1. Global Development

2. Max Weber Protestant work ethic Are poor people just lazy or stupid?
Are some cultures not compatible with economic success?

3. The conditions many in poverty live in force them to behave differently, yet still rationally.
Poor are risk adverse
Poor discount the future

4. Institutions
Weber right in regards to institutionalization such as bureaucracy.
Institutions are the rules of the game.
Private property, free market principals, bureaucracy, democracy

5. So why do we have bad institutions?
Self-Reinforcing
Colonial Legacies
Path Dependence

6. Conquest and Extraction
Settlement and Institutionalization

7. Conditions for Colonization
Colonial Objective
Types of Settlers
Natural Resources
Suitability of Environment

8. Latin America
Primary Commodities VS

9. United States
Manufactured Goods
Declining Terms of Trade

13. As World gets wealthier consumption of finished (manufactured) goods increases greatly.
Demand for primary goods does not keep pace, and varies greatly over time.

14. Bananas vs Oil What about more expensive commodities?
Oil, Gold, Diamonds
Such resources can be a curse.

15. No Taxation Without Representation

16. Resource Curse The need to generate revenue creates the need to tax
Taxation creates demands from taxed
Taxation takes massive bureaucracy

17. Extraction takes minimal labor and human capital (education and training)
Industry and manufacturing need massive amounts of labor and training

18. Saudi Arabia Gallup Poll: 71% Say public sector jobs more stable.
Height of Arab Spring $10 Billion placed into development fund
In 2015 $32 Billion given to average citizens (mostly government jobs)

19. Import Substitution Industrialization
Problem: Need to industrialize but but can't compete
Answer: Establish trade barriers (tariffs and quotas) to foster domestic industrial development
Problem: Need massive amounts of capital to build expensive industry
Answer: Borrow it

20. Brazilian Miracle 1968 -1980 10% Average GDP Annual Growth
Infant mortality 140 to 95

21. Export Oriented Industrialization
Pick a few key industries (steel, automotive, electronics)
Support industries with massive subsidies (government payments), cheap credit and trade barriers
Leave rest of economy open
Need technocratic government bureaucracy to be able to effectively pick and help key industries

22. East Asian Miracle
South Korean GDP grew by an average of 8%
Companies like Samsung, LG, Hyundai, Kia
11th biggest economy and 27th richest (Brazil 7th biggest but 77th richest)

23. Is it Repeatable?
Asian Tigers mostly homogenous societies with major external threat.
High levels of foreign aide due to security .
Few natural resources
Can countries succeed like this in today's globalize economy?

24. Latin American Debt Crisis
Oil prices sky rocket
OPEC countries loan out their new cash windfall
As recession continues debt becomes untenable
Massive devaluation of currency and inflation
% GDP Per Capita growth

25. Asian Financial Crisis
Hot money (Over-investment in East Asia)
Cheap credit in East Asian economies
Asset prices sky rocket
Strong Dollar hurt exporters pegged to US currency
China as a new competitor

26. International Monetary Fund
Bretton Woods Conference (1944)
Maintained balance of payments to facilitate stable exchange rates.
Mission changed to being lender of last resort
Requires conditionality (reforms) on loans.

27. Neo-Liberal Reform Washington Consensus
Free trade, free market, deregulation, privatization, lower tax rates, focus on fighting inflation
Failures: Asian Financial Crisis (1997), Global Financial Crisis (2008)

28. Foreign Aide
Big Push (Jeffrey Sachs)
Moral Hazard
Inefficiencies

29. Millennium Project (UN)
All 189 Member states joined in 2000
September of 2000 initiated Millennium Developmental goals to be achieved by 2015
Results uneven
Worked with World Bank and IMF to forgive debt
Provide programs to improve health and education and alleviate poverty

30. Millennium Project (UN)
To eradicate extreme poverty and hunger
To achieve universal primary education
To promote gender equality and empower women
To reduce child mortality
To improve maternal health
To combat HIV/AIDS, malaria, and other diseases
To ensure environmental sustainability[1]
To develop a global partnership for development[2]

31. Inefficiencies Fundraising: What causes get the most attention?
Who Gets What: Logistics and costs do not always lead to correct solutions
Top down approach focuses on donor goals and broad objectives, not developmental success

32. Private Property and Micro-Finance
Private property makes individuals value the future. Generates investment.
Problem: Poorest do not have as much access to such rights and have even less access to credit.
Microfinance: Loans as little as $25 can allow for significant improvements to business and health.