Chapter 20 Developing Nations
Ch. 20 Vocabulary Key Terms
11. The first concern is humanitarian. Industrialized countries of the world believe it is their moral responsibility to help those who have less than they do. Many people in developing countries die of starvation while other countries, enjoying abundance, find it hard not to help. The second concern is economic. Assistance to developing countries helps assure the industrial nations of a stable supply of raw materials. Developing countries also provide markets for the products of industrial nations. The third concern is political. Despite the increasing failure of communism, various political ideologies wage a struggle for the allegiance of developing countries.
12. Government can be an obstacle to economic development because a country whose government often changes will have a hard time developing economically. Such constant changes impede long-term planning. Economic development is even more difficult if the political changes occur through violent revolution. If the government is not honest, economic development will be slow. Corrupt officials damage the economy by depositing the nation’s savings on a personal account in a foreign bank or by spending huge sums for economy on personals. When people see this, they are discouraged and reduce their incentive to save/invest.
13. Capital flight occurs when corrupt officials smuggle money out of the country and deposit it aboard. Another reason capital light occurs is because people living in the borrowing countries have no faith in their government or the future of the country’s economy. As a result, countries face a cash shortage, which prevents hem from paying interest on their foreign debt.
14. The four changes that take place in the takeoff stage are as follows: 1) customs have been put aside and people have begun to seek new and better things, 2) people have begun to imitate the new or different techniques that outsiders have brought into the country, 3) outside help from an industrial nation may be providing financial, educational, or military aid, and 4) a country starts to save and invest more of its national income.
15. The World Bank suggests industrialized countries: 1) to reduce trade barriers-eliminating trade barriers would generate as much as $50 billion annually in export earnings for the developing countries, 2) to reform macroeconomic policy-changing the policy would greatly improve world economic development, 3) to increase financial support-industrialized nations need to provide more external financing to the developing countries, and 4) to support policy reform-support of the developing countries, especially when the countries are trying to develop freer and more efficient market economies.
16. Three sources of financial capital for development are collected by attracting private investments, receiving assistance from industrialized countries, and by borrowing from International Agencies.
17. Old- 1) The government can focus on intensive labor industries like making automobiles, radios, shirts, etc. 2) They can also open their market up to free trade. New- 1) They can try to attract tourism to their nation. 2) They can have low labor to attract big companies from bigger nations.
18. If all industrialized nations developed a purely capitalistic attitude and begun massive exploitation of developing nations, then the developing nations will not have a chance to develop.