International Development and Aid Min Shu Waseda University 2018/6/12 International Political Economy 1
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
Outline of the lecture What is (economic) development? Industrialization: import-substitution or exportpromotion 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 2018/6/12 International Political Economy 3
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 2018/6/12 International Political Economy 4
Nominal GDP per capita in 2016 (IMF) http://www.imf.org/external/datamapper/ngdpdpc@weo/oemdc/advec/weoworld 2018/6/12 International Political Economy 5
Gini coefficient in 2008~2013 (WB) 2018/6/12 International Political Economy 6
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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 2018/6/12 International Political Economy 9
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 2018/6/12 International Political Economy 10
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 2018/6/12 International Political Economy 11
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 2018/6/12 International Political Economy 12
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 2018/6/12 International Political Economy 13
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 policymaking 2018/6/12 International Political Economy 14
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 2018/6/12 International Political Economy 15
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 2018/6/12 International Political Economy 16
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. 2018/6/12 International Political Economy 17
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) 2018/6/12 International Political Economy 18
Poverty reduction: past and future Rapid reduction of poverty in the past two decades However, an uneven future 2018/6/12 International Political Economy 19
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 2018/6/12 International Political Economy 20
Group Presentation International development From WB to NDB and AIIB 2018/6/12 International Political Economy 21