2b. Links with global system - strategic issues

• neo-colonial dependency, export primary commodities
• agricultural cash crops: beverages (coffee, tea, cocoa), fibers, vegetable oils, rubber, dope.
• minerals, metals, diamonds
• terms of trade move against agriculture, commodity prices fluctuate
• Can third world countries manipulate the pricing system?  Can cartels restrict supply to push prices up?  (eg. OPEC)  Ans: It is very hard for cartels to be successful; everyone has an incentive to cheat.
• The petro-state (Nigeria, Venezuela, Mid-East, Russia, Burma)
• oil rich, weak institutions, poorly functioning public sector, corruption
• oil generates revenue and taxes, highly concentrated
• oil provides very little employment.
• volatile revenue stream, economic instability.
• political conflict over control of the oil wealth
• petroleum wealth can be shared broadly or at least to some cities and peoples:
• Venezuela under Chavez
• Sudan
• Can be coupled with extensive state ownership of industry  Chavez new program, 2007
• dependent development, very limited (at best), led to debt trap

• Alternative strategy 1:  import substituting industrialization (ISI)--make it, don't import it, autarchy
• reasonably successful in Latin America, 1945-1970
• Later,  this did not work, impossible to compete effectively against global leaders in producition
• led to bankruptcy, dependency, debt trap

• Strategy 2: Export Oriented Industrialization
• ladder of products:
•     labor intensive: toys, sewing, optical, ship building, manufacture
•     brain intensive: electronics, computers, numerical controlled machines,  programing computer software
•  telephone call centers, fairly common in India
•  starting in Kenya?  1 |
•     capital intensive:  banking, investments
• Basically very successful in East Asia
                    Japan and its copiers  Taiwan, S. Korea, Singapore, Hong Kong (4 Tigers)
                         later adopted by China
• Problems
• competition with poorer countries, some other country will "do it for less"
• corruption, crony capitalism leads to inefficiency and financial crises
• rich countries try to protect their own markets  example: shrimp market

complain about competing with "cheap foreign labor", "outsourcing"

• Strategy 3: Agricultural Development--Green Revolution (Example: Punjab)
• Improved agricultural technology, more productive seeds
• research by many research centers for various crops (International Rice Research Institute)
• provide inputs: fertilizer, irrigation (incl pumps, electricity, etc.) pesticides
• provide credit so farmers can buy the inputs
• provide ag. extensionsion (training), marketing services.
• improve roads, bridges, marketing
• land consolidation richer farmers buy more land to use tractors more efficiently
• can create tensions as rich farmers consolidate holdings, create landless laborers; more tensions come from attraction of poor laborers to the region (red revolution).
• note: violent secession movement in Punjab, early 1980s, 20,000 killed  obit of leader
• New Interest in Green Revolution for Africa 2007  1 | 2

• Strategy 4: Growth with Equity
• land reform, make land holding more equal (much opposition to this policy)
• Best examples: Japan, Taiwan (Wolf Ladejinsky)
• keep farm prices high to support rural income
• Problem: urban population wants low food prices
• Government subsidies creates major budgetary problems
• emphasize labor intensive products that can be profitable on small holdings:
• dairy (white revolution),
• aquatic products (blue revolution),
• special fruits, vegetables, cut flowers, nuts, spices.
• This strategy is hard to implement, lots of political opposition about land redistribution and cost of infrastructure
• Most countries have an "urban bias," and put health services, schools in urban areas.  Food prices are kept low, to benefit urban consumers.  So it is hard for rural areas to grow, and migration continues to the better-off cities.
• urban areas can explode in large scale demonstrations
• can threaten a regime, force resignation or escallation into violence
• example: Bangkok, 2006
• Strategy 5: Basic Needs (example: Kerela, Sri Lanka)
• emphasize education (always a good idea)
• strong health services
• food rationing to ensure everyone gets basic diets
• Agricultural development too slow, migration to cities continues
• Note: Sri Lanka has degenerated into ethnic civil war
• Countries go bankrupt
• unproductive investments
• deteriorating prices
• can't collect taxes
• can't pay off old loans
• corruption
• Debt Relief?
• Debate on whether aid/loans helps or hurts countries:
• helps: provide food, develop infrastructure, maintain subsidies, education, health, police (mixed blessing)
• hurts:
• loans were designed to help donor countries (tied loans, shipping requirements)
• feeds corruption, inefficient planning.
• Inadequate provisions for maintainence
• lack local support, not integrated with broader plans
• Should more loans be given?
• Should old debts be cancelled?   Jubilee 2000 campaign Decision to cancel debts, 2005

 
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