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Compare and contrast the development policy of import substitution the policies associated with the neoliberal counterrevolution." . . .[During the 1970s] one popular development policy during the 1970s was import substitution. Countries were encouraged to produce internally what they previously had relied on from the mother country, especially basic, low-tech consumer goods. Often, high import tariffs were imposed on foreign goods to protect infant home-grown industries, a policy called “protectionism.” (p. 189)"The next stage in development thinking was the neoliberal counterrevolution, which dovetailed with the free-market approaches of the 1980s and the end of the Cold War. These policies were championed by the Ronald Reagan and Margaret Thatcher administrations in the United States and the United Kingdom, who advocated that dependency-era approaches of protectionism and state-owned industries perpetuated dependency rather than cured it. Protected state-owned industries were not forced by the market to be competitive in price and quality. . . . Instead of protectionism to keep out foreign competition, the neoliberal approach advocates that countries devalue their own currencies to make their exports more attractive.. . . Neoliberal reforms are not only economic phenomena, but social ones as well: social welfare programs from health care to education have been opened up to market competition by cost-cutting governments. " (p. 189)
Import subsitution, by protecting industries from the rigors of competition, often resulted in inefficiency and slow economic growth. Neoliberal changes often promoted growth, but resulted in a more unequal distribution of income.
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The figure below shows the "daily productive hours" for men and women in several African countries.
What are your comments and impressions?
A good answer to this question might compare the data above with what you know of the workloads of men and women in the US. As more women have entered the work force to share in the income-earning responsibilities, what has happed to the tradition woman's role as homemaker in the US?"Gender differences exist throughout the world, but they tend to be more pronounced in LDCs. Inequalities exist not only in political and social freedoms, but also in the allocation of resources such as education, health care, food, crop fertilizer, and bank credit. The pattern of inequality begins at an early age, with female infanticide in countries like India and China that favor male children, and boys staying in school longer and visiting doctors more frequently. In South Asia, female literacy rates are 24 percentage points below male rates, which translates into fewer employment opportunities outside the home. Overall, in MDCs there are about 8 women for every 10 men in the labor force, but there are only 4 women for every 10 men in the Middle East and North Africa labor markets. African women perform about 90 percent of the work of processing food crops, providing household water and fuelwood, hoeing, and weeding. And women who do get jobs usually continue to bear the brunt of household chores." (p. 191)
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1. True/False Circular and cumulative causation implies a widening economic gap between more developed core regions and less developed periphery regions.2. True/False Generally speaking, differences in per capita income and welfare between rich and poor countries have narrowed since then end of the colonial era.
3. True/False Circular and cumulative causation is a trickle-down effect.
4. True/False A country’s GNP per capita is a better indicator of its economic production than of the welfare of its inhabitants.
5. True/False The two axes of the development scatter diagram were a composite economic ranking and a composite human welfare ranking.
6. True/False Some of the countries we studied had high economic rankings with low human welfare rankings, but no countries we studied had the opposite (low economic rankings and high human welfare rankings.
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A. What are some good indicators of development. Explain.
Examples of good development variables include:
- electricity consumption per capita
- energy consumption per capita
- computer ownership per capita
- telephones per capita
- newsprint per 1000 inhabitants
- individual savings rate
- percent of export earnings derived from a single nonmanufactured commodity
- paved road density (km per sq mile)
- persons per doctor
- persons per hospital bed
- life expectancy
- percentage access to safe water
- female literacy
- primary school enrollment of girls as a percentage of boys
- average years of schooling
- percentage of population with college degree
- some kind of freedom or human rights index
- public expenditure on military (% of GNP)
- energy efficiency index
- percentage of national land area protected
- some measure of environmental protection such as SO2 limits per million BTU of coal
- average fertilizer used per acre
- percentage of income earned by top or bottom 10% or 20% of families, or Gini coefficient
- urbanization
- crime rate
- poverty rate
- hunger rate
- dependency ratio (under 15 yrs of age + over 65 yrs of age, divided by labor force cohorts)
- calories or protein consumption per person
- percentage of GNP from service sector
B. Know why are the following NOT good indicators of development?
Poor development variables are those that do not effectively measure the aspect of development that they purport to measure. Below we attempt to categorize the types of flaws that variables can have:1. Mass variables that mostly measure how large a country is, e.g.,:
- total GNP
- total electricity consumption
- total number of doctors
2. Variables that may be perceived as “good” or “bad” but which are largely independent of development:
- population density
- inflation rate
- exports as a percent of GNP
3. Production variables that do not account for economic specialization and world trade as alternate sources of the same goods. Consumption variables are superior in most cases:
- energy production
- steel production
- computer manufacturing
4. Closely related to the above are variables that do not account for different methods to achieve the same end:
- coal consumption per capita
- oil consumption per capita
- natural gas consumption per capita (for many energy uses, any of these three can be substituted for the others)
5. Variables with U-shaped or reverse-U-shaped distributions with respect to development:
( "U-shaped" means that the variable is high for poor countries, low for middle income countries, and high again for rich countries. The opposite is true for "reverse-U-shaped" variables.)
- % employment in manufacturing
- SO2 emissions
6. Growth rate variables which may indicate progress toward development but not level of development. Very often, less developed countries can achieve higher growth rates because their base level is so much lower:
- growth in GNP
- growth in GNP per capita
- growth in energy consumption
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Use this data for the hypothetical country of Harperland to answer the questions that follow.
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For the following indicators of development indicate whether a More Developed Country will have a HIGH value or a LOW value.
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A. Why do Cuba, Poland, Sri Lanka, and Moldova rank higher on the human welfare than on the economic dimension? (Hint: look at Table 7.2.)Cuba, Poland, Sri Lanka, and Moldova are socialist or formerly socialist countries. Poland today has a capitalist system, but much of the economy still is run by the government. These four countries lack the free market mechanisms that historically led to the highest levels of economic development. Their economies are, for the most part, inefficient and non-innovative. Socialist systems are, on the other hand, very successful in providing the basic needs for their citizens. They make an explicit choice to equalize access to food, housing, health care, and education. It is not unusual for citizens in socialist countries to get better medical care and education than poor people in more developed countries.
B. Why do Saudi Arabia and the United Arab Emirates rank higher on the economic than on the human welfare dimension?
High GNP per capita in Saudi Arabia and the United Arab Emirates is based more on oil exports than on across-the-board modernization. They use oil export earnings to import most of their food and thus a low proportion of their labor forces are engaged in agricultural activity. . High GNP per capita and a low proportion of the labor force in agriculture give Saudi Arabia and the United Arab Emirates high economic development rankings. Their human welfare rankings, on the other hand, are lower because they are Islamic countries where traditional culture still is strong. Women play very traditional roles, and often they are poorly educated . Also, development and health care are unevenly distributed, with a select few being multi-millionaires while many do not have access to modern education and health services.
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E-Mail instructor: mhealy@harper.cc.il.us
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