Chapters 9-11

Dealing with Risk and Uncertainty

• game theory
• prisoner's dilemma
• probablility tree model

• reasons for cities
• reasons for different city sizes
• reasons for city locations
• reasons for rich and poor regions
• urban bias in Third World
• reasons for urban bias
• result of ruban bias
• spread effects
• backwash effects
• implications (e.g., central place theory)
• effort to mediate urban growth

• Locational shifts in manufacturing since Industrial Revolution
• Economies of Agglomeration
• localization economies
• urbanization economies
• Third World vs. First World city sizes
• and projected city sizes
• Primate cities vs. rank order
• Urban Infrastructure
• Economic base multiplier
• basic and non-basic industries
• city size and basic/ non-basic mix
• Input-output analysis as way to measure impact of industries
• forward and backward linkages
• Cumulative and circular causation
• Economic Growth policies
• general (geographic)
• specific (industry based)
• Enterprise zones

• international vs. local trade
• longer distances
• political interests
• Trade and
• size of country
• size of GNP of single country
• size of GNP of trading partners
• rich-rich, poor-rich, rich-poor, poor-poor
• Products traded
• poor countries
• rich countries
• BEM -- Big Emerging Markets
• which?
• imports mainly producer goods
• Comparative Advantage theory of trade
• Factor Endowment Theory
• factor price equalization
• law of one price. but
• factor intensity reversal
• different labor laws
• transportation costs
• Currency exchange rates
• purchasing power for domestic goods
• money supply:economy comparison
• interest rates
• Multinationals
• intracorporate trading
• advantags
• Government policies affecting trading
• import tariffs
• specific and ad velorum tariffs
• purpose of tariffs -- protection
• infant industries
• sunset industries
• strategic industries
• regulations, quotas, prohibitions, subsidies for domestic
• effects of tariffs on
• producers
• consumers
• government
• dumping
• lower than domestic prices
• lower than production costs
• predatory pricing
• General Agreement on Trade and Tariffs
• transparency
• most favored nation status to all members
• reciprocity
• World Trade Organization
skip rest of chapter after p 377

Gross National Product
       Value of all finished goods/services produced by countrymen in a year
Gross Domestic Product
        Value of all finished goods/services produced on domestic soil in a year

GDP/population = pcGDP
Shortcomings of pcGDP or pcGNP as measure of development

• distribution of wealth
• depreciation not counted
• "bad" goods/services count
• informal sector ignored
• doesn't reflect real incomes
• exchange rate
• implies consumption measures well-being
• people have negative effect

• population growth rate (dmeographic transition)
• economic growth rate (diminishing returns)
• geographic concentration (growth pole)
• regional inequality

Multinational corporations and LDC development

• benefits -- transfer of technology, jobs, capital
• costs -- second rate technology, job competition, transfer pricing, dependency, export orientation

1. Traditional society
2. Preconditions for takeoff
3. Takeoff
4. Drive to maturity
5. Age of Mass Consumption

1. optimistic model
1. innovation occurs at growth pole
2. urbanization, unbalanced growth follows
3. technology spins off and benefits periphery
4. eventually "polarization reversal" as growth pole fragments
5. hence development entails period of inequality
2. critical model
1. complex system of cores and core countries, and peripheries
2. cores exploits peripheries
3. hence development causes underdevelopment

EXPORT LED INDUSTRIALIZATION
    full bore on exports, trade

STAPLE THEORY OF DEVELOPMENT
    export excess of locally consumed product

Reasons why wealthy countries are at an advantage in economic development

• economies of scale
• population growth rates
• stronger negotiating power in trade
• technologically superior
• better health and education
• structural rigidity in 3rd world
• Engel's law
• polital stability

Educating women is current approach to development

• delays marriage
• increases opportunity cost of children
• information about birth control, hygeine and nutrition
• confidence and self esteem
• more income for family
• increased social equality