Definition and measures of economic development
definitions
emerging/developing
high income v middle income v low income
first world, second world, third world (outdated)
human development
recognizing value of health, education, standard of living, etc
economic development:
sustained increase in the standard of living of a country population
results from changes and improvements in wealth, education, infrastructure, and technology
Market failures (types, examples, how governments intervene to prevent/fix them)
market failure
economy fails to produce or distrust necessary goods or services
increasing returns to scale
average cost per unit decreases as a firm produces more goods
often lead to monopolies
larger companies often have advantage over smaller ones
EXAMPLE
For example, it costs your local electric company a tremendous amount of money to build a power plant and to set up the utility system that produces and distributes electricity. However, it costs the electric company next to nothing, relative to its initial cost, to hook your apartment or house up once the system has been built. The economic implication of increasing returns to scale is that larger, established companies often possess advantages over smaller, newer companies. Once the electric company has set up its distribution network, an entrepreneur would be hard-pressed to set up a competing power plant and distribution network, given the high start-up costs and likely market penetration of the existing electric company. The established company could even drive the new company out of business by temporarily discounting its prices at an unprofitable rate.
Monopolies
larger companies often have advantage over smaller ones
must be broken up by the government
ie multiple lawsuits against Microsoft for its potentially monopolistic behavior regarding Microsoft edge
externality
something an individual or organization does that affects the welfare of others
when negative externalities outweigh the positives
ie pollution in the Gulf of Mexico, but oil drilling creates more jobs
government regulates
Relationship between democracy and development
democracy â citizens can demand resources from the state
accountability, leading to economic development - leaders want to be reelected
protect individual property rights
weak states tend to be more ineffective - fail to extract taxes
nondemocratic regimes
more insulated from political parties
not public minded - not worried about providing goods
not up for reelection - doesnât have to give anyone anything
more efficient in times of crisis
Degrees/types of state intervention in the economy, their goals, their impact on development
Interventionist state
central government allocates resources, makes investment decisions, and owns many profitable industries and resources
China
nondemocratic
command economy
highly interventionist state in which the government controls all economic activity
ie China
economic liberalism
approach that favors minimal state involvement in the economy as the best recipe for growth
favoring individual freedom of choice
minimal government regulation, lower taxes/tariffs, more freedom
ie USA
social democracy
political ideology with roots in late 1800s
balances capitalist markets and private property with a greater degree of state intervention in the economy
alleviate economic inequalities free market economies create
example: germany
state-led development
government coordinates private sector investments
encourages individuals to save instead of spend
gives preferential treatment to industries regarded as essential for national economic benefit
ie Japan, South Korea
Colonialism and development (predicted relationship, strength of argument, examples)
how much intervention is best for economic development
colonial legacies and development
extractive v settlement colonies
extraction creates dependence between north and south
settlement has
Trinidad and tabago v Gabon
trinidad
unity of middle class - able to make more coherent demands
less repression - more able to mobilize and demand improvements and increased opportunities
gabon
less unity - government played groups off each other
divided by sector and ethnicity
fell into resource curse
The resource curse
the phenomenon where countries rich in natural resources experience lower economic growth, political instability, and poorer development outcomes than countries with fewer resources
governments maintain centralized control - addicted to revenue, dependent upon it
diverse economy cannot develop
ie India, Gabon
Measures and types of inequality
Gini -
difficult to interpret and determine how cases differ
good for high and low, bad for variation in the middle
good for high levels of inequality
palmer ratio
better and looking at the middle class
top 10%, bottom 40%, middle 50%
better at more extreme levels of inequality
countries that are at a higher level with Gini struggle with palmer - more detailed
Relative vs. absolute mobility
relative
how much youâre able to move compared to others within your generation/peer group
many Americans at the top and bottom of mobility, but not so much in the middle
American dream is struggling
stickiness at the ends - rich stay rich, poor stay poor
absolute
how much youâre able to move compared to yourself
up/downward change over time
middle class tends to have higher incomes than their parents at the same age
shows american dream is succeeding
Welfare state definition and programs
government spending on programs such as pensions, disability, health care, family support, job training, unemployment, public education, and housing subsidies
types of programs:
healthcare
most USA have private health insurance
only poorest people lacked health insurance
Germany and Sweden provide healthcare
child + family + poverty
Germany and Sweden provide free daycare
unconditional poverty relief
USA does not do this
labor laws
Sweden, Germany - more economic insurance for working class, higher minimum wage, high standards for labor and job protections, more government funding for disability
USA believes in economic liberalism - low distributive taxation
Reasons for the existence of the welfare state
helps politicians to keep their jobs
promotes health of economy + citizens
people are always in need, someone is always going to need help
Progressive taxation
income increase â taxation increases
used to fund public sector and welfare state
Why welfare state spending varies among countries
relative strength of organized labor v corporations
unions tactics and effects
strikes
negotiations
collective actions
political pressure
salience of other political identities
gender, religion
not just economically left or right
coalitions of different parties pushing for different things
institutions (electoral systems, federalism)
proportional representation often leaders to larger welfare states
more political parties represented in government
federalism
slows down spending
state strength
ability to extract taxes efficiently
ability to spend on the things that it wants
stronger states can maintain larger welfare states
globalization
capital mobility
can a business pack up and move where profits are higher and costs are lower
incentives states to tax less to remain competitive
Labor unions â actions, effects
relative strength of organized labor v corporations
unions tactics and effects
strikes
negotiations
collective actions
political pressure
more labor unions = more welfare
Intersectionality â definition, significance, examples
cross cutting v reinforcing cleavages (horizontal inequality)
reinforcing cleavages
looking for systematic patterns of inequality
cross cutting cleavages
discrimination is not compounded by economic class
ie people of color are not also likely to be poor
policy proposal
recommendations for lessening horizontal inequalities in the US
benefits of your policy ?
costs and limitations
minority women in UK and france experiencing heightened discrimination
Pikettyâs theory and policy proposals â strengths and weaknesses of argument
wealth v income
income = flow of resources into your accounts
wealth = stock of everything you own
thesis: focusing too much on income and too little on wealth
rate of return
argument: redistribute wealth, not income
tax wealth instead of income
need to have collective world effort
rich people can move their assets around
issues:
feasibility, capability
political will - world leaders would probably lose money
Purpose of a literature review
combine all information on your research topic before beginning research
cohesive summary on what is already there
identify gaps
Illiberal democracy
aspects of democracy and autocracy
elections may exist, but may not be free or fair
victor orban - Hungary
What is comparative politics?
systematic search for answers
compare different countries, same country over time, different regions within a country
different from IR bc its looking at domestic situations of individual countries, not their interactions with each other