If You're So Smart...
The Rich Nations Mystery
Which "Wood" You Choose?
What 'Wood' You Do: Cook Food or Build Houses?-Part 2
Capital & Advanced Technology
Another vital turning point in economic growth is the development of people. A nation's educational, scientific, intellectual, artistic and cultural resources are not just ends in themselves for immediate enjoyment, they also represent capital assets that can enhance the quality of life for future generations. Anti-child labor laws reflect this view in the best interests of the individual child and future national productivity. Countries with a lack of abundant natural resources, like the "Pacific Rim" nations (including Korea, Japan, Singapore, Thailand, Taiwan, among others), have wisely concentrated on development of their human and technological resources. With rather homogeneous cultures, they have easily developed stable legal and political systems and sophisticated urban infrastructure. However, people outside the region have expressed some concern about a lack of opportunities for girls and women to pursue professional advancement.
Critical first steps toward investment in human resources include maternal health programs and immunization of children against preventable diseases. These actions generally decrease the among children, and increase life expectancies, allowing households to undertake longer-term planning and investments.
In 1997, Haiti was the poorest country in Latin America, with an average income per person of $250 per year. Venezuela was a relatively prosperous middle-income country with a per capita income of $3,020 per year. Please contrast the two countries' approaches with respect to health care. Also contrast the current health status of each country. Where is life expectancy higher? Where is infant mortality lower?
Which country invests more in children, in health care and in education? How are prospects for economic development in Haiti likely to be stunted by the inability to invest in children?
to get a profile of health care in each country.
Then, go to:
for more specific information.
An important lesson learned from economic history is that international trade usually benefits all parties involved, regardless of size or wealth. Specialization and trade enhances a nation's productivity and standard of living. Western Europe and Eastern Asia governments understand this principle and have enjoyed immense benefits from opening their economies to imports of others' goods and services, thereby increasing their own exports. During the 1950s, Argentina and other Latin American countries cautiously avoided trade under the goal of national self-sufficiency. These inward-looking policies isolated Argentina from participating in much of the global growth in the 1960s and 1970s. Chile has participated in world trade, but most of the benefits have accrued to the richest Chileans, thereby widening the gap in Chile's national income distribution and causing civic unrest.
Convertibility of money between two countries refers to the ability to exchange one currency for another (for example, to convert US Dollars to Japanese Yen) in a free market. How does convertibility of money affect the ability to trade between two countries? How does this trade, then, make people in the country better off?
for information presented in another Econedlink lesson on How Money Affects Trade.
$$ For More Info. Explore the website of the International Monetary Fund: http://www.imf.org/external/index.htm.
Political Stability - another key to sustainable economic development is stability in a nation's political, financial and civic systems. Stability has been a boon to long-term business investment and consumer confidence in Canada, the United States and China (where the "Household Responsibility System" generated approximately 11% annual economic growth during the 1980s and 1990s). These countries allow their citizens to benefit from the output of their productive activities, which promotes a long term vision among workers. In economic terms, the institution of property rights is critical for entrepreneurs to be willing to take risks in hopes of earning profits. Political instability has hurt long-term planning in Uganda, Rwanda and, most recently, Indonesia.
A key government policy involves currency exchange rates. Currency exchange rates determine the prices consumers pay for imported goods and producers receive for their exports. During unstable times, governments are tempted to adopt a short term perspective and deliberately overvalue their currency, a strategy which cannot be sustained. Eventually the country must devalue its currency back to internationally competitive levels, which can cause even more social unrest, as it has recently in Indonesia and Mexico.
How do the lending and credit operations of the International Monetary Fund (IMF) promote or fail to promote political stability? During the recent financial crisis, the IMF took a substantial and highly visible role. What are some of the ways in which the IMF intervened on the international scene during the past few years?
for some of the IMF policies undertaken during the recent crisis.
$$ For More Info. View the website of the U.S. Peace Corps: www.peacecorps.gov