Untitled Flashcards Set

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  • first world, second world, third world (outdated)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 → 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 - doesn’t 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 you’re 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 you’re 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 → 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 – 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 – 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

Piketty’s theory and policy proposals – 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