CHAPTER 13 International Development INTERNATIONAL RELATIONS Seventh Edition

CHAPTER 13 International Development INTERNATIONAL RELATIONS Seventh Edition Joshua S. Goldstein Pearson Education, Inc. © 2006

What is Economic Development? n n n Capital accumulation Rising per capita incomes Increasing skills in a population New technological styles Related social and economic changes Pearson Education, Inc. © 2006

Newly Industrialized Countries (NICs) n n n Despite the poverty in the “South, ” there are some success stories NICs export light manufactured goods Most successful: Four Tigers Thailand Malaysia Israel Pearson Education, Inc. © 2006

Per Capita GDP of South Korea, China, and Ghana Pearson Education, Inc. © 2006

China n n n After Mao, Deng Xiaoping encouraged “free economic zones” MNCs shift production to China every year because China’s labor force is vast, low-paid, and disciplined For more than a decade, China has experienced growth rates of nearly 10 % each year Pearson Education, Inc. © 2006

Lessons n n n Export-led growth: NICs used this, but it does not work for everyone Import substitution: Raising tariffs to protect new industries may work in short term, but countries find it hard to change policy over long term Concentrating capital for manufacturing Pearson Education, Inc. © 2006

North-South Business Relations n n n n Foreign investment Joint ventures Favorable regulatory environments Labor supply considerations Technology transfer Brain drain The green revolution Pearson Education, Inc. © 2006

North-South Debt n n n Borrowing is an alternative to foreign investment Debt service Default Debt renegotiation Lenders try to extract as much as they can Pearson Education, Inc. © 2006

Debt in the Global South, 2004 Pearson Education, Inc. © 2006

Foreign Assistance n n n Most assistance comes from “north” 90% of government assistance comes from the Development Assistance Committee (DAC) Required: 0. 7% of GNP to be given in foreign aid Only Norway, Sweden, Denmark, the Netherlands, and Luxembourg meet the target The United States gives the lowest percentage of GNP of rich countries, but gives most in total economic aid given Multilateral and bilateral aid Pearson Education, Inc. © 2006

Who’s Helping? Pearson Education, Inc. © 2006

Three Different Models n n n The Disaster Relief model The Missionary model The Oxfam model Pearson Education, Inc. © 2006