2018/6/12 International Political Economy 1 International Development and Aid Min Shu Waseda University
2018/6/12 International Political Economy 1
International Development
and Aid
Min Shu
Waseda University
Group Presentation in Thematic Classes
Contents of the group presentation on June 26
Related chapter in Global Political Economy
Pre-assigned current issue(s)
Book chapter for Group 11
Ch12: ‘Global Growth, Inequality, and Poverty’
Current issue for Group 12
‘The Schengen Crisis and the Refugee Inflow to Europe’
2018/5/15 International Political Economy 2
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Outline of the lecture
What is (economic) development?
Industrialization: import-substitution or export-
promotion
Neo-liberalism and the Washington Consensus
1960-70s: North-South conflict and the NIEO
1980s: the debt crisis
1990s-: human development and poverty reduction
International development: ODA, World Bank and
private investment
Group presentations
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What is (economic) development?
What is development?
Economic growth
A multi-dimensional view on development
Economic development: multiple aspects
Improving people’s living standards
Industrialization, capital accumulation, technological evolution,
environment protection, etc.
Modernization of the society
Measuring economic development
Developed and developing countries
GDP per capita, economic growth rate
Income gap within individual countries
The Gini coefficient
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Nominal GDP per capita in 2016 (IMF)
http://www.imf.org/external/datamapper/NGDPDPC@WEO/OEMDC/ADVEC/WEOWORLD
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Gini coefficient in 2008~2013 (WB)
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What is (economic) development?
Development economics
Stages of economic development (Rostow)
Traditional society mass consumption society
Traditional society, Pre-conditions for take-off, Take-off, The
drive to maturity, Age of high mass-consumption
Structure of economic development (Lewis)
Agricultural economy industrial economy
Surplus labor and urban-industrailization
Neo-classical views on economic development
Vital roles of the market
Path to industrialization
Import-substituting industrialization
Export-oriented industrialization
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What is (economic) development?
State-led development
State intervention in the forms of industrial policy and/or trade
policy to achieve economic development
The developmental state in East Asia
Neo-liberalist views on development
Economic development based on market mechanism
Privatization and deregulation
Implications of economic development
Political institutions and democratization
Changes of social structure
Environmental impacts
…
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Industrialization:
import-substitution or export-promotion
Industrialization and economic development Moving beyond the agricultural economy
Mobility of labor: from agriculture to manufacture
Import-substituting industrialization Erecting trade barriers to protect local industries
Industrialization based on domestic industrial development
Export-oriented industrialization Using FDIs to promote exporting industries
Industrialization based on comparative advantage
Experiences of East Asia and Latin America
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State-led development and
the East Asian miracle
Newly industrialized economies (NIEs) in East Asia
1970s: South Korea, Taiwan, Hong Kong, and Singapore
1980s-: Thailand, Malaysia, the Philippines and Indonesia
2000s: China, Vietnam and India
State-led industrial policy
Guiding (private) investment to specific industries/sectors
Credit allocation, tax break, and trade protection
Promoting industrial upgrade
Textile steel automobile & semiconductor IT & high tech
The coordination between the state and business
Alliance capitalism (crony capitalism); state capitalism
Business sector receives support of the government
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State-led development and
the East Asian miracle
State-led development and the Asian values
Loyalty to authorities
Personal connections and networks
Bureaucrat-centered society
Economic foundations of rapid growth in East Asia
Emphasis on education
High saving rate
Inflow of FDIs
Human capitals
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Neo-liberalism and
Washington Consensus
What is neo-liberalism?
Economic policies based on neo-classic economic thoughts
Different from neo-liberalism in IR theories
Emphasising the roles of the market
Opposing state intervention
The rise of neo-liberalism
Keynesian economics under attack in the 1970s and 80s
The poverty trap; middle income trap
government failure or market failure?
IMF and World Bank policies
Post-Cold War US influences on global economic policy-
making
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Neo-liberalism and
Washington Consensus
The Washington Consensus Fiscal discipline
Removing subsidies
Tax reform
Market-based interest rate
Competitive exchange rate
Trade liberalization
FDI liberalization
SOE privatization
Deregulation
Property rights
Yet, the downside of market mechanism has been exposed by the global financial crisis in 2008
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1960-70s: North-South conflict and the NIEO
The focus of economic development 1960s: GNP growth
1970s: Basic Human Needs (GHN)
The North-South problem 1964 UN Conference of Trade and Development (UNCTD)
1973 Oil embargo against the US
1974 Declaration for the Establishment of a New International
Economic Order adopted by the UN General Assembly
1981 the North-South Summit failed
Developing countries resisting the IEO dominated by developed countries
However, facing domestic instability and global weakness
Failed to form a united front
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1980s: the Debt Crisis
Reasons behind the Debt Crisis
Trade deficit resulting from the increasing oil price
Oil dollars offered cheap credit through international capital
market
Deficit countries borrowed large amount of oil dollars
Mounting international debts in some developing countries
Unfolding of the Debt Crisis
1982 Mexico declared it unable to repay its debt
Debt crisis quickly spread to other Latin American countries
Impacts of the Debt Crisis
IMF and World Bank demands
Emergency policies: currency depreciation, fiscal austerity, etc.
Long-term policies: deregulation, privatization, etc.
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1990s onwards:
human development and poverty reduction
Human development
Since 1990 UN Development Programme have published
Human Development Report annually
Human Development Index (HDI)
Gender-related Development Index (GDI)
Gender Empowerment Measurement (GEM)
Human Poverty Index (HPI)
Poverty reduction
UN: the Millennium Development Goals
(1) poverty and hunger; (2) universal education; (3) gender equality;
(4) child mortality; (5) maternal health; (6) combat HIV/AIDS; (7)
environmental sustainability; (8) global partnership
IMF and WB: Poverty Reduction Strategy Papers (PRSP)
Poverty reduction: past and future
Rapid reduction of poverty
in the past two decades
However, an uneven future…
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International development:
ODA, World Bank and private investment
Official Development Assistance (ODA)
ODA was initially used to support non-communist regimes
Different countries’ ODA
Japan: mercantilist; US: strategic; EU: humanitarian
World Bank
World Bank Group: IBRD, IDA, IFC, MIGA
Policy frontier of international development
Private investment
Investment of private corporation
International NGOs
Philanthropy organizations
Group Presentation
International development
From WB to NDB and AIIB
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