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Flashcards in Pathways to Economic Development Deck (18)
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1

What is the ISI?

Import Substitution Industrialization

2

What is the main purpose of the ISI?

To build industrial capacities within a country, rather than importing a product

3

Why was the ISI created?

-Due to the need of autonomy & domestic pressures
-For protection against multinational corporations
-To protect infant industries
-To seek diversification of production

4

How do states play a big role within ISI?

-By deciding which goods should be produced
-By allocating subsidies
-By instituting other trade barriers

5

Which are some drawbacks for ISI?

-Protecting inefficient industries
-Indiscriminate protectionism
-Competitive protectionism

6

Which is a need of the ISI?

International loans

7

In the terms "Washington Consensus," what is understood by the term "Washington"?

-US Congress
-The Fed
-The US Executive
-Think Tanks
-Financial institutions

8

Which are the 10 articles of the Washington Consensus?

1. Fiscal deficit
2. Public expenditure priorities
3. Tax reform
4. Interest rates
5. Exchange rates
6. Trade policy
7. Foreign direct investment
8. Privatization
9. Deregulation
10. Property rights

9

In the Washington Consensus, what is understood by 1. Fiscal deficit?

Government must reduce deficit

10

In the Washington Consensus, what is understood by 2. Public expenditure priorities?

Cutting off unnecessary subsidies & increasing investment in human capital & building infrastructure

11

In the Washington Consensus, what is understood by 3. Tax reform?

Keeping taxes low & building a broad tax base

12

In the Washington Consensus, what is understood by 4. Interest rates?

Market-determined, positive rates that encourage savings

13

In the Washington Consensus, what is understood by 5. Exchange rates?

Value of a currency in comparison to another currency

14

In the Washington Consensus, what is understood by 6. Trade policy?

Liberalizing imports

15

In the Washington Consensus, what is understood by 7. Foreign direct investment?

Dismantling of barriers so as to import skills, know-how & capital

16

In the Washington Consensus, what is understood by 8. Privatization?

Relieving pressures on government budget & mitigating moral hazard

17

In the Washington Consensus, what is understood by 9. Deregulation?

Eliminate / reduce the amount of rules surrounding economic activities

18

In the Washington Consensus, what is understood by 10. Property rights?

Providing certainty for economic activity & encouraging wealth accumulation & investment