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Economic growth is the only way to raise standards of living in developing countries -- or any country for that matter. The Solow Growth Model explains that this is a function of capital-labor ratio and population growth, but technological growth can impact this as well.

In order to have growth, access to the rest of the world is pretty much a prerequisite, as is some element of a knowledge economy. For these to occur, access to the Internet is essential the way that the telephone was 50 years ago.

So Internet access impacts food, clothing, and shelter. Western countries can give handouts and solve the problem for the time being, or we can help promote Internet access and solve the problem permanently.

Moreover, many people in the US and EU do not have enough food, clothing, or shelter. Does this mean that we should ignore science and technology until everybody does? No rational economist would argue this.

There is a good deal of research that shows that deregulation of telecoms leads to wider access at lower prices. (Examples can be found in Turkey, Argentina, and Ghana.) So the best thing that developing countries can do is liberalize their telecom infrastructure and stimulate investment in telecoms and IT. Does this preclude subsidies? Of course not. We subsidize in the US and it's a good thing. And it's a good thing in developing countries.

As a simple economic matter of optimization, while they would make less per DVD, say, they would sell more DVDs overall, and make a greater profit.

Some good points have been made already.

The balance of payment situation has been mentionned, but I think it also has something to do with security concerns as well as countries wanting to develop an indigenous software sector.

Basically, your whole economy is dependent on outside investments to keep running, and that's hurting your currency. Some have suggested using the Euro for petroleum sales to hurt the dollar further, possibly causing a recession in the US (obviously aiming to affect the next elections).

If you are unsure how deep anti-American sentiment runs, consider the last Pew Research Center annual survey on attitudes towards Americans. The percentage of people that think suicide bombings against the US are justifiable is just plain scary.

So while the BOP, security and protectionnism all play to a certain extent, I wouldn't underestimate the sheer resentment against the US.

No. You must be unaware of the 'multiplier effect' in economics, you can read up here. Basically, if there is surplus productive capacity in a economy (which Germany surely has) a stimulative effect at employing that surplus will have spill over benefit to everyone (chip makers need bakers, burger flippers etc) economically 'near' them. The money goes round the economic circle and multiplies.

As Germany is in a depressed economic position (lots of deflationary pressures) such fiscal stimulus is useful (this was the argument for the Bush tax cuts - but that was probably unnecessary in the US (and was not 'directed' to undercapacity areas of the economy), but is much more necessary in Germany), not that this is a cure-all as German is suffering really bad structural problems too.

Then there is the money multiplier concept (a not very good definition here) which explains how money increases as the definition broadens - is cash money, but the amount of money on deposit is greater than all cash in circulation and in bank tills This is a seperate issue and not relevant to this discussion, but a fine demonstation that of all things in life, money is one ofthe finest examples of something which multiplies.

While the budget deficit MAY be a smaller percentage of GDP than other major powers (I haven't found info on this), this site says that if your debt was payed off, the US budget would have a $175 billion dollar surplus. It also says that interest on debt accounts for 19% of US GDP. So don't get too pleased with the possible fact that the deficit is low. Without paying off debt, the US is going to have rising deficits just to cover interest on your debt.

It's a little more compilcated than the simple Demand and Supply diagram for perfect competition, since this is clearly not a case of perfect competition basing any price simply on the price elasticity of demand and supply.

As someone said previously, there is an Oligopoly in control of LCD manufacture, probably a collusive one.

They're also practicing Price Discrimination.

Consequently they are at the point where they can generate Super Normal Profit, and this will continue in the short term as long as the Oligopoly remains intact.

It's a little more compilcated than the simple Demand and Supply diagram for perfect competition, since this is clearly not a case of perfect competition basing any price simply on the price elasticity of demand and supply.

As someone said previously, there is an Oligopoly in control of LCD manufacture, probably a collusive one.

They're also practicing Price Discrimination.

Consequently they are at the point where they can generate Super Normal Profit, and this will continue in the short term as long as the Oligopoly remains intact.

What's interesting about these little pricing games is that we internet users have been sticking it to the online businesses for a while now. Armed with (nearly) perfect information about the marketplace we have forced them to give up the premiums that businesses have traditionally been able to charge for better location, better advertising, and the like, resulting in a huge consumer surplus. Now, it looks like businesses are finally learning how to use the unique characteristics of the net to their advantage, and they're starting to win back some of that consumer surplus. For all the talk about how the rules of business have changed in the digital age, it looks as if the game may be fundamentally the same, once everyone learns how to play under the modified rules.

-rpl