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Intro to Intl Exam #2

Terms in this set (27)

(1) Foreign Aid and Capital Investment
A) South need foreign aid/capital investment because # of domestic capital was inadequately set to fuel domestic economic growth
B) South focused on foreign aid - Marshall Plan
C) North (USA) focused on private capital to investment
D) Economic growth of US
E) "Take Off" Point -- once there is a certain amount of foreign capital, there will be self-sufficiency and growth:

Problems with this:
-- most countries have too small a market to ever generate sufficient domestic capital
-- most capital were in the form of loans > interest
-- repatriation of profits

(2) Common Market/Economic Integration
A) Model is European Economic Comm. ECC, EC, Eu
B) Est. regional common markets ^ seize of the market for member states
C) Common Market defined: lower tariffs on member goods, common external tariffs
D) Member state goods need to be complementary, not competitive -- wide amount of products needed

Problems with this:
-- southern economies tend to be monocultural and lack complementary goods
-- even w/ common market -- still small

(3) Price Stabilization / Preferential Tariffs
-- P.S: agricultural/raw materials
-- P.T: industrialization, heavy industry/light industry
*Price Stabilization:
-- fluctuating and declining global market prices
-- est. price floors and price ceilings and multiyear contacts; can better economic planning w/ set funds and time
Lome Accords I, II, III -- Contou Accords

*Preferential Tariffs:
-- lower tariffs on a range of goods from developing countries
-- usually seen to increase export market for developing countries light industrial exports

Lome Accords I, II, III -- Contou Accords

(4) Import Substituions:
-- Goal is to reduce imported manufactured goods and replace them w/ domestically produced m goods
-- increase tariffs on imported goods to protect domestic manufacturers -- Protective Tariff

Problem with this:
-- low quality manufactured goods domestically
-- domestic consumers still wanted foreign goods
-- companies/labor lobbying continue w/ high tariffs

(5) Export Led Industrialization (ELI)
-- most successful
-- increase overseas market for a country's manufactured goods by increasing their competitiveness overseas
-- ELI Policies
(1) Establish realistic exchange rates
(2) Reduce import barriers
(3) Eliminate export taxes
(4) Tax incentives to exporters
(5) Encourage FDI in export industries:
Foreign Direct Investment
(6) Subsidize export sector(s)
(7) Extend favorable credit
(8) Aid Education
**Best at this: Brazil, Japan, S. Korea, Taiwan