Deck 11: Development: Causes of the Wealth and Poverty of Nations

Question 1

Which of the following illustrates when a government would have trouble creating a favorable environment for economic growth?

A)The climate of Chile is temperate.
B)Brazil had a relatively centralized and stable government when it became independent.
C)The government of Mali did not have much technical expertise when it became independent.
D)The British trained many Indians before their country became independent.
E)International investors want a country to have secure property rights before lending money.

Answer 1

C

Question 2

Why are adverse international conditions insufficient for explaining why some countries remain poor?

A)Some developing countries have been successful at developing,despite adverse international conditions.
B)In general,international conditions have been favorable for economic development.
C)In general,international conditions have had no effect on economic development.
D)International conditions are adverse only for colonies and have no effect once colonies become independent.
E)Adverse international conditions have been offset by foreign aid from developed countries.

Answer 2

A

Question 3

When do domestic interests impede economic growth?

A)When business groups want to innovate without government interference.
B)When powerful domestic groups feel threatened by government economic policies.
C)When the government is strong enough to overcome special interest groups.
D)When a large segment of the population works in export-oriented industries.
E)When international banks are lending money to a country.

Answer 3

B

Question 4

The majority of the world's population lives in:

A)wealthy countries.
B)moderately wealthy countries.
C)poor countries.
D)democratic countries.
E)countries that are located in Africa and South America.

Question 5

What has happened to the proportion of the world's population living in abject poverty?

A)The proportion of the world's population living in abject poverty has declined since the 1980s.
B)Economic growth has increased so much that almost none of the world's population lives in abject poverty.
C)The proportion of the world's population living in abject poverty has increased slightly.
D)The proportion of the world's population living in abject poverty has increased substantially.
E)The proportion of the world's population living in abject poverty has stayed the same.

Question 6

What is an "encompassing coalition" in regard to overcoming collective action problems?

A)When less developed countries are surrounded by developing countries.
B)An alliance consisting of enough domestic groups that it pursues broad social welfare.
C)An alliance of foreign investors who can force less developed countries to make economic concessions.
D)A politically powerful alliance of domestic groups that can force the government to implement policies to benefit their own economic interests.
E)A union of less developed countries that can force developed countries to implement fairer trade policies.

Question 7

Why is Zambia an example of failed potential for economic development?

A)Although Zambia experienced substantial economic development,its economic growth did not keep pace with that of South Korea.
B)Although Zambia had substantial natural resources and a respected national leader,its economy worsened instead of improving after independence.
C)Although Zambia's economy grew steadily,much higher economic growth was expected,because of the country's substantial natural resources.
D)Like typical developing countries,Zambia became independent with few resources left with which to develop.
E)Zambia's economy worsened after independence because of severe ethnic conflict.

Question 8

Which of the following countries would have the best geographical factors for economic development?

A)A country with no coastline.
B)A country in a tropical region.
C)A country in a temperate climatic region.
D)A country where malaria is present.
E)A country with no reserves of oil.

Question 9

Why did African countries have policies that benefited the urban elite?

A)The rural population plays no role in economic development.
B)Governments implemented policies that benefited powerful urban interest groups.
C)International organizations forced them to implement these policies.
D)Most of the population of Africa lived in urban areas.
E)The traditionally conservative rural elite continually blocked attempted economic reforms.

Question 10

What is the relationship between democracy and development in South and North America?

A)Autocratic states are more capable of developing their economies,as they are able to ignore special interests.
B)People were generally not interested in democratic representation in South America.
C)Some equality in the economic system leads to more equal governance in the political system in North America,and this representation facilitated development-oriented institutions.
D)The unequal development of wealth in South America encouraged the political institutions to represent the rich,which fostered faster economic growth than in North American societies.
E)European colonial powers generally cared more about their colonies in North America than their South American colonies and worked to develop those colonies first.

Question 11

Which of the following statements does NOT accurately describe sub-Saharan Africa?

A)In sub-Saharan Africa,nearly one-third of children under five years old are malnourished.
B)In sub-Saharan Africa,fewer than one-third of children who are of secondary school age attend school.
C)Barely one-half of the population of sub-Saharan Africa has access to clean water.
D)Average incomes in sub-Saharan Africa today are comparable to the incomes in western Europe 200 years ago.
E)The population of independent sub-Saharan countries has always been poorer than those of South Korea and Taiwan.

Question 12

What are secure property rights?

A)People are safe from invasion by neighboring countries.
B)Property owners can be confident that material goods will not be seized arbitrarily.
C)There is a clearly written democratic constitution.
D)There is a capitalist society in which people can buy and sell property.
E)The government is able to buy or expropriate property to create infrastructure.

Question 13

Why are secure property rights important for economic development?

A)Governments need to be able to make use of public lands for infrastructure projects.
B)Property owners need to be able to buy land in order to build factories or create large-scale farms.
C)Countries that are insecure and subject to invasions from neighboring countries are less likely to have the necessary economic and political environment for development.
D)When property owners think their assets are secure they are more likely to invest in improvements to their land.
E)Countries cannot develop economically without a clearly written democratic constitution.

Question 14

Why would some domestic interests oppose policies that foster economic development in their own country?

A)Businesses that want to innovate fear that the policies will encourage a government to expropriate their assets.
B)Some people want policies to fail,so they can use the economic crisis as an excuse to leave the country.
C)Some groups want to ensure that they have secure property rights.
D)Urban factory owners do not want cities overrun with unskilled rural workers as a result of policies that encourage urbanization.
E)Groups who receive special concessions from government do not want to lose their privileges.

Question 15

Which of the following is NOT likely to have interests that are detrimental to economic development?

A)The owner of a factory making products to export to Europe.
B)A wealthy landowner hoping to use his or her political influence to take over smaller parcels of land.
C)The owner of a sugar plantation.
D)A corporation that receives tax credits from the government.
E)A bureaucrat who receives bribes for expediting paperwork.

Question 16

What might have helped economic development in South Korea and Taiwan?

A)Both countries had significant natural resources.
B)Both countries had democratic governments.
C)Competition with North Korea and China helped create national unity.
D)Neither country had significant national security concerns.
E)Both countries carefully followed import-substituting industrialization policies.

Question 17

What was one of the primary differences between North and South America that helped determine the difference in development?

A)North America was colonized by mostly European nations,while South America was not.
B)South America was more prone to democratic institutions that make decisions about development more difficult.
C)South America encouraged the private ownership of property,and property owners block the development of their land.
D)The countries that colonized North America were generally militarily more powerful than those that colonized South America.
E)The political institutions in North America tended to be more democratic than those in South America.

Question 18

How did government policies benefit the urban elite in sub-Saharan Africa?

A)Governments reduced tariffs on luxury goods.
B)Governments made it easier for the urban elite to buy vacation homes in rural areas.
C)Governments provided technology like cable television only in large population centers.
D)Governments created modern efficient bureaucracies.
E)Governments taxed farmers to provide resources for urban businesses and workers.

Question 19

Which of the following is NOT an example of infrastructure?

A)Businesses.
B)Roads.
C)Water supply.
D)Schools.
E)Railroads.

Question 20

We refer to countries that have lower levels of economic development as:

A)marginal countries.
B)less developed countries.
C)import-subsidizing countries.
D)export-oriented countries.
E)commodity cartels.

Question 21

We refer to a situation in which a few large firms can effectively control their industry as a(n):

A)monopoly.
B)primary product.
C)favorable term of trade.
D)oligopoly.
E)export-oriented industry.

Question 22

What is the relationship between settlers' mortality rates and development in former colonies?

A)Colonies had the autonomy to develop independently where diseases such as malaria kept colonial settlers from relocating to the region.
B)Where climate allowed colonial settlers to survive,the resulting colonial policies were more likely to benefit both colonizer and colony.
C)Countries with tropical climates were attractive to citizens from northern Europe,who learned how to overcome tropical diseases.
D)More Europeans moved to countries with temperate climates,which gave them more direct control and led to increased exploitation by colonial powers.
E)Former colonies where European settlers were most likely to die from diseases are the countries that now have the highest rates of economic growth.

Question 23

All of the following are primary goods EXCEPT:

A)coffee.
B)automobiles.
C)copper.
D)cotton.
E)oil.

Question 24

Which of the following is NOT a way that the international economic institutions are biased against poor countries?

A)The World Trade Organization does not address rich countries' protectionist agricultural policies.
B)Rich countries can use the International Monetary Fund to reward the countries that are their allies.
C)The United States and the European Union can veto International Monetary Fund proposals.
D)Rich countries have more votes in the International Monetary Fund than poor countries.
E)Many poor countries are not allowed to join the International Monetary Fund.

Question 25

Why do rich countries sometimes promote policies that hurt less developed countries?

A)Rich countries want to keep poor countries poor so they have cheap sources of food imports.
B)Rich countries do not know that their policies hurt poor countries.
C)Rich countries take the advice of poor countries,which often unintentionally leads to poor outcomes.
D)Rich countries want to keep poor countries poor so that they will never become military threats.
E)Rich countries often protect the interests of powerful domestic groups at the expense of poor countries.

Question 26

Which of these cases is an example of worsening terms of trade for a less developed country?

A)El Salvador signs a free-trade agreement with the United States that allows the United States to keep some tariffs on Salvadoran goods.
B)The International Monetary Fund (IMF)forces Indonesia to reduce its tariffs.
C)A group of foreign investors removes its money from Kenya,because the government does not grant the group special concessions.
D)The price of Chilean copper decreases while the price of Japanese cars increases.
E)The amount of oil Nigeria can export decreases while the number of imported cars increases.

Question 27

According to Argentine economist Raúl Prebisch,________ countries are likely to benefit from the long-term trajectory of the terms of trade in the international economy.

A)militarily powerful
B)less developed
C)developed
D)democratic
E)autocratic

Question 28

Which of the following is an example of detrimental colonial policies?

A)Building roads to transport natural resources out of inland areas.
B)Building ports where colonial powers could dock their naval vessels.
C)Creating schools where students learned English or French.
D)Colonial powers allowing their colonies to trade only with the colonizing country.
E)Colonial powers encouraging their colonies to produce basic manufactured goods.

Question 29

Countries in which people live on less than $1,000 a year are generally concentrated in what region of the world?

A)North Asia.
B)South America.
C)Central America.
D)Sub-Saharan Africa.
E)Eastern Europe.

Question 30

What is the "resource curse"?

A)Having very few natural resources in a country,which hinders development.
B)Not having oil reserves or sufficient coal deposits for industrialization.
C)Not investing sufficiently in education,so that economic growth is hurt by lack of skills in future adults.
D)Having lucrative natural resources,which can hurt a country's economic development.
E)Colonies being stripped of their valuable natural resources by colonial powers.

Question 31

Which of the following is an example of an oligopoly?

A)Oil producers restrict global oil supply in order to prop up the price of oil.
B)The automobile industry in the 1970s was dominated by four or five large firms.
C)Taiwan spurs exports to developed countries by subsidizing certain popular industries.
D)Mexico attempts to become self-sufficient by erecting trade barriers and developing domestic industry.
E)Cotton farmers receive large amounts of subsidies from the U.S.government.

Question 32

How does democracy affect the likelihood that necessary public goods will be provided?

A)More representative institutions are likely to give more weight to public concerns about overall economic growth.
B)Having elections makes democratic governments more susceptible to the influence of special interest groups who resist economic reforms.
C)Since citizens oppose tax increases,democracies are often unable to raise the revenue necessary for providing public goods.
D)In general,dictatorships are more likely to provide public goods than democratic countries.
E)Citizens in democracies are more likely to organize and provide public goods themselves.

Question 33

Which of the following illustrates the conflict between rich and poor countries' interests?

A)Citicorp makes several large loans to Turkey during a currency crisis.
B)International copper companies use cutting-edge technology to build mines in Chile.
C)El Salvador signs a free-trade agreement with the United States.
D)Thai workers make low-cost shoes for Europeans.
E)Ford does not increase worker training in Argentina,because wages will increase.

Question 34

How did colonialism benefit the colonies?

A)Some built infrastructure that later contributed to colonial economic development.
B)Colonies traded only with the colonial power,creating an important trading partnership.
C)The colonial powers sent special elite administrators to their colonies.
D)The citizens of the colonial power had special economic privileges.
E)Manufacturing was limited in the colonies.

Question 35

What is import substituting industrialization (ISI)?

A)A policy of importing goods that are necessary for promoting industrialization.
B)A policy of promoting industrialization to replace foreign goods with domestically produced goods.
C)A policy of encouraging free trade as a means of industrializing quickly.
D)A policy of encouraging the use of alternative resources necessary to fuel industrialization.
E)A government policy of obtaining foreign technology as a means of encouraging industrialization.

Question 36

Which countries are members of the Group of 77?

A)The 77 island nations of the world.
B)Top oil-exporting countries.
C)Less developed countries.
D)The wealthiest countries.
E)Countries primarily located in the Northern Hemisphere.

Question 37

Why did Argentine economist Raúl Prebisch think trade worked against the interests of less developed countries (LDCs)?

A)His research found that trade inevitably hurt the economies of all countries,whether developing or developed.
B)His research found that the experience of colonialism permanently damaged the chances of industrialization for LDCs.
C)His research found that international organizations were deliberately creating trade agreements that hurt LDCs' interests.
D)His research found that,over time,the price of LDCs' manufactured goods decreased relative to the price of developed countries' goods.
E)His research found that,over time,the price of LDCs' primary exports decreased relative to the price of developed countries' manufactured exports.

Question 38

Why did colonialism hamper the development of less developed countries?

A)Colonialism actually helped poor regions develop more than it hindered them.
B)Colonial powers sent settlers to live in their colonies,thereby uprooting generations of traditions.
C)Many European colonial powers became too poor to properly provide for their colonies.
D)Europeans did not understand the culture of their colonies and implemented the wrong policies.
E)Colonial powers acted in their own interests,even when this conflicted with the interests of their colonies.

Question 39

How did the economic policies of poor countries change after 1914?

A)Poor countries changed from principally exporting primary products to encouraging industrialization.
B)Poor countries reduced previously high levels of trade protection and encouraged imports.
C)Poor countries began borrowing more money from international investors.
D)Poor countries reduced the level of government involvement in their economies in order to spur innovation.
E)The governments of poor countries began to ban foreign direct investment in their countries.

Question 40

Why do most industrialized countries subsidize and protect their farmers?

A)Farmers are a politically important domestic interest group.
B)More developed countries want to hurt the economies of less developed countries.
C)Economic theory supports the idea that food should be protected.
D)The countries need lower-priced food to sustain industrialization.
E)The United Nations encourages countries to have a strong domestic agricultural industry.

Question 41

Which of the following would be a policy consistent with ISI?

A)Ghana attempts to reduce its dependence on imported oil by developing alternative energy sources.
B)Malaysia reduces regulations on its banks to encourage investment.
C)China keeps its currency undervalued to make Chinese exports cheaper.
D)Egypt refuses a loan from Bank of America.
E)Brazil places tariffs on cars made in the United States.

Question 42

Why was the New International Economic Order proposed?

A)European countries wanted to reduce the power of the United States.
B)Less developed countries wanted to make conditions more favorable for poor countries.
C)The United States wanted to reduce the amount of foreign aid it gave to poor countries.
D)Middle Eastern countries wanted to earn more profit from their oil exports.
E)Colonies hoped international reforms would help them become independent from European colonizers.

Question 43

Which of the following would be a desired result of ISI?

A)Zambia reduced its dependence on imported oil.
B)Argentina quadrupled the number of cattle raised for export to rich countries.
C)India became mostly self-sufficient in manufacturing the products it needed.
D)Brazilian factories produced computers of lesser quality than those built in the United States.
E)Unemployed urban workers in Ghana moved to rural areas to take advantage of the coffee boom.

Question 44

Which of the following is NOT a reason that the Organization of Petroleum Exporting Countries was more successful at affecting the price of oil than other commodity cartels?

A)There are a small number of countries with significant oil reserves.
B)Oil is not a commodity that spoils,so there is no need to sell it off quickly.
C)Many oil-producing countries have cultural ties to one another.
D)Members were able to strictly enforce compliance with the organization's policies.
E)There are few alternative sources of energy to substitute for oil.

Question 45

How likely is it that foreign aid will solve the problems of development for poor countries?

A)Foreign aid is unlikely to solve poor countries' problems,since poor countries have been rejecting foreign donations.
B)It is unlikely that foreign aid will solve development problems,because rich countries have ended most of their foreign aid programs.
C)Foreign aid is likely to help spur economic growth,since the United States and Europe are significantly increasing the amount of donations to poor countries.
D)Foreign aid is unlikely to solve the huge humanitarian problems in poor countries,even though rich countries donate nearly half their budgets in aid.
E)Foreign aid is unlikely to alleviate development problems because much aid is misused by recipient governments.

Question 46

Why are governments sometimes unable or unwilling to implement policies that create favorable conditions for economic growth?

Question 47

What is the Washington Consensus?

A)A document that outlines how to keep the United States the dominant world power.
B)A set of policies advocated by developed countries that are intended to help less developed countries grow their economies.
C)A policy by the United States that allows for infant industry protection by emerging economies.
D)An international movement to encourage democratization in less developed countries, as democracy is a fundamental stepping stone to development.
E)An international agreement by developed countries not to import goods from countries that have poor working conditions.

Question 48

Why did countries abandon ISI?

A)Other countries saw how fast Latin American countries had grown by encouraging exports and decided to adopt the same policies.
B)The "Asian Tigers" were devastated by the debt crisis and had to make significant reforms to recover.
C)The International Monetary Fund convinced indebted countries that the Washington Consensus had been wrong to advocate ISI policies.
D)The International Monetary Fund pressured indebted countries to reduce trade protection and to privatize government enterprises.
E)Politically powerful domestic groups who had been hurt by the policies overthrew the governments that implemented ISI.

Question 49

Export-oriented industrialization is a policy of:

A)encouraging the consumption of high-tech foreign exports to fuel domestic industrialization.
B)promoting economic development by encouraging free trade.
C)promoting economic development by encouraging manufacturing for foreign consumption.
D)encouraging economic development by promoting foreign direct investment.
E)encouraging developed countries to reduce tariff barriers on developing countries' exports.

Question 50

Which of the following would be consistent with the demands of the New International Economic Order?

A)Reducing U.S.tariffs on European automobiles.
B)Allowing Zambia to join the United Nations.
C)Reducing tariffs on Brazilian soybean exports to Europe.
D)Improving the security of foreign direct investment in Botswana.
E)The United States reducing the number of Peace Corps volunteers in Africa.

Question 51

Explain why democratic governments are often better able to implement policies that favor economic growth.

Question 52

Which of the following is NOT a reason for a backlash against the economic policies of the 1980s and 1990s?

A)There were a series of financial and currency crises in the 1990s that caused economic hardship.
B)Many less developed countries did not experience significant levels of economic growth.
C)Income distribution within less developed countries appeared to become more unequal.
D)Less developed countries tried import-substituting industrialization in the 1990s and it failed.
E)Some less developed countries experienced economic catastrophes.

Question 53

What group of actors advocated for a New International Economic Order?

A)Less developed countries.
B)Developed countries.
C)International financial institutions.
D)Members of the Warsaw pact.
E)Western European countries.

Question 54

How do domestic interests contribute to some countries remaining poor?

Question 55

Which of the following is NOT consistent with the Washington Consensus?

A)Lowering tariffs.
B)Selling government enterprises to private investors.
C)Reducing restrictions on foreign investment.
D)Increasing government spending on infrastructure.
E)Decreasing inflation.

Question 56

What explains the different patterns of economic development for Zambia and South Korea?

Question 57

Which of the following policies is consistent with export-oriented industrialization?

A)A Korean car company purchasing its computers from a U.S.firm.
B)Japan removing all barriers to trade with the United States.
C)Mexico keeping tariffs on cars imported from the United States.
D)Taiwan keeping its currency weak or undervalued.
E)The Brazilian government creating and owning a power company to provide electricity for domestic industries.

Question 58

Which of the following would NOT be a result of following ISI policies?

A)A government giving a below-market rate loan to a budding automobile industry.
B)A government giving a subsidy to encourage research and development in consumer electronics.
C)A government nationalization of domestic power companies.
D)A government liberalizing trade to reduce the price of industrialized products for consumers.
E)A government erecting new tariffs to protect domestic firms from international competition.

Question 59

Which of the following has NOT adopted export-oriented industrialization?

A)Brazil.
B)South Korea.
C)Singapore.
D)Taiwan.
E)Hong Kong.

Question 60

Which of the following is NOT a reason that countries adopted ISI?

A)Countries thought that having a manufacturing sector was a requirement for a modern society.
B)Countries thought relying on exporting primary goods would be disadvantageous in the long term.
C)Prominent international institutions endorsed ISI as an effective policy for encouraging development.
D)ISI was a popular plan of action as part of a broader reaction to colonialism and the desire for independence.
E)Politically significant domestic groups supported ISI policies.

Question 61

To what extent has colonialism hampered development in less developed countries?

Question 62

Why were OPEC members more successful at creating international change than the wider group of less developed countries? Consider collective action problems in your response.

Question 63

How do the interests of rich and poor countries converge and conflict?

Question 64

Explain how international institutions affect development in poor countries.

Question 65

How and why have the economic effects of colonization differed between North America and Latin America?

Question 66

Explain what international and domestic factors contributed to countries' abandonment of ISI.

Question 67

Do rich countries have an obligation to help the global poor? Why or why not?

Question 68

Why did governments in less developed countries implement policies that benefited the urban elite,even when these policies hurt the agricultural sector?

Question 69

Describe export-oriented industrialization (EOI)and explain the effect of EOI policies.

Question 70

Explain Raúl Prebisch's theory about the terms of trade for less developed countries and their effect on the development policies implemented by poor countries.

Question 71

Why did less developed countries adopt import substituting industrialization (ISI)? What problems developed because of ISI policies?

Question 72

Is increased aid from developed countries likely to change the current state of the international system in regard to lesser developed countries? Why or why not?

Question 73

How has geography affected the economic development of poor countries?