Deck 11: International Trade and Economic Growth

Question 1

GDP per capita in low-income countries is less than _____ per year.

A) $602
B) $2,000
C) $5,000
D) $7,500

Answer 1

$602

Question 2

ODA as a percentage of GDP for all developed countries is approximately _____ .

A) 0.10
B) 0.26
C) 0.52
D) 0.86

Answer 2

0.26

Question 3

List GDP per capita for low-, middle-, and high-income countries. Show how these numbers are the result of the mismatch between the percentage of world population living in the three types of countries and the percentage of world output produced by each type of country.

Answer 3

GDP per capita in the low-, middle-, and high-income countries is $602, $2,782, and $34,316, respectively. These differences are the result of the large percentage of the world's population living in the low- and middle-income countries relative to the percentage of world output originating in these countries. 36.5 and 47.8 percent of the world's population live in low- and middle-income countries. On the other hand, only 3.2 and 19.2 percent of the world's output originates in these countries. A large percentage of the world's population living in these countries coupled with a relatively small percentage of world output results in GDP per capita being much lower than that of the high-income countries. These countries contain 15.7 percent of the world's population but produce 77.7 percent of the world's output.

Question 4

List and describe the preconditions necessary for economic growth theory to work properly.

Question 5

Describe how the production function relates real GDP to the size of the labor force. How does the concept of diminishing returns affect the production function?

Question 6

How do increases in the capital stock or improvements in technology affect real GDP?

Question 7

Describe how openness enhances economic growth.

Question 8

What role do MNCs play in the economic growth of developing countries?

Question 9

How can the possession of primary products enhance economic growth?

Question 10

What are the elements of an import substitution development policy? Why are many countries now abandoning this strategy?

Question 11

Describe an export promotion development strategy?

Question 12

What is the relative importance of ODA in the economic development process?

Question 13

List and briefly describe the major multilateral development organizations.