Ecomomics evelopment 10th y p todaro and smith chapter 16
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Chapter 16
Some Critical
Issues for the
Twenty-First
Century
Copyright © 2009 Pearson Addison-Wesley. All rights reserved.
Critical Issues of the 21st
Century
•
Global Interdependence
•
Global Environment
•
Crisis in Sub-Saharan Africa
•
Transition in Eastern Europe
•
Democracy & Global Conflict
Copyright © 2009 Pearson AddisonWesley. All rights reserved.
16-2
Global Interdependence
International Trade:
•
Flow of manufactured goods and armaments from MDCs to LDCs (70% or world trade)
•
Flow of natural resources and cash crops from LDCs to MDCs (30% of world trade)
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16-3
Global Interdependence
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16-4
Global Interdependence
• In MDCs, recession reduces the demand for
imports from LDCs
• In LDCs, reduced export earnings lowers the
demand for imports from MDCs, resulting in a
global recession
• Each $1 billion exports in the U.S. supports
25,200 jobs in LDCs
Copyright © 2009 Pearson AddisonWesley. All rights reserved.
16-5
Global Interdependence
International Finance:
• Flow of FDI from MNCs into LDCs (the “global factory”)
• Flow of ODA from MDC governments to LDC
governments
• Flow of loans from banks & IMF/World Bank to LDCs
• Flow of debt-service payment from LDCs to MDCs
• Flow of funds due to TOT decline from LDCs to MDCs
• Flow of resident capital from LDCs to MDCs
Copyright © 2009 Pearson AddisonWesley. All rights reserved.
16-6
Global Interdependence
Human Capital:
•
Flow of people from politically, socially, and economically repressed LDCs to MDCs
– Legal immigration: The Brain Drain
– Illegal immigration
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16-7
Global Interdependence
•
Reduce the debt and debt-service burden
•
Create new LDC funding: tax resident capital outflow and MNCs
•
Establish new international institutions to stabilize global economic relations
•
Reform IMF and World Bank policies
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16-8
Global Environment
The Greenhouse Effect and Global Warming:
• Excessive per capita energy fossil fuel
consumption due to affluence
• Rapid deforestation due to poverty, falling
primary-commodity export prices, and
commercial land development
• Rapid desertification due to soil erosion, land
over-use, and lack of fertilization
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16-9
Global Environment
The Rio Summit’s Agenda 21:
• Alleviate poverty and improve environmental
capital
• Invest in R&D to reduce soil erosion
• Improve family planning through female education
and employment
• Prevent the destruction of the rain forest
• Protect the natural habitats and biodiversity
• Invest in alternative energy to reduce pollution
Copyright © 2009 Pearson AddisonWesley. All rights reserved.
16-10
Global Environment
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16-11
Global Environment
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16-12
Energy Consumption Per Capita
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16-13
Crisis in Africa
•
Decline in the standard of living
•
Rapid population growth, but slow economic growth
•
Social and political oppression and human rights violations
•
HIV-infection and death from AIDS (20 million HIV-positive in 1997 of which 9 million were women)
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16-14
Transition in Eastern Europe
•
Sharp decline in the GDP
•
High and rising inflation
•
Increased poverty: 14 million (4%) in 1988 to 119 million (32%) in 1994
•
Increased crimes and social injustice
•
Diversion of funds from LDC development ($100 billion per year)
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16-15
Democracy & Global Conflict
•
Help LDC people remove non-democratic governments and repressive regimes (e.g., Iran, Syria)
•
Solve international conflict that makes the oppressed resort to violence and terror (Iraq & Afghanistan wars; ArabIsraeli land dispute)
•
Eradicate poverty and prejudice: one world, one people
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16-16
