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Two Paths to Development

Self Sufficiency and International Trade
by

Dennis Cabrera

on 21 June 2017

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Transcript of Two Paths to Development

Formed in 1995

Goal was to remove barriers to trade

Eliminate tariffs, quotas, and government subsidies

Reduce the restriction on the movement of money

World Trade Organization

Uneven resource distribution

Increased dependency on developed countries

Market decline

International Trade Shortcomings

Economy shifts from production of heavy industry to consumer goods

5. Age of Mass Consumption

High percentage agricultural
Too much resources going to non-productive activities


1. Traditional Society

1. Traditional Society

2. Preconditions for Takeoff

3. Takeoff

4. Drive to Maturity

5. Age of Mass Consumption

Rostow Model

Develop a country’s unique economic assets

Concentrate scarce resources on it distinctive local advantage

Proceeds can help finance development

International Trade Path

4. Reducing poverty takes precedence over encouraging a few people to become wealthy

Key elements to Self Sufficiency

3. Investment is spread equally across all sectors across regions and sectors

Key Elements of Self Sufficiency

1. Restricting the importation of goods through tariffs, quotas, or licenses

Key Elements of Self Sufficiency

What policies are successful in achieving economic growth?

How can poor countries pay for development?

Two Fundamental Obstacles

Anti-democratic

Decisions benefit large corporations at the expense of poor people

Sovereignty of countries is compromised

WTO Protestors

Countries can accuse other nations of violating agreements

WTO is authorized to rule on the charges

Intellectual property, copyright, patent

WTO Enforcement of Agreements

Success of Europe, North America, and Japan

Abundant supply of raw materials/ end of colonialism

Concern for economic competitiveness can filter to other economic sectors

Why the trade optimism?

Most countries adopting the trade approach by late 20th century

Trade increased

International Trade Triumphs

The Four Asian Dragons: Singapore, Hong Kong, Taiwan, and South Korea

Arabian Peninsula States: Saudi Arabia, Kuwait, Oman, Bahrain, and UAE

International Trade Examples

Modern technology diffuses to other industries
Other industries experience rapid growth

4. Drive to Maturity

A few industries begin to generate economic growth
These few industries achieve technical advances


3. Takeoff

Elite group initiates economic activity
Country invests in infrastructure
These will stimulate an increase in productivity


2. Preconditions for Takeoff

W.W. Rostow proposed a 5 stage model of development in the 1950s

Rostow Model

Protection of inefficient businesses
Need for large bureaucracy

Shortcomings of Self Sufficiency

Required licenses for importation

Heavy tariffs

Indian currency could not be converted

Many govt. owned businesses

Lot of regulations for business

Case Study: India 1947

2. Protection from international competition to insure success for domestic business

Key Elements of Self Sufficiency

Countries open themselves to foreign investment and international markets

International Trade

Countries encourage domestic production of goods, discourage foreign ownership of businesses and resources, and protect their businesses from international competition

Self Sufficiency

Self Sufficiency Model

International Trade Model

Two Paths to Development

Two Paths to Development

Why Do Countries Face Obstacles to Development
Full transcript