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International Development Notes
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th) ^ Extraction of oil: manufacturing products, car industry ^ China since 1978 following a similar path How did they change from agriculture to manufacturing?
y modern sectors: ^ Natal: private property rights, functioning legal systems, markets,commercial agriculture and industrycommercial agriculture, and industry ^ Transkei: communal property in land and all-powerful traditionalchiefs until recentlyI^ li^ ti^ f L^
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T^ k i i t^ N t l ^ Implication of Lewis model: change Transkei into Natal ^ However this was man-made not the natural process of^ However, this was man-made, not the natural process ofeconomic growth
y p p^
^ Initially created demand for goods: Black Africans(Xhosa):^ ^ Adopted plows^ ^ Wanted private property, which weakened the chiefs^ ^ Dug irrigation ditches^ ^ Built fences ^ Slow weakening of extractive political and economicinstitutions burgeoning economic progressinstitutions, burgeoning economic progress
y ^ Was not an inevitable outcome of the process of development ^ But created by the stateE t^ ti^ th h d it
li^ it ^ Extractive growth had its limits:^ ^ No creative destruction^ ^ 80% population could not use their talents: barred from skilledworkers, businessmen, entrepreneurs, engineers, or scientists^ ^ 1970s: GDP growth = 0 ^ The dual economy ended in 1994^ The dual economy ended in 1994^ ^ But not the natural course of economic development^ ^ Empowerment by Blacks who managed to organize and rise up
y^ y^ p
g^ g ^ Structural change: not inevitable ^ Extractive political institutions may block:^ ^ Fear of creative destruction1960s 70s: foreign aid to build modern sector = failure^ 1960s, 70s: foreign aid to build modern sector = failure
p^ p^
p^ y commodities (raw + agricultural) Terms of trade declining ^ Ratio of export prices to import prices ^ (because demand for manufactured goods increase as worldeconomy develops) ^ Prebisch-Singer hypothesis ^ Developing countries kept in poverty by industrialized countries Solution: Solution: ^ Protect infant industries ^ In import substitution sectors, or export sectors
g ^ Related to structural change ^ Encourage local industries in developing countries ^ 1950s, 60s ^ Mixed results 1980s: structural adjustment policies, Washingtonconsensusconsensus