Politicsof Developing Nations
1. Patron-ClientNetwork- This describes a system where a mutually obligatoryrelationship is arranged by an individual who has wealth, power,social status, or some other personal resource. Such individualsacquire the loyalty of humble persons. Therefore, the patron-clientnetwork ensures that political support is traded for materialcomforts.
2. Financialrepression- This is a term used to describe fiscal measures used bygovernments to reduce debt and boost their coffers. Such measuresinclude the deliberate attempts to maintain low interest rates thatsupersede the rate of inflation. Consequently, savers remit taxesthat are transferred as benefits from lenders to borrowers. Financialrepression allows the government to receive cheap loans fromcommercial banks.
3. Caste- Thisrefers to segmented, hierarchical systems of social organization andcontrol. Individuals are born into caste (priestly, untouchables)which determines everything about a person’s place in society. Someof the predetermined factors involve education, employment, andmarriage. Opportunities distributed according to caste eliminatecompetition.
4. Corruption-This refers to a form of unethical or dishonest conduct by a personentrusted with a position of authority, often to obtain personalbenefit. It may include many activities such as embezzlement andbribery. Granted, corruption could involve practices that are legalin many nations. In particular, political corruption refers to theuse of powers by government officials to acquire illegitimate gains.Nevertheless, an illegal act by an officeholder constitutes politicalcorruption only if the act is directly related to their officialduties, is done under color of law, or involves trading in influence.
5.Redistribution- This refers to the transfer of income and wealth fromsome individuals to others by means of social mechanisms. Some ofthese mechanisms include taxation, charity, welfare, public services,land reform, monetary policies, confiscation, divorce, or tort law.Redistribution is concerned with reducing inequalities in wealthdistribution.
2. Dependency leads to getting stuck by incapacitating the ability ofpoor persons to fend for themselves. On the other hand, poorleadership leads to getting stuck through the lack of developmentpolicies. Socioeconomic conditions cause people to lack adequateresources. In particular, the collective action problem hinders theability of persons to cater to their personal preferences. In thisregard, the interests of the group differ from an individual’sinterests. The economic and social benefits of a particular endeavordepend on each person in the group cooperating and acting in unison.Nevertheless, large societies cannot provide a guarantee of unanimousaction. Therefore, each person is motivated to act in theirindividual interest. However, countries such as China and Indiapresent exceptions to the logic of these policies. For example, Indiaseemed to be a pluralist democracy during the Congress Party’s era.During that time, the country had peaceful elections with very fewincidents of violence. Also, there were smooth transitions from oneregime to the other. Nonetheless, the caste system causedrestrictions in entry by barring citizens from fully participating inthe democratic process. Such discrimination was visible during thelong political succession of members of the Gandhi family. Besides,vote banking was a popular phenomenon where groups of Indianscustomarily elected new leaders based on their caste. Consequently,their dependency on aid limited the full expression of their domesticrights. On the other hand, China may seem to have plenty of economicprosperity due to its high level of GDP per capita. Nevertheless, theseeming prosperity occurred due to the movement of inputs rather thaninnovation and economic development.
1. Pettis andother economists have maintained that China needs to alter itsdevelopment policy to focus on domestic demand. Many economists areconvinced that the country needs to introduce competition todetermine who gets loans. For example, banks can offer competitiveloans to people rather than making capital available to those whotrade political favors. Chinese leaders (all Phase B) have opted fora policy that dramatically suppresses domestic demand. China’sdevelopment policy has three key distortions. First, the governmentmanipulates policy so that general public pays for the transfer toexporters, who can then capture domestic consumption (wealth) inother countries. Secondly, their export “success” is based ongovernment policies that allow Chinese exporters to undercut thecompetition in export markets. The costs for ensuring such policiesare paid for by average Chinese citizen. Thirdly, innovation is notthe source of Chinese export success. This is because the governmentmoves resources in such a manner that allows them to offer goods atvery low prices. Besides, the country lacks entrepreneurs who havegone out and risked their own capital. Subsequently, businessmencannot figure out how to innovate to provide a cheaper, betterproduct. Nevertheless, China is not likely to make the changesproposed by Pettis and other economists. This is because Chinalargely competes on low price, rather than on quality. Therefore, therise in GDP is one-off Phase B growth, and not development.Furthermore, prices are lowered through government intervention thatredistributes from consumers to producers. However, the Chinesegovernment cannot force improvements in quality through innovation.