because life is too short for not to develop
Posts tagged developing countries
Liberalization of trade in financial services is good (or not) for economic growth in developing countries.
Feb 13th
Bellow, I provide arguments to oppose the liberalization proposition.
As provided in 4a, the argumentation confronting the liberalization in financial service is basically based on the doubt that financial repressions by central bank over financial institutions is really exist. Just to repeat the argument, for instance, the worry that the financial repression will weaken the saving propensity of the people and therefore also weaken transferability of saving into investment but in fact, the demand for investment is not depend on the availability of accumulated saved money since there are always a central bank who can back up the commercial bank in the case of the excessive investment demand. The other argument is that the liberalization through high rate of interest in order to make saving attractive can have a boomerang effect on investment, when investor loosing their mood to invest even though the money have been accumulated through saving simply because the high rate of interest.
The other argument is something related to the situation in developing country itself. Since developing country need investment project to develop and since that investment project need a more stable and steady supply of money which is cannot be satisfied if the financial sector is being liberalized. In the deregulated financial sector, an investment agent is always has a full freedom to move their capital from one financial institution to another institution as they wish without any investment purposive regulation. In this way the availability of private saving is always in the form of “hot” money that can easy to come and easy to go. This fast moving money is becoming faster in term of transaction by the aid of information and communication technology. Meanwhile, an to be successful an investment project need several condition that most of it need a long lasting commitment to invest since it happening in the real economy. Because, in turn, the investment project in developing country could also highly affects the real macroeconomic indicators such as income and unemployment which is hard if the money market is liberalized.
Intensification of international trade leads to environmental degradation and resource depletion in developing countries.
Feb 13th
Provide three arguments in favour AND three against this proposition.
Intensification of international trade leads to environmental degradation and resource depletion in developing countries because of: (i) developing countries tend to specialize in ‘dirty industries’ that Multi-national corporations (MNCs) transfer their pollution intensive production facilities to poorer countries, because of the uncontrolled environmental regulations or even non-existing environmental regulations in developing countries; (ii) comparative advantage of developing countries produces and export environmentally intensive goods to a greater degree than is efficient, and at prices that are below social cost (iii) deforestation for export crops, rain forest that rich in biodiversity in developing countries is destroyed to give way for the production of certain cash crops such as palm, timber, coffee.
However, there are arguments that international trade can bring beneficial effect for environment as: (i) Techniques or technologies shift to cleaner and environmental friendly, this happen when developing countries imports environmentally friendly products such as fuel-efficient autos. Trade also brings technological innovation, or multi national corporation who bring global standards to where the domestic site is less friendly. (ii) Multilateral agreements for trade sanction, as in Montreal Protocol on ozone depletion, Kyoto Protocol.