Comparative Politics Notes

11/6/2013 9:01:00 AM

China: Conclusions very complicated history, enormous, difficult to summarize in one case study.. Economic Issues Role of the Govt Economic Growth Poverty Reduction Inequality Really important to remember that China has encouraged and experienced one of the FASTEST growing economies that the world has ever seen. # of people living in poverty has significantly decreased in China simultaneously, inequality has been worsening This means the economy has been growing so much that even the poorest people are getting benefits but theyre much much smaller than the benefits of the rich. According to Heritage Foundation, China doesnt rank very high as a

free economy. Has a very open market, but doesnt score well on Government Spending, Fiscal Freedom (keep in mind Heritage Foundation is advocacy foundation for free economy, is not non-partisan) Gov invests a lot in urbanization and building of whole new cities, really large scale projects. Chinas rapid growth depicted in terms of real change in gross domestic product (GDP) since 1990 in % (from IMF) GDP per capita 2009 in US = $46,433 GDP per capita 2009 in China = $3,566 Rural poverty is increasing a lot in China, more than urban poverty Economic trend: % of population living under poverty rates. Chinese gov tries to make it seem as though poverty is not as bad as it seems. keep in mind that inequality is also rapidly growing in US and other wealthy, developed countries.

high economic growth often leads to higher inequality overall, inequality has gone up very rapidly since 1980s, esp in rural areas (not so much in urban). Long history of conflict b/w Japan and China. Govt encourages this sometimes in order to drum up nationalism and distract citizens from disliking Chinese govt. China has invested tons of $ in building infrastructure. There are tons of empty towns the govt has built. Has been going on for about 5 years. We still dont know what the result of this will be govt is funding it. Some economists are concerned that this is pushing China to huge economic collapse. China is encouraging urbanization, offers good subsidizes for urbanizing. We really don't know where this is headed New Chinese survey (1 month ago, cited in WSJ) 16% of households in China have had their land seized or destroyed over the last 10 years Gov is making enormous effort to move people from rural places to urbanization. Creates a fair amount of political tension. Globalization Wednesday 11/20 Dont forget, final is CUMULATIVE Companies not doing well after Wednesdays announcement that China is backing off one child policy = companies providing contraception Example: Trade and Poverty Is Free Trade good for the poor? (in a very global sense) Is trade a good tool for combatting poverty in the world? Global trade has grown tremendously since the 1960s. Trade has grown faster than size of overall economy (both have increased a lot, lots more economic overall but portion composed of trade is proportionally bigger than it was in the 60s.

The logic is that trade is good for the poor because trade is good for economic growth. Types of trade have increased over the past few decades (since 1950) o Steepest increase = manufactured products (including cars, computers, telephones, refrigerators, etc.) o Distribution of world merchandise exports by region: developing countries in Asia have begun to trade more. Opposite of free trade is protectionism. Ex: US company that manufactures steel; free trade world would remove barriers, etc. for companies from other countries to sell steel in the US. Economists like to classify countries by endowments (endowments = something the country either has a lot of or is good at) ex: capital, land, and labor. If you happen to have a lot of capital, in your country you want to make something that is really expensive such as developing computers, selling computer software, engineering products. o Countries that are capital intensive: USA, Germany, Japan Whatever factor your country has a lot of, thats your comparative advantage. Most agriculture in US are not labor intensive but in most of the world, agricultural products are labor intensive. Other labor intensive products: basic manufacturing, textiles, toys, sporting goods. Chemicals, cars, require capital *Clicker Q: If a country is land and labor intensive, what would they export? Apples. Who o o o is Free Trade good for? Owners of abundant factors Can be good for the poor if they are connected to the trade sector Ex: If you are a person who works in agriculture in Ecuador, lowering trade barriers to sell flowers in the US is probably good for you.

o Important: This is only benefit for those who are working in the abundant factors. o Wealthy countries do not trade very freely, there are a lot of protectionist policies in wealthy countries. o The world isnt a world of free trade, there is a lot of protectionism. o Overall free trade may be good for economic growth, but it has really different effects on different developing countries depending on what sector you work in. o o Government takes over production of gas and oil in Bolivia o Has taken very hostile stance towards the US. o Has made a statement that

11/6/2013 9:01:00 AM

11/6/2013 9:01:00 AM