ECON 315 Lecture Notes - Lecture 7: Infant Industry Argument, Foreign Direct Investment, Comparative Advantage
23 Jun 2017
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Document Summary
Some economists and politicians believe that an active gov in developing country could counteract the power of the local elites and countries in the center. Distribute power and resources towards the masses and away from local and international businessmen. Reduce the country"s reliance on foreign goods and produce them locally instead. Particularly popular in latin american and african countries in 1980s. Most focus today is on latin america. Industrialized countries (the center) caused underdevelopment in developing countries. To create local industries capable of producing substitutes for expensive imports and promote industrial growth and expansion of domestic markets. Developing countries had disappointing growth performance first half of. Volatility in the price of primary good exports. Countries whose gdp is based solely on exports is not necessarily strong because if the cost of the export tanks, so does the economy. The policy aimed to encourage domestic industries by limiting competing imports. Large dependence from countries in the center.
