Illiberal Democracy, Institutions, and Development Policies

Political and Economic Concepts for Development

Illiberal Democracy

Illiberal democracy — a governing system in which, although elections take place, citizens are cut off from knowledge about the activities of those who exercise real power because of a lack of civil liberties.

Political-Economic System

Political-economic system — the relationship between economic and political institutions and the policies and outcomes they create.

Institutions

Institutions — humanly devised constraints that structure political, economic, and social interaction: the rules of the game, formal or informal, legal or not, backed by organizations or not.

Welfare State

Welfare state — a system whereby the government undertakes to protect the health and well-being of its citizens, especially those in financial or social need, by means of grants, pensions, and other benefits. (Social democracy)

Colonialism and Imperialism

Colonialism/imperialism — a system in which a state extends its power beyond its borders to control other territories and people.

Export-Oriented Industrialization (EOI)

Export-oriented industrialization (EOI) — a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage, thereby creating an international market.

Import Substitution Industrialization (ISI)

Import substitution industrialization (ISI) — a trade and economic policy which advocates replacing foreign imports with domestic production. ISI is based on the premise that a country should attempt to reduce its foreign dependency through local production of industrialized products, creating a home market.

Comparative Advantage

Comparative advantage — the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity. If one country has a comparative advantage over another, both parties can benefit from trading because each party will receive a good at a price that is lower than its own opportunity cost of producing that good. Comparative advantage drives countries to specialize in the production of the goods for which they have the lowest opportunity cost, which leads to increased productivity.

Globalization

Globalization — the process in which people, ideas, and goods spread throughout the world, creating more interaction and integration between the world's cultures, governments, and economies. Includes free trade, the spread of ideas and information, and the sharing of cultures.

Foreign Aid

Foreign aid — the international transfer of capital, goods, or services from a country or international organization for the benefit of the recipient country or its population.

Iron Rice Bowl

Iron Rice Bowl — lifelong security and care; central planning of production, allocation, and distribution of goods; economic isolation and lower performance.

Development in Low-Income and Developing Countries

Key elements:

• 1) A role for government.
• 2) Building and maintaining political and economic institutions.
• 3) Fight corruption.
• 4) Incorporate the informal economy — street vendors.
• 5) International aid.
• 6) Special economic zones — more economically liberal than the rest of the country, a laboratory for reforms; first in Ireland.