Question 1

World Bank structural adjustment loans were largely dependent on developing countries changing policies to

Accepted Answer

Structural adjustment loans from the World Bank often required developing countries to privatize state-owned enterprises as a condition for receiving funding. This was seen as a way to promote market-based economies and reduce government control over key industries.

Question 2

Brazil,India,and China (the BICs)have sharply increased their share of world output since 1980 now accounting for about 20% collectively.Which of the following statements is not true?

Accepted Answer

The statement that "Other developing countries have been enthusiastic about allowing the BICs to represent their interests in trade negotiations" is not true. Many developing countries have their own negotiating coalitions and interests, and may not necessarily align with the BICs.

Question 3

Economic performance,as a result of neo-liberal reforms mandated by World Bank and IMF structural adjustment policies,has been uniformly successful throughout the developing world.

Accepted Answer

Economic performance in the developing world as a result of neo-liberal reforms mandated by World Bank and IMF structural adjustment policies has not been uniformly successful. While some countries have experienced economic growth and improved economic conditions, others have struggled and faced setbacks. There are also criticisms that these policies have led to increased inequality and social hardship in some countries.

Question 4

According to the World Bank and the IMF,East Asia succeeded because markets played a large role,and states played a small role in allocating resources.

Accepted Answer

This is the main argument behind the "East Asian miracle" that occurred in countries such as Japan, South Korea, and Taiwan in the latter half of the 20th century. These countries implemented policies that promoted economic growth through market mechanisms, while minimizing state intervention and bureaucracy. The World Bank and IMF have lauded this approach as a successful model for development.

Question 5

ISI also generated an important imbalance in persistent current-account deficits.

Accepted Answer

ISI strategies typically focused on import substitution and domestic production of goods, leading to increased imports and decreased exports, which contributed to persistent current-account deficits.

Question 6

According to Oatley,one of the worst features of ISI was the opportunities it created for government corruption.

Accepted Answer

Oatley argues that ISI created opportunities for government corruption because the government had control over the allocation of resources and could easily grant favors or contracts to allies or family members. This led to a culture of bribery and kickbacks, which had a negative impact on the economy and society as a whole.

Question 7

Why was the East Asian export oriented strategy so successful for the countries that adopted it? What effect did it have on the decline of manufacturing labor in advanced industrial states?

Accepted Answer

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Question 8

Domestic politics in support of urban residents aggravated the budget deficits generated by ISI.

Accepted Answer

Domestic politics in support of urban residents, such as subsidies and protectionist policies, put additional pressure on the government's budget deficits generated by Import Substitution Industrialization (ISI) policies. This led to further economic instability and difficulties in managing public finances.

Question 9

Brazil,India and China are now using their greater economic and trade power to attempt to capture a larger share of the gains available from international trade cooperation by shaping the agenda of the Doha Round.

Accepted Answer

Brazil, India, and China are emerging economies that are using their growing economic and trade power to push for their interests in global trade negotiations, including in the Doha Round. They are seeking a larger share of the benefits from international trade cooperation by shaping the agenda and negotiating positions of the developing countries in the WTO.

Question 10

How did ISI inefficiencies reinforce the tendency of most governments to maintain overvalued exchange rates?

Accepted Answer

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Question 11

How did the search for urban political support in the wake of the failure of export oriented agriculture during the inter war period lead to budget crises under ISI development policies?

Accepted Answer

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Question 12

Explain why most developing countries reversed 35 years of post WW II structuralist development policies to adopt neo-liberalism and export-oriented industrialization.

Accepted Answer

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Question 13

According to Oatley,the international institutions of the IMF and the World Bank linked financial assistance to economic reforms that

Accepted Answer

Oatley argues that the IMF and World Bank's financial assistance linked to economic reforms aimed to increase the role of the market in the economy. This included implementing policies such as privatization and deregulation, which aimed to reduce the state's involvement in the economy and promote private sector growth.

Question 14

The adoption of neoliberal reforms in the developing world has

Accepted Answer

The adoption of neoliberal reforms in the developing world has resulted in the labor-intensive aspects of production being shifted to developing societies, as these reforms emphasize reduced government regulations and free trade, leading to multinational corporations outsourcing their production to countries with lower labor costs.

Question 15

How did Asian governments implement policies that encouraged exports?

Accepted Answer

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Question 16

The decline in agricultural production caused by government promotion of industrialization was most severe in Latin America.

Accepted Answer

The decline in agricultural production due to the promotion of industrialization was most severe in the Soviet Union and China, where forced collectivization and policies like the Great Leap Forward led to massive disruptions in agricultural production and famine. In Latin America, while there were shifts towards industrialization, the impact on agriculture varied and was generally less catastrophic.

Question 17

According to Oatley,recent research clearly demonstrates that neo-liberal reforms have reduced poverty and narrowed the income gap between the advanced industrial countries and the developing world.

Accepted Answer

This statement is false. Recent research suggests that neo-liberal reforms have not reduced poverty and may have even widened the income gap between the advanced industrial countries and the developing world.

Question 18

According to Oatley,the economic consequences of World Bank imposed structural adjustment policies that

Accepted Answer

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Question 19

Economic crises struck developing countries during the early 1980s's in large part as a consequence of governments' decision to borrow to finance their budget and current account deficits.

Accepted Answer

This statement is true. Many developing countries borrowed heavily during the 1970s and early 1980s, often to finance large infrastructure projects or to fund subsidies for basic goods. However, as global interest rates rose and commodity prices fell, these countries found it increasingly difficult to service their debts. This led to a series of economic crises and debt defaults throughout Latin America, Africa, and Asia.

Question 20

According to Oatley,the main reason that the East Asian model was so successful was that the Taiwanese and South Korean governments eliminated most import tariffs and non-tariff barriers.

Accepted Answer

The success of the East Asian model, particularly in Taiwan and South Korea, was not primarily due to the elimination of most import tariffs and non-tariff barriers. Instead, it was largely attributed to a combination of government-led industrial policies, including targeted investments in specific sectors, export promotion, and the development of human capital, alongside maintaining certain protective measures to nurture domestic industries until they were competitive internationally.

Quiz 7: Trade and Development II: Economic Reform