Question 1

Explain the importance of terms of trade in Singer-Prebisch theory.Has research confirmed these hypotheses?

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Question 2

Explain the coordination problems identified by structuralist theory and the suggested remedies for government intervention.

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Question 3

Explain how and why structuralism became the dominant theory of development economics.

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Question 4

The New International Economic Order (NIEO),according to Oatley,represented a new attempt by developing countries

Accepted Answer

The NIEO was a set of radical demands put forth by developing countries to fundamentally alter the operation of the international economy, with the goal of increasing their economic power and reducing dependence on the developed world. Despite some successes, it was largely unsuccessful in achieving its goals.

Question 5

According to Oatley,the benefits of ISI were transferred from

Accepted Answer

Oatley argues that the benefits of ISI were transferred from rural agriculture to urban manufacturing and nontraded-goods sectors. ISI policies focused on protecting and promoting domestic manufacturing, which led to a shift in resources from agriculture to industry, particularly in urban areas. This shift had positive effects on urban manufacturing and nontraded-goods sectors, but often had negative effects on rural agriculture and export-oriented commodities producers.

Question 6

Backward linkages arise when

Accepted Answer

Backward linkages refer to the indirect effects of one industry's production on other industries that supply components or inputs for that production. Choice E correctly describes this situation, as the production of one good would increase demand for the components or inputs supplied by industries that provide materials, parts, or other goods necessary for the production of that good. The other choices are incorrect: A describes a situation where the production of one good reduces demand for components, which is a case of forward linkages; B is partly correct but does not capture the indirect effects on other industries; C describes a situation where the direction of causality is reversed, as the production of goods for export is itself a result of the backward linkages created by exporting industries; and D mixes up the effects on producers and consumers, and also does not capture the indirect effects on other industries.

Question 7

Most developing countries either nationalized or heavily controlled the financial sector in order to direct financial resources to targeted industries.

Accepted Answer

This statement is true. Many developing countries saw nationalization or heavy control of the financial sector as a way to direct funds to strategic industries and promote economic development.

Question 8

GATT Part IV was successful in creating meaningful changes in the trade policies pursued by the advanced industrial countries.

Accepted Answer

GATT Part IV, which focused on increasing trade opportunities for developing countries, had limited success in creating meaningful changes in the trade policies of advanced industrial countries. Many developed countries did not fully implement the concessions or changes that would significantly benefit developing countries.

Question 9

According to structuralists in the post WWII era,markets in developing countries would not naturally reallocate sufficient resources from agriculture to manufacturing because they were still dominated by export-oriented agricultural interests.

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Question 10

Explain how landowner dominated politics prior to WW II differed considerably across regions in the developing world.

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Question 11

The Group of 77 was a trade alliance of developing country governments that

Accepted Answer

The Group of 77 mainly sought to use UNCTAD (the United Nations Conference on Trade and Development) to pursue international rules that would increase their share of the gains from trade. The group was founded in 1964 by seventy-seven developing countries, and has since expanded to 135 member states. The aim of the G77 was to promote economic cooperation among its members and to enhance their bargaining power in the international arena. This was done by advocating for greater representation of developing countries in international organizations and discussions, as well as calling for reforms to the global trading system to address the needs and interests of poorer nations.

Question 12

The structuralists' assertion that coordination problems would prevent investment in manufacturing was not a serious problem for governments intent on industrialization.

Accepted Answer

Structuralists argued that coordination problems, such as the simultaneous development of various sectors necessary for industrialization, were significant obstacles. Governments had to undertake considerable planning and intervention to overcome these challenges and successfully promote industrialization.

Question 13

The push toward decolonialization in Africa in the 1950s was led by a coalition of indigenous professionals who had acquired positions in the administration of colonial economic and political rule.

Accepted Answer

The push toward decolonialization in Africa in the 1950s was indeed led by a coalition of indigenous professionals who had acquired positions in the administration of colonial economic and political rule. They used their positions to challenge colonial policies and advocate for independence.

Question 14

The GSP agreements agreed to by advanced industrial countries in the late 1960s were of limited importance because they used limited quotas of goods that could enter under preferential tariff rates.

Accepted Answer

The GSP agreements did indeed use limited quotas of goods that could enter under preferential tariff rates. Therefore, they were of limited importance.

Question 15

Explain how the collapse of agriculture during the Great Depression brought to power governments supported by import-competing interests.

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Question 16

Trade and development policies in developing countries after WW I have been strongly shaped by political competition between former colonial and nationalist agriculture.

Accepted Answer

Trade and development policies in developing countries after World War I have been more significantly shaped by a variety of factors including colonial legacies, global economic pressures, internal political dynamics, and the influence of international financial institutions, rather than solely by political competition between former colonial and nationalist agriculture.

Question 17

The United Nations Conference on Trade and Development (UNCTAD)was established in 1964 as a

Accepted Answer

UNCTAD was created to promote the interests of developing countries in the world trade system. It aims to help developing countries integrate into the world economy and trade on equitable terms, while also advocating for policies that support sustainable development.

Question 18

Most governments of developing countries after World War II believed that higher standards of living were not possible with most people living on subsistence agriculture.

Accepted Answer

This statement is true. Many post-WWII developing countries believed that higher standards of living could only be achieved through industrialization and modernization, which required a shift away from subsistence agriculture.

Question 19

Developing governments' belief that industrialization would not occur in their countries if they participated in the GATT-based system played an important role in shaping their trade and development policies.

Accepted Answer

Developing countries often believed that the GATT-based system was designed to benefit industrialized countries and that their participation would hinder rather than promote their own industrialization. As a result, they often adopted protectionist trade policies and pursued import-substitution industrialization strategies instead.

Question 20

Pecuniary external economies are a problem of interdependent coordination among market processes.

Accepted Answer

Pecuniary external economies refer to the benefits received by firms due to increased demand for their products or services, which leads to lower average costs of production. However, these benefits are not captured by the firms themselves but by the industry as a whole. This creates a coordination problem among market processes because individual firms cannot internalize the positive externalities they generate, leading to suboptimal market outcomes. Therefore, it is true that pecuniary external economies are a problem of interdependent coordination among market processes.

Quiz 6: Trade and Development I: Import Substitution Industrialization