Developing Countries

 

  • International inequality 
    • Income distribution
    • Initial conditions
  • Colonialism  
  • Four ideas about poverty
    • Infrastructure
    • Markets
    • Political institutions
    • Social institutions

POL 103

Tuesday

April 4

  • Study abroad info session
    Wed (tomorrow) 1 p.m.
    Rowley Hall room G207
  • Arts and Sciences, first-year advising
    Today 2 p.m.
    Rowley Hall room G127
  • First-year politics majors must meet with me before registering for the fall
    See: cal.chadrector.net

Developing Countries

 

  • International inequality 
    • Income distribution
    • Initial conditions
  • Colonialism  
  • Four ideas about poverty
    • Infrastructure
    • Markets
    • Political institutions
    • Social institutions

Developing Countries

 

  • International inequality 
    • Income distribution
    • Initial conditions
  • Colonialism  
  • Four ideas about poverty
    • Infrastructure
    • Markets
    • Political institutions
    • Social institutions

1.2. Initial conditions

Until 1800 or so, it's a tossup

1.2. Initial conditions

By about 1800, Europe/North America leading

1.2. Initial conditions

By about 1800, Europe/North America leading

Why?

Historically, a number of ideas....

1.2. Initial conditions

Possible explanations for European explosion

  • "Protestant Ethic" - Max Weber
  • Climate / adult lactose tolerance
  • Political weakness / science and rationalization
  • Industrialization timing

Developing Countries

 

  • International inequality 
    • Income distribution
    • Initial conditions
  • Colonialism  
  • Four ideas about poverty
    • Infrastructure
    • Markets
    • Political institutions
    • Social institutions

2. Colonialism

2. Colonialism

Colonialism: relationship between political units

  • Metropole: imperial power
  • Periphery: local unit, colony

Why colonialism?

  • Wealth / power disparity
  • Interest groups in metropole
  • Political weakness in periphery

Usual motives:

  • Investment
  • Trade

2. Colonialism

Why colonialism matters today

  • National borders
  • Political institutions in former colonies
  • Social institutions

...all these matter for political freedoms, commerce, and human development

Developing Countries

 

  • International inequality 
    • Income distribution
    • Initial conditions
  • Colonialism  
  • Four ideas about poverty
    • Infrastructure
    • Markets
    • Political institutions
    • Social institutions

3.1. Infrastructure

Why are poor countries poor?

Maybe it's because they don't have as much stuff as rich countries. 

Example - electricity

3.1. Infrastructure

Solution - large investments

example: Aswan High Dam, Egypt

3.1. Infrastructure

Large investments in 1950s-60s often failed to produce economic growth

  • Investments driven by narrow concerns
  • Infrastructure overused 
  • Unintended effects, Ex: Urbanization trap
    More development in cities, leads to
    More migration to cities, leads to
    Potential for unrest in cities, leads to
    More services in cities, leads to 
    More migration to cities...

 

Developing Countries

 

  • International inequality 
    • Income distribution
    • Initial conditions
  • Colonialism  
  • Four ideas about poverty
    • Infrastructure
    • Markets
    • Political institutions
    • Social institutions

3.2. Markets

Why are poor countries poor?

Maybe it's because markets don't operate well. 

People get the wrong "price signals"

Examples:

  • Ghana - agricultural marketing boards
  • Latin America - import substitution

3.2. Markets

Solution - get the prices right

examples:

  • Japan and export-led industrialization
  • Chile and domestic reforms

Problems -

  • Requires careful management
  • Social dislocations
  • Reforms create winners, who influence politics (e.g. Russia or Argentina in 1990s)
  • Solutions are often unstable

Developing Countries

 

  • International inequality 
    • Income distribution
    • Initial conditions
  • Colonialism  
  • Four ideas about poverty
    • Infrastructure
    • Markets
    • Political institutions
    • Social institutions

3.3. Political institutions

Why are poor countries poor?

Maybe it's because political institutions don't operate well. 

The state has no incentive to respect private property and invest in the right kind of infrastructure. E.g. predatory or weak states. 

3.3. Political institutions

Solution - get the institutions right

examples:

  • Indonesia and democratization
  • China and the incorporation of capitalists
  • African electoral democracy

Problems -

  • Difficult to compensate losers
  • Hard to know in advance which reforms work
  • Attempts at openness often fail

Developing Countries

 

  • International inequality 
    • Income distribution
    • Initial conditions
  • Colonialism  
  • Four ideas about poverty
    • Infrastructure
    • Markets
    • Political institutions
    • Social institutions

3.4. Social institutions

Why are poor countries poor?

Maybe it's because social institutions don't operate well. 

Individual citizens and agents of the state do not maintain the "right" kind of relationship, regardless of institutions

  • Corruption
  • Ties to non-state institutions (religious/ethnic)