Problem Set 11

In 2003, the per-capita income in China was roughly ________ of that in the U.S.

1/8

Export-led growth tends to

exploit domestic comparative advantages.

All the following nations except ________ have recently utilized export-led growth policies.

Argentina

Brazil's export record in 1999 illustrated the principle that

protectionist policies tend to discourage exports.

An efficient economy would set the marginal product in the traditional sector

equal to that in the modern sophisticated sector.

Which industrialization policy used by developing countries places emphasis on the comparative advantage principle as a guide to resource allocation?

export promotion

Taiwan and South Korea are examples of developing nations that have recently pursued these industrialization policies

export promotion.

Statistical evidence suggests that

free trade policies promote economic growth more effectively than do import substitution policies.

To help developing countries expand their industrial base, some industrial countries have reduced tariffs on designated manufactured imports from developing countries below the levels applied to imports from industrial countries. This policy is called

generalized system of preferences.

The development of countries like South Korea has been supported by all of the following EXCEPT

high domestic interest rates.

Which trade strategy have developing countries used to restrict imports of manufactured goods so that the domestic market is preserved for home producers?

import substitution

The infant industry argument was an important theoretical basis for

import-substituting industrialization.

The experience of sub-Saharan Africa, as compared to that of "Other Asia" (not including the HPAEs) supports the argument that

neither trade liberalization nor import substitution is a foolproof strategy for economic development.

The "East Asian Miracle" of the "Four Tigers" in the 1960s was replicated by

other East Asian countries.

China's recent experience supports the proposition that

policy changed can dramatically prompt export oriented growth

A reason why it is difficult for developing countries to maintain a cartel is that

producers in the cartel have an economic incentive to cheat.

The relatively rapid economic growth experienced by Chile in the late 1980s

rejected the conventional Latin American reliance on import substitution.

Import substitution policies make use of

tariffs that discourage goods from entering a country.

Sophisticated theoretical arguments supporting import-substitution policies include

the problem of appropriability.

The experience of Chile's foreign sector in the last two decades of the 20th century supports the proposition that economic growth is supported by

trade liberalization policies.