|  Lecture
2. Poverty and the Economic Development Process
A. The Problems to be faced in initiating economic
development:
• Coordinating initiatives, building capacity
• Facing uncertainty, calculating risk
• Confronting power and entrenched interests
• Acquiring resources: Financing investment
B. Core classical ideas:
• Marx: Exploitation of labor and hegemony
of capital, circuit of capital
• Schumpeter: Role of the ‘entrepreneur’
and of finance in facilitating innovation
• Keynes: Importance of aggregate demand
in increasing employment
• Kalecki: The political challenges of full-employment
and of guaranteed employment
C. Neoclassical approaches:
• Microeconomics: Market displacement, arbitrage
and efficient pricing, market segmentation and
the exercise of power
• New Keynesian economics: The functionality
of rigidities in price systems, the role of asymmetric
information in principal/agent situations
D. Focus on four markets:
• A market for exportables: the problem
of intermediate goods and of required technology
and skill levels (to import or try learning-by-doing?)
• A market for non-tradeables: the adequacy
of local demand in sustaining a boom (differences
in the size/adequacy of non-tradeable markets,
US vs. Brazil), link to income distribution, wealth
levels, and in-migration of population/capital
• The labor market: the problem of power
and the short side of the market – scarce
technically-skilled labor vs. plentiful low-skill
labor; interactions between labor demand and aggregate
demand curves
• The credit market: the problem of inadequate
credit and capital; to take on foreign capital
and credit, or not? Debt load vs. leverage
E. Focus on market structures:
• The physical conjuncture of industries
and households in space: spatial assets vs. aspatial
assets, irreversibility and liquidity, the challenge
of spatial development
• Extensive vs. intensive development (margin-stretching
vs. inframarginal development)
• Proximity effects, opportunities for spillovers
of various kinds
• The problem of scale
• Agglomeration as temptation to massive
mistakes or as a necessity of industrial strategy
F. Poverty in the scheme of markets:
• A residual due to unemployed labor (non-geographic)
• A problem of inadequate capacity (education,
skilled labor, infrastructure)
• A problem of market imbalance (too much
focus on non-tradeables, too little on exportables?)
• A spatial problem of mismatch between
population and jobs
• A predictable byproduct of high growth
(exportables), or an expression of strategic failure?
Lecture 3. Spatial Aspects of Development, Impoverishment,
and Discrimination
A. Increasing returns to scale and spatial dynamics
• Spatially-specific vs. aspatial investment
theory
• Industrial clusters and path dependence
in explaining the rise of computer, biotechnology
complexes
• “Increasing returns” and fiscal
or technological spillovers
• Relevance for problems of poverty? Michael
Porter’s ideas about “competitive
advantage of the inner city”
B. Cross-border balances: the spatial microeconomy
as an open macroeconomy
• The “inner city” as a developing
country
• The trade balance and capital account
of the inner city
• The location of production and its implications
for regional economic output and balances
• “Disinvestment” from the inner
city and the problem of inner-city revitalization
• The favela – equivalent to an American
inner city
C. Redlining and strategic interaction among
banks and firms
• The availability of credit and the volume
of home purchases and business loans
• The symmetry between racial segregation
and economic dividing lines
• Categories of racial and social discrimination
• I: Personal discrimination
• II: Structural discrimination
• III: Rational discrimination
• Inter-market effects; and transformations
of one category of discrimination into another
• Racial redlining, geographic redlining:
when area determines value
Lecture 4. Strategies for Local Enterprise
Financing and Development
A. “Free the (local) banks” to make
loans and extend credit
• The impact of economic crisis, devaluation,
and inflation on bank lending
• The preconditions for local banks to make
productive loans
• The problem of defining “local”
banks in a cross-border merger wave
B. Government and industry procurement programs
• SBA Business Development programs
• SBA 8(A) procurement and “set asides”
for women and minorities
• The Adarand challenge
• HUBZones Program and spatially-targeted
procurement
C. Financing strategies I: Microenterprise and
microcredit approaches
• The Grameen model
• Analyzing Grameen from a strategic and
incentive perspective
• Keynesian aspects of the Grameen model
• Power and conflict and microenterprise
Lecture 5. Strategies for Impoverished
Communities
A. “War on poverty” and the impoverished
community
• The 1960s US “War on poverty”
• The political reaction to the “War
on poverty”
• The underlying political economy of the
“War on poverty”: the emerging redundancy
of unskilled inner-city labor
B. Fiscal and monetary policy stimulus and poor
communities
• Federal vs. local spending and the poor
• “Targeted” vs. “general”
programs and the poor
• Financial innovation and the low-income
community
• Monetary policy in the era of free global
capital flows
C. Living-Wage laws in U.S. cities and states
D. Unionization of low-income workers –
the case of homeworkers in Los Angeles
E. Financing Strategies II: The South Shore Bank
of Chicago
• The South Shore model
• Analyzing South Shore from a strategic
and incentive perspective
• Keynesian aspects of the South Shore model
• Power and “greenlining” and
South Shore Bank
F. Financing Strategies III: Ethnic Banks
• The Ethnic Banking Model
• The case of Los Angeles
• Immigration of money and population: a
special case?
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