EC239 Chapter Notes - Chapter 11: Opportunity Cost, Numeracy, Trade Literature
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Introduction: whi(cid:272)h (cid:272)ou(cid:374)tries are (cid:862)de(cid:448)elopi(cid:374)g (cid:272)ou(cid:374)tries(cid:863), the term developing countries does not have a precise definition, but it is a name given to many low- and middle-income counties, gdp per capita, 2009 (dollars) Import-substituting industrialization was a trade policy adopted by many low- and middle=income countries before the 1980s: the policy aimed to encourage domestic industries by limiting competing imports. It may be wasteful to support industries now that will have a comparative advantage in the future: with prote(cid:272)tio(cid:374), i(cid:374)fa(cid:374)t i(cid:374)dustries (cid:373)a(cid:455) (cid:374)e(cid:448)er (cid:862)gro(cid:449) up(cid:863) or (cid:271)e(cid:272)o(cid:373)e competitive. Infant industries and market failures: two arguments for how market failures prevent infant industries from becoming competitive: Imperfect financial asset markets: because of poorly working financial laws and markets (and more generally, a lack of property rights), firms cannot or do not save and borrow enough, to invest sufficiently in their production processes.
