Jason Renfro ECO351 G

Question #1: a) There are a number of countries I would have predicted to be on the list of Success Stories in the article Not by Bread Alone. India is a surprise omission from the list considering the amount of human capital they have available. As one of the world leaders economically, it seems only natural that they would also have focused on and raised their HDI in the process along the way. There are also a number of African nations I might have expected to see on the list as well, mostly those of East Africa. East Africa has seen monumental progress over the past decade and a half in terms of implementing social and political policies that previously hadnt been in place. These policies include establishing strong foundations for both health and education, moving towards gender equality, and also opening up their markets to foreign investment by multinational corporations.

b) Brazil, since the end of the lost decades of the 1980s and 90s has shown astounding progress economically due to an increasingly export-heavy orientation of their economy. Soybeans are their number one commodity sold to the international market, with China as the single largest beneficiary. Even with this economic boom in recent years, many critics still believe Brazil should be better off than they currently are

pertaining to overall HDI standards. The biggest issue facing Brazil is the efficient and fair allocation of their large amounts of capital inflows that come as a result of their exports. Brazil has one of the worst examples of income inequality in the world. The highest 5th of their society receives 58.7% of the income, while the lowest 5th takes in only 3%. Social and political spending usually benefits the most well-off in society rather than those who are in the most need for it. Lackluster spending on education, health, and community development has led to an overall delay in growth throughout the country as a whole. The most staggering example of this downfall would be the fact that education continuing on after a primary level is virtually nonexistent. Brazil seems to be caught in a struggle between short and long term results in their economy, which could be why their social progress is lagging while their economic success is better than ever.

South Korea currently holds one of the highest HDI ratings in the entire world, which is an astounding fact considering where they fell on the list just a few decades ago. With their investment in national income being the highest in the world, they have contributed large sums of money into renovating their infrastructure which has paid off in numerous ways. They took large numbers of their work force from agriculture and diverted them into the industrial sector. Using their tax breaks and various incentives, the government persuaded firms to follow their directives all pertaining to extensive development planning for long term efficiency throughout all markets. Some examples of this development planning include; setting single firm export targets, improving

technology levels, and increasing their levels of comparative advantage in order to leverage deals with international partners. South Korea is a prime example of how government assistance can help overcome coordination issues within a single countries economy, and lead them towards higher levels of productivity.

Argentina has historically had high levels of foreign capital investment flowing into their borders, which in some ways has had a negative effect and stunted their growth over the past half century. The country defaulted on their debt in 2002 following a decade of reasonable prosperity, thus shrinking their economy sizably. Argentina put a huge emphasis on exporting their primary goods to the rest of the world, and therefore opened themselves up to foreign firms gaining substantial control within the country; stunting Argentinas own ability to develop these fields of industry. Due to this lack of control, Argentina was forced to comply with any restructuring plans that were brought about by these foreign firms, and eventually sold off many state industries to multinational companies. The progress that Argentina was making over the years was as a result of the foreign controls and had no foundation that the country alone could stand on. The policies that the government was implementing were for the benefit of certain special groups rather than in an effort to move towards completing development goals to move the country along. In the end, Argentina handed over their economic fate piece by piece to outside forces, and were at the mercy of those externalities rather than their own personal directives moving forward into the future.

China has seen unprecedented economic progress over the past three decades, including an average annual growth rate of 9% per year, and a 45% reduction of its citizens living in poverty. This economic boom was brought about by a massive opening of their markets to world trade, and the careful restructuring of their economy to coincide with the growing demands of globalization. Around the same time that the global market was beginning to really take off, China directed their focus on an exportoriented overhaul of their business and industrial sectors. At the same time that they were increasing exports, they were drawing the attention of firms around the world with their large market of potential consumers. Due to a high demand from these foreign firms for a market share, China was able to position themselves favorably and pick and choose which deals seemed most beneficial be it partnerships, technical knowledge, or content rights on products. Most of the growth that China saw in their industrial labor sector was diverted from agriculture signifying a change of emphasis on what the driving force of the economy would be going forward. All of this development was carefully monitored by the government in a dual track system that acted as a safety net for firms to gradually open up to the international market without risking collapse or inefficiency. Many question whether Chinas prosperity is sustainable at this high rate going into the future, for all the progress they are making, it is not without its pitfalls.