Promoting active learning

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Economic Problems of Developing Countries
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Economic Problems of Developing Countries

• The Problem of Underdevelopment

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THE PROBLEM OF UNDERDEVELOPMENT

• The gulf between rich and poor countries
• differences in GNY

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GNY per head as of US GNY per head 2000
(using ppp exchange rates)
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THE PROBLEM OF UNDERDEVELOPMENT

• The gulf between rich and poor countries
• differences in GNY
• differences in mortality and health

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THE PROBLEM OF UNDERDEVELOPMENT

• The gulf between rich and poor countries
• differences in GNY
• differences in mortality and health
• other differences

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Selected world statistics
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Selected world statistics
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Selected world statistics
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Selected world statistics
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Selected world statistics
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Selected world statistics
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Selected world statistics
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Selected world statistics
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Selected world statistics
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Selected world statistics
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THE PROBLEM OF UNDERDEVELOPMENT

• Differences between developing countries
• resources and climate
• infrastructure
• cultural and social factors
• degree of industrialisation
• relations with developed world

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THE PROBLEM OF UNDERDEVELOPMENT

• Measuring development
• basic needs approach
• advantages of this approach
• disadvantages of this approach
• using GNY statistics
• advantages of this approach
• disadvantages of this approach
• the Human Development Index

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Human Development Index (HDI) for selected
countries (1999)
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Human Development Index (HDI) for selected
countries (1999)
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Human Development Index (HDI) for selected
countries (1999)
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Human Development Index (HDI) for selected
countries (1999)
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Human Development Index (HDI) for selected
countries (1999)
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Human Development Index (HDI) for selected
countries (1999)
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Human Development Index (HDI) for selected
countries (1999)
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Human Development Index (HDI) for selected
countries (1999)
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Human Development Index (HDI) for selected
countries (1999)
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Economic Problems of Developing Countries

• International Trade and Development

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INTERNATIONAL TRADE AND DEVELOPMENT

• Role of international trade in economic
  development
• importance of trade
• trade strategies
• primary outward-looking strategy
• secondary inward-looking strategy
• import-substituting industrialisation (ISI)
• secondary outward-looking strategy
• exporting manufactures

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INTERNATIONAL TRADE AND DEVELOPMENT

• Primary outward-looking strategy
• importance of primary exports
• justification for exporting primaries
• comparative advantage (HeckscherOhlin)
• vent for surplus engine for growth
• weakness of traditional trade theory
• problems for primary exporters long term
• slow growth in exports
• rapid growth in imports
• problems for primary exporters short term
• price and output fluctuations

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World primary commodity prices (1990 100)
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World primary commodity prices (1990 100)
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INTERNATIONAL TRADE AND DEVELOPMENT

• Primary outward-looking strategy
• importance of primary exports
• justification for exporting primaries
• comparative advantage (HeckscherOhlin)
• vent for surplus engine for growth
• weakness of traditional trade theory
• problems for primary exporters long term
• slow growth in exports
• rapid growth in imports
• problems for primary exporters short term

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INTERNATIONAL TRADE AND DEVELOPMENT

• Primary outward-looking strategy
• importance of primary exports
• justification for exporting primaries
• comparative advantage (HeckscherOhlin)
• vent for surplus engine for growth
• weakness of traditional trade theory
• problems for primary exporters long term
• slow growth in exports
• rapid growth in imports
• problems for primary exporters short term
• price and output fluctuations

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INTERNATIONAL TRADE AND DEVELOPMENT

• Import-substituting industrialisation
• the process of ISI
• justification
• problems of primary-outward looking policies
• greater dynamic potential with industrial
  production
• infant industries

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INTERNATIONAL TRADE AND DEVELOPMENT

• Import-substituting industrialisation
• adverse effects
• against comparative advantage
• cushions inefficiency
• urban bias
• damages exports
• wide variations in effective protection
• social / cultural problems
• environmental costs

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INTERNATIONAL TRADE AND DEVELOPMENT

• Exporting manufactures

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Growth rates and export performance of selected
secondary outward-looking countries
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Growth rates and export performance of selected
secondary outward-looking countries
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Growth rates and export performance of selected
secondary outward-looking countries
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INTERNATIONAL TRADE AND DEVELOPMENT

• Exporting manufactures
• transition from inward-looking to
  outward-looking industrialisation

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INTERNATIONAL TRADE AND DEVELOPMENT

• Exporting manufactures
• transition from inward-looking to
  outward-looking industrialisation
• benefits from a secondary outward-looking policy

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INTERNATIONAL TRADE AND DEVELOPMENT

• Exporting manufactures
• transition from inward-looking to
  outward-looking industrialisation
• benefits from a secondary outward-looking policy
• drawbacks of a secondary outward-looking policy

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Economic Problems of Developing Countries

• Structural Problems in Developing Countries

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STRUCTURAL PROBLEMS IN DEVELOPING COUNTRIES

• The neglect of agriculture
• problems of urban bias
• policies to promote agriculture
• problems with these policies
• Inappropriate technology
• capital-intensity biases
• arguments for capital-intensive technology
• arguments for labour-intensive technology

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STRUCTURAL PROBLEMS IN DEVELOPING COUNTRIES

• Unemployment
• rapid population growth
• capital-intensity bias

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Limited choice of techniques one technique only
Capital (K)
O
Labour (L)
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Limited choice of techniques one technique only
Q3
Q1
Q2
Q3
Capital (K)
Q2
K1
Q1
O
Labour (L)
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Limited choice of techniques one technique only
Q3
Q1
Q2
Q3
Capital (K)
Q2
Q1
O
Labour (L)
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Limited choice of techniques one technique only
Q3
Q1
Q2
Q3
Capital (K)
K
Q2
Q1
O
L
Labour (L)
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Capital intensity bias
Capital (K)
Q1
Q2
O
Labour (L)
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Capital intensity bias
Capital (K)
K
Q1
Q2
O
L
Labour (L)
53
Capital intensity bias
A
Capital (K)
d
K
Q1
Q2
O
B
L
Labour (L)
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STRUCTURAL PROBLEMS IN DEVELOPING COUNTRIES

• Unemployment
• rapid population growth
• capital-intensity bias
• ruralurban migration

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STRUCTURAL PROBLEMS IN DEVELOPING COUNTRIES

• Unemployment
• rapid population growth
• capital-intensity bias
• ruralurban migration
• external influences

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STRUCTURAL PROBLEMS IN DEVELOPING COUNTRIES

• Unemployment
• rapid population growth
• capital-intensity bias
• ruralurban migration
• external influences
• Inflation

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STRUCTURAL PROBLEMS IN DEVELOPING COUNTRIES

• Unemployment
• rapid population growth
• capital-intensity bias
• ruralurban migration
• external influences
• Inflation
• problems of hyper-inflation

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STRUCTURAL PROBLEMS IN DEVELOPING COUNTRIES

• Unemployment
• rapid population growth
• capital-intensity bias
• ruralurban migration
• external influences
• Inflation
• problems of hyper-inflation
• monetarist explanations

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STRUCTURAL PROBLEMS IN DEVELOPING COUNTRIES

• Unemployment
• rapid population growth
• capital-intensity bias
• ruralurban migration
• external influences
• Inflation
• problems of hyper-inflation
• monetarist explanations
• structuralist explanations

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Economic Problems of Developing Countries

• The Problem of Debt

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Growth in debt of developing countries(average
annual)
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Growth in debt of developing countries(average
annual)
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Growth in debt of developing countries(average
annual)
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Growth in debt of developing countries(average
annual)
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Debt ratios and the growth of debt (average of
all developing countries)
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Debt ratios and the growth of debt (average of
all developing countries)
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Debt ratios and the growth of debt (average of
all developing countries)
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THE PROBLEM OF DEBT

• Effects of the first oil shock 197178
• Effects of the second oil shock 197984
• deep world recession
• decline in commodity prices
• high interest rates
• Effects of recessions in early 1990s and early
  2000s

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THE PROBLEM OF DEBT

• The effects of the debt problem on developing
  countries
• effects on growth
• effects on poverty
• Coping with debt crises rescheduling
• rescheduling official loans
• rescheduling commercial loans

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THE PROBLEM OF DEBT

• Dealing with debt
• structural reform in developing countries
• IMF policy recommendations
• interventionist solutions
• debt swaps
• debt forgiveness
• the HIPC initiative
• Jubilee 2000
• subsequent events
• should all debt be cancelled and aid increased?