, sell, buy

another aftermath of the great depression was \___ \___ \___ protection:
- high \___ + currency devaluation \= trade ground to a halt
- other countries were begging their neighbors for gold (not to sell other goods, meant to isolate other economies from influence which kept foreign goods from being imported
- trade stops as everyone is trying to \___, no one is trying to \___

WWII, democracy, capitalism, economic, political

during \___ the US emerges as the worlds new dominant power... WHY?
- seeking the promote \___ and \___ over Communism, and recognized the clear connection between economic and political instability (\___ led to \___)

dollar, gold, international

the US had to estimate to reinvigorate global trade, bringing the dollar-gold standard: the \___ would be the new currency, backed by \___

- USD would be the \___ currency for trade (everyone else pegs to the USD)

bretton woods, white, keynes

UN Monetary & Finaacial Conference - \___ \___ (1994)

- harry dexter \___: apart of the US Treasury, major advocate for the US
- john maynard \___: apart of the Brit treasury

dollar/gold standard, neutral, USD

1st agreement of bretton woods: \___/\___ \___:
- officially adopted
- Brits preferred \___ currency that wasn't attached to any country (the US said if they were going to fund it, it needed to be on the \___ standard)
- for trade, finance, and reserve currency

International Monetary Fund, quota, great depression, emergency

2nd agreement of bretton woods: \___ \___ \___:
- loans conditions: take stocks of that country's economy and evaluate the economy to give a structural economy plan
- Based on \___ system: countries that pay in the most had the largest say
- created based on the failures of the \___ \___
- serves as an \___ bank for the world, can grant cash infusion
- goal was to stop economic crisis from falling and resulting in a solutionless economic problems

International Bank for Reconstruction and Development, world bank

3rd agreement of bretton woods: \___ \___ \__ \____ \___ \____:
- initially focused on reconstruction post-European wars
- focus today: world development, called the \___ \___

General Agreement on Tariffs and Trade

4th agreement of bretton woods: \___ \___ \__ \___ \__ \___

- \___ \___ \___ \___: whatever you agree to with most favorite nation applies to all members

World Trade Organization, free trade, protectionism

\___ \___ \___:
- made trade much easier, applies to industrial goods
- premise was to get flow of goods/capital going again as trade and investment are sources for growth for global economy
- premise of \___ \___ was aimed at chipping away at \___ (beggar-thy-neighbor)

shortage, appreciation

shortly after the beginning of bretton woods, problems started to arise:
- the USD standard wasn't working due to \___ and low levels of investment lead to USD flowing in and the \___ of the USD

convertibility crisis of 1947, devaluation, deflation, austerity, protectionism

\___ \___ \__ \___: bretton woods system wasn't working and whole system starts to fall apart

options:
- \____: lead to no money coming in
- \____: reduce price levels, help domestic consumers; counterproductive b/c you have to slow the economy down to depression levels
- restricting the economy: \___, which cannot fix problems
- \____: would hurt europe

US economy, World Bank

the bretton woods system is dependent on the \___ \___
e.g. \___ \___ issued Reconstruction Loans in May 1947; first they went out the France, made an assessment of countries who would pay loans before giving them out

Marshall plan, USD, communism

In 1948, the US issues the \___ \___ that had political and economic focuses to figure out how much aid Europe needed and determined how much to grant them... would be passed by Congress in 1948

economic focus: Europe's economy was a mess, World Bank couldn't provide enough, needed more \___ for the dollar standard to work

Political focus: get \___ out of Europe

communism, trade

results of the Marshall Plan

Political success: stops \___ in its tracks, victory for capitalism and democracy
Economic success: gives countries money to rebuild, get industries up and running again, start \___ again... stabilize, rebuild, and grow the economy

Golden Age, Singapore, Hong Kong, Taiwan, South Korea, Trade

Economic "\___ \___," especially for Europe from 1950-1973
- Unemployment low in Europe, higher in the US compared to other European countries; GDP per capital increases substantially
- Economies grew to be competitor of the US economy along with 4 Asian Tigers: \___, \___, \___, \___
- \___ is the driver to increase the global economy

1971, US

The Death of the Dollar/Gold Standard (\___)
- Bretton Woods is working for everyone else but the \___... WHY?
- Drained the economy, end of monetary system

American Deficit Spending, Trade imbalances, declined

US Deficit Spending and Dollar Problems
- \___ \__ \___ by design from the beginning needed to spend a lot of money to get global circulation; US buying a lot of everyone's goods; USD flowing out into economies, US investing across globally (eventually the economy was hurt)
- \___ \___, where the dollar standard artificially inflated the dollar; US peg (locked in) to gold, everyone else pegs to USD, everyone is now more competitive than we are
- US gold holdings \___ relative to the USD

Charles de Gaulle, US

France and the run on America gold reserves under \___ \___ \___ adm.; France didn't agree with America Cold War policy so they rejected it
- Pulled out of EU and NATO in 1969, they didn't want to be linked to the US and wanted to break Europe free from the US; would start calling for international currency separate from the \___
- Began cashing in dollars for gold

gold supply, devalue, germany, japan, domestic spending

how could the US fix economic problems with France (aka de Gaulle)?

- stop the run of \___ \___: implement domestic policies that targeted private investors; Americans investing outside the US (didn't work)
- \___ the dollar: adjusting peg to $38/oz of gold, costs $3 more/oz of gold -\> dollar worth less and shock across the system
- renegotiate trade/exchange rate terms: look to \___ and \___ in particular to raise value of currency to make goods more expensive for competition (didn't work)
- Curb \___ \___: late 1960's, spending money on Vietnam war

1971, Nixon Shock, market, government

August 15, \___, the "\___ \___": Nixon announced that the US would be going off dollar gold standard, was a permanent measure beginning the end of the Bretton Woods monetary system
- USD no longer pegged to gold, start floating -\> value of currency is set by \___ or determined by the \___

1973

Devalued USD in 1971 and 1973 - Bretton Woods Monetary System was over
- Many components still exist, like the WTO; \___ is the final death
- Most of everyone's currency begins to float and the value of currency impacted by the market makes for changes in trade volume

OPEC, 1973, Oil

\___ Oil Crisis of \___: originated with the devalued and floating dollar
- Why was it impacted? \___ is pegged with USD
- Founding members were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela

Yom Kippur, 1973, Israel, raising

\___ \___ War of \___: Israel took Sinai Peninsula of 1969, Egypt and Syria came together to take over Sinai Peninsula
- US sided with our ally, \___, and the OPEC countries responded by \____ the price of oil to hurt Western powers -. followed by oil embargo
- exposed the fact that the Golden Age was over

stagflation, keynesian, thatcher, reagan

End of the Long Bottom

- \____: stagnant economy (slow growth & high unemployment) + inflation; brings a new way to thinking about economic models
- end of \____ economics: economic decline -\> challenged with neo-liberal approach (both adopted by \___ and \___)

fiat currency

the dollar following the end of bretton woods is now known as a \___ \___, meaning it has no intrinsic value; rather we assign value

the US is chief reserve currency and currency for international trade, commerce, and finance

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