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Eco. 361—30-8-2021 (Online Discussion Quiz 4–More Vital Questions to Budding Famour Economists)

Following from the previous questions, clearly and convincingly answer the following Questions as the Special Adviser to Mr. President on Economic Development and Poverty Alleviation.

14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?

15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?

Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?

16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?

17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?

18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?

19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?

20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?

What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?

21. What is meant by globalization, and how is it affecting the developing countries?

22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?

23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?

24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?

Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?

25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?

26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?

27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?

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Comments 271

  1. Avatar Iheukwumere Chinedu Kingsley. Economics/Political science. 2018/243099 says:

    Name: Iheukwumere Chinedu Kingsley
    Department: Economics/Political science
    Reg. Number: 2018/243099

    Answers
    Answer 14
    Do educational systems in developing countries really promote economic development or are they simply a mechanism to enable certain select group or classes of people to maintain positions of wealth power and influence?

    Yes educational systems helps in promoting economic development. Overall, education is about the unleashing of human capabilities: economic, civic, and humanistic. When education is successful, it enables individuals not merely to exercise their agency in participating in economic, civic, and humanistic activity but also to shape or re-shape economic, civic, and humanistic life. Education for professional skills not merely prepares people for the workforce; it shapes the labor market itself. Education for citizenship not merely prepares people to participate in civic and political life; it enables social participation that shape political institutions. Education for human talents not merely develops the vast domain of human potential; it advances humanity’s storehouse of knowledge and cultural achievement.
    1. Education develops productive skills, and this is valuable for the individual, to advance in the labor market and for society, to improve and maintain prosperity and compete in a globalized economy.
    2. Education develops civic skills, and this is valuable for the individual, to allow for meaningful participation in civil society and political life, and for society, to benefit from an informed and engaged citizenship.
    3. Education develops human talents and interests, and this is valuable for the individual, allowing for personal nourishing, and for society, since the expansion of knowledge and human achievement are valuable for their own sake.
    4. Education can be a vehicle for equity and greater social inclusion, or when absent, poorly delivered or unfairly distributed, a vehicle for injustice and greater social exclusion.

    Answer 15
    As more than half the people in developing countries still reside in rural areas and how can agricultural and rural area best be promoted?
    Are higher agricultural prices sufficient to stimulate food production or are rural institutional changes (land redistribution, road, transport, education etc) also needed?
    Answer
    Agricultural Development” mainly aims at increasing agricultural products such as crops, livestock, fish and etc. Human being, land and capital are simply regarded as production goods and means. On the other hand, “Rural Development” mainly targets on people and institutions. Rural development includes agricultural development activities, however it is one of the means of economic revitalization for active farmers and targeted rural villages.
    Rural development aims to improve livelihoods by implementing comprehensive development for rural areas where a majority of people in poverty live. Rural development can also contribute to reduce poverty in urban areas by reducing excessive population influxes from rural areas.
    Therefore to promote agricultural and rural development, these actions need to be taken:
    (a) Promoting poverty eradication in rural areas.
    (b) Promoting pro-poor planning and budgeting at the national and local levels.
    (c) Addressing basic needs and enhancing provision of and access to services as a precursor to improve livelihoods and as an enabling factor of people’s engagement in productive activities.
    (d) Providing social protection programmes to benefit, inter alia, the vulnerable households, in particular the aged, persons with disabilities and unemployed many of whom are in rural areas.
    (e) Build social capital and resilience in rural communities. In this context:
    (i) Empower women and small-scale farmers, and indigenous peoples, including through securing equitable land tenure supported by appropriate legal frameworks;
    (ii) Promote equitable access to land, water, financial resources and technologies by women, indigenous peoples and other vulnerable groups;
    (iii) Support and promote efforts to harmonize modern technologies with traditional and indigenous knowledge for sustainable rural development;
    (iv) Provide access to credit and other mechanisms as well as resources for farm-based activities, especially for small-scale farmers, including women in particular, in developing countries to better manage the various risks they face, including price, weather, climate, water shortages, land degradation and natural disasters, including by providing aid and promoting the development of agricultural insurance markets;
    (v) Protect and ensure sustainable use of traditional knowledge, including indigenous knowledge in accordance with article 8 (j) of the Convention on Biological Diversity, for the management of natural resources to address the challenges of sustainable development;
    (vi) Facilitate the active participation of vulnerable groups, including women, youth and indigenous peoples and rural communities, in the elaboration of local and national planning of rural development, taking into account national legislation;
    (vii) Build the resilience of rural communities to cope with and recover from natural disasters;
    (viii) Promote and scale up labour-intensive recovery activities in addition to capital-intensive programmes;
    (ix) Support training and capacity-building of rural communities to effectively implement adaptation programmes to climate change at the local level;
    (x) Invest resources to enhance research aimed at adapting to the challenges of climate change;
    (xi) Foster and strengthen capacities of rural communities for self-organization for building social capital, taking into account national legislation;
    (f) Strengthen the human capacities of rural people. In this context:
    (i) Strengthen rural health-care facilities and capacities, train and increase the number of health and nutrition professionals and sustain and expand access to primary health-care systems, including through promoting equitable and improved access to affordable and efficient health-care services, including provision of basic health-care services for the poor in rural areas, in particular in Africa, for effective disease prevention and treatment;
    (ii) Create and develop educational programmes for rural communities aimed at disease prevention;
    (iii) Eliminate old and new forms of illiteracy in rural communities and ensure provision of primary education and access to secondary and tertiary educational opportunities as well as vocational and entrepreneurship training including proactive and market-related elements to build capacities within rural communities, in particular for youth, young girls, women and indigenous people;
    (iv) Encourage rural communities participation in decision-making, promote rural communities’ empowerment and rural leadership;
    (v) Improve access by rural people and communities to information, education, extension services and learning resources, knowledge and training to support sustainable development planning and decision-making
    (g) Invest in essential infrastructure and services for rural communities.

    Answer 16
    What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    i. Environmental sustainability is defined as responsible interaction with the environment to avoid depletion or degradation of natural resources and allow for long-term environmental quality. The practice of environmental sustainability helps to ensure that the needs of today’s population are met without jeopardizing the ability of future generations to meet their needs.
    Human actions can deplete natural resources, and without the application of environmental sustainability methods, long-term viability can be compromised.
    The World Commission on Environment and Development (1987) defines the term Sustainable Development as “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” This concept, therefore, takes into consideration the right to development and the protection of the environment. Sustainable Development, therefore, aims to meet present needs and address short-term issues with the overall goal of long-term Sustainability.
    Accordingly, the implementation of Sustainable Development will require progress in three areas, well known as the three (3) pillars of Sustainable Development, which are Environment, Economic, and Social.
    Thus, to achieve sustainability, we must find a balance between the three pillars in relation to being viable, equitable, and bearable. Thereby fostering through Sustainable Development Poverty alleviation, Gender equality, Capacity building, Clean technology, Clear institutional framework, Economic growth and development, Sustained biodiversity (protection & conservation of ecological services). This in turn helps a nation to develop and meet short-term horizons, with long-term vision.
    ii. With respect to climate equity, a heated debate has arisen over who should take the most responsibility for climate action. Historically, the global north of industrialized nations (the United States and western Europe) has contributed most to global warming.
    Fights over climate justice and equity are essentially about what we owe each other as human beings. The rich, Western, industrialized countries should share the largest burden not only for historical reasons, but because they are wealthy enough to absorb the costs for the long-term well-being of themselves and the global south.
    But arguing over what nation or social group should be held culpable can distract from the urgent need to act for the well-being of people and the planet now. Global warming threatens the well-being of people and the planet, raising crucial issues of ethics and public policy that we ignore at our peril. Left unchecked, or by doing too little too late, climate change will haunt future generations and leave a despoiled earth as our legacy.
    Noah Diffenbaugh, an author of the study and a climate scientist at Stanford University had critically said, “The countries that are most responsible for global warming are different from the countries that are bearing the brunt of global warming.
    The unbridled pursuit of economic growth has brought the planet’s ecosystems to the brink of collapse. The 2005 United Nations Millennium Ecosystem Assessment Synthesis Report concluded that human economic activity during the previous fifty years produced more severe degradation of the planet’s ecosystems than in any prior period in human history. Some scholars refer to the post-1950 surge of economic activity as the Great Acceleration and argue that this period should be regarded as the beginning of the Anthropocene.
    The global North, with only eighteen percent of the world’s population, is responsible for approximately seventy-four percent of this extraordinary economic expansion. While the North reaps the material benefits of the Great Acceleration, the environmental consequences are borne disproportionately by Southern countries and by the planet’s most vulnerable human beings, including indigenous peoples, racial and ethnic minorities, and the poor.

    Answer 17
    Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    Privatization, a method of reallocating assets and functions from the public sector to the private sector, appears to be a factor that could play a serious role in the quest for growth. In recent history, privatization has been adopted by many different political systems and has spread to every region of the world. The process of privatization can be an effective way to bring about fundamental structural change by formalizing and establishing property rights, which directly creates strong individual incentives. A free market economy largely depends on well-defined property rights in which people make individual decisions in their own interests. The importance of property rights is captured by economist Hernando de Soto as he states, “Modern market economies generate growth because widespread, formal property rights permit massive, low-cost exchange, thus fostering specialization and greater productivity” (1996). Along with creating strong incentives that induce productivity, privatization may improve efficiency, provide fiscal relief, encourage wider ownership, and increase the availability of credit for the private sector.
    Privatization can have a positive secondary effect on a country’s fiscal situation. As Easterly discusses, privatization should not be used to finance new government expenditures and pay off future debts. Instead, privatization enables countries to pay a portion of their existing debt, thus reducing interest rates and raising the level of investment. By reducing the size of the public sector, the government reduces total expenditure and begins collecting taxes on all the businesses that are now privatized. This process can help bring an end to a vicious cycle of over-borrowing and continuous increase of the national debt (Poole, 1996).
    Along with creating incentives, privatization gives ownership to a larger percentage of the population. Given the level of established property rights, individuals become more motivated and driven to work on and invest in their property since they are directly compensated
    for their efforts. Therefore, privatization will cause an increase in investment for yet another reason (Poole, 1996). Furthermore, state ownership leads to crowding-out of investment from the private sector. In order to retain a monopoly in a particular industry, state enterprises prevent the private sector from getting to credit (Cook and Uchida, 2003). Additionally, privatization leads to an increase in foreign direct investment which can potentially play a significant factor in the quest for growth. Therefore privatization can be an answer to economic problem.
    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    Developing countries adopt poor development policies because they are not aware of the implications of such policies and maybe they lack the manpower needed for adequate policy making. They can improve on there choices by making policies that is suitable enough to stimulate economic development in their country.Policies for economic development could involve:
    Improved macroeconomic conditions (create stable economic climate of low inflation and positive economic growth)
    Free market supply-side policies – privatisation, deregulation, lower taxes, less regulation to stimulate private sector investment.
    Government interventionist supply-side policies – increased spending on ‘public goods’ such as education, public transport and healthcare.

    Answer 19
    Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    Yes expanded international trade is desirable in a developing country provided it focus on the production of goods in which it has comparative advantage over others. Though trade liberalization does not automatically increase trade, let alone growth. The impact of trade openness depends on national context, rather than on the application of a theoretical demonstration. The reality is that trade liberalization has different effects on poverty in different countries, depending on a wide range of factors, including macroeconomic stability, infrastructure and the financial sector. It is quite clear that trade alone will not help the developing world reach the MDGs and that the international community must significantly increase its efforts to cope with trade liberalization and establish certain conditions for growth to take place in all countries. Developing countries have to be better prepared before entering the global market.Developing countries should develop or expand their supply capacity before opening up to global competition. They will need technical and financial assistance to benefit from the opportunities that trade opening provides. For this reason, the international community has launched the Aid for Trade initiative, which has been designed to help developing countries build their supply capacity by developing infrastructure investments, productive capacity investments and transition assistance.
    ii. Freeing trade frequently benefits the poor especially. Developing countries can ill-afford the large implicit subsidies, often channeled to narrow privileged interests, that trade protection provides. Moreover, the increased growth that results from freer trade itself tends to increase the incomes of the poor in roughly the same proportion as those of the population as a whole. New jobs are created for unskilled workers, raising them into the middle class. Overall, inequality among countries has been on the decline since 1990, reflecting more rapid economic growth in developing countries, in part the result of trade liberalization.

    Answer 20
    When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    i. Import substitution industrialization (ISI) is a theory of economics typically adhered to by developing countries or emerging market nations that seek to decrease their dependence on developed countries. The approach targets the protection and incubation of newly formed domestic industries to fully develop sectors so that the goods produced are competitive with imported goods.
    Countries initially implemented ISI policies in the global south (Latin America, Africa, and parts of Asia), where the intention was to develop self-sufficiency by creating an internal market within each country. The success of ISI policies was facilitated by subsidizing prominent industries, such as power generation and agriculture, and encouraging nationalization and protectionist trade policies.
    ii. The impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries.
    The IMF promotes monetary cooperation and provides policy advice and capacity development support to preserve global macroeconomic and financial stability and help countries build and maintain strong economies. The IMF also provides short- and medium-term loans and helps countries design policy programs to solve balance of payments problems when sufficient financing cannot be obtained to meet net international payments obligations. IMF loans are funded mainly by the pool of quota contributions that its members provide. IMF staff are primarily economists with wide experience in macroeconomic and financial policies.
    The World Bank promotes long-term economic development and poverty reduction by providing technical and financial support to help countries reform certain sectors or implement specific projects—such as building schools and health centers, providing water and electricity, fighting disease, and protecting the environment. World Bank assistance is generally long term and is funded both by member country contributions and through bond issuance. World Bank staff are often specialists on particular issues, sectors, or techniques.
    The IMF and World Bank have worked together to reduce the external debt burdens of the most heavily indebted poor countries under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). To date, debt reduction packages under the HIPC Initiative have been approved for 36 countries out of 39 eligible countries providing $76 billion in debt-service relief over time. The IMF and World Bank continue to collaborate in assisting low-income countries achieve their development goals without creating future debt problems.

    Answer 21
    What is meant by globalization, and how is it affecting the developing countries?
    Globalization is a term very widely used, in the research and policy debates, as well as by the press and the general public, but very seldom precisely defined. In fact, several definitions have been put forward that put the stress on different aspects of the phenomenon. From a narrow economic point of view the term refers to the fast-growing degree of interdependence among countries and regions through increased international trade and capital flows. A broader definition would include aspects such as information, environmental, social, cultural, and even health issues that are in many cases becoming increasingly `global’. Governance and the role of national governments is also affected by globalization, as the importance of global governance bodies and agreements (e.g. the WTO) increases, and as a world-wide trend toward less regulations and more role for markets gains strength (though some point to a possible reversal of the current trend).

    Answer 22
    Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    The export of primary agricultural product should not be promoted instead developing countries should attempt to industrialize by developing their manufacturing industries which will help to process the primary products of agriculture, this will result to increase in productivity and income of a country.

    Answer 23
    How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    i. High foreign debt hampers the development of countries because the money has to be used for interest and principal payments and is not, therefore, available for key investments, such as infrastructure or social spending.
    Long-standing internal and external problems are again among the key causes of debt in low-income countries. However, the current situation differs significantly from previous debt crises. In particular, the creditors involved have mainly granted non-concessional loans and not concessional loans.
    Poor debt management and low government revenues due to inefficient tax policies and weaknesses in the rule of law are among the internal causes. Furthermore, the loans are often used for the consumption of goods, rather than for productive investments. In addition, there are external shocks, such as falling commodity prices since 2011 or natural disasters like floods or storms. Structural problems, such as a poorly diversified economic and export structure, result in their economies being highly vulnerable to price and demand fluctuations on the world market.
    In order to prevent a renewed debt crisis in developing countries, it is of primary importance to establish good debt management practices. The capacity for public debt management needs to be improved and an appropriate debt structure established which takes into account loan maturities and the ratios of domestic and foreign currency. Good debt management also provides greater transparency and more complete data on the debt situation in developing countries. The good debt management measures implemented to date by lenders, such as the Debt Management Facility of the World Bank, the International Monetary Fund and UNCTAD’s Debt Management and Financial Analysis System Programme, must be further expanded and improved. Another important element is establishing a set of uniform principles for responsible lending and borrowing.
    ii. The implications of debt problem on economic development is that it hampers economic development.
    iii. In the event of a debt crisis, it will be difficult to co-ordinate with such a heterogeneous group of creditors. Making use of external credits for investments (in the area of economy) whose role in the structure of industry of developed countries gets constantly diminished is a disadvantageous phenolmenon; yet, it is inevitable, which is proven by the whole civilization development. The cumulative effect is a financial and liquidity crisis that threatens to become a global macroeconomic upheaval, with significantly negative world GDP growth, perhaps for two or three years, sharply increased unemployment, pressures on public revenues and deflation. Therefore financial crisis has a negative effect on development.

    Answer 24
    What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    i. Foreign aid is defined as the voluntary transfer of resources from one country to another country. This transfer includes any flow of capital to developing countries. A developing country usually does not have a robust industrial base and is characterized by a low Human Development Index (HDI) (Wikipedia). Foreign aid can be in the form of a loan or a grant. It may be in either a soft or hard loan. This distinction means that if repayment of the aid requires foreign currency, then it is a hard loan. If it is in the home currency, then it’s a soft loan. The World Bank lends in hard loans, while the loans of its affiliates are soft loans.
    Foreign aid to developing countries has been an important source of finance to enhance economic growth. Role of foreign aid can help boost capital investment in schemes which improve economic development. However, it depends on the type of foreign aid. However, numerous studies of aid effectiveness have failed to arrive at a consensus. Some studies on aid effectiveness found that foreign aid adversely affected domestic resource mobilisation. While others hold the view that aid has a positive impact on growth. Now the question is how does foreign aid affect the economic growth of developing countries?
    Positive Relationship between Foreign Aid & Development
    Some researchers suggested that good economic policy is a pre-requisite for the effectiveness of aid. This view has been challenged by many who find that aid is effective even independent of policy. In general, aid is found to have a positive impact on economic growth through several mechanisms (i) aid increases investment (ii) aid increases the capacity to import capital goods or technology (iii) aid does not have an adverse impact on investment and savings (iv) aid increases the capital productivity and promotes endogenous technical change.
    Papanek finds a positive relation between aid and growth. Fayissa and El-Kaissy show that aid positively affects economic growth in developing countries. Singh also finds evidence that foreign aid has positive and strong effects on growth when state intervention is not included.
    Negative Relationship between Foreign Aid & Development
    By contrast, foreign aid is found to be significantly and negatively correlated with growth. There are a number of underlying causes, such as aid dependency, bad economic management of the recipient countries, corruption and poor coordination and cooperation among aid agencies etc.
    Many researchers find that foreign aid has negative impact on growth. “Knack argues that high level of aid erodes institutional quality, increases rent-seeking and corruption; therefore, negatively affects growth. Easterly, Levine and Roodman, using a larger sample size to reexamine the works of Burnside and Dollar, find that the results are not as robust as before. Gong and Zou show a negative relation between aid and growth” (cited by Minh, 2006).
    Firstly, due to the volatile nature of aid, the government of the recipient country is sometimes unable to mobilise the volume of aid on time and fails to persuade donors that remaining funds will be spent efficiently. Thus, disbursement of aid may be further delayed; hampering the government’s spending ability. Conditionality is another problem related to foreign aid which constraints the economic development of the recipient countries. Moss, a former consultant for the World Bank, said that tied aid is “highly inefficient since it restricts the market and thus costs the donor more money for the same benefit” (cited by Djankov, et al., 2006, p. 24).
    Secondly, we think capacity has been a major constraint. Traditionally, the donor-recipient relationship has been an asymmetric one involving a strong and a weak party, where political and economic structures of domination and exploitation provided little space for the latter to choose. If the aid is tied one then at the time of negotiation, the donors bargain with their high capacity.
    Sometimes foreign aid makes a nation aid dependent rather than making economically independent. Food aid injected in Somalia bring food deficit to the country. Somalia had become alarmingly dependent on imported food (Mathew, 2009 on the Daily Gambia Echo).

    Answer 25
    Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    i. Yes multinational corporations should be encouraged to invest in the economies of poor nations under the following conditions:
    Multinational corporations provide an inflow of capital into the developing country. E.g. the investment to build the factory is counted as a capital flow on the financial account of the balance of payments. This capital investment helps the economy develop and increase its productive capacity.
    The inflows of capital help to finance a current account deficit. (Basically, this means that foreign investment enables developing countries to buy imports.)
    Multinational corporations provide employment. Although wages seem very low by Western standards, people in developing countries often see these new jobs as preferable to working as a subsistence farmer with even lower income.
    Multinational firms may help improve infrastructure in the economy. They may improve the skills of their workforce. Foreign investment may stimulate spending in infrastructure such as roads and transport.
    Multinational firms help to diversify the economy away from relying on primary products and agriculture – which are often subject to volatile prices and supply.
    ii. Globalization is profitable for multinational corporations who integrate in their own networks international production systems. Ensuring the economic development moves to a new level “the global market economy” while the insurance of the well-being of nations remains the same within the national area.
    As shown in the last 20 years, globalization has brought to the countries of the world more disadvantages than advantages. For example:
    unfair distribution of benefits of globalization, the number of losers being greater than the number of winners; undermining the national sovereignty by passing the control of national economies of the countries from the hands of governments in the hands of powerful states, global corporations and international organizations; deepening regional and global instability as a result of economic crisis transmission from one country to another.
    The main connections of the global economy with the international monetary-financial system result from the operational credit-financing operations, discount operations and liquidities regulation operations.

    Answer 26
    What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    i. The role of fiscal policy in developed economies is to maintain full employment and tabilize growth. In contrast, in developing countries, fiscal policy is used to create an environment for rapid economic growth. The various aspects of this are:
    1. Mobilisationm of resources: Developing economies are characterized by low levels of income and investment, which are linked in a vicious circle. This can be successfully broken by mobilizing resources for investment energetically.
    2. Acceleration of economic growth: The government has not only to mobilize more resources for investment, but also to direct the resources to those channels where the yield is higher and the goods produced are socially acceptable.
    3. Minimization of the inequalities of income and wealth: Fiscal tools can be used to bring about the redistribution of income in favor of the poor by spending revenue so raised on social welfare activities.
    4. Increasing employment opportunities: Fiscal incentives, in the form of tax-rebates and concessions, can be used to promote the growth of those industries that have high employment￾generation potential.
    5. Price stability: Fiscal tools can be employed to contain inflationary and deflationary tendencies in the economy.

    The main goal of fiscal policy in a newly developing economy is the promotion of the highest possible rate of capital formation. Underdeveloped countries are encompassed by vicious circle of poverty on account of capital deficiency; in order to break this vicious circle, a balanced growth is needed. It needs accelerated rate of capital formation.
    To accelerate the rate of capital formation, the fiscal policy has to be designed to raise the level of aggregate savings and to reduce the actual and potential consumption of the people.
    In short, for promoting economic growth, the fiscal policy must be first formulated in such a way that it will increase the rate of volume of investment in the public and private sectors. The tax policies must discourage unproductive and speculative investment. Second, fiscal policy must mobilise more and more resources for capital formation. Hence, taxation must be used to curb excessive consumption. Third, it must encourage an inflow of foreign capital.
    ii. Though it is not always the case, economic development is often accompanied by a rise in military expenditure (hereafter ME). For instance, data from World Bank (World Development Indicators) shows that from 1988 to 2012, countries with the highest ME (as a proportion of GDP) have the highest economic development (5.96% in high income non-OECD and 2.57% in OECD), while countries with lower shares have lower economic development (2.08% in middle income countries and 2.05% in low income countries). What is the interaction between ME and economic development? Does ME promote economic growth? There are no clear-cut answers to these questions as complex interactions between ME and economic growth may occur.
    Theoretically, ME can promote as well as hinder growth. ME may promote growth through the following channels. ME develops new technology that spills over to private sector, creates socioeconomic structure through spin-offs effects, provides public infrastructure and protections against threats, and increases aggregate demand and employment through the Keynesian multiplier effect. On the other hand, ME is harmful for growth through its opportunity costs. Through the gun-butter trade￾off, ME crowds out investment or other productive activities. A rise in ME often comes with increased tax burden and government debt which may reduce growth. The net effect of ME on growth therefore will depend on the benefits versus the opportunity costs.
    Although many studies have investigated the relationship between ME and growth, unfortunately, the empirical evidence that is currently available is inconclusive (Smith, 1980; Yildirim et al., 2005).
    Whenever military spending changes, there are discussions and debates as to its economic impacts. Broadly speaking, there are two sets of views. One sees the military as a drain on the economy, especially in the form of depleting the private sector of key technological and managerial resources. Whatever benefits there are from demand stimulation and technological spin-offs are swamped, in this view, by the drain of resources that could, and should, be utilized for investment in human and physical capital and for research and development. This view of the economic costs of military outlays can be found in the writings of economists and policy makers from Adam Smith to Dwight Eisenhower, and received its most complete recent articulation in the works of Seymour Melman (1965; 1983), Lloyd J. Dumas (1986) and others.
    The second and alternative view treats the military budget as a source of aggregate demand for goods and services and, therefore, a source of economic stimulation. This second view has come to be known as Military Keynesianism, after John Maynard Keynes, who argued that in extreme situations the government should spend on anything as a means of stimulating aggregate demand, and following the experience of Nazi Germany in the 1930s and the United States prior to and especially after its entrance into World War II, where rearmament helped bring these countries out of depression. Therefore large military spend can either speed or Mar development.

    Answer 27
    What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Microfinance as we know it today, has been popularised by Muhammad Yunus, winner of the Nobel Peace Prize in 2006. Dr Yunus referred to as the ‘banker of the poor’ has been the founder of the first micro-credit institution, the Grameen Bank in 1976 in Bangladesh.
    Microfinance, also called microcredit​, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. Microfinance allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices.
    Microfinance aims to improve financial services access for marginalized groups, especially women and the rural poor, to promote self-sufficiency. Access to essential financial services can empower individuals economically and socially by creating self-reliance and economic sustainability in impoverished communities where salaried jobs are scarce. The benefits of microfinance include:
    i. Small loans enable entrepreneurs to start or expand micro, small and medium enterprises.
    ii. Savings help families build assets to finance school fees, improve homes (e.g., install power or running water) and achieve goals.
    iii. Insurance products can offset the cost of medical care.
    iv. Money transfers and remittances allow families to easily send and receive money across borders.
    Any development intervention of people at the grassroots is poverty alleviation focused. Grassroots development do not only champion the elevation of the well-being and empowerment of people and groups but also broaden their horizons in making choices and taking investment opportunities thereby bringing about positive change in their standard of living. Anchored in grassroots development is the development of enterprises. This is because the grassroots are dominant in these enterprises. At the grass root, the active poor are those at the grassroots who run enterprises known as micro, small or medium enterprises.
    Microfinance has since been recognized as the main vehicle for poverty alleviation. This recognition of microfinance especially the micro-credit component has received global attention as echoed by the UN General Assembly and Ehali and Danopoulos. Generally, microfinance is the provision of financial and non-financial services to the poor on sustainable basis. These services of microfinance include microcredit, savings, micro insurance, money transfer services and business advisory services.

  2. Avatar EZEMA CHARITY CHIADIKOBI says:

    NAME:EZEMA CHARITY CHIADIKOBI
    REG NO:2018/245943
    DEPARTMENT: ECONOMICS

    14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    Education involves the process of facilitating learning, or the acquisition of knowledge, skills, values, morals, beliefs, and habits. Education enhances ones cognitive ability and promotes creativity, creativity will like wise lead to new innovations that will foster the growth of a country.
    Furthermore it is assumed that developing countries should find going through the development process easier as already developed country have created the innovations required for development, but in this, there is the need to learn about the processes involved, the technological appliances, finding correct pathways, in short there is need for education.
    Education can be said to be a form of human capital and an investment in capital will lead to greater profits, likewise, a greater economy. In my opinion education could be used to maintain power but it could as well be used to open new pathways towards development.
    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?
    According to historical industrialization processes, all economically established countries started from humble beginnings, first agriculture then industrialization. This implies the transitioning from agriculture to industrialization are different sides of the same coin and they are therefore collectively required for development. A lot of people in Nigeria reside in rural areas characterized by mass expanses of land which could be cultivated to promote growth. To instigate rural dwellers to cultivate, the government could:
    1. Protect people new in the field: to start things is always hard the government could provide a soft blanket in event of hardship, this will encourage business start ups

    2. Provide appliances required in agriculture: the government should import appliances like tractors and make them readily available so as to enhance the production of agricultural produce.
    3. Provide funds to grow the agricultural sector
    Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    Like explained earlier agriculture is needed for industrialization, like wise industrialization is needed for efficient agriculture. If the produce is cultivated transportation channels are needed to convey it to the end users, good roads are needed for transportation, they all work together.
    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable developing as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?

    ● Environmental sustainable development can be defined as an approach to the economic development of a country without compromising with the quality of the environment for future generations. In the name of economic development, the price of environmental damage is paid in the form of land degradation, soil erosion, air and water pollution, deforestation, etc. This damage may surpass the advantages of having more quality output of goods and services.

    ● there is serious economics cost of achieving sustainable development. This is as a result of huge capital cost it takes for the achievement of sustainable development. The advanced countries like Europe, USA e.t.c spend a lot in the process of achieving sustainable development.

    ● The poor south bears the major damage of global environmental damage. This can be seen from the adversed effect of global warming causes environmental degradation, erosion and flood in the poor south of Africa. That they have little or no resources to curtail or manage the situations thereby making them highly vulnerable from the damage.

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    The free market is an economic system based on supply and demand with little or no government involvement. It is a summary description of all voluntary exchanges that take place in a given economic environment. Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions.
    Privatization is The transfer of ownership, property or business from the government to the private sector is termed privatization. The government ceases to be the owner of the entity or business.
    . When the markets are free or the service companies are privatized the government still has roles to play in the economy. For instance provision of security, all firms will be walking towards maximizing profits and in a bid of doing so, so many human needs are disregarded, such as security.
    Another example is the need to bridge the inequality gap between rich and poor. The government does so by taxing individuals on a PAYU basis. Such funds collected would be used to provide infrastructures, such as roads.
    18. -Support pay equity
    -Increase the Earned Income Tax Credit for childless workers
    -Provide paid leave and paid sick days
    -Establish work schedules that work
    -Invest in affordable, high-quality child care and early education
    -Expand Medicaid

    19. Yes
    The government
    -Increased revenues.
    Longer product lifespan.
    Easier cash-flow management.
    Better risk management.
    Benefiting from currency exchange.
    Access to export financing.
    Disposal of surplus goods.

    20. When a country is totally dependent on such import of the foreign good and can’t be productive without it

    21. Globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale.
    It’s affecting developing countries positively

    22. Developing countries should industrialize by developing their manufacturing industries

    23. When the country is not having enough revenue to pay for the goods purchased
    The implications of the foreign debt on a countries is stop that countries full participation in international trade
    Financial crisis affect development in a negative way the rate of growth would drop

    24.The impact of foreign aid if the government of the country uses it to enhancing education, building rural and urban infrastructure and reducing trade risk the said country is said to experience a net benefit in economic performance

    25. According to Peter J Buckley, the global factory is a structure through which multinational enterprises integrate their global strategies through a combination of innovation, distribution and production of both goods and services. The global factory is analysed within a Coasean framework with particular attention to ownership and location policies using methods that illustrate its power in the global system. Developing countries are constrained by the existence and power of global factories. Firms in developing countries are frequently constrained to be suppliers of labour intensive manufacturing or services into the global factory system. Breaking into this system is difficult for emerging countries. It requires either a strategy of upgrading or the establishment of new global factories under the control of focal firms from emerging countries. The implementation of these strategies is formidably difficult.

    26.Financial and financial policies are used to regulate money circulation in an economy. Fiscal policies involves the usage of government expenditures and taxes while financial policies involves the central bank using financial instruments such as interest rates, open market operations etc to regulate money supply. These policies attempts to keep the economy stable by preventing inflation or deflation. Large military expenditure stimulate economic growth if it is productive. This would ensure national security which would facilitate the economic stability.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?Microfinance refers to the financial services provided to poor individuals or groups who are typically excluded from traditional banking. Most microfinance institutions focus on offering credit in the form of small working capital loans, which are sometimes called microloans or microcredit. Microfinance in plays a major role in the development of a country. It aims at assisting communities of the economically excluded to achieve greater level of asset creation and income security at the household and community level. The utmost significance of microfinance in is that it dispenses the access to the capital to small entrepreneurs

  3. Avatar NWOKE EBERECHI says:

    NAME: NWOKE EBERECHI ANGEL
    REG NO:2018/251570
    DEPT: ECONOMICS

    14. Training in each sense is one of the major components of development. … Education raises individuals’ usefulness and inventiveness and advances business venture and innovative advances. What’s more it assumes an exceptionally vital part in getting financial and social advancement and further developing pay appropriation.

    15. Rustic development is seen essentially in the monetary feeling of the method involved with guaranteeing a dynamic improvement in financial security of individuals in provincial regions. Provincial regions are normally characterized as far as most extreme populace thickness, with figures fluctuating from 150 to 500 occupants for each square kilometer, contingent upon the construction of society.1 Whileany financial movement in country regions will can possibly add to rustic development, the specific jobs cultivating may play fall into four general classifications:

    Business. In nations whose portion of generally speaking work in horticulture is at undeniable levels, for instance where ranchers address more than half of the labor force, cultivating is probably going to be the key financial action deciding the advancement of provincial development. With a particularly significant extent of the workforce occupied with horticulture, any arrangement which prompted a quick and fake decrease in business could have grievous ramifications for the workforce and dependants, prompting social and political flimsiness.

    Related economy. The ranch area in each nation upholds a scope of subordinate and administration ventures, creating monetary action in supply and circulation chains just as handling enterprises. Where cultivating is the essential financial movement, the whole provincial economy, including administrations, for example, medical care, schooling and fundamental framework, may rely upon the benefit of the area.

    In remote and fringe regions, where society has distinguished an authentic need to forestall eradication, cultivating is probably going to be one of a restricted scope of monetary exercises conceivable to keep up with the financial reasonability of the locale.

    All through provincial regions, cultivating may add to country development by offering ecological and social types of assistance to society.

    16. Regardless of whether you are focused on the battle against environmental change, you might be uncertain of the response to “what is natural manageability?” The standard meaning of ecological supportability compares to earth feasible development, yet what’s the significance here from a commonsense perspective? It implies there should be a reasonable connection between the regular assets accessible to us and the human utilization of those assets:

    For sustainable assets like yields or lumber, the pace of reap shouldn’t surpass the pace of recovery. This is known as “reasonable yield.”

    For non-inexhaustible assets like non-renewable energy sources, the pace of exhaustion shouldn’t surpass the pace of development of sustainable choices like sun based or wind power.

    For contamination, the paces of waste age shouldn’t surpass the limit of the climate to acclimatize that waste. This is known as “manageable garbage removal.”

    So, ecological manageability expresses that the paces of inexhaustible asset gather, non-sustainable asset consumption, and contamination digestion can be normally kept up with endlessly. The United Nations World Commission on Environment and Development goes further, characterizing ecological manageability as acting today in a manner that guarantees that people in the future will have sufficient normal assets to keep a personal satisfaction equivalent to if worse than that of current ages.

    Accomplishing a harmony between normal assets and human utilization that is both aware of the regular world yet energizes our advanced lifestyle, is one of the main pieces in the environmental change puzzle. With unchecked asset exhaustion, we hazard a worldwide food emergency, energy emergency, and an expansion in ozone harming substance outflows that will prompt a dangerous atmospheric devation emergency. Then again, with an excessive number of limitations on the utilization of regular assets, we hazard easing back mechanical and monetary progression.

    For the fate of our planet and the people who populate it, gauge the contending needs of ecological security and human development so both the regular world and society can prosper. Finding some kind of harmony is testing—however not feasible—and issues encompassing maintainability, the climate, and society have been the focal point of researchers, rationalists, government officials, and strategy specialists for quite a long time.

    17. The conventional privatization objective of working on the proficiency of public endeavors additionally stays a significant objective in emerging nations, as does decreasing the subsidies to state-possessed undertakings (SOEs). … The following segment inspects the impacts of privatization as far as firms’ productivity and execution

    18. A large number of the present most unfortunate nations don’t gather satisfactory incomes to fabricate the human resources, framework, and establishments required for more grounded development and quicker destitution decrease. In sub-Saharan Africa, for instance, 15 of the 45 nations have incomes lower than 15% of GDP. Additionally, sub-Saharan Africa’s asset rich nations have incomes that are more unpredictable and lower than nations that are asset poor. Indeed, even with considerable unfamiliar awards and credits, government spending by developing nations is lower than by cutting edge economies. In 2018, government spending in sub-Saharan Africa arrived at the midpoint of 23% of GDP contrasted and 31.4 percent in center pay nations and right around 39% in the high level ones.

    19. Global exchange permits nations to extend their business sectors and access labor and products that in any case might not have been accessible locally. Because of worldwide exchange, the market is more aggressive. This eventually brings about more cutthroat valuing and brings a less expensive item home to the shopper.

    20. I. The trade control is vital and ought to be embraced to really look at the trip of capital. This is exceptionally significant when a country’s cash is under speculative strain. In such cases levies and standards would not be viable. Trade control being immediate technique would effectively introduce the trip of capital of hot cash.

    ii. Trade control is successful just when the equilibrium of installment is upset because of some brief reasons like dread of war, disappointment of yields or some different reasons. In any case, in case there are some other fundamental reasons, trade control gadget would not be productive.

    iii. Trade Control is essential when the nation needs to segregate between different causes of supply. Nation might permit unfamiliar trade generously for imports from delicate money region and imports from hard cash regions will be liable to light import control. This training was embraced after Second World War because of intense dollar deficiency.

    Indeed, even in India, many import licenses were given for use in rupee money regions just, i.e., nations with which India had rupee-exchange courses of action. Along these lines in above cases, the trade control is embraced. In such cases shares and taxes don’t help in reestablishing harmony of installment balance.

    21. Globalization is characterized as a cycle that, in view of global methodologies, means to extend business procedure on an overall level, and was encouraged by the help of worldwide interchanges because of innovative progressions, and financial, political and natural developments.

    The objective of globalization is to furnish associations a prevalent cutthroat situation with lower working expenses, to acquire more noteworthy quantities of items, administrations, and purchasers. This way to deal with rivalry is acquired through broadening of assets, the creation and development of new venture openings by opening up extra business sectors and getting to new unrefined components and assets. Expansion of assets is a business procedure that builds the assortment of business items and administrations inside different associations. Broadening reinforces establishments by bringing down authoritative danger factors, spreading interests in various regions, making the most of market openings, and gaining organizations both level and vertical in nature.

    The Economic Impact on Developed Nations

    Globalization propels organizations to adjust to various procedures dependent on new philosophical patterns that attempt to adjust the privileges and interests of both the individual and the local area overall. This change empowers organizations to contend worldwide and furthermore means a sensational change for business pioneers, work, and the board by really tolerating the investment of laborers and the public authority in developing and carrying out organization approaches and methodologies. Hazard decrease by means of broadening can be refined through organization contribution with global monetary establishments and banding together with both nearby and worldwide organizations.

    Globalization brings revamping at the worldwide, public, and sub-public levels. In particular, it brings the revamping of creation, worldwide exchange, and the joining of monetary business sectors. This influences capitalist monetary and social relations, through multilateralism and microeconomic peculiarities, like business intensity, at the worldwide level. The change of creation frameworks influences the class structure, the work interaction, the utilization of innovation, and the construction and association of capital. Globalization is presently seen as minimizing the less instructed and low-talented specialists. Business extension will presently don’t naturally infer expanded work. Furthermore, it can cause a high compensation of capital, because of its higher portability contrasted with work.

    The peculiarity is by all accounts driven by three significant powers: the globalization of all item and monetary business sectors, innovation, and liberation. Globalization of item and monetary business sectors alludes to an expanded financial joining in specialization and economies of scale, which will bring about more noteworthy exchange monetary administrations through both capital streams and cross-line passage action. The innovation factor, explicitly media transmission and data accessibility, has worked with far off conveyance and given new access and dispersion stations, while redoing modern constructions for monetary administrations by permitting passage of non-bank elements, like telecoms and utilities.

    22. As indicated by gauges from the Federal Reserve branch in Minneapolis, human efficiency and comparing ways of life were basically unaltered from the start of the farming age around 8000 to 5000 B.C. until 1750 A.D. That all began to change in Great Britain in 1760. Normal pay and populace levels started an extraordinary, supported increment. (GDP) per capita, which had been fixed for millennia, developed drastically with the rise of the advanced capitalist economy.

    Financial antiquarian Deirdre McCloskey, writing in the Cambridge University Press in 2004, contended that industrialization was “absolutely the main occasion throughout the entire existence of mankind since the taming of creatures and plants, maybe the most significant since the development of language.” Not all students of history concur about the flash that touched off the Industrial Revolution. Most financial experts highlight the progressions in lawful and social establishments in Great Britain that permitted streamlined commerce and gave business people the room and impetuses to face challenges, improve, and benefit.

    23. Helpless debt the board and low government incomes because of wasteful expense strategies and shortcomings in law and order are among the inside causes. Moreover, the advances are frequently utilized for the utilization of merchandise, as opposed to for useful ventures. Furthermore, there are outside shocks, for example, falling product costs beginning around 2011 or cataclysmic events like floods or tempests. Primary issues, for example, an inadequately expanded financial and product structure, bring about their economies being exceptionally powerless against cost and request variances on the world market.

    What’s going on with regards to the current debt circumstance is that the loan bosses – and subsequently the debt structure – have changed fundamentally. Developing nations have essentially expanded their acquiring at economic situations, particularly from new moneylenders like China and India, and from private banks. As indicated by the United Nations Conference on Trade and Development (UNCTAD), public debt at economic situations as a portion of absolute debt multiplied somewhere in the range of 2007 and 2016 in low-pay nations, ascending to 46 percent. Contrasted with the concessional advances from customary respective (prominently moneylenders in the OECD Development Assistance Committee) and multilateral banks like the IMF and WB, these credits have higher premium and more limited developments. This further endangers the debt sustainability of developing nations.

    Contrasted with those nations that are not individuals from the Paris Club, public debt as a portion of GDP in low-pay nations multiplied somewhere in the range of 2007 and 2016. One of these moneylenders hangs out specifically: China. Interestingly, credits from individuals from the Paris Club have declined impressively.

    In developing nations, the measure of public debt owed to private banks as a portion of absolute debt rose from around 40% in 2000 to 60 percent in 2016, as indicated by UNCTAD. Additionally, has unfamiliar debt expanded, yet homegrown debt has likewise risen strongly in developing nations.

    To forestall a recharged debt crisis in developing nations, it is of essential significance to set up great debt the board rehearses. The limit with respect to public debt the executives should be improved and a proper debt structure set up which considers advance developments and the proportions of homegrown and unfamiliar money. Great debt the executives additionally gives more prominent straightforwardness and more complete information on the debt circumstance in developing nations. The great debt the executives measures carried out to date by moneylenders, for example, the Debt Management Facility of the World Bank, the International Monetary Fund and UNCTAD’s Debt Management and Financial Analysis System Program, should be additionally extended and improved. One more significant component is setting up a bunch of uniform standards for mindful loaning and acquiring. There have been different proposition so distant from the United Nations, the G20, the OECD and the Institute of International Finance (a worldwide relationship of private monetary organizations).

    In case of a debt crisis, it will be hard to arrange with a particularly heterogeneous gathering of lenders. Accordingly, the utilization of aggregate conditions in bond agreements ought to be stretched out now to work on any future rebuilding of government bonds.

    Given the normal ascent in worldwide financing costs and the more limited developments of non-concessionary advances, there will keep on being significant dangers for the debt sustainability of developing nations later on. It is about time that move is made and arrangements at worldwide level came to stop another debt crisis happening.

    24. Foreign aid, monetary development and financial development are consuming issues standing up to

    development business analysts and specialists today. This is just in light of the fact that a portion of the

    scientists support the view that foreign aid lead to development while others contend that aid does

    not add to financial development and hence adversely affect monetary

    development in the beneficiary country. Since the 1960s, foreign aid begins its excursion, yet

    there are dubious contentions on whether the significant focus on its organization has been

    accomplished or not.

    Foreign aid is the gifts of cash, merchandise, or administrations starting with one country then onto the next. Such

    gifts can be made for a compassionate, philanthropic reason, or to propel the public

    interests of the giving country. Aid can be between two (respective) or many (multilateral)

    nations/foundations. Respective aid is generally tied aid (contingent aid) is when beneficiaries

    should buy items/administrations from the giver country. Multilateral aid is typically loosened

    aid that can be spent in any area of the beneficiary country.

    This is a writing audit and consequently no different writing survey is given here. One

    of the impediments of the review is that it doesn’t notice any patterns of a specific financial

    substance based on experimental confirmations. All the more critically, this examination isn’t country

    explicit so it might make vagueness if somebody intends to relate with a specific financial

    unit. The reason of those limits is that this review is anything but a quantitative investigation rather a

    general conversation with respect to the job foreign aid in monetary development.

    25. For some, the principal rule of policymaking is to try not to control medication that could be more regrettable than the actual infection. With regards to prodding business in developing nations, a vital manifestation of the “illness”— or market disappointment—that blocks the rise of new firms is an absence of money when extreme danger is implied. A shortage of business people implies there are not many financial backers (since they can’t fence their danger), and without even a trace of financial backers there are not many business visionaries. Accordingly, a normal flow of treatment to cure the issue is to have the public authority share hazards with financial backers, or to accept the dangers by putting resources into firms, producing a large enough mass of new businesses and financial backers. This, thus, would take into account more complete danger capital business sectors.

    Nonetheless, this strategy is likewise dangerous. Regardless of whether financial backers get public subsidies, the (reasonable) disappointment of the pioneers is sufficient to distance expected supporters to stick to this same pattern and put resources into that market.

    So what approach may end up being a more viable “medication”? Is there a job for private area entertainers, other than financial backers? Indeed, in worldwide organizations (MNCs), there might be.

    MNCs are normally bigger and more useful than homegrown firms, and are generally ready to put resources into neighborhood markets. MNCs in numerous nations are assuming a significant part in purchasing new innovations, yet in addition in facilitating new firms through hatchery programs. Be that as it may, they can accomplish more: they can put on a greater scale in innovation new companies identified with their line of business. In this setting, new companies in developing nations can benefit gigantically, not just from the accessibility of new wellsprings of financing, yet in addition from working inside the crease of a bigger and more useful firm with a record of putting intensely in innovative work (R&D) and advancement. At the same time, MNCs would now be able to re-appropriate a portion of their corporate innovative work endeavors by putting resources into neighborhood new companies.

    This methodology may likewise tackle the issue of coordination disappointment. Not at all like numerous trading companies, MNCs are as of now there, and will stay there. These bigger global organizations have effectively carried enormous repaired expenses to set a foreign auxiliary, and given leaving would cause additionally fixed expenses, they’re probably not going to leave with any scramble. Given their bigger scope, MNCs can fence their danger capital portfolios by putting resources into new companies across a wide range of areas where they work, utilizing their nearby auxiliaries to screen their ventures. Consequently, negative returns in an unsafe venture portfolio at the nearby level wont risk their visit on the lookout. This will ultimately expand the mass of new businesses, and conceivably draw in hazard capital financial backers to that market.

    Potential business people may stress this methodology could prohibit their new firms from future rounds of venture, or deny them the chance to offer their innovation to an entertainer other than the global (like a contender, for example). All things considered, joining a sound portion of legitimate structures could lessen these worries. For example, agreements might be composed to fuse some type of “right of first refusal” provision, in which the MNCs can forestall the early selling of a hatched startup to a contender provided that the previous matches the proposition the last is making.

    26. Financial arrangement can advance macroeconomic strength by supporting total interest and private area livelihoods during a monetary slump and by directing monetary movement during times of solid development.

    27. Microfinance, additionally called microcredit​, is a sort of banking administration gave to jobless or low pay people or gatherings who in any case would have no other admittance to monetary administrations.
    While foundations partaking in the space of microfinance frequently give loaning—microloans can go from as little as $100 to as extensive as $25,000—many banks offer extra administrations, for example, checking and investment accounts just as miniature protection items, and some even give monetary and business education. The objective of microfinance is to at last offer devastated individuals a chance to become independent. Destitution decrease was standardized in 1944, with the foundation of the World Bank at the birth of the Bretton Woods2 framework. With the IMF and GATT appointed the assignments of settling the world’s economy and advancing deregulation in the post WW II world, the issue of destitution was appointed to the World Bank. The modern countries felt some obligation regarding the world’s poor; after all since Africa and portions of Asia, including India, had been settlements in European domains and they would require some assistance once they acquired their freedom. The technique, with the U.S. as pioneer, was to carry deregulation to the developing scene with the desire for coordinating them into the formal economy. Since the World Bank’s soonest days endeavors to lessen neediness have based on enormous worldwide associations. Working through states and other conventional foundations, credit was disseminated to developing nations as long as they clung to strategies endorsed by the World
    Bank. The focal point of destitution decrease from the 1950s-1980s was to incorporate helpless populaces into the economy through better macroeconomic execution. Financial experts had recognized the poor as part of a gigantic “casual” area that remained “basically imperceptible, in government plans and financial plans, in business analysts’ models, in investors’ portfolios, and in public strategies” (Robinson, 2001, pp. 12). As spectators noticed, the endeavor to decrease destitution appeared to be sad. These projects were called underlying change projects, and they were profoundly ineffective. States’ credit
    Bretton Woods was an arrangement of rules, foundations and methods set up to control the worldwide financial framework after the
    end of WWII. The framework was revolved around the United States, the world’s chief modern state post WWII. The International
    Financial Fund and the International Bank for Reconstruction and Development (what turned into the World Bank) were set up here. Here “state” takes the political theory meaning of country. reimbursement dipped under half, expenses of subsidies expanded, and a large part of the assets were redirected to the politically amazing. As reports of defilement surfaced and many years of aid demonstrated unproductive, many provided to accept that administration with some timely help made reliance and that aid was doing pretty much nothing to help networks (Murduch, 1999, pp. 1569-70, Diop et al., 2007, pp. 36). If such fabulous worldwide associations and state legislatures proved unable “tackle” the destitution issue, then, at that point, what was to be done?
    Microfinance arose toward the start of a change in development thinking. This shift reflected change in monetary idea at that point. The development that carried Thatcher and Reagan to control advanced unrestricted economy arrangements and an overall doubt in proper foundations. The philosophical pendulum had moved to one side giving an opening to microfinance. With microfinance at the rudder, center advanced toward the encouraging and backing of the “casual” area, with the expectation that a assistance would permit individuals to basically pull themselves over the destitution line. As Robinson (2001) clarifies:
    Until the 1980s the presence of in-formal microenterprises-road merchants, home studios, market slows down, suppliers of casual transportation administrations was by and large apparent by policymakers and market analysts to be an aftereffect of monetary brokenness. Microenterprises were considered as minimal in excess of a pointer that the design and development pace of the formal economy were lacking to ingest the public workforce, as were seen as a hidden type of joblessness. Microfinance upheld these casual microenterprises through microcredit. The microcredit way to deal with destitution decrease is “the arrangement of little credits to people, ordinarily inside gatherings,
    as capital venture to empower pay age through independent work”. Poor people’s organizations were currently seen as an image of neglected interest for credit. Neediness was currently thought to be the consequence of market disappointment: Market flaws, unbalanced data and the high fixed expenses of limited scope loaning, limit the entrance of the poor to formal money, consequently pushing the poor to the casual monetary area or to the outrageous instance of monetary avoidance. Likewise, it is contended that
    working on the entrance of the poor to monetary administrations empowers these specialists to develop useful resources and upgrade their efficiency and potential for supportable livelihoods. (Green, Kirkpatrick, and Murinde, 2006)
    Microfinance would address the market disappointment, giving admittance to credit to poor people. Credit would make financial force that would produce into social force, lifting the poor out of destitution (Yunus, 1999, p. 150).
    In 2008 it was assessed that there were 2,420 microfinance establishments (MFIs),addressing 99 million borrowers in 117 nations (Gonzalez, 2008). A significant number of these projects didn’t need guarantee, detailed advance reimbursement rates over 95%, and contacted helpless people who had earlier been hard to reach. As Velasco and Marconi (2004) depict:
    Microfinance plays out a conjuring-stunt: it accomplishes higher paces of credit reimbursement than regular banking, without approaching the insurance which traditional banks utilize to secure their credit portfolio. It plays out this stunt through building social connections, which substitute for guarantee by coming down on the borrower to reimburse credits. These connections might be either bunch situated (in which case peer tension inside the gathering is an significant component in strain to reimburse) or individual-based, in which case the tension comes from credit officials and sometimes guides and others inside the customer’s local area (pp. 521). Microfinance showed up as a new answer for an old issue. It had all the earmarks of being a “mutual benefit”
    circumstance, where both monetary foundations and helpless customers benefit. The “shared benefit” appearance of micro finance made unrivaled fervor in the realm of monetary development. In 1997, Yunus coordinated the main worldwide Microcredit Summit. At the gathering 137 nations were addressed and they consented to assemble will, construct limit, and end destitution in the world (Yunus, 1999, p. 256, 259). In the Summit’s Declaration (co-composed by Yunus), the message is clear:
    Microfinance, as a piece of a lot bigger work to end destitution, will give “microfinance
    administrations, explicitly credit for independent work and investment funds capacities” and will zero in on the world’s least fortunate individuals. Ladies’ entrance ought to be focused on, as they are “extremely adroit at saving, profoundly inventive business visionaries, and predictable in guaranteeing that profit go straightforwardly to meeting
    family needs.” Microfinance is a significant instrument for reasonable social and monetary advancement, what’s more, a critical procedure in finishing destitution (“Declaration”, 1997) (Yunus, 1997, pp. 256).
    The objectives of the development were additionally refined when the Microcredit Summit Campaign set up four center subjects: coming to the most unfortunate, guaranteeing a positive quantifiable effect on the lives of customers and their families, assembling monetarily independent organizations, and coming to and enabling ladies (Daley-Harris, 2002). These are the objectives of the micro-finance development, first set up at the Summit, and later refined in the four center topics. This paper will examine microfinance as far as how well it accomplished its own objectives: to come to the least fortunate populaces, to guarantee a positive quantifiable effect on the existences of customers and their families, to construct monetarily independent organizations, and to reach and engage ladies.

  4. Avatar Izueke Maximilian c says:

    Name : IZUEKE CHIDERA MAXIMILIAN
    REG NO: 2018/246268
    DEPARTMENT : Combined social sciences
    (Economics/political science)
    No14 – Education surely provides economic development because Education help to raise people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society.
    15.Increase output and productivity of agriculture, focusing on major food crops such as rice, wheat and maize as well as livestock;Support the development of agriculture, agri-business and agro-industries particularly for small farmers and entrepreneurs, enabling them to respond to market opportunities, build resilience and attract investment;Raise rural living standards through increased investment in infrastructure, human resources and services for employment and income generation; andImprove market access for small-scale producers and promote inclusive growth.

    Agriculture can contribute significantly to economic growth in normal times and serves as an employer of last resort in times of crisis. Stagnation of crop productivity, as reflected in yield plateaus in some parts of the region, is a critical constraint to meeting rapidly rising demand.

    Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    Answer: institutional changes are needed in rural areas because even when prices are high if good infrastructure are not put in place it will still go off balance.

    16. While it may seem that environmental sustainability and sustainable development are one in the same, there is quite a few ways in which they diverge in their goals. They do have the same overall goal that of conserving natural resources and creating more energy efficient projects and practices – but the two groups that are focused on them may find themselves in disagreement about what the priorities of actions are. Having a better understanding of how they are different and the same can help you do know how to navigate dealing with both.
    Sustainable development is development that meets the needs of the present, without compromising the ability of future generations to meet their own needs.”Sustainable development has 3 goals: to minimize the depletion of natural resources, to promote development without causing harm to the environment and to make use of environmentally friendly practices
    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    This growth of privatization has not, of course, gone uncontested. Critics of widespread privatization contend that private ownership does not necessarily translate into improved efficiency. More important, they argue, private sector managers may have no compunction about adopting profit-making strategies or corporate practices that make essential services unaffordable or unavailable to large segments of the population. A profit-seeking operation may not, for example, choose to provide health care to the indigent or extend education to poor or learning-disabled children. Efforts to make such activities profitable would quite likely mean the reintroduction of government intervention—after the fact. The result may be less appealing than if the government had simply continued to provide the services in the first place.Overriding the privatization debate has been a disagreement over the proper role of government in a capitalist economy. Proponents view government as an unnecessary and costly drag on an otherwise efficient system; critics view government as a crucial player in a system in which efficiency can be only one of many goals. It is not always the answer to development because private owners will seek for profit and might forgo things important to development.
    18.why do so many developing countries select such poor development policies and what can be done to improve these choices?
    To reduce poverty in developing economies, the focus maybe on different policies
    * Education-greater spending on education and training can enable higher skilled workforce
    * Foreign Aid – aid from developed countries can be used to invest in better health care and education
    *Diversification of economy away from agriculture to manufacturing. This enables greater economic development but may be difficult to do without the right skills and infrastructure.
    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?

    International trade is desirable for the development of poor nations.. First, domestic consumers can buy cheaper imported goods and producers can export goods at higher foreign prices. Second, with the lowering of tariff and the removal of trade barriers, all country could increase the total output and social welfare by making the best use of comparative advantages and specialization while doing international trade.

    20. For developing economies, other issues could involve:

    a Export oriented Development – Reduction in tariff barriers and promoting free trade as a way to improve economic development.
    b. Diversification away from agriculture to manufacturing as a way to promote economic development.
    Government of developing countries should adopt policy of foreign-exchange control, raise tariff, or set quotas on the importation of certain non essential goods if it continues to experience dumping and unfavourable balance of payment to promote the growth of their own industrialization.
    The International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries impacts negatively on developing countries because, the conditions attached to borrowing of loans impedes the development efforts of developing Countries. The financial threats to poor countries amount to blackmail, and puts poor nations in conditions of no choice but to comply.
    21. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is the free movement of goods, services and people across the world in a seamless and integrated manner. Globalization can be thought of to be the result of the opening up of the global economy and the concomitant increase in trade between nations. In other words, when countries that were hitherto closed to trade and foreign investment open up their economies and go global, the result is an increasing interconnectedness and integration of the economies of the world.
    Globalization puts developing countries at risk of increasing income inequality. The increase in inequality in the United States over the last 25 years (during which the income of the poorest 20 percent of households has fallen in real terms by about 15 percent) has been blamed, rightly or wrongly, on changes in trade, technology and migration patterns associated with increasing economic integration with other countries.
    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    Exports of primary agricultural products should be discouraged rather developing countries should construct industries that will carry out final production of goods. This will enable them reduce their dependency on imported goods and also boost their exchange rate through exportation.

    23.The debt arose as many developing countries borrowed heavily from private banks in developed nations to finance their growing capital needs and to pay for sharply rising crude oil bills during the 1970s.
    Debt in the developing world is principally a post-colonial economic phenomenon, which began to emerge in the 1960s. Movements to relieve the burden of debt emerged at the same time: the meeting of the Argentine government with its international creditors in Paris in 1956 led to the formation of the “Paris Club” of official creditors, which still exists today. The Paris Club, a completely informal organisation, agreed to treat the debt due to them in a co-ordinated way, and made arrangements for rescheduled payment.

    The debt problem accelerated in the aftermath of the collapse of the Bretton Woods exchange rate system, which led up to the energy crisis in 1973. In order to stabilise the financial system, banks were willing to lend large sums of money to the developing world, disregarding a nation’s ability to pay back the loan. In the context of negligible interest rates, governments were happy to accept this offer.

    The mid to late 1970s saw a rise in interest rates, however, while at the same time prices of crops and raw materials produced by many developing countries fell. As a result, many resorted to borrowing more to service their growing debts. In 1982, when Mexico announced that it would default on its debts, the International Monetary Fund (IMF) – an organization of 187 countries working to foster global monetary co-operation and sustainable economic growth – and the World Bank responded, providing more loans to help the country service its debt. Since then the IMF and World Bank have continued to provide loans in order to help other underdeveloped countries.
    24. Foreign aid, economic growth and economic development are burning issues confronting
    development economists and researchers today. This is simply because some of the
    researchers support the view that foreign aid lead to growth while others argue that aid does
    not contribute to economic growth and thus have a negative impact on economic
    development in the recipient country. Since the 1960s, foreign aid starts its journey, but still
    there are controversial arguments on whether the major aim for its institution has been
    achieved or not.
    Foreign aid is the donations of money, goods, or services from one nation to another. Such
    donations can be made for a humanitarian, altruistic purpose, or to advance the national
    interests of the giving nation. Aid can be between two (bilateral) or many (multilateral)
    countries/institutions. Bilateral aid is usually tied aid (conditional aid) is when recipients
    must purchase products/ services from the donor country. Multilateral aid is usually untied
    aid that can be spent in any sector of the recipient country.
    This is a literature review and for that reason no separate literature review is given here. One
    of the limitations of the study is that it doesn’t observe any trends of any particular economic
    entity on the basis of empirical evidences. More importantly, this analysis is not country
    specific so it may create ambiguity if someone plans to relate with any particular economic
    unit. The excuse of those limitations is that this study is not a quantitative analysis rather a
    general discussion regarding the role foreign aid in economic development.

    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    Multinational corporations (MNCs) are enterprises which have operations in more than one country. They manage production establishments or deliver services in at least two countries.
    MNCs are believed to be highly beneficial for developing countries in terms of bringing employment opportunities and new technologies that spillover to domestic firms. Furthermore, MNCs often benefit from government subsidies, which could in future be linked to investment in local firms.
    Global factory and Globalization emergence have influenced international economic relations in the following ways:
    Globalization has led to reduction in cultural barriers which has proved to be conducive for economic co-operations among nations.
    Movement of capital between countries due toglobalization has also played an important role in maintaining international economic relations.
    There is also increased flow of communications which allows vital information to be shared between individuals and corporations around the world.

    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    The foremost role of fiscal and financial policies in underdeveloped countries is mobilization of resources in the private and public sectors. Generally, the national income and per capita income is very low due to low rate of savings. Therefore, the governments of such countries through forced savings (involuntarily decreasing present consumption, while saving money), pushes the rate of investment and capital formation which in turn accelerates the rate of economic development.
    It is observed that low economic growth in developing countries is due to huge military expenditure and the supporters of this statement are of view that increase in military expenditure reduces resources for prother productive sectors like education, health care, development projects etc. and thus, ultimately lead to low economic growth and development.
    27. What Is Microfinance?
    Microfinance, also called microcredit​, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.
    While institutions participating in the area of microfinance most often provide lending—microloans can range from as small as $100 to as large as $25,000—many banks offer additional services such as checking and savings accounts as well as micro-insurance products, and some even provide financial and business education. The goal of microfinance is to ultimately give impoverished people an opportunity to become self-sufficient.
    Potentials of microfinance:
    1. Supporting microfinance institutions to ensure funds for low-income borrowers.
    Microfinance institutions (MFIs) across Asia and the Pacific struggle to get commercial funding to provide financial services to their borrowers. ADB partners with international and domestic financial institutions to support MFIs. ADB’s Microfinance Risk Participation and Guarantee Program facilitates local currency lending to the microfinance sector. Since 2010 the program has assisted 35 MFIs that have provided microfinance services to over six million borrowers in Bangladesh, Cambodia, India, Indonesia and Myanmar. As a part of ADB’s COVID-19 pandemic relief and recovery response, the program’s size has been increased to help support microfinance in difficult conditions.
    2. Empowering women by financing micro, small and medium-sized enterprises.
    Many micro, small, and medium-sized enterprises (MSMEs) are women-led and owned, so providing them with better financial options will improve women’s livelihoods and incomes. In Pakistan, MSMEs account for more than 90% of all enterprises. ADB partners with one of the country’s leading microfinance service providers to expand its lending operations, especially for women borrowers. The assistance will give Pakistani women and women-led MSMEs access to much-needed long-term financing to develop their livelihoods and incomes.
    3. Delivering access to education as well as finance for rural women.
    Microfinance services are helping rural women gain financial independence and empowering them to make good decisions. In the People’s Republic of China (PRC), around 45% of the rural population lacks credit access, especially women who usually have neither physical collateral nor the education needed to organize their finances. ADB’s partnership with CD Finance Management (previously called CFPA Microfinance Management) provides microcredit to poor rural households, targeting at least 121,000 women borrowers and includes measures to improve their financial planning skills and literacy.
    Here are some limitations faced by Microfinance Institutions
    *Over-Indebtedness. …
    *Higher Interest Rates in Comparison to Mainstream Banks
    *Widespread Dependence on Indian Banking System
    *Inadequate Investment Validation
    *Lack of Enough Awareness of Financial Services in the Economy
    *Regulatory Issues

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    14.Education enriches and raises people”s productivity, creativity, promotes entrepreneurship and these all lead to broad social benefit. Education, skills and acquisition of knowledge become the main elements of a nation”s productivity.

    15.Agriculture plays an important part in rural development, especially due to land use, in countries where the sector is of less economic significance.
    Agriculture can contribute significantly to economic growth in normal times and serves as an employer of last resort in times of crisis. Stagnation of crop productivity, as reflected in yield plateaus in some parts of the region, is a critical constraint to meeting rapidly rising demand.

    A key element of the strategy is therefore to focus on avenues for boosting productivity in major cereal crops. Livestock and fisheries hold great potential, but sustainability is key to continuing success in all subsectors.

    The key objectives of this priority area are to increase agricultural output and productivity, raise rural living standards, improve market access and support agribusiness.

    The primary tools will be the increased use of new technologies, technical support to members and subregions, support to agribusiness and capacity building.

    Expected results include enhanced policy prescriptions, strengthened research facilities, boosted institutional capacity and promotion of knowledge exchange.

    16.Environmental sustainability is defined as responsible interaction with the environment to avoid depletion or degradation of natural resources and allow for long-term environmental quality. The practice of environmental sustainability helps to ensure that the needs of today’s population are met without jeopardizing the ability of future generations to meet their needs.
    The costs of environmental damage become the benefits of environmental protection and restoration, if they are thereby mitigated or avoided. There are three broad environmental strategies to deliver these benefits, the ‘triple-de’: decarbonisation, to reduce the level of global warming; detoxification, to reduce the emissions or impacts of other pollutants; and dematerialisation, to reduce the environmental impacts associated with resource extraction, conversion and processing.

    17.There is a large body of literature about the economic effects of privatization. However, since it was mainly written in the 1990s, there was typically limited emphasis on issues which have come to the fore more recently, as well as more recent developments in the evidence about privatization itself, much of it from developing economies.
    When governments divested state-owned enterprises in developed economies, especially in the 1980s and 1990s, their objectives were usually to enhance economic efficiency by improving firm performance, to decrease government intervention and increase its revenue, and to introduce competition in monopolized sectors (Vickers and Yarrow 1988). Much of the earlier evidence about the economic impact of privatization concerned these topics and was based on data from developed countries and later, transition countries. These findings have been brought together in two previous surveys, by Megginson and Netter (2001) and Estrin et al. (2009) respectively. The former assesses the findings of empirical research on the effects of privatization up to 2000, mainly from developed and middle-income countries, while the latter concentrates on transition economies including China, over the 1989 to 2006 period.1 However, the experiences from the wave of privatizations that have occurred in developing countries before and since these studies warrant a new examination of the impact of privatization in the context of the development process.

    The tone of the privatization debate has evolved in recent years in international financial institutions as privatization activity has shifted towards developing economies, and as a consequence of the difficulties of implementation and some privatization failures.
    In order to maintain a smooth functioning between agriculture and industrial sectors, a sound socio-economic infrastructure is necessary. Thus, government should  invest huge amount money of for the development of overhead capitals like energy, power, transport, communications, education, health, housing.

    18. Many of today’s poorest countries do not collect adequate revenues to build the human capital, infrastructure, and institutions needed for stronger growth and faster poverty reduction. In sub-Saharan Africa, for example, 15 of the 45 countries have revenues lower than 15 percent of GDP. Moreover, sub-Saharan Africa’s resource-rich countries have revenues that are more volatile and lower than countries that are resource-poor. Even with substantial foreign grants and loans, government spending by developing countries is lower than by advanced economies. In 2018, government spending in sub-Saharan Africa averaged 23 percent of GDP compared with 31.4 percent in middle-income countries and almost 39 percent in the advanced ones.

    Comparisons between today’s developing countries and today’s advanced economies can provide aspiration but less so in terms of recommendations about policies and institutions. Of greater value for developing countries are comparisons with advanced economies when they were less prosperous and would have been considered low-income or lower middle-income. Using government spending a century ago by 14 of today’s advanced economies (Advanced 14), we highlight four lessons for developing countries. We develop these lessons in greater detail in a forthcoming working paper.

    Governments can advance development even with low levels of government spending.

    Today’s low-income countries spend more than twice on average than today’s advanced economies spent more than a century ago (Figure 1). To be sure, this difference reflects the lack of the tax instruments and systems we have today. From 1850 until the early 1900s, customs duties and excises provided the bulk of government revenues, while the personal income tax and VAT were not introduced in countries until later. Moreover, society’s expectations from the government were much different then. In 1900, for example, spending on unemployment, health, pensions, and housing amounted to only 1.1 percent of GDP in the Scandinavian countries on average and to 0.7 percent of GDP in the U.S. Even with low level of government spending, economic development was brisk in most of the Advanced 14 at the turn of the 20th century, with infrastructure improvements financed by private capital and the strong expansion of primary and secondary education.

    And here lies the lesson for today’s developing economies: While working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be on improving the business environment to attract private capital—mobilizing private finance for development.

    19.International Trade is usually referred as the exchange of goods, and services across

    international borders or territories. It is noticed that the initial stage of international trade is

    called “Mercantilism”. It has emerged since the seventeenth and eighteenth century in Europe.
    Understanding about International trade definition gives a hint to policy makers or

    economists to understand about international trade; meanwhile, it is noticed that the various

    definitions of international trade given by different economists can be an indicator to

    calculate the cost and benefit of doing international trade.

    20.Exchange controls are government-imposed limitations on the purchase and/or sale of currencies. These controls allow countries to better stabilize their economies by limiting in-flows and out-flows of currency, which can create exchange rate volatility. Not every nation may employ the measures, at least legitimately; the 14th article of the International Monetary Fund’s Articles of Agreement allows only countries with so-called transitional economies to employ exchange.
    Many western European countries implemented exchange controls in the years immediately following World War II. The measures were gradually phased out, however, as the post-war economies on the continent steadily strengthened; the United Kingdom, for example, removed the last of its restrictions in October 1979. Countries with weak and/or developing economies generally use foreign exchange controls to limit speculation against their currencies. They often simultaneously introduce capital controls, which limit the amount of foreign investment in the country.

    21.Globalization means the speedup of movements and exchanges (of human beings, goods, and services, capital, technologies or cultural practices) all over the planet. One of the effects of globalization is that it promotes and increases interactions between different regions and populations around the globe.
    Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. … The developed countries were able to invest in the developing nations, creating job opportunities for the poor people.

    22.For a large number of developing countries, especially the 82 low-income food-deficit countries (LIFDCs) currently identified by FAO,1 the agricultural sector remains largely underdeveloped, in respect of production both for the domestic market and for export. At the same time, in most of these countries, the agricultural sector lies at the centre of their economies. It accounts for a large share of GDP, employs a large proportion of the labour force, represents a major source of foreign exchange earnings, supplies the bulk of basic food required by the population and provides subsistence and other income for large rural populations (see Table 1). Thus, significant progress in promoting economic growth, reducing poverty and enhancing food security cannot be achieved in most of these countries without realising more fully the productive potential of the agricultural sector and its contribution to overall economic development.

    Several factors have contributed, in varying degrees in different countries, to this underdevelopment of the agricultural sector. However, two key factors stand out: the past policy bias against agriculture in these countries and the major distortions on world agricultural markets due to the protection and subsidization of this sector in many developed countries. While progress has been made in both areas in recent years, much remains to be done. Developing countries have a crucial stake in the next round of WTO negotiations on agriculture, as these will largely determine whether meaningful reforms that address these issues are achieved.
    23. emerging markets and developing countries have about $11 trillion in external debt and about $3.9 trillion in debt service due in 2020. Of this, about $3.5 trillion is for principal repayments. Around $1 trillion is debt service due on medium- and long-term (MLT) debt, while the remainder is short-term debt, much of which is normal trade finance.

    For the poorest countries (all those eligible for support from the International Development Association or IDA), 2020 MLT debt service is about $36 billion, divided in roughly equal proportions between multilateral, bilateral (mostly non-Paris Club), and commercial creditors.

    All developing country regions are potentially seriously affected: Latin America has the highest debt service/exports ratio, Africa has the least diversified export mix, East Asia has the largest absolute amount of debt service.

    In normal circumstances, the principal amounts would simply be refinanced in global capital markets or offset by new disbursements from existing lenders. But circumstances are not normal. Credit markets have tightened, spreads have risen, and many countries are faced with very large reductions in foreign exchange revenues. In the face of huge global economic uncertainty, it is hard to predict which countries and regions will be most vulnerable, and not all the vulnerability has been caused by the pandemic. Already, Venezuela, Argentina, and Lebanon have defaulted and face lengthy and damaging legal proceedings with each creditor trying to negotiate individually, resulting in dead-weight losses for everyone until the situation is sorted out.

    One indication that the problem is widespread is that already 90 countries have approached the IMF to access emergency financing instruments. It seems clear that this is not just a low-income or an African country problem.

    There are several calls for debt standstills (here, here and here) to ease the burden on developing countries. Debt threatens to create a global development emergency in much the same way as the pandemic is creating a global health emergency. Both could result in social unrest and instability. Something will have to be done, so it is useful to recap the lessons from previous debt crises.

    Timeliness and urgency are important. Many developing countries simply will not have the foreign exchange to service their debt this year, notably those who are heavily indebted, are commodity dependent (two-thirds of all developing countries according to UNCTAD), have relied on large tourism receipts, or on remittances. A good example of the value of buying time is the negotiated rollover of private bank credits to Korea in 1997-98, aided by regulators who agreed not to call the measures a technical default.

    In the current context, timeliness means that case-by-case solutions may not be feasible. Like COVID-19, there is a need to flatten the curve of debt reschedulings so that the peak falls within the capacity of the system to handle them. Hence the calls for the G-20, the IMF/World Bank, the U.N. or others to develop a simple debt standstill framework that can buy time for proper sustainability analyses to be done on a country-by-country basis

    24. Emerging Foreign aid is very important to many less-developed countries (LDCs) around the globe. It can have a substantial effect on their improvement by providing much-needed programs that provide jobs, healthcare and sustainability to the regions of the globe that need it most. Providing aid to LDCs can also promote positive outcomes for the country giving aid.

    Here are 10 reasons why providing foreign aid to LDCs is so important:

    • It can be used as humanitarian aid. This form of aid is generally given during times of great distress such as natural disasters until the state can support the disaster relief effort. The European Consensus on Humanitarian Aid categorizes humanitarian aid as a “…needs-based emergency response aimed at preserving life, preventing and alleviating human suffering, and maintaining human dignity wherever the need arises if governments and local actors are overwhelmed, unable, or unwilling to act.”

    • It can help LDCs fight against diseases such as HIV/AIDS. HIV and AIDS are still a major threat in countries such as Africa and require support from other countries willing to help with the crisis. Organizations and governments around the globe, such as UNITAID and PEPFAR, provide aid to help fight HIV/AIDS in LDCs. A new plan submitted by UNAIDS projects the end of the HIV epidemic as a public health threat by 2030. The new plan would need $26.2 billion by 2020 and an additional $22.3 billion by 2030 to eliminate the disease.

    • It helps with economic growth in LDCs. Aid is generally given in countries that are characterized as low income or that have high unemployment rates. This results in low savings and investments, meaning the capital stock is small. Countries that are provided aid need rapid economic development. Providing aid stimulates the growth of the world economy along with promoting economic development within the region.

    • It can help with market expansion. Providing aid to a country could mean the expansion of goods and resources that can be shared between the two countries. This can attract new investors into the country further improving the LDCs economy.

    • It helps with basic infrastructure in LDCs. Another key component to promoting a strong economy is the expansion of a well-developed infrastructure. Basic necessities such as transport, communication, power, education, health services and industry serve as key components to building a strong and long-lasting infrastructure.

    • It helps promote improvements in agriculture. Aid can be used to teach farmers how to utilize their land and resources more efficiently to produce more crops. This, in turn, provides vitamin and nutrient giving foods to people living in LDCs.

    • It can help with poverty relief. In 2013, 767 million people (10.7 percent of the world population) lived on less than $1.90 a day, well below the world poverty line. This is a drastic improvement from the 1.85 billion in 1990 and the number has gotten significantly better over the years. However, there is still much to do. Many of the global poor live in rural areas where they do not have access to adequate medical treatment and education.

    • It helps LDCs grow and become more independent. By providing aid to promote health, education, and infrastructure, LDCs can focus more on growing their economies. By reducing the amount of disease and poverty, citizens of these regions will be able to flourish and contribute to the growth of the country.

    • It promotes political ties. Aid can be used to establish and strengthen the connection between the donor and recipient countries. Aid is given to both LDCs and developed countries alike to promote solidarity and companionship.

    • It makes the world safer. Providing LDCs with aid and development reduces the threat of terrorist organizations by alleviating poverty in susceptible countries. A study provided by the RAND Corporation concluded that development is a more effective strategy against terrorism than military force.

    markets and developing countries have about $11 trillion in external debt and about $3.9 trillion in debt service due in 2020. Of this, about $3.5 trillion is for principal repayments. Around $1 trillion is debt service due on medium- and long-term (MLT) debt, while the remainder is short-term debt, much of which is normal trade finance.

    For the poorest countries (all those eligible for support from the International Development Association or IDA), 2020 MLT debt service is about $36 billion, divided in roughly equal proportions between multilateral, bilateral (mostly non-Paris Club), and commercial creditors.

    All developing country regions are potentially seriously affected: Latin America has the highest debt service/exports ratio, Africa has the least diversified export mix, East Asia has the largest absolute amount of debt service.

    In normal circumstances, the principal amounts would simply be refinanced in global capital markets or offset by new disbursements from existing lenders. But circumstances are not normal. Credit markets have tightened, spreads have risen, and many countries are faced with very large reductions in foreign exchange revenues. In the face of huge global economic uncertainty, it is hard to predict which countries and regions will be most vulnerable, and not all the vulnerability has been caused by the pandemic. Already, Venezuela, Argentina, and Lebanon have defaulted and face lengthy and damaging legal proceedings with each creditor trying to negotiate individually, resulting in dead-weight losses for everyone until the situation is sorted out.

    One indication that the problem is widespread is that already 90 countries have approached the IMF to access emergency financing instruments. It seems clear that this is not just a low-income or an African country problem.

    There are several calls for debt standstills (here, here and here) to ease the burden on developing countries. Debt threatens to create a global development emergency in much the same way as the pandemic is creating a global health emergency. Both could result in social unrest and instability. Something will have to be done, so it is useful to recap the lessons from previous debt crises.

    Timeliness and urgency are important. Many developing countries simply will not have the foreign exchange to service their debt this year, notably those who are heavily indebted, are commodity dependent (two-thirds of all developing countries according to UNCTAD), have relied on large tourism receipts, or on remittances. A good example of the value of buying time is the negotiated rollover of private bank credits to Korea in 1997-98, aided by regulators who agreed not to call the measures a technical default.

    In the current context, timeliness means that case-by-case solutions may not be feasible. Like COVID-19, there is a need to flatten the curve of debt reschedulings so that the peak falls within the capacity of the system to handle them. Hence the calls for the G-20, the IMF/World Bank, the U.N. or others to develop a simple debt standstill framework that can buy time for proper sustainability analyses to be done on a country-by-country basis.

    All creditors must participate. In the early days of the mid-1980s debt crisis, the Baker plan sought voluntary extensions of new credits by banks to highly indebted countries, to permit them to grow out of their crisis. In the event, banks provided one-third less money than anticipated and the plan largely failed to meet its objectives because a group of midsized banks had incentives to free ride and exit. Commercial banks similarly exited ruble bond markets when a large IMF package to help Russia deal with its 1998 debt crisis did not address private debt and capital flight. The IMF’s legal framework, however, precludes it from providing financial support without its program directly addressing debt sustainability, so the IMF is able now to encourage private creditors to accept haircuts as a precondition of a program—a design feature that was used to good effect in the case of Ukraine in 2015.

    Currently, there are two groups of potential free-rider creditors who are quantitatively important but who do not participate in any formal debt restructuring processes like the Paris or London clubs: private holders of bonds without collective action clauses, and official lenders from China and other non-OECD countries. However, for both political and financial reasons, it would be hard to have an effective response today without including these two groups of creditors.

    Market-based solutions can work but require a degree of coordination and comprehensiveness. In the 1980s debt crisis, the Brady Plan gave banks an option to exit by taking a haircut in exchange for credit enhancements on loans restructured into bonds. Since then, many developing countries have tapped bond markets, often using collective action clauses that facilitate restructurings should those become necessary. But not all bonds have such issuances, and holdouts can complicate proceedings, as happened with vulture funds’ holdings of Argentina bonds issued in New York that prevented implementation for six years of the 2010 debt restructuring agreement reached with 93 percent of bondholders.

    In the current context, a useful precedent may be U.N. Security Council resolution 1483, granting a debt-shield mechanism to prevent commercial creditors from suing the government of Iraq to collect on sovereign debt. With this in place, Iraq was later able to settle its commercial debts through a combination of a debt buyback, at a discount for small debtors, and a debt-for-debt swap with a haircut for larger creditors.

    25.The global factory is a structure through which multinational enterprises integrate their global strategies through a combination of innovation, distribution and production of both goods and services. The global factory is analysed within a Coasean framework with particular attention to ownership and location policies using methods that illustrate its power in the global system. Developing countries are constrained by the existence and power of global factories. Firms in developing countries are frequently constrained to be suppliers of labour intensive manufacturing or services into the global factory system. Breaking into this system is difficult for emerging countries. It requires either a strategy of upgrading or the establishment of new global factories under the control of focal firms from emerging countries. The implementation of these strategies is formidably difficult.

    26.Fiscal policy can promote macroeconomic stability by sustaining aggregate demand and private sector incomes during an economic downturn and by moderating economic activity during periods of strong growth. … This helps economic agents to form correct expectations and enhances their confidence.
    Military spending according to the Keynesian approach is a component of government consumption, which stimulates economic growth by expanding demand for goods and services. Military spending affects economic growth through many channels.

    27.Microfinance is a banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. Microfinance allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices.
    ways in which microfinance contributes in combating poverty, she states that microfinance creates access to productive capital for the poor, which together with human capital, addressed through education and training, and social capital, achieved through local organization building, enables people to move out of poverty.

  6. Avatar Okeke Mmesoma .F. says:

    Name: Okeke Mmesoma .F.
    Department: Library and information science/Econs
    Reg Number: 2018/245372
    Email: okekedennis82@gmail.com

    14) Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    Yes, because Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution. Education also increases the accessibility of people to modern and scientific ideas. It increases the efficiency and ability of people to absorb new technology. It creates awareness of the available opportunities and mobility of labour.

    15) As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?
    Agriculture can contribute significantly to economic growth in normal times and serves as an employer of last resort in times of crisis. Stagnation of crop productivity, as reflected in yield plateaus in some parts of the region, is a critical constraint to meeting rapidly rising demand.
    A key element of the strategy is therefore to focus on avenues for boosting productivity in major cereal crops. Livestock and fisheries hold great potential, but sustainability is key to continuing success in all subsections.
    The key objectives of this priority area are to increase agricultural output and productivity, raise rural living standards, improve market access and support agribusiness. The primary tools will be the increased use of new technologies, technical support to members and subregions, support to agribusiness and capacity building.
    Expected results include enhanced policy prescriptions, strengthened research facilities, boosted institutional capacity and promotion of knowledge exchange.

    I)Increase output and productivity of agriculture, focusing on major food crops such as rice, wheat and maize as well as livestock;
    ii)Support the development of agriculture, agri-business and agro-industries particularly for small farmers and entrepreneurs, enabling them to respond to market opportunities, build resilience and attract investment;
    iii)Raise rural living standards through increased investment in infrastructure, human resources and services for employment and income generation; and
    Improve market access for small-scale producers and promote inclusive growth.

    15b)Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    High food and agricultural commodity prices and concerns about population growth, increasing per capita food demands and environmental constraints have pushed agriculture and food production up, so it is sufficient and rural institutions are also needed.

    16) What do we mean by “environmentally sustainable development”?
    It is defined as a condition of balance, resilience, and interconnectedness that allows human society to satisfy its needs while neither exceeding the capacity of its supporting ecosystems to continue to regenerate the services necessary to meet those needs nor by our actions diminishing biological diversity.

    16b)Are there serious economic costs of pursuing sustainable development as opposed to simple output growth?
    In terms of the perspective from the developed countries, economic growth results in increasing wealth, income, standard of living, and improved health care facilities.

    16c) who bears the major responsibility for global environmental damage,the rich North or the poor South?
    The Rich North is responsible for 92% of excess global environmental damage.

    17) Are free markets and economic privatization the answer to development problems? Yes, privatization may improve efficiency, provide fiscal relief, encourage wider ownership, and increase the availability of credit for the private sector.
    17b)Do governments in developing countries still have major roles to play in their economies? Yes, it attempts to promote economic stability and growth, and it attempts to regulate and control the economy. The federal government regulates and controls the economy through numerous laws affecting economic activity.
    The government;
    (1) provides the legal and social framework within which the economy operates.
    (2) maintains competition in the marketplace.
    (3) provides public goods and services.
    (4) redistributes income.
    (5) corrects for externalities and
    (6) takes certain actions to stabilize the economy.

    18) Why do so many developing countries select such poor development policies?
    These include low levels of education, poor water quality or a lack of doctors. Political factors, some countries are at war or the government may be corrupt. Therefore money does not reach the people who need it most and spending on areas such as education and infrastructure may be insufficient.
    18b) what can be done to improve such poor development polices?
    I believe that Education will do a greater job via spending on education and training can enable higher-skilled workforce. Then, Foreign Aid; aid from developed countries can be used to invest in better health care and education. Diversification of economy away from agriculture to manufacturing.

    19) Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    Yes it is, international trade activities have remarkably populated for many countries when there was emerging new commodities, sailing technique, especially international trade theories.countries should trade because trade makes them better off even they are rich or poor countries.
    19b)It is advantageous for all the countries of the world to engage in international trade. However, the gains from trade can never be same for all the trading nations. Some countries may reap a larger gain compared to others. Thus, gains from trade may be inequitable but what is true is that “some trade is better than no trade”.Exporting allows a country’s producers to gain ownership advantages and develop low-cost and differentiated products.

    20) When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    Trade agreements can improve market access across all areas of trade (goods, services and investment)and help to maintain and stimulate the competitiveness of firms.Foreign investment supplements domestic savings: without foreign investment, production, employment and income would all be lower.
    20b) What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    The International Monetary Fund (IMF) and the World Bank are institutions in the United Nations system. They share the same goal of raising living standards in their member countries. Their approaches to this goal are complementary, with the IMF focusing on macroeconomic and financial stability issues and the World Bank concentrating on long-term economic development and poverty reduction. The IMF also provides short- and medium-term loans and helps countries design policy programs to solve balance of payments problems when sufficient financing cannot be obtained to meet net international payments obligations and The World Bank promotes long-term economic development and poverty reduction by providing technical and financial support to help countries reform certain sectors or implement specific projects—such as building schools and health centers, providing water and electricity, fighting disease, and protecting the environment.
    21. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by exchange of trade in goods and services, technology, and flows of investment, people, and information. It also means the speedup of movements and exchanges of goods and services all over the planet. One of the effects of globalization is that it promotes and increases interactions, also economic growth between different regions and populations around the globe.
    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    Export promotion is a set of activities that brings about increase in the sale of agricultural producs to other nations,it also to the sale of nation’s produce to another so yes it should be promoted. Also developing countries can also attempt industrialization as it is a leading sector to economic development and can have economies of scale by applying advanced technology and division of labour and scientific management. So production and employment will increase rapidly. This will bring economic growth and capital formation.
    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    Some of the high levels of debt were amassed following the 1973 oil crisis. Increases in oil prices forced many poorer nations’ governments to borrow heavily to purchase politically essential supplies, Unpayable debt” is external debt with interest that exceeds what the country’s politicians think they can collect from taxpayers, based on the nation’s gross domestic product.
    The implication; The debt helps to improve welfare while if it is used in excess and irresponsibly, it can be one of the most disastrous acts for any nation and also rather than solving the financial crisis it increases it to the severe stage.
    Financial crises; Banking failures and reductions in domestic lending; In this kind of case it is likely that banks will reduce lending in order to shore up their capital. Reductions in bank lending will reduce investment, lower growth and increase unemployment.
    Reduction in export earnings; there will be dual pressures on developing country trade, reduced demand for their exports and reduced trade credit.
    24a)What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    foreign aid retards and distorts the process of economic development of undeveloped countries and results in dependence and exploitation, it also helps improve the economic development of underdeveloped countries. It also replaces domestic savings and flows of trade. Developing country should seek foreign aid in terms of outright grants or in terms of long term loans at low interest rates. Also, loans should accompany minimum conditionality’s, if any, it must also include only transfer of financial resources and must not include any military or internal security reinforcement.

    24b)Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    Yes,Providing aid stimulates the growth of the world economy along with promoting economic development within the region. It can help with market expansion. Providing aid to a country could mean the expansion of goods and resources.
    25a)Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions?
    Yes, multinational corporations should be encouraged because Multinational corporations are
    believed to be highly beneficial for developing countries in terms of bringing employment opportunities and new technologies that spillover to domestic firms. It can also play an important role in building an entrepreneurial ecosystem in developing countries.

    25b)How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?

    The emergence of the global factory and the globalization has positively influenced international economic relations in many ways which the growth of global production networks and significant changes in the location of manufacturing-related activities worldwide.
    26.a)What is the role of financial and fiscal policy in promoting development?
    Fiscal policy can promote macroeconomic stability by sustaining aggregate demand and private sector incomes during an economic downturn and by moderating economic activity during periods of strong growth.Fiscal policy helps to accelerate the rate of economic growth by raising the rate of investment in public as well as private sectors.

    26b)Do large military expenditures stimulate or retard economic growth?
    Yes, Increase in demand generated by military spending leads to increased utilization of capital stock and higher employment. Increased capital stock may lead to higher profits, which may in turn lead to a higher investment, in some cases it can cause retardation of economic growth.
    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Microfinance is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.it provides loans, savings and checking accounts; microinsurance giving them the opportunity to be self sufficient.
    Microfinance has been acclaimed to be effective vehicle for poverty eradication. Since poverty alleviation is rooted in grassroots development, it’s services will help the poor be able to work and make money to cater for themselves.

  7. Avatar CHIMA PRINCE CHUKWUEMEKA says:

    Name: Chima Prince chukwuemeka
    Reg no: 2018/243755
    Dept: Economics department
    Eco 361 Assignment
    ✓Do educational systems in developing countries really promote economic development or are they simply a mechanism to enable certain groups or classes of people to maintain positions of wealth,power and influence.
    ANSWER
    Education in-developing States is a very important factor for development, it increases the productivity of the people and the technological advancements. It helps in the progress of the increase in human capital is as a result of increase in investment in educational systems. It also leads to better informed citizens and thus enables them to make useful policy decision. It is important to note that educated people understand the problem of Economy and how to fix them.
    ✓As more than half people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted? Are higher agricultural prices sufficient to stimulate food production or are rural institutional changes (Land, road,transport, education) also needed?
    Answer
    Rural areas are usually called rural in terms of the population density and the structure of the society. Any economic activity in rural areas will have the ability to contribute to rural development. Agricultural and rural development can be achieved through educating the people on merchanization process. Also can be done through development. Economies naturally bring about growth in rural areas. Employment which shares an overall of the employment in agriculture is also high. Farming is an economic activity and is likely to be the key economic activity determining the progress of the rural development. When such amount of a population is engaged in agriculture any policy that is made which causes a shift and reduction in employment can have a terrible effect on the labour Force this leads to social and political instability.
    Price though is important should not be the sole motivation. Other things are to be put in place.
    ✓Whaf do we mean by “environmentally sustainable development”?. Are the serious economic cost of pursuing sustainable development as opposed to simple output growth and who bears the major responsibility for global environmental damage. The rich north or the poor south.
    Answer
    Environmental sustainability can be said to be the relationship between natural resources and the way those resources are used in the environment. The rate at which waste is generated shouldn’t exceed the capacity of the environment to assimilate that waste environmental sustainability says that whatever is being done with the natural resources should not affect the environment negatively. It must be done to improve the environment and not deplete it. There must be a balance between natural resources and human consumption.
    The question to be asked now is “Who are the rich north? and who are the poor south?. The rich north is used to depict developed countries while the poor south used to depict developing countries. The rich north contribute to the damage and this is due to their high consumption and in turn the poor south bears it because they don’t have what it takes to bear or withstand the damage.
    ✓Are free markets and economic privitazation the answer to development problems or do government in developing countries still have major roles to play in their Economics?
    Answer
    Privatisation improves the efficiency of public enterprises and also reduces the subsidies two state-owned enterprises therefore it checkmates the excesses of the government in developing countries but it doesn’t remove the fact that the government in developing countries still have major roles to play in their economies.
    ✓Wht do so many developing countries select such poor development policies and what can be done to improve these choices?
    Answers
    Many a country do not have adequate revenue to build infrastructure institutions and human capital which is needed for growth and fast poverty reduction even with foreign grants and loans government spending buy some developing countries is still lower than by the advanced economies. The government can advanced development buy reduced government spending. It is seen that countries with low income spend more than twice on average than today’s advanced economies. Development varies among the advanced and developing countries. Growth can happen with a smaller or larger government.
    ✓Is expanded international trade desirable from the point of view of the development of poor nation’s? Who gains from trade, and how are the advantages distributed among nation’s?
    Answer
    International trade is defined as the outflow and inflow of international exchange that usually results from the imports and exports of goods and services. It is created in order to increase the economic development between Nations it is observed that developing countries may have less competition an international market. Different countries possess different endowment and they produce different goods. Trade will naturally occur among these countries because not all countries are endowed with the same natural resources. While trade exist some countries will gain less than the others but they can still maximize their benefits as much as they can. Looking at the costs and benefits between the rich and the poor we can conclude that developing countries suffer more from trade deficit why the developed countries enjoy more benefits from trade. Despite these, developing countries can also gain satisfaction from trade.
    ✓when and under what conditions , if any should government in developing countries adopt a policy of foreign exchange control raise tarrifs, or set quota on the importation of certain “non essential” goods to promote their Industrialization or to ameliorate chronic balance of payments problem?
    What has been the impact of international monetary fund stabilization programs and world Bank structural adjustment lending on the balance of payment growth prospects of heavily indepted less developed countries?
    Answer
    The global economic environment for many developing countries including the current upswing in some countries which results from the high demand for oil and other raw materials needs to be turned into a dynamic process of economic growth and change and create employment and raises the standard of living over the long term. For this to take place trade and development report, government of developing countries should work actively in ensuring that the strengthen domestic businesses. Countries should not be overly restricted buy international trade rules. Government should also protect fledging enterprises including through the application of subsidies and tariffs until domestic producers can meet up with international competition in the sale of their products. Some policies that can be applied include policies that supports innovative investment acceptance of imported technology strengthening of industrial policies and strategic trade integrations. the impact of international monetary fund stabilization programs and structural adjustments lending on the balance of payments and growth prospects of heavily-indebted less developed countries:
    In the 1990s the world Bank and IMF structural adjustment programs came under criticism from civil society for having negative social and economic impacts on marginalized people and for undermining democracy in other countries. The policy conditions attached to these programs be able to bring about critical political and economic reforms. As a result the bilateral and multilateral traders began to look for new development strategies.
    ✓what is meant by globalization and how is it affecting the developing countries?
    Answer
    Globalisation can be defined as the process of economic political and cultural integration. the history of globalisation dates back to the second half of the 20th century where the development of transport and communication technology lead to a situation whereby national borders appeared to be too limiting for economic activity. Google ization is important in developing countries it has certain advantages such as technological development political influences health systems economic processes and so on. Globalisation improves the health and education system of a country and also the culture affects and trade processes.
    ✓should exports of primary product such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly possible?
    Answer
    Export of primary products should be promoted because some countries are endowed with certain natural resources which other countries do not have. Due to these deficiencies in natural endowment trade between these countries is inevitable. Countries should engage in export of primary products such as agricultural commodities but should not depend solely on exports for its income. Also the location of industrial facilities as an impact on poverty reduction and inequality.
    ✓ how did so many developing nation’s get into such serious foreign debt problems and what are the implications of debt problems for Economic development?. How do fininancial crises affect development?
    Answer
    Increase in foreign debt discuss the development of countries because the money that should be used for interest and principal payments is not being used for it. Poor debt management and no government revenues due to inefficient tax policies and weaknesses and the rule of law among the internal causes of death. Also loans are usually used for the consumption of goods instead of for productive investments. Developing countries have increased their borrowing especially from a new lenders such as China and also private creditors according to the United Nations conference on trade and development public debt at market conditions as a share of total debt has doubled between 2007 and 2016 in low-income countries. In developing countries public debt owed to private creditors Rose from 40% in the year 2000 to 60% in the year 2016. In order to prevent a debt crisis in countries,a good debt management practice must be established. Good debt management provides greater transparency on death situation in developing countries. It measures implemented to date by lenders such as the international monetary fund and UNCTAD debt management. Also establishing a set of principles for responsible lending and borrowing will be of great help.
    ✓ what is the impact of foreign Economic ais from rich countries? Should developing countries continue to seek such aid and if so under what conditions and for what purposes? Should developed countries continue to offer such aid and if so under what conditions and for what purpose?
    Answers
    Sustained inflow of foreign AIDS is roughly expected to increase growth rate of 3 to 4% per year. It is politically argued at 8 keeps bad government in power but then aid has actually helped to support democratic transitions by supporting civil societies organisation and multi-party elections. It programs can help support development progress.
    ✓ Should multinational corporation be encouraged to invest in the economies of poor nation’s and if so under what conditions? How gave the emergence of the global factory and the globalization of trade and finance influenced international Economic relations?
    Answers
    As Domestic firms move part of their products to other countries knowledge capital and technology become very important. The loss of sovereignty to Supra national regional institutions is more acceptable two international institutions that are more remote. Social programs within the European Union I am forcing major redistribution of revenue between individual countries. Globalisation and corporate governance are two key issues which interact to provide governance issues arising from the globalisation of businesses. These impose costs on the local economy and the environment. Also the remoteness of production for their ultimate owners also causes issues that arise from globalisation of businesses. They are terms to design policies to attract every stage of the global factory is fetal this results in the subsequent increase in the value of factor productivities and industrial policy choices.

    ✓What Is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard Economic growth?
    Answer
    The role of financial and fiscal policy promotes development in various ways. There are various tools of fiscal policy such as public expenditure public works taxation budget e.t.c this various tools go a long way in maintaining full employment in underdeveloped economics. Taxation and public expenditure is also a powerful instrument in the hands of public authority which affects the changes in disposable income consumption and investment. Tax burden can be raised in such a manner that it may not return new investment. Fiscal policies plays various roles to promote economic development in underdeveloped countries. Some of this role includes:
    * Acceleration rate of growth.
    * Mobilization resources .
    * Encouragement of socially optimal investment .
    * Inducement to investment and capital formation

    ✓What is Microfinance and what are it’s potential and limitations for reducing povery and spurring grassroots development?.
    Answer
    Microfinance Bank (MFB) is any company licensed by the Central Bank of Nigeria CBN to carry on the business of providing financial services such as savings and deposits, loans, domestic funds transfer and non-financial services to microfinance clients. The major goal of microfinance is to give people the opportunity to become self-sufficient. microfinance plays a major role in The reduction of poverty in the lives of individuals and groups. But recently it’s been observed that microfinance Banks has led to increasing levels of indebtedness amongst communities and has left them vulnerable in several ways which include economic vulnerability social vulnerability and environmental vulnerability.

  8. NAME: IKO GRACE ONU
    Reg No. 2011/179787
    300 level.
    Assignment on ECO 361
    • For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    • The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    • Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    • Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    • Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    • Second, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development.
    • Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.
    2.
    Economic institutions are responsible for organizing the production, exchange, distribution and consumption of goods and services.  Economic institution is also one of the basic institutions. For the sake of survival each society has an economic system ranging from simple to complex.
    2B. They determine attitudes, motivations and conditions for development. If institutions are elastic and encourage people to avail economic opportunities and further to lead higher standard of living and inspire them to work hard, then economic development will occur.
    3a. Our deeply unfair economic system is enabling the super-rich to amass huge fortunes but making it harder for billions of poor people to put food on the table or get treatment when they are sick. The economy is rigged against you if you’re poor, especially if you are a woman or a person of color.
    • 4a. Natural Factors. More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth. …
    • Human Factor. The quantity of labour is a factor that contribute to growth. …
    • Physical Capital. …
    • Institutional Factor.
    4b. Examples might be extreme flooding or desertification . Social factors – some parts of the world have issues that are caused by people. These include low levels of education, poor water quality or a lack of doctors. Political factors – some countries are at war or the government may be corrupt.

  9. Avatar Abalihi Chukwuebuka Ernest says:

    14.Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enhance certain select group or classes of people to maintain positions of wealth, power, and influence?

    Education is considered to play a key role in the economic development of any country because, it is the mechanism through which knowledge, skills and experience regarding different fields can be acquired and ultimately creating the comparative advantage for the country.
    Education is a human right and is central to achieving many other sustainable development outcomes.
    A quality basic education gives children and youth the knowledge and skills they need to face daily life challenges, and take advantage of economic and lifelong learning opportunities. It is also a key driver for reducing poverty, fostering economic growth, achieving gender equality, and social development.
    These benefits are even greater when support to education is targeted toward girls. Girls who complete their primary education tend to find better jobs, marry later and have fewer children. They are also:
    half as likely to have children who suffer from malnutrition
    less likely to have children who die before the age of five
    less likely to turn to prostitution
    less prone to be victims of sexual violence or become infected with HIV
    Education is particularly important to communities that are fragile or rebuilding. Education provides stability, structure and hope for the future, helping children and youth to overcome trauma caused by war, disaster, or conflict.
    Having a safe learning environment also makes children and youth less vulnerable to exploitation, kidnapping, and recruitment by militant groups or organized crime.
    However, around 59 million children in developing countries do not have access to basic education. The quality of education is also a key concern: 250 million children are unable to read, write or count, even after four years of schooling.
    Many young people in developing countries who have not been able to complete a quality education are lacking the foundational and high level skills for work and life.

    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development be promoted? Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    The following points highlight the top eleven suggestions to increase agricultural productivity.

    1. Transport Facilities: To facilitate the farmers to produce new farm inputs and enable them to sell their product in markets, villages should be linked with mandies. It would help to raise their income which in turn stimulates the farmer’s interest to adopt better farm technology with sufficient income.Thus the cultivator can invest more for the improvement of land.
    2. Irrigation Facilities: Crop productivity depends not only on the quality of input but also on the irrigation facilities. Therefore, canals, tube wells should be constructed to provide better irrigation facilities for the security of crops. Extensive flood control measures should be adopted to prevent the devastation caused by floods.
    Institutional Credit: To save the farmers from the clutches of moneylenders, adequate credit facilities should be made available at reasonable cheap rates in rural areas. The land mortgage banks and co-operative credit societies should be strengthened to provide loans to the cultivators. Moreover, integrated scheme of rural credit must be implemented.
    4. Proper Marketing Facilities: Marketing infrastructure should be widened and strengthened to help the farmers to sell their products at better prices. There should be proper arrangements for unloading of the produce in the markets. Besides, price support policy must be adopted and minimum prices should be guaranteed to the peasants.
    5. Supply of Quality Inputs: The farmer in the country should be supplied with quality inputs at proper times and at controlled prices. To protect the farmers exploitation, effective steps are needed to be taken to check the sale of adulterated fertilizers.
    6. Agricultural Education: In a bid to guide and advise the farmers regarding the adoption of new technology arrangements should be made for agricultural education and extension services. It would assist the farmers to take proper crop-care leading to increase in crop productivity.
    7. Reduction of Population on Land: As we know, that in our country, majority of population depends on agriculture to earn their both ends meet. This increases the pressure of population on land which leads to subdivision and fragmentation of land holdings. Therefore, proper climate should be generated to encourage the farm people to start employment in subsidiary occupations. It will help to reduce the population pressure on land. Surplus labour should be withdrawn from agriculture sector and be absorbed in non-agricultural sector.
    8. Provision of Better Manure Seeds: The farmers should be made familiar with the advantage of chemical fertilizer through exhibitions and these inputs should be made easily available through co-operative societies and panchayats. Liberal supplies of insecticides and pesticides should be distributed at the cheap rates all over the country side.
    Definition of Rural Development

    The definition of “rural” differs by country, though it is usually used in contrast to “urban”. For instance, this word is defined based on population density in Japan, indicating an area other than “an area with over 5,000 people, which consists of each district with a population density of over 4,000 per square kilometer”. However, we cannot simply apply this definition to other countries. Moreover, due to the fact that the concept of “rural” varies from Asia to Africa, it is difficult to define it uniformly. Therefore, the use of “rural” (including fishing and mountain villages) as a relative concept to “urban”, based on social, economical, and natural conditions in each country may be most adequate. The term could also be used to describe areas where a majority of the residents are engaged in agriculture in a broad sense (including livestock farming, forestry, and fisheries.
    It is estimated that in 2015 still roughly 2.8 billion people worldwide lack access to modern energy services and more than 1 billion do not have access to electricity. For the most part this grave development burden falls on rural areas, where a lack of access to modern energy services negatively affects productivity, educational attainment and even health and ultimately exacerbates the poverty trap.
    In rural areas, only 56 per cent of births are attended by skilled health personnel, compared with 87 per cent in urban areas.
    About 16 per cent of the rural population do not use improved drinking water sources, compared to 4 per cent of the urban population.
    About 50 per cent of people living in rural areas lack improved sanitation facilities, compared to only 18 per cent of people in urban areas.
    Effective Approaches for Rural Development
    Although the trickle-down theory was based on the belief that an expanded macro economy could improve the living standards of impoverished people, its effectiveness has been
    questionable. However its failure does not necessarily mean that efforts should be concentrated at the grass-roots level only. This is because the development of rural areas cannot be achieved without attention to urban areas, which are the main consumers of agricultural products. If conventional development projects were effective, rural poverty would have improved more significantly. Therefore, it is clear that the traditional rural development approach needs to be improved.
    Hitherto, rural development depended on external assistance from foreign countries. However external inputs have been restrained due to donors’ current poor financial conditions. As a result, the promotion of rural development requires effective external inputs to generate sufficient results and is capable of engendering further improvements. Development issues mus therefore be comprehensively and cross-sectionally understood for this to be realized. Maximum use of human and material resources in rural areas is also necessary. Some potential approaches are described as follows below.

    (1) Endogenous Development:
    ① To emphasize comprehensive local development for human rights advocacy, human development and qualitative progress of living standards based on environmental conservation and sustainable social development.
    ② To adopt a development approach that promotes inter-industrial relationships through the comprehensive utilization of local resources, techniques, industries, human resources, cultures, and networks placing value on mixed economic working situations. Also, to implement necessary regulations and instruction to promote cooperation between cities and local economy.
    ③ To facilitate community participation in policy-making. To establish local autonomy through community participation, decentralization and resident self-governance. At the same time, to develop project implementation bodies based on regional realities.
    (2) Participatory Development:
    The promotion of the development of human and physical resources in rural areas requires recognizing the fact that local people themselves are the main implementors of development projects. If the people participate passively in projects, they become inactive and will depend on external inputs. In order to avoid this situation, local decision-making in project planning and implementation is important. In other words, a project that the local people themselves plan and implement is given priority as local materials and human resources are utilized effectively by the local people’s initiative and responsibility. Local independence and sustainable development of
    project outcomes are enhanced by the effective use of local resources.
    16. What do we mean by environmentally sustainable development? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage-the rich north or the poor south?

    What is environmentally sustainable development?
    The goal of environmental sustainability is to conserve natural resources and to develop alternate sources of power while reducing pollution and harm to the environment. For environmental sustainability, the state of the future – as measured in 50, 100 and 1,000 years is the guiding principle. Many of the projects that are rooted in environmental sustainability will involve replanting forests, preserving wetlands and protecting natural areas from resource harvesting. The biggest criticism of environmental sustainability initiatives is that their priorities can be at odds with the needs of a growing industrialized society.

    What is Environmentally Sustainable Development?
    Sustainable development is the practice of developing land and construction projects in a manner that reduces their impact on the environment by allowing them to create energy efficient models of self-sufficiency. This can take the form of installing solar panels or wind generators on factory sites, using geothermal heating techniques or even participating in cap and trade agreements. The biggest criticism of sustainable development is that it does not do enough to conserve the environment in the present and is based on the belief that the harm done in one area of the world can be counter balanced by creating environmental protections in the other.
    According to Brundtland Commission in its 1987 report “Our Common Future”,
    “Sustainable development is development that meets the needs of the present, without compromising the ability of future generations to meet their own needs.”
    Sustainable development has 3 goals: to minimize the depletion of natural resources, to promote development without causing harm to the environment and to make use of environmentally friendly practices.
    However, The goals of the two groups diverge when it comes to the development of endangered areas. For instance, there will be disagreements when it comes to developing construction practices on a wetland. The environmental sustainability focus would argue that the preservation of the wetland is more important than everything else. Sustainable development will show that by incorporating preservation areas, and contributing to the overall preservation of a different wetland area that the damage is balanced out. Sustainable development will also argue that the local economic benefits will lead to more funding to create environmental protection areas elsewhere.
    Are there serious economic costs of pursuing sustainable development as opposed to simple output growth?
    The benefits of Sustainable Economic Development impact more than just those in poverty. For example, reducing energy use and expanding public transit options leads to less air pollution, which can improve asthma and heart conditions. Efficient homes and businesses will be more comfortable and safer.
    Who bears the major responsibility for global environmental damage-the rich north or the poor south?

    We know that environmental damage is caused by human activity, but pinning down exactly who is responsible is trickier than it might seem.
    One of the most frustrating things about the climate crisis is that the fact that earlier action could have prevented it. With every passing year of inaction, the emissions cuts needed to limit global warming to relatively safe levels grow steeper and steeper. Many groups have been accused of being at blame for this ongoing lack of action, from fossil fuel companies and wealthy countries, to politicians, rich people and sometimes even all of us. Others may feel it’s not useful to blame anyone. “If you want to engage with the non-converted and get them to want stronger climate action, blaming them is not going to be a very fruitful pathway,” says Glen Peters, research director of the Center for International Climate and Environment Research in Oslo. Whether we label it blame or not, the question of who is responsible for the climate crisis is a necessary one. It will inevitably impact the solutions we propose to fix things. But it’s also important to acknowledge that allocating emissions to someone – the extractors of fossil fuels, the manufacturers who make products using them, the governments who regulate these products, the consumers who buy them – does not necessarily mean saying they are responsible for them. For example, many people across the world lack access to a steady, clean electricity supply and instead use high-emission diesel generators to generate electricity. You can allocate these emissions to the people using the generators, but it is hard to say they are to blame for them. “You’re just slicing through the system at one end of the supply chain versus the other,” says Julia Steinberger, professor of ecological economics at the University of Leeds. “That alone is not enough to allocate blame.”
    Seventy percent of the world’s greenhouse gas emissions over the previous two decades are attributable to just 100 fossil fuel producers. What examining each of these links of the supply chain does do, however, is allow us to understand this complex system differently, she adds.But ultimately what is important is understanding who holds the power over the choices available to everyone else. By challenging how, and for whom, that power is gained and used, perhaps we can begin to shed light on how to truly turn things around on climate.
    Fossil fuel firms clearly play a major role in the climate problem. A major report released in 2017 attributed 70% of the world’s greenhouse gas emissions over the previous two decades to just 100 fossil fuel producers. An update last year outlined the top 20 fossil fuel firms behind a third of emissions. But it is not only through their ongoing extraction of fossil fuels that these companies have had such a huge impact on climate action. They have also worked hard to shape the public narrative. In 2015, an investigation by US website Inside Climate News revealed that the oil firm Exxon knew about climate change for decades and led efforts to block measures to cut emissions. Revelations like this have contributed to strong public anger at fossil fuels firms. Many now think that such companies have said and done everything they could to be able to continue extracting and burning fossil fuels – no matter the cost.
    Amy Westervelt is a climate journalist who has spent years exploring the thinking behind big oil’s strategy over the past decades, most recently in her podcast Drilled. She says there was a point in the late 1970s when oil companies in the US like Exxon appeared to be embracing renewables and increasingly viewing themselves energy companies, rather than just oil companies. But this mindset had changed completely by the early 1990s due to a series of oil crises and changing leadership, she says. “There was this real sort of shift in mindset from ‘If we have a seat at the table, we can help to shape the regulations,’ to ‘We need to stop any kind of regulation happening.’”
    Fossil fuel firms have since done “a great job” of making any kind of environmental concerns seem elitist, adds Westervelt. For example, Rex Tillerson, the Exxon chief executive who went on to be US secretary of state, repeatedly argued that cutting oil use to fight climate change would make poverty reduction harder. “They have this talking point that they’ve been trotting out since the 1950s, that if you want to make that industry cleaner in any way, then you’re basically unfairly impacting the poor. Never mind that the costs don’t actually have to be offloaded on to the public.” At the same time, fossil fuel companies have long employed PR tactics in a bid to control the narrative around climate change, says Westervelt, pushing doubts about the science and working to influence how people understand the role of fossil fuels in the economy. “They have put a real emphasis on creating materials for social studies, economics and civics classes that all centre the fossil fuel industry,” says Westervelt. “I think there’s a real lack of understanding about just how much that industry has shaped how people think about everything, and very deliberately so.”
    Rich people
    Concentrating on the influence of fossil fuel companies in the failure to reduce emissions means focusing on where the supply chain starts and the push to keep extracting fossil fuels. But we can also look at where it ends – the people who consume the final products from fossil fuels, and, more specifically, those who consume a fair bit more than the rest. Across 86 countries, the richest 10% of people consume around 20 times more energy than the poorest 10%.
    A recent international study from the University of Leeds calculated that, across 86 countries, the richest 10% of people consume around 20 times more energy than the poorest 10%. A big portion of this heightened consumption by richer people is through transport, the study found: flights, holidays and big cars driven long distances.
    So do studies like this lay the blame for climate change at the doors of rich consumers? Yes and no, says Steinberger, who co-authored the paper.
    Yes, because rich people do have far more choice in how they spend their money. “If you’re rich enough to afford a big car, you’re also rich enough not to afford a big car. If the lifestyles that rich people choose to lead are very ostentatious and wasteful, they definitely have responsibility over this,” says Steinberger. Rich people also tend to be more influential in government and in the companies driving government policy, she says. “In general, if we’re talking about who has the power to make decisions, it’s probably rich people in different roles.”
    But also no, says Steinberger, because even high consumers live within a system that enables, and even rewards, their consumption.
    Recent events have helped put the impact of individual action into perspective. Even at the height of the coronavirus pandemic in April, with many countries in lockdown, daily global CO2 emissions fell 17% compared with 2019 levels. The drop is certainly major – emissions were temporarily comparable to 2006 levels – but the fact it was not even more gives an insight into how much deeper emissions cuts need to go than the lifestyle changes available to individual people.
    Rich countries

    Widening out the frame from individual consumption, another way climate blame is often apportioned is by looking at which countries emit the most. The question of whether richer, historically more polluting countries should take more responsibility for climate change than others has long been a sore point at international climate negotiations. Back in 1992, when the first international climate treaty was signed to set up a framework for future climate negotiations, it included an important – and yet, to some, still contentious – principle. The treaty acknowledged that countries had different historic responsibilities for emissions, as well as varying abilities to reduce them going forwards.
    Addressing climate change requires urgent action by all people certainly, including rich and poor, but with wealthy countries taking the lead – Mohamad Adow
    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    What Is Privatization?
    Privatization occurs when a government-owned business, operation, or property becomes owned by a private, non-government party. Note that privatization also describes the transition of a company from being publicly traded to becoming privately held. This is referred to as corporate privatization.
    Privatization describes the process by which a piece of property or business goes from being owned by the government to being privately owned. It generally helps governments save money and increase efficiency, where private companies can move goods quicker and more efficiently.
    How Privatization Works
    Privatization of specific government operations happens in a number of ways, though generally, the government transfers ownership of specific facilities or business processes to a private, for-profit company. Privatization generally helps governments save money and increase efficiency.
    In general, two main sectors compose an economy: the public sector and the private sector. Government agencies generally run operations and industries within the public sector. In the U.S., the public sector includes the U.S. Postal Service, public schools and universities, the police and firefighter departments, the national park service, and the national security and defense services.
    Enterprises not run by the government comprise the private sector. Private companies include the majority of firms in the consumer discretionary, consumer staples, finance, information technology, industrial, real estate, materials, and healthcare sectors.
    Advantages and Disadvantages of Privatization
    Proponents of privatization argue that privately-owned companies run businesses more economically and efficiently because they are profit incentivized to eliminate wasteful spending. Furthermore, private entities don’t have to contend with the bureaucratic red tape that can plague government entities.
    On the other hand, privatization naysayers believe necessities like electricity, water, and schools shouldn’t be vulnerable to market forces or driven by profit. In certain states and municipalities, liquor stores and other non-essential businesses are run by public sectors, as revenue-generating operations.
    Real-World Examples
    Before 2012, the state of Washington controlled all sales of liquor within the state, meaning that only the state could operate liquor stores. This policy allowed the state to regulate how and when liquor was sold, and to collect all revenue from liquor sales within the state. However, in 2012, the state moved to privatize liquor sales. Once privatized, private businesses such as Costco and Walmart could sell liquor to the general public. All previously state-run stores were sold to private owners or closed, and the state ceased collecting all revenue from liquor sales.
    One of the most famous and historically important examples of privatization occurred after the fall of the Soviet Union. The Soviet Union’s form of government was communism, where everything was owned and run by the state; there was no private property or business.
    Privatization began before the collapse of the Soviet Union under Mikhail Gorbachev, its then-leader, who implemented reforms to hand over certain government enterprises to the private sector. After the Soviet Union collapsed, there was mass privatization of previous government enterprises to a select portion of the populace in Russia, known as oligarchs, that dramatically increased inequality within the nation.
    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?

    Population Growth
    Among all the developing countries, population growth remains one of the reasons for these countries to remain poor. To take specific examples, both India and China have historically been among the poorer countries because of their huge populations. It was only after the economic liberalisation and opening up of their respective economies that these countries began on a growth.
    Shortage of Resource Capital
    It has been often stated that one of the reasons for the under-development of certain regions has been due to the “tyranny of geography”. This is true in the case of many of the less developed countries. Because of the non availability of resources, many countries have traditionally been at the bottom of the economic ladder. Some examples are the South East Asian countries, who till they started on a path of export led growth were stagnant in economic development.
    Scarce Human Capital
    It is a corollary of poor economic growth that the human development in terms of the social indicators also lags behind the developed countries. Because of lack of access to education and other social needs, the populace of the less developed countries often lack the skills to compete in the global economy.
    Poor Infrastructure
    Among the many ills that the less developed countries face, Infrastructure or the lack of it is one of the most prominent factors for poor economic growth. It is a vicious cycle as massive investments are needed to develop the infrastructure and poor countries cannot afford the same. And unless infrastructure is improved, the economies cannot “take off” in a significant way.
    Regional Conflict
    The best examples of countries that have had poor economic growth due to regional conflicts are the African economies that are perpetually at war with each other and within themselves. Despite the availability of resources in the Western African countries, the state of civil war in many of these countries has made the economic development of them stunted. Poor economic growth brings with it the attendant problems of scarcity and competition for these scarce resources with the result that there is often an internecine battle among different ethnic groups for the same resources. Thus, these countries do not find a way out of the regional conflicts without intervention by the United Nations and other regional powers and that too the peace brokered by them is often fragile and prone to disruption.
    On the other hand, high rates of economic growth fuel a different kind of conflict, namely the race for the spoils of growth and this can be seen in some of the South Asian countries, which, despite having high rates of growth are dogged by conflict arising.
    Corrupt Systems and Institutions
    This is an endemic problem in many of the countries that became independent from the colonial powers in the latter half of the 20th century. Poor economic growth leads to bad governance and a lack of respect for the rule of the law.

    Compared to the western countries where the institutions were established centuries ago and there is a broad consensus among civil society on the nature of governance and the welfare state, in many of the less developed countries, the institutions are under attack from vested interests and the common person pays a price for bad governance.
    What can be done to improve these choices?
    1. Combating and establishment of corrupt free institutions:Governments of developing countries should take conscious actions towards tackling the problem of institutional corruption that obviously retards development.
    2. Stable/ consistent Government policies: unstable government policies of developing countries is also another factor that leads to the selection of poor development policies. Conscious efforts by every administration to follow and see through with whatever policies it comes up with is very necessary for development.
    3.Imroved macroeconomic conditions: Improved macroeconomic conditions (create stable economic climate of low inflation and positive economic growth).
    4. Diversification away from agriculture to manufacturing as a way to promote economic development.
    5. Free market supply-side policies – privatisation, deregulation, lower taxes, less regulation to stimulate private sector investment.
    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    Benefits of Trade:
    Virtually, every nation finds it advantageous to trade with other nations. They are linked to one another, in varying degrees, by trade flows and financial networks that surround the globe.
    Gains from trade accrue from specialisation, i.e., division of labour. Division of labour and specialisation within a country make necessary a greater amount of exchange, so greater division of labour recessiates an extension of trade. Specialisation is the logical offshoot of exchange among nations Thus, a greater variety of products in larger quantities may be available. Thus, we have both production gain and consumption gain.
    Every country produces goods maximum on the basis of comparative advantage. By exchanging these goods, nations can consume more than before trade. It was Adam Smith who first pointed out the advantages of trade in reaping the advantages of specialisation and the economic benefits flowing from it, viz.; improvement in production and productivity and hence national wealth/income of every participating country.
    Secondly, a similar gain from trade, called ‘vent for surplus’, has been illustrated by Adam Smith. International trade increases the level of productive activity by stimulating efficient utilisation of resources. Countries may then experience surplus produce. Smith then argued that trade was a means of disposing of surplus produce for exports. Thus, trade, ‘vents’ a surplus productive activity that would otherwise go unsold in the absence of trade.
    Thirdly, there are other three kinds of gains from trade:
    (i) Those that remove the narrowness of domestic market, induce innovations, achieve the full advantages of economies of large scale production and increase productivity;
    (ii) Those that make savings and capital accumulation easier; and
    (iii) Those that acquire new knowledge, new ideas and cultures, new skills and entrepreneurship and disseminate technical knowledge.
    Fourthly, empirical evidence suggests that trade can boost productivity which, in turn, raises the incomes and standards of living even of poor developing countries. The link between trade and productivity, being a potential one, can be identified with exports and imports. Through imports, countries stand to gain by importing machineries and various capital goods embodying new, modern technologies as well as by importing ideas that help rise in productivity.
    Mastering and adaptability of new technologies require a learning process. It is through learning, benefits of technological improvement can be reaped. On the export side, we must say that market access supports the learning process. It is said that trade helps to promote specialisation and sustain production tempos of goods in which ‘learning effects’ are embodied. Thus, by opening up channels to the export and import markets, a country ‘can support technological upgrading via learning’. Trade-induced learning processes help all countries to improve incomes and, thus, economic welfare over the long run. This is what makes trade a powerful ‘engine of growth’.
    Finally, trade is not considered as an important ‘engine of growth’, but also it can contribute to poverty alleviation by expanding markets, making larger investments in various fields, creating jobs, raising productivity which, in turn, raise incomes of the poor people. However, the link between trade and poverty reduction is a ‘potential’ one, rather than an automatic one. For all these reasons, it is said that ‘trade is an engine of growth’. There is no reason for any country to remain in isolation.
    Disadvantages of Trade:
    The ‘trade engine’ theory lost its ‘fuel’ in the developing countries after the World War II. Some economists suggested that gains from trade can never be unambiguous for all the trading countries—both developed and developing. Thus, the message runs—free international trade is harmful for the poor developing countries.
    Raul Prebisch, Hans Singer, Gunnar Myrdal argued in the 1950s that the gains from trade are biased—rich countries gain at the expense of the poor countries. Their arguments are as follows: Poor LDCs are, by nature, primary goods producing countries while rich countries are producers of manufacturer articles.

    Former buys manufactured goods from the latter countries by exporting their primary goods, at a low prices or at unfavorable terms of trade. Thus, these countries pay more to the developed countries for their imports while developed countries pay less to the developing countries for their imports. In other words, gains from trade largely accrue to the developed countries. Benefits of lower prices of exportable of LDCs are transferred to the overseas consumers rather than producers of developing countries. It is thus, clear that LDCs cannot gain much from the export of primary commodities.
    Secondly, some left economists argue that trade results in ‘dependent development’. In other words, trade between rich and poor nations is exploitative in nature. These economists argue that underdevelopment of poor countries is to be explained in terms of external factors rather than internal factors. Historically, colonial countries of the past say, Asia, Africa and Latin America, did not have economic independence where European capitalist imperialist powers ruled. From these colonies, capitalist countries drew their economic resources and filled their coffers simply by exploiting them. For the existence of the capitalist order, existence and generation of surplus and then transferring them to their countries, was indispensable. Thus, without assisting the poor developing countries, capitalist imperialist countries flourished. This is called ‘development of underdevelopment’ as a deliberate consequence of free international trade. Danger of dependence is often explained in the following way. A country may face economic depression if its international trading partner suffers from it and then it spreads from one country to another. The Great Depression that emanated during 1929-30 in the US economy swept all over the world and all counties suffered badly even if their economies were not caught in the grip of the depression. Such overdependence becomes catastrophic during war. Further, commercial rivalries resulting from trade may lead to war.
    Against this backdrop, one must not jump to a conclusion that poor LDCs must not trade with anyone, particularly developed nations. This is highly unrealistic since no country, whatever the size and whatever the level of development, is self-sufficient. Thus for survival, trade is essential. All countries trade. To reap the maximum advantages of trade right trade policies need to be adopted. In addition, cooperation among all countries can promote more benefits from growth. Sometimes, some form of trade and economic cooperation among equals may be suggested so as to get larger benefits from trade.

    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    International trade increases the number of goods that domestic consumers can choose from, decreases the cost of those goods through increased competition, and allows domestic industries to ship their products abroad. While all of these effects seem beneficial, free trade isn’t widely accepted as completely beneficial to all parties.
    For example, former U.S President Trump’s 2016 presidential campaign was highly critical of free trade agreements. In 2018, the Trump administration introduced billions of dollars in new tariffs on Chinese imports and threatened tariffs on other countries.China retaliated by announcing tariffs on U.S. imported goods, including steel and pork.Trump also introduced tariffs on steel and aluminum imports from the European Union, Mexico, and Canada in 2018.Later that year, China announced a 25% tariff on $16 billion worth of U.S. goods, including vehicles and crude oil, in retaliation for the U.S. tariffs on $16 billion worth of Chinese goods. “This is tit-for-tat exactly,” Art Hogan, chief market strategist at B. Riley FBR told CNBC. “Our $16 billion comes at a scheduled time. China said we see your $16 billion and we’ll match your $16 billion.
    What is a Tariff?
    In simplest terms, a tariff is a tax. It adds to the cost borne by consumers of imported goods and is one of several trade policies that a country can enact. Tariffs are paid to the customs authority of the country imposing the tariff. Tariffs on imports coming into the United States, for example, are collected by Customs and Border Protection, acting on behalf of the Commerce Department. In the U.K., it’s HM Revenue & Customs (HMRC) that collects the money.
    It is important to recognize that the taxes owed on imports are paid by domestic consumers and not imposed directly on the foreign country’s exports.8 The effect is nonetheless to make foreign products relatively more expensive for consumers, but if manufacturers rely on imported components or other inputs in their production process, they will also pass the increased cost on to consumers. Often, goods from abroad are cheaper because they offer cheaper capital or labor costs; if those goods become more expensive, then consumers will choose the relatively costlier domestic product. Overall, consumers tend to lose out with tariffs, where the taxes are collected domestically.
    Why Are Tariffs and Trade Barriers Used?
    Tariffs are often created to protect infant industries and developing economies but are also used by more advanced economies with developed industries.9 10 Here are five of the top reasons tariffs are used:
    Protecting Domestic Employment
    The levying of tariffs is often highly politicized. The possibility of increased competition from imported goods can threaten domestic industries. These domestic companies may fire workers or shift production abroad to cut costs, which means higher unemployment and a less happy electorate.
    The unemployment argument often shifts to domestic industries complaining about cheap foreign labor, and how poor working conditions and lack of regulation allow foreign companies to produce goods more cheaply. In economics, however, countries will continue to produce goods until they no longer have a comparative advantage (not to be confused with an absolute advantage).
    Protecting Consumers
    A government may levy a tariff on products that it feels could endanger its population. For example, South Korea may place a tariff on imported beef from the United States if it thinks that the goods could be tainted with a disease.
    Infant Industries
    The use of tariffs to protect infant industries can be seen by the Import Substitution Industrialization (ISI) strategy employed by many developing nations. The government of a developing economy will levy tariffs on imported goods in industries in which it wants to foster growth. This increases the prices of imported goods and creates a domestic market for domestically produced goods while protecting those industries from being forced out by more competitive pricing. It decreases unemployment and allows developing countries to shift from agricultural products to finished goods. Criticisms of this sort of protectionist strategy revolve around the cost of subsidizing the development of infant industries. If an industry develops without competition, it could wind up producing lower quality goods, and the subsidies required to keep the state-backed industry afloat could sap economic growth.
    National Security
    Barriers are also employed by developed countries to protect certain industries that are deemed strategically important, such as those supporting national security. Defense industries are often viewed as vital to state interests, and often enjoy significant levels of protection. For example, while both Western Europe and the United States are industrialized, both are very protective of defense-oriented companies.

    ECONOMY ECONOMICS
    The Basics of Tariffs and Trade Barriers
    FACEBOOK
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    By BRENT RADCLIFFE
    Fact checked by YARILET PEREZ
    Reviewed by MICHAEL J BOYLE on April 27, 2021
    TABLE OF CONTENTS
    EXPAND
    Who Collects a Tariff?
    Why Are Tariffs and Trade Barriers Used?
    Common Types of Tariffs
    Non-Tariff Barriers to Trade
    Who Benefits from Tariffs?
    How Do Tariffs Affect Prices?
    Tariffs and Modern Trade
    The Bottom Line
    International trade increases the number of goods that domestic consumers can choose from, decreases the cost of those goods through increased competition, and allows domestic industries to ship their products abroad. While all of these effects seem beneficial, free trade isn’t widely accepted as completely beneficial to all parties.

    In fact, President Trump’s 2016 presidential campaign was highly critical of free trade agreements.1 In 2018, the Trump administration introduced billions of dollars in new tariffs on Chinese imports and threatened tariffs on other countries.2 China retaliated by announcing tariffs on U.S. imported goods, including steel and pork.3 Trump also introduced tariffs on steel and aluminum imports from the European Union, Mexico, and Canada in 2018.4 Later that year, China announced a 25% tariff on $16 billion worth of U.S. goods, including vehicles and crude oil, in retaliation for the U.S. tariffs on $16 billion worth of Chinese goods. “This is tit-for-tat exactly,” Art Hogan, chief market strategist at B. Riley FBR told CNBC. “Our $16 billion comes at a scheduled time. China said we see your $16 billion and we’ll match your $16 billion.”5

    This article will examine how some countries react to a variety of factors that attempt to influence trade.

    KEY TAKEAWAYS
    Tariffs, or taxes imposed on imports, have been making news lately as the Trump administration initiated multiple tariff rounds on China and elsewhere.
    Tariffs are a type of protectionist trade barrier that can come in several forms.
    While tariffs may benefit a few domestic sectors, economists agree that free trade policies in a global market are ideal.
    Tariffs are paid by domestic consumers and not the exporting country, but they have the effect of raising the relative prices of imported products.
    Who Collects a Tariff?
    In simplest terms, a tariff is a tax. It adds to the cost borne by consumers of imported goods and is one of several trade policies that a country can enact. Tariffs are paid to the customs authority of the country imposing the tariff. Tariffs on imports coming into the United States, for example, are collected by Customs and Border Protection, acting on behalf of the Commerce Department.6 7 In the U.K., it’s HM Revenue & Customs (HMRC) that collects the money.

    It is important to recognize that the taxes owed on imports are paid by domestic consumers and not imposed directly on the foreign country’s exports.8 The effect is nonetheless to make foreign products relatively more expensive for consumers, but if manufacturers rely on imported components or other inputs in their production process, they will also pass the increased cost on to consumers.

    Often, goods from abroad are cheaper because they offer cheaper capital or labor costs; if those goods become more expensive, then consumers will choose the relatively costlier domestic product. Overall, consumers tend to lose out with tariffs, where the taxes are collected domestically.

    General Agreement on Tariffs and Trade (GATT)
    Why Are Tariffs and Trade Barriers Used?
    Tariffs are often created to protect infant industries and developing economies but are also used by more advanced economies with developed industries.9 10 Here are five of the top reasons tariffs are used:

    Protecting Domestic Employment
    The levying of tariffs is often highly politicized. The possibility of increased competition from imported goods can threaten domestic industries. These domestic companies may fire workers or shift production abroad to cut costs, which means higher unemployment and a less happy electorate.

    The unemployment argument often shifts to domestic industries complaining about cheap foreign labor, and how poor working conditions and lack of regulation allow foreign companies to produce goods more cheaply. In economics, however, countries will continue to produce goods until they no longer have a comparative advantage (not to be confused with an absolute advantage).

    Protecting Consumers
    A government may levy a tariff on products that it feels could endanger its population. For example, South Korea may place a tariff on imported beef from the United States if it thinks that the goods could be tainted with a disease.

    Infant Industries
    The use of tariffs to protect infant industries can be seen by the Import Substitution Industrialization (ISI) strategy employed by many developing nations. The government of a developing economy will levy tariffs on imported goods in industries in which it wants to foster growth. This increases the prices of imported goods and creates a domestic market for domestically produced goods while protecting those industries from being forced out by more competitive pricing. It decreases unemployment and allows developing countries to shift from agricultural products to finished goods.

    Criticisms of this sort of protectionist strategy revolve around the cost of subsidizing the development of infant industries. If an industry develops without competition, it could wind up producing lower quality goods, and the subsidies required to keep the state-backed industry afloat could sap economic growth.

    National Security
    Barriers are also employed by developed countries to protect certain industries that are deemed strategically important, such as those supporting national security. Defense industries are often viewed as vital to state interests, and often enjoy significant levels of protection. For example, while both Western Europe and the United States are industrialized, both are very protective of defense-oriented companies.

    Retaliation
    Countries may also set tariffs as a retaliation technique if they think that a trading partner has not played by the rules. For example, if France believes that the United States has allowed its wine producers to call its domestically produced sparkling wines “Champagne” (a name specific to the Champagne region of France) for too long, it may levy a tariff on imported meat from the United States. If the U.S. agrees to crack down on the improper labeling, France is likely to stop its retaliation. Retaliation can also be employed if a trading partner goes against the government’s foreign policy objectives.
    Who Benefits from Tariffs?
    The benefits of tariffs are uneven. Because a tariff is a tax, the government will see increased revenue as imports enter the domestic market. Domestic industries also benefit from a reduction in competition, since import prices are artificially inflated.
    Unfortunately for consumers—both individual consumers and businesses—higher import prices mean higher prices for goods. If the price of steel is inflated due to tariffs, individual consumers pay more for products using steel, and businesses pay more for steel that they use to make goods. In short, tariffs and trade barriers tend to be pro-producer and anti-consumer.
    The effect of tariffs and trade barriers on businesses, consumers, and the government shifts over time. In the short run, higher prices for goods can reduce consumption by individual consumers and by businesses. During this period, some businesses will profit, and the government will see an increase in revenue from duties.
    In the long term, these businesses may see a decline in efficiency due to a lack of competition, and may also see a reduction in profits due to the emergence of substitutes for their products. For the government, the long-term effect of subsidies is an increase in the demand for public services, since increased prices, especially in foodstuffs, leave less disposable income.

    21. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. Countries have built economic partnerships to facilitate these movements over many centuries. But the term gained popularity after the Cold War in the early 1990s, as these cooperative arrangements shaped modern everyday life.
    The wide ranging effects of globalization are complex and politically charged.As with major technological advances, globalization benefits society as a whole, while harming certain groups.Understanding the relative costs and benefits can pave the way for alleviating problems while sustaining the wider payoffs.

    THE HISTORY OF GLOBALIZATION IS DRIVEN BY TECHNOLOGY, TRANSPORTATION, AND INTERNATIONALCOOPERATION

    Since ancient times, humans have sought distant places to settle, produce, and exchange goods enabled by improvements in technology and transportation. But not until the 19th century did global integration takeoff. Following centuries of European colonization and trade activity, that first “wave” of globalization was propelled by steam ships, railroads, the telegraph, and other breakthroughs, and also by increasing economic cooperation among countries.The globalization trend eventually waned and crashed in the catastrophe of World War I, followed by post war protectionism, the Great Depression, and World War II. After World War II in the mid- 1940s, the United States led efforts to revive international trade and investment under negotiated ground rules, starting a secondwave of globalization, which remains ongoing, though buffeted by periodic downturns and mounting political scrutiny.
    GLOBALIZATION AS ATOOL FOR PROSPERITY AND PEACE
    After World War II, the.United States helped build aglobal economic order governed by mutually accepted rules and over seen by multilateral institutions.The idea was to create a better world with countries seeking to cooperate with one another to promote prosperity and peace. Free trade and the rule of law were main stays of the system, helping to prevent most economic disputes from escalating into larger conflicts.The institutions established include: WTO(World trade organization), NATO(North Atlantic treaty organization), WorldBank.

    EFFECTS OF GLOBALIZATION
    MORE GOODS AT LOWER PRICES:
    Globalization encourages each country to specialize in what it produces best using the least amount of resources, known as comparative advantage.This concept makes production more efficient, promotes economic growth, and lowers prices of goods and services, making them more affordable especially for lower-income households.
    SCALED UP BUSINESSES
    Larger markets enable companies to reach more customers and get a higher return on the fixed
    costs of doing business.Technology firms have taken special advantage of their innovations this way.
    BETTER QUALITY AND VARIETY
    Competition from abroad drives firms to improve their products. Consumers have better products and more choices as aresult.
    INNOVATION
    Expanded trade spurs the spread of technology, innovation,.and the communication of ideas. The best ideas from market leaders spread more easily.

    How has globalization affected developing countries?
    GLOBALIZATION HAS DISPLACED SOME WORKERS, WHILE SUPPORTING HIGH-SKILL JOBS: Globalization changes the types of jobs available but has little effect on the overall number of jobs in the ever-changing labor market. That being said, some workers have directly benefited from expanding global commerce, while others have not. Certain manufacturing and industry workers in specific geographic regions loose out.
    Other common arguments: Globalization is like technological progress. Both disrupt some livelihoods while enlarging the economic pie and opening up new and better-paying job opportunities. The internet, for instance, made many jobs obsolete but also created new higher-paying jobs and industries unheard of only a few decades ago.
    Protectionism helps select groups but at a higher cost for everyone else. Imposing tariffs on steel, for instance, helps certain domestic steel producers, but many more jobs depend on businesses that need some imported steel to make goods that are affordable.

    22.Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    Economically, it is believed that over importation especially of primary commodities such as

    agricultural commodities that can be produced locally would in the long run hurt any economy.

    As such, developing countries especially in Africa shouldlook to be

    industrialized as this would reduce theirover dependency on imported goods.The

    move towards industrialization would also increase the developing countries’ self-sufficiency in

    terms of providing its own food and creating jobs for the locals and also increase their GDP/GNP.

    Also, this wouldalso lead to an increase in the developing countries’ foreign exchange and

    subsequently reduce its trade deficit.

    Thus, industrialization would lead to a high level of self-sufficiency when achieved and subsequently development.
    23.How did so many developing Nations get into such serious foreign debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    Today, many developing economies in Africa and Asia are in serious foreign debt as a result of many factors; corruption and mismanagement of funds that are meant for implementation of various projects, lack of strong social and judicial institutions, leadership problems, poor government policies that affects the macro economy of the country, over dependence on imports leading to balance of trade deficit, unsustainable government policies, among many other factors.
    B.The implications of such foreign debt problems on economic development includes:
    * It stagnates or retards a country’s growth/development process; excessive amount of foreign debts will hinder a countrie’s capacity to attain its full potential, whether through education, infrastructural development, or healthcare, because the country spends a major part of it’s earnings trying to reduce it’s debt burden, this becomes a challenge to the economy’s development in the longrun.
    C.The financial crisis that hit the world economy in 2008-2009 has transformed the lives of many individuals and families, even in advanced countries, where millions of people fell or are at the risk of falling into poverty and exclusion. Financial crisis slows and retards a country’s development due to low per capita income, unemployment, problem in growing budget and trade deficits, currency devaluation, higher rates of inflation, increasing public debt and dwindling currency reserves.
    24.What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes? Should developed countries continue to offer such aid, and if so, under what conditions and forwhat purposes?
    Obviously, foreign aid fromd developedc countries helps developing countries to finance public infrastructures/projects. However, developing countries should not heavily depend on these aids, they should rather endeavor to set up policies that will help them attain development with minimal foreign assistance.
    Relying heavily on foreign aid in order to attain development is dangerous for economic development as some of these aids sometimes come with arbitrary conditions which in one way or the other affect growth and development. Although, developing countries should seek for such aids when left with no other alternative only on the conditions that such aids would be used to finance capital projects that would help spur development. Developed countries should however continue to offer foreign debt toassist developing countries are in taking on capital projects that would help increase the developing countries output capacity.
    25.Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the global factory and the globalization of trade and finance influenced international economic relations?

    Government of developing economies should create and champion economic policies that are favourable and would encourage for foreign corporations investment. The effect of this is there would be an increase in employment level, provision of new products and technology, human capital development among others.
    B. How have the emergence of the”global factory” and globalization of trade and finance influenced international economy?
    The emergence of the globalization of trade and finance has helped in building strong bilateral relationship between countries and has equally helped advance growth in more and more developing countries as trading between different countries has seen the movement of firms from their home countries to foreign ountries, which has been a sort of positive impact on the firms and the host countries.

    26.What is the role and of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard growth?
    The different tools of fiscal policy such as taxation, government expenditure on goods and services, etc, can go a long way in maintaining full employment without inflationary or deflationary forces in developing countries. Obviously, taxation and public expenditure is a powerfull tool in the hands of public authorities which greatly affect the dynamics in disposable incomes, consumption and investment. An anti recession tax policy increases disposable income of individuals, encourages consumption andinvestment.This would ultimately result in increase in spending activities which in turn would increase effective demand for goods and services.
    On the contrary, during inflation, anti inflationary policies help to reduce the inflation gap. Such measures are adopted which help to wipe off the excessive purchasing power and demand of consumers.Tax burden is raised in such a manner as it may not repel new investment. Keeping in view all facts in mind, it is stated that fiscal policy plays a significant role in promoting economic development and stability of developing countries.

    27. What is microfinance and what are its potentials and limitations for reducing poverty and souring grassroots development.
    Microfinance also called micro finance credit is a type of banking service provided to small scale business owner mostly in rural areas that have little or no access to credit facilities of large commercial Banks. With their low interest loans to small scale business owners or potential business owners, micro finance Banks help inreducing poverty and spur development asmore an more individuals get equipped with substantial capital inorder to venture in to one business or the other.
    The limitations of microfinance are in their limited capital base, which makes it impossible for a large number of small scale businesses to have access to these loanable capitals, thus making development slow.

  10. Avatar Igbokwe Cynthia Esther says:

    NAME: Igbokwe Cynthia Esther
    Reg No: 2016/234606
    Department: Economics

    14. Yes Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.An economy’s productivity rises as the number of educated workers increases since skilled workers can perform tasks more efficiently.Industries with higher education and training requirements tend to pay workers higher wagesIndustries with higher education and training requirements tend to pay workers higher wages.

    15.Agricultural and rural development can be promoted in the following ways
    -Hosting or volunteering at agriculture education events
    -Sharing agricultural information through school assignments, articles in school and community newspapers, blogs, Facebook, Twitter, Instagram and other social media
    -Being available to speak with the public about agriculture
    -Developing educational exhibits for public events such as fairs, festivals and store promotions.
    The rural institutional changes are very much needed

    16.Environmental sustainability is the responsibility to conserve natural resources and protect global ecosystems to support health and wellbeing, now and in the future.
    Yes there are serious cost of pursuing sustainable development
    The poor south bears the major responsibility

    17. Yes free market and economic privatization is the answer to development problem

    18. -Support pay equity
    -Increase the Earned Income Tax Credit for childless workers
    -Provide paid leave and paid sick days
    -Establish work schedules that work
    -Invest in affordable, high-quality child care and early education
    -Expand Medicaid

    19. Yes
    The government
    -Increased revenues.
    Longer product lifespan.
    Easier cash-flow management.
    Better risk management.
    Benefiting from currency exchange.
    Access to export financing.
    Disposal of surplus goods.

    20. When a country is totally dependent on such import of the foreign good and can’t be productive without it

    21. Globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale.
    It’s affecting developing countries positively

    22. Developing countries should industrialize by developing their manufacturing industries

    23. When the country is not having enough revenue to pay for the goods purchased
    The implications of the foreign debt on a countries is stop that countries full participation in international trade
    Financial crisis affect development in a negative way the rate of growth would drop

    24.The impact of foreign aid if the government of the country uses it to enhancing education, building rural and urban infrastructure and reducing trade risk the said country is said to experience a net benefit in economic performance

    25. According to Peter J Buckley, the global factory is a structure through which multinational enterprises integrate their global strategies through a combination of innovation, distribution and production of both goods and services. The global factory is analysed within a Coasean framework with particular attention to ownership and location policies using methods that illustrate its power in the global system. Developing countries are constrained by the existence and power of global factories. Firms in developing countries are frequently constrained to be suppliers of labour intensive manufacturing or services into the global factory system. Breaking into this system is difficult for emerging countries. It requires either a strategy of upgrading or the establishment of new global factories under the control of focal firms from emerging countries. The implementation of these strategies is formidably difficult.

    26.Financial and financial policies are used to regulate money circulation in an economy. Fiscal policies involves the usage of government expenditures and taxes while financial policies involves the central bank using financial instruments such as interest rates, open market operations etc to regulate money supply. These policies attempts to keep the economy stable by preventing inflation or deflation. Large military expenditure stimulate economic growth if it is productive. This would ensure national security which would facilitate the economic stability.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?Microfinance refers to the financial services provided to poor individuals or groups who are typically excluded from traditional banking. Most microfinance institutions focus on offering credit in the form of small working capital loans, which are sometimes called microloans or microcredit. Microfinance in plays a major role in the development of a country. It aims at assisting communities of the economically excluded to achieve greater level of asset creation and income security at the household and community level. The utmost significance of microfinance in is that it dispenses the access to the capital to small entrepreneurs.

  11. Avatar OKONKWO CHIKAODINAKA JUSTINA says:

    NAME: OKONKWO CHIKAODINAKA JUSTINA
    REG NO:2018/242322
    DEPT: ECONOMICS
    EMAIL: okonkwochikaodinaka@gmail.com

    V NO 14
    Education in every sense is one of the fundamental factors of development. … Education increases the productivity and creativity of people and promotes entrepreneurship and technological advances. In addition it also plays a very crucial role in securing economic and social progress and improving income distribution.

    NO 15.
    Farming and related activities make up the basic fabric of rural life, contributing significantly to the overall state of rural regions in terms of employment and business opportunities, infrastructure and quality of the environment. In some developing countries, farming may be the primary economic activity of a region and support the vast majority of the population in employment. So the following best promote agricultural and rural development in these regions:
    •Land reforms:Land redistribution will enable farmers in rural areas get the desired land for agriculture
    •Provision of social infrastructure like roads and transport:provision of road and transport can facilitate smooth movement of agricultural products from one place to another,
    •Education and training of the farmers:it is very paramount
    •Provision of adequate credit to farmers:provision of credit to farmers will boost mechanized farming thereby, further increasing agricultural food production.
    Indeed, higher agricultural prices can stimulate food production which will enable the country earn valuable foreign exchange. But food production can also be augmented by making rural institutional changes.

    NO 16.
    Environmentally sustainable development means development which uses, conserves and enhances the community’s resources so that ecological processes on which life depends are maintained and the total quality of life, now and in the future, can be increased.
    There are no serious economic costs incurred in pursuing sustainable development as opposed to simple output growth.
    The rich North bears the major responsibility for global environmental damage because most of their development policies are geared towards getting rich first, and hope to have the resources to fix the environment later, what is known as ‘grow now, clean up later’ mind set. This is the way the old industrial countries did it, and is the standard assumption, especially in developing and emerging economies.

    NO 17
    Free markets and economic privatization are prerequisites for the attainment of development, and it spurs active participation of citizens in an economy.when private individuals and corporations own property and markets are allowed it has the effect of setting an economy on a rapid economic growth and development path.
    However, the government have to play certain roles so as to enable full realisation and actualization of economic development. In addition to providing a conducive environment for the free market to thrive, governments in developing nations are responsibe for the following roles:
    Maintaining the territorial integrity of the country
    Provision of public infrastructure and utilities
    Maintenance of law and order in the economy

    N0. 18
    Why many developing countries select poor development policies :
    • Lack of resource planning :we make plans for timelines, meetings, structure,themes and interfaces But sometimes in the midst of all the planning we forget to plan for one resource.this is one of the major reason why projects fail.Project management involves resource management, often taking other projects into consideration. Most of us know that financial resource planning is important.
    • Unclear Goals and Objectives :One way to almost guarantee project failure is to begin work without clear project objectives and goals. After all, there’s no way to know whether you’ve succeeded when you aren’t completely sure what you’re trying to accomplish. Several popular frameworks for goal setting, such as SMART goals and CLEAR goals are there but the essence is that your goals must be measurable and realistic. Don’t just say you want to “lose weight,” say you want to lose fifteen pounds in the next four months. That’s both measurable and realistic. The projects you manage are more complex than that, which is why it’s even more critical to define your objectives clearly.
    • Lack of visionary leadership :Many developing nations lack the necessary visionary leaders that will pilot the affairs of their nations and the resultant implication is that they end up adopting poor developmental policies.
    •Weak institutions :Many developing countries so lack the resources to establishe strong development institutions that will help make sound development policies that will enhance their situations economically and socio-politically. As a result they end up adopting poor development policies.
    •Corrupt government :Many political leaders in the developing countries are corrupt. As a result they only adopt development policies that benefit their selfish interest instead of the masses thereby resulting to the adoption of development policies that are very poor in nation.
    REMEDY
    • Eradicating corruption among they leaders.
    • Voting in visionary leaders into powers.
    •Having clear goals and objectives.
    •Having enough resources in place.
    • Building strong institutions that will help make and implement sound development policies.
    NO 19
    Expanded International trade is desirable for the development of poor nation’s. International trade spurs economic growth, creates job, reduces price, increase varieties of goods available to consumers, and helps country acquire new technology.
    ✓ In the absence of unfair conditions and prices or because of the value of, the product being traded, which favours developed country more, everyone tends to benefit equally from trade, especiallywhen the countries trading considers the theory of comparative cost advantage.

    NO 20
    Favourable balance of payment proposes, higher export to import. Too much importation of goods and services leads to balance of payment deficit and death of local industries. When such is the case of any country, the government should either adopt foreign exchange control policy, raise tariffs, set quotas on the importation of certain non essential goods, which will help foster Industrialization and ameliorate chronic balance of payments problems.
    ✓ The impact of International Monetary Fund ” stabilization programs” and World Bank ” Structural Adjustment” lending on the balance of payments as growth prospects of heavily indebted less developed countries cannot be overemphasized. It helps developing countries in development of local industries and in the promotion of export, by the provision of funds, advisory services, and so on and so forth. This helps them to offset some debts, and export more than they import.

    No 21
    Globalization, is the process of interaction and integration among people, companies, and governments worldwide. Globalization is the spread of products, technology, information, and jobs across nations.
    ** Globalization affects developing countries in the following ways:
    •Economic and Trade Processes Field:Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers. They cannot share the same economic growth that developed countries had. However, with globalization the World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans. Many developing nations began to take steps to open their markets by removing tariffs and free up their economies. The developed countries were able to invest in the developing nations, creating job opportunities for the poor people
    •Education and Health Systems :Globalization contributed to develop the health and education systems in the developing countries. We can clearly see that education has increased in recent years, because globalization has a catalyst to the jobs that require higher skills set. This demand allowed people to gain higher education. Health and education are basic objectives to improve any nations, and there are strong relationships between economic growth and health and education systems. Through growth in economic, living standards and life expectancy for the developing nations certainly get better. With more fortunes poor nations are able to supply good health care services and sanitation to their people. In addition, the government of developing countries can provide more money for health and education to the poor, which led to decrease the rates of illiteracy. This is seen in many developing countries whose illiteracy rate fell down recently. It is truth that, living standards and life expectancy of developing countries increase through economic gains from globalization.
    • Culture Effects:Globalization has many benefits and detriment to the culture in the developing countries. Many developing countries cultures has been changed through globalization, and became imitate others cultures such as, America and European countries. Before globalization it would not have been possible to know about other countries and their cultures. Due to important tools of globalization like television, radio, satellite and internet, it is possible today to know what is happening in any countries such as, America, Japan and Australia. Moreover, people worldwide can know each other better through globalization

    N0. 22
    Agriculture’s percentage share in a country’s economy is relatively high and is constantly witnessing tremendous growth and diversifies. Agriculture’s most important contribution is obviously that of providing employment. Each sector is differently affected by changes in agricultural production and prices.
    The positive impact of agriculture exports on growth is due to the importance of agriculture in terms of creating jobs and opportunities for the economy as a whole. Also, sufficient national investment in the agriculture sector leads to enlarging these opportunities and then improves the Chinese economic growth.

    No 23
    Many developing Nations get into serious foreign debt problems as a result of the following reasons: Corruption and embezzlement of funds, funds which are apportioned for specific Economic activities when they are squandered and embezzled by corrupt leaders who are after their own selfish desires, hence the need for borrow from foreign countries. Secondly Mismanagement of funds, thirdly Over dependence on Oil which most times may fail as a result of high oil prices.
    When they fail to pay back the acquired debts or borrowed debts, this shoots a tragic blow to the economy and result in many issues.
    B. The implications of such foreign debt problems includes the following: it hinders or slows a country’s Development, Also Excessive amounts of foreign debt will hinder countries’ capacity to invest in their financial prospects, whether through education, infrastructure, or health care, because their small income is spent on repayment of loans. It is a challenge to economic development in the long term.
    C. HOW FINANCIAL CRISIS LIMITS DEVELOPMENT
    Financial crisis slows and hampers a country’s Development due to low per capita income, unemployment, problem in growing budget and trade deficits, currency devaluations, higher rates of inflation, increasing public debt and dwindling currency reserves.

    No 24
    most of the recent research concludes that aid supports growth, as shown in the excellent summary by Ardnt, Jones, and Tarp. the research shows that a “sustained inflow of foreign aid equivalent to 10 percent of GDP is roughly expected to raise growth rates per capita by one percentage point on average.” For developing countries with per capita growth rates of 3-4 percent per year, an extra percentage point of growth is an important addition. Other reviews of the recent literature have reached similar conclusions. Even The Economist magazine, long skeptical of aid, changed its tune a couple of years ago, concluding that most evidence shows that aid boosts growth.
    A final argument is political—that aid keeps bad governments in power. But again, recent research suggests the opposite: since the end of the Cold War, aid has helped support democratic transitions both by reinforcing broad development progress and by supporting civil society organizations, stronger judicial systems, and multiparty elections.
    . Aid programs (alongside diplomacy and other tools of international engagement) are not the driving force behind development, but they can help support development progress along the way.

    N0. 25
    Yes, Multinational should encourage economics development in the developing nations.Multinational corporations are those large firms which are incorporated in one country but which own, control or manage production and distribution facilities in several countries. Therefore, these multinational corporations are also known as transnational corporations. They transact business in a large number of countries and often operate in diversified business activities. The movements of private foreign capital take place through the medium of these multinational corporations. Thus multinational corporations are important source of foreign direct investment (FDI).
    Besides, it is through multinational corporations that modern high technology is transferred to the developing countries. The important question about multinational corporations is why they exist. The multinational corporations exist because they are highly efficient. Their efficiencies in production and distribution of goods and services arise from internalising certain activities rather than contracting them out to other firms. Managing a firm involves which production and distribution activities it will perform itself and which activities it will contract out to other firms and individuals.
    In addition to this basic issue, a big firm may decide to set up and operate business units in other countries to benefit from advantages of location. For examples, it has been found that giant American and European firms set up production units to explore and refine oil in Middle East countries because oil is found there. Similarly, to take advantages of lower labour costs, and not strict environmental standards, multinational corporate firms set up production units in developing countries.
    Globalization permits companies to find lower-cost ways to produce their products. It also increases global competition, which drives prices down and creates a larger variety of choices for consumers. Lowered costs help people in both developing and already-developed countries live better on less money.

    NO 26
    What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    The various tools of fiscal policy such as budget, taxation, public expenditure, public works and public debt can go a long way for maintaining full employment without inflationary and deflationary forces in underdeveloped economies.
    Obviously, taxation and public expenditure is a powerful instrument in the hands of public authority which greatly affect the changes in disposal income, consumption and investment.
    During inflation, such measures are adopted which help to wipe off the excessive purchasing power and consumer demand. Tax burden is raised in such a manner as it may not retard new investment’s. below are the purposes:
    •To Mobilize Resources:The foremost aim of fiscal policy in underdeveloped countries is to mobilize resources in the private and public sectors. Generally, the national income and per capita income is very low due to low rate of savings. Therefore, the governments of such countries through forced savings pushes the rate of investment and capital formation which in turn accelerates the rate of economic development.
    • To Accelerate the Rate of Growth:Fiscal policy helps to accelerate the rate of economic growth by raising the rate of investment in public as well as private sectors. Therefore, various tools of fiscal policy as taxation, public borrowing, deficit financing and surpluses of public enterprises should be used in a combined manner so that they may not adversely affect the consumption, production and distribution of wealth.
    • To Encourage Socially Optimal Investment:In underdeveloped countries, fiscal policy encourages the investment into those productive channels which are considered socially and economically desirable. This means optimal investment which promotes economic development and avoids wasteful and unproductive investment.
    They tend to raise productivity and widen the market to enjoy external economies. At the same time, unproductive investment is checked and diverted towards productive and socially desirable channels.

    NO 27
    Microfinance, also called microcredit, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.
    While institutions participating in the area of microfinance most often provide lending—microloans can range from as small as $100 to as large as $25,000—many banks offer additional services such as checking and savings accounts as well as micro-insurance products, and some even provide financial and business education. The goal of microfinance is to ultimately give impoverished people an opportunity to become self-sufficient.

    For more than twenty years microfinance has been viewed as a key poverty reduction strategy. However, more recently its real value and impact have been questioned, with both economic and social problems linked to it. Findings of the study Microfinance and the business of poverty reduction: Critical perspectives from rural Bangladesh suggest these concerns are well founded.
    The research reports the results of an ethnographic study of microfinance in three villages in rural Bangladesh, all of which had been targeted by microfinance organisations. It focuses on households and individuals and documented the experience of microfinance borrowers over time. The study involved observations of borrower meetings, focus groups and in-depth interviews, and was conducted by two teams of researchers and their locally based associates. Data collection focused on subjective experiences arising from a life of poverty, such as feelings of vulnerability and helplessness. The study approached the problem of poverty reduction schemes from the perspective of the receivers of microfinance rather than from the supply side, the microfinance organisations themselves.
    It found that microfinance has led to increasing levels of indebtedness among already impoverished communities and exacerbated several dimensions of vulnerability, these being:
    1) Economic vulnerability – The study finds that microfinance clients had little success in escaping poverty. Loans were primarily used for necessities such as food and medicine, home repair, or education, rather than income generating activity. Added to that, the income generating schemes advocated by providers and NGOs, specifically agricultural ones, did not yield profitable results. When borrowers took out further loans from alternative providers to pay off existing loans, they found themselves trapped in a spiral of debt. Microfinance can therefore exacerbate poverty, the very thing it is supposed to combat.
    2) Social vulnerability – Communities that have strong familial and social networks are considered better equipped to deal with poverty. “Solidarity groups” consisting of family, friends and associates often stuck together and supported family members dealing with debt. However, due to the fear of debt default, surveillance increased within and between groups of borrowers and led to an erosion of trust, even amongst family members. Aggressive repayment tactics from lenders often involved public shaming of defaulters which adversely affected their social ties with both community and family. The “solidarity groups” that were the basis of the social collateral of microfinance loans thus led to an erosion of bonding social capital.
    3) Environmental vulnerability – the findings indicate that traditional farming practices in the villages are increasingly supplanted by income generating schemes encouraged by microfinance providers and NGOs, such as maize growing. As well as a high occurrence of crop failure due to inexperience and the generally unsuitable weather conditions, there is also evidence that maize growing has an adverse effect on the quality of the region’s soil and thus on the viability of future farming. The aggressive promotion of non-traditional cash crops can result in environmental vulnerabilities and threats to sustainable farming.

  12. Avatar UGWU SERAH IZUNNA says:

    NAME: UGWU SERAH IZUNNA

    REG NO: 2018/247399

    DEPARTMENT: ECONOMICS

    COURSE: ECO 361 DEVELOPMENT ECONOMICS I
    Assignment.
    14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?

    Yes, educational systems in developing nations really promote development because quality basic education gives children and youths in developing countries

    Education in every sense is one of the fundamental factors of development. … Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.

    The knowledge and skills they need to take advantage of economic and lifelong learning opportunities. It is also a key driver for reducing poverty, fostering economic growth, achieving gender equality, and social development. All these benefits derived from education in developing countries will lead to enhanced economic development.

    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted? Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    Agricultural and rural development can be best promoted through the following means:
    Improved access to loans for farmers
    Provision of infrastructure in rural areas
    Training and sensitization of the farmers
    Higher Agricultural prices as well as rural institutional changes can stimulate food production in rural areas. Land redistribution will enable the farmers get sufficient land for farming, provision of roads and transport will enable easier transportation of farm produce, education will increase the farmer’s skill and access to adequate credit can lead to the acquiring of mechanized farming instruments by the farmers to boost production.

    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    Environmentally sustainable development is a development process aimed at maximizing the economic welfare and wellbeing of the people, while minimizing the negative effects this development process may generate.
    The rich North bears the major responsibility for global environmental damage due to the fact that economic activities which damage the environment are mostly generated in the North.

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    In a way free markets are necessary and provide answer to development problems. This is because it breeds competition and bring about allocative efficiency in the economy. The competition in free markets arise because of individuals’ quest to satisfy their self interests but in serving their self interests they are unknowingly serving the interest of the economy as a whole. This will now lead to increased economic activities which will spur economic growth and development.
    In all these, the government still have major roles to play in the economy. In addition to providing a conducive environment for the free market to thrive they also play regulatory roles as well as providing public socio-economic facilities which may not be provided by the free market. The government also play a redistributive role to promote equity in income distribution so as to ensure the welfare and social wellbeing of the individuals that constitute the society.

    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    Poor economic growth and development policies in developing nations are associated with low education standard, political instability, underdeveloped financial systems, high government deficits, and insufficient infrastructure. Policies to improve these choices are:
    Improvement of institutional quality
    Increasing access to Education
    Improving the role and status of women
    Adopting strategies to enhance agricultural food productivity.
    Lowering of trade barriers

    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    Expanded international trade is crucial to the development prospects of a developing nation. Countries that are open to international trade tend to grow faster, innovate, improve productivity and provide higher income and more opportunities to their people.
    Those who gains from trade are those countries who exports goods in which they have a lower opportunity cost in producing and those countries who are more naturally endowed than others.

    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems? What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    Governments in developing countries Should adopt a policy of foreign exchange control, raise tariffs, or set quotas on the importation of certain nonessential goods if the importation of these goods threaten the growth of infant industries in the economy and if the possibility of increased competition from these imported goods threaten domestic industries thereby, retarding development. These actions by the Government will serve to increase the prices of the imported nonessential goods and create a domestic market for domestically produced goods while protecting budding domestic industries from being forced out by more competitive pricing.
    The IMF Stabiliztion Program and World Bank Structural Adjustment has led to high social costs since they undermine access to quality and affordable public services due to government cuts in services like health and education, and they often involve the reduction of food subsidies and a decline in wages, affecting vulnerable populations in particular. All these have served to inhibit the growth prospects of developing countries.

    21. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale. It is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information.
    Globalization has helped developing countries to trade with the rest of the world and increase their economic output hence, engendering growth.
    The health and education system in developing countries has benefited in a positive way due to the contribution of globalization.
    Globalization has helped improve developing countries rates of illiteracy, living standards and life expectancy.

    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    Yes, export of primary products of agriculture should be promoted. In a situation where the climate of a developing country favours the productions of a particular crop, that country should specialise in production of that particular crop and export it. If the relative terms of trade of agricultural products in the country improve it will subsequently bring about rapid development in the manufacturing sector which will put the country on the path to attaining industrialization.

    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    Poor debt management and low government revenues due to inefficient tax policies and weak institutions are among the causes of serious foreign debt problem in developing nations.
    The implications are slowing down of economic growth in developing countries, because most of the revenues generated will be used to service these debts at the expense of productive investments in the economy.
    Financial crises affect development in the following ways:
    Negative GDP growth trend of two to three years.
    Sharply increased unemployment
    Pressure on public revenues
    Deflation etc.

    24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes? Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    Studies have shown that foreign aids impacts the economies of developing countries positively. But developing countries should discontinue seeking these aids because it promotes a culture of dependency and leave the developing countries in such a state where they can be easily exploited by the foreigners.
    Developed countries should try to keep offering these aids to developing nations especially when they are in a period of low growth and economic stagnation.

    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    Yes, multinational corporations should be encouraged to invest in the economies of poor nations. This is because with their investment comes other economic advantages to the poor country in the form of foreign direct capital (FDI), technologial know-how etc. Now, if the inflow of FDI and spillover of technologial knowledge into local industries can improve the flow of economic activities in the poor country, then multinational corporations investment should be encouraged.
    The emergence of global factory and globalization of trade and finance has resulted in greater interconnectedness among markets around the world and increased communication and awareness of business opportunities in the far corners of the globe. More investors can access new investment opportunities and study new markets at a greater distance than before.

    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    The main role of fiscal and financial policy in enhancing economic growth and development in a developing economy is the promotion of the highest possible rate of capital formation and also to divert existing resources from unproductive to productive and socially more desirable uses.
    Large military expenditure indeed, retard development. This is because when the governmet spend more on military, it will reduce the amount that can be allocated to other key sectors like education, healthcare, infrastructure etc. This will then serve to slow down economic growth.
    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Microfinance institutions are (MFI) are organizations that offers minor loans to the needy people. They provide access to credit for the rural and urban, low income earners.
    Microfinance helps to reduce poverty and spur grassroots development in the follow ways:
    Small business creation: They do this by providing micro loans to the needy people in the society, so that they can start up their own business and earn income.
    Women Enpowerment: They provide financial backing to women and help them set up their own enterprises and thus, contribute to the economy.
    By performing these key roles noted above, Microfinance can play a significant role in poverty alleviation and grassroots development.

  13. Avatar Olayiwola Nurudeen Akanni says:

    Name: OLAYIWOLA NURUDEEN AKANNI
    Reg No: 2018/246563
    Department: ECONOMICS
    Course: ECO 361

    Assignment
    14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    Answer
    Education in every sense is one of the fundamental factors of development. … Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.
    Education is not simply a mechanism that enables certain selected groups to maintain positions of wealth, power and influence. Relating this question to the situations in Nigeria and Africa at a whole, wealth and influence can be attained without education but power cannot be attain without education.
    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?
    Answer
    (i) Provision of credit facilities to farmers:
    This role of government in the development of agriculture is carried out by the granting of loans through agricultural banks.
    However, the loans granted to farmers are repayable. Subsidies are the credit facilities, which also form part of the assistance given to farmers by the government. These subsidies may be given through the provision of inputs at reduced prices. Subsidy is non-repayable.

    (ii) Provision of extension services:
    The role of government in the development of agriculture is also effected through the provision of extension services. The trained extension workers meet with the farmers to disseminate new farming techniques, in order to improve their outputs. This also helps to educate the farmers on the ways to adopt the new ideas and accept the innovation with cooperation.

    (iii) Rehabilitation of feeder roads:
    The government also promotes agricultural development through the rehabilitation of feeder roads, which are the major links between the rural communities and the urban centres to promote the effective transportation of farm produce to the urban centres where the harvested farm produce are in high demand. The government undertakes the construction of bridges from one place to another in order to link the rural communities.

    (iv) Provision of land:
    The government usually promotes the development of agriculture through the provision of land to prospective investors and commercial firms that are ready to invest in agriculture. This helps to solve the problem of land availability, which is a major factor, which constrains farmers to a low level of agricultural production of subsistence agriculture. Commercial agriculture normally requires large hectares of land, large capital, skilled persons. It is preferred by the populace than subsistence agriculture.

    (v) Building of modern storage facilities:
    The government in recent times have been involved in the provision of an effective storage
    system through the building of modern storage facilities, to reduce the problem of wastage of harvested agricultural crops. This is carried out through the construction of large silos for storage of grains, thus promoting the availability of the stored grains for future use and preventing acute shortage of agricultural crops over a long period.

    (vi) Establishment of marketing boards:
    The government helps in the development of agriculture through the establishment of marketing board in order to standardise the marketing of agricultural produce supplies by farmers. This activity regulates the marketing of produce directly to the multinational firms. Agricultural crops such as cocoa, cotton, and rubber are some of the produce that the government normally helps to regulate and control their prices, in order to effect stability in the economy. Incessant fluctuation of prices to the detriment of farmers is thereby averted.

    (vii) Increase cultivation of crops:
    The government helps to boost agricultural production through the large scale cultivation of certain agricultural crops in order to increase their availability to the firms. The abundant supply of agricultural crops can only be achieved through the participation of the government in the cultivation of valuable crops that can earn revenue locally, and even foreign exchange, through export of produce.

    (viii) Formulation and implementation of agricultural policies:
    The government normally plays a vital role in the development of agriculture through the formulation of agricultural policies meant to boost agricultural production in the country. These policies are implemented for the benefit of farmers. However, agricultural policies face the problem of poor implementation by the government. The government is able to formulate such agricultural policies through the services of trained agriculturists, in order to achieve better results from the process.
    The various tools of fiscal policy such as budget, taxation, public expenditure, public works and public debt can go a long way for maintaining full employment without inflationary and deflationary forces in underdeveloped economies.

    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    Environmental Sustainable development is an approach to economic planning that attempts to foster economic growth while preserving the quality of the environment for future generations.
    The sustainable development cost is the environmental costs caused by the environmental disruption in the process of socio-economic sustainable development, including the cost of man-made destruction resources or the difference costs due to environmental differences, including the unreasonable use of resources

    17. Are free markets and economic privatization the answer to development problems
    Yes because, Privatization generally helps governments save money and increase efficiency. In general, two main sectors compose an economy: the public sector and the private sector. Government agencies generally run operations and industries within the public sector.
    By privatizing, the role of the government in the economy is reduced, thus there is less chance for the government to negatively impact the economy (Poole, 1996). … Instead, privatization enables countries to pay a portion of their existing debt, thus reducing interest rates and raising the level of investment.
    Do governments in developing countries still have major roles to play in their economies?
    The government (1) provides the legal and social framework within which the economy operates, (2) maintains competition in the marketplace, (3) provides public goods and services, (4) redistributes income, (5) cor- rects for externalities, and (6) takes certain actions to stabilize the economy.

    18. Why do so many developing countries select such poor development policies
    Many developing countries select such poor development policies as a result of bad governance and the problem of government not ensuring if the policy implemented will suit the problem of the country.
    What can be done to improve these choices?
    Before a development policy can be implemented, the problem facing the country has to be known so as to the best policy that will suit it.

    19. Is expanded international trade desirable from the point of view of the development of poor nations?
    Yes, It has the potential to be a significant force for reducing global poverty by spurring economic growth, creating jobs, reducing prices, increasing the variety of goods for consumers, and helping countries acquire new technologies.
    Who gains from trade, and how are the advantages distributed among nations?
    Developed countries gain from international trade and the Gains from International trade refers to that advantages which different countries participating in international trade enjoy as a result of specialization and division of labour. An decrease in transportation costs increases the gains from trade.

    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    A country with high rate of importation( nonessential goods) result to a decrease in value of the currency as more money is pursuing the exchange currency, the increase the rate of it leading to a less valur of the currency used for the exchange. If government should set a quota or raise tariff on importation, there will a decrease in the rate of importation which will satisfy the following conditions;
    To protect nascent industries
    To fortify national defense programs
    To support domestic employment opportunities
    To combat aggressive trade policies
    To protect the environment
    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    Imposed by both the IMF and the World Bank, SAPs usually include several basic economic stabilization components. Crafted by the IMF, these are geared toward bringing an economy into balance through, typically, reducing inflation and decreasing budget deficits while meeting debt payment schedules.

    21. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is a process of global economic, political and cultural integration. It has made the world become a small village; the borders have been broken down between countries. ”The history of globalization goes back to the second half of the twentieth century, the development of transport and communication technology led to situation where national borders appeared to be too limiting for economic activity” (Economic Globalization in Developing Countries, 2002). Globalization is playing an increasingly important role in the developing countries. It can be seen that, globalization has certain advantages such as economic processes, technological developments, political influences, health systems, social and natural environment factors. It has a lot of benefit on our daily life. Globalization has created a new opportunities for developing countries. Such as, technology transfer hold out promise, greater opportunities to access developed countries markets, growth and improved productivity and living standards. However, it is not true that all effects of this phenomenon are positive. Because, globalization has also brought up new challenges such as, environmental deteriorations, instability in commercial and financial markets, increase inequity across and within nations. This paper evaluates the positive and negative impact of globalization on developing nations in the following proportions;
    1- Economic and Trade Processes Field
    Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers. They cannot share the same economic growth that developed countries had. However, with globalization the World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans. Many developing nations began to take steps to open their markets by removing tariffs and free up their economies. The developed countries were able to invest in the developing nations, creating job opportunities for the poor people. For example, rapid growth in India and China has caused world poverty to decrease (blogspot.com.2009). It is clear to see that globalization has made the relationships between developed countries and developing nations stronger, it made each country depend on another country. According to Thirlwall (2003:13) ” Developing countries depend on developed countries for resource flows and technology, but developed countries depend heavily on developing countries for raw materials, food and oil, and as markets for industrial goods”. One the most important advantages of globalization are goods and people are transported easier and faster as a result free trade between countries has increased, and it decreased the possibility of war between countries. Furthermore, the growth in the communication between the individuals and companies in the world helped to raise free trade between countries and this led to growth economy. However, globalization has many economy and trade advantages in the developing countries, we must also note the many disadvantages that globalization has created for the poor countries. One reason globalization increases the inequality between the rich and poor, the benefits globalization is not universal; the richer are getting rich and the poor are becoming poorer. Many developing countries do benefit from globalization but then again, many of such nations do lag behind.” In the past two decades, China and India have grown faster than the already rich nations. However, countries like Africa still have the highest poverty rates, in fact, the rural areas of China which do not tap on global markets also suffer greatly from such high poverty (blogspot.com.2009). On the other hand, developed countries set up their companies and industries to the developing nations to take advantages of low wages and this causing pollution in countries with poor regulation of pollution. Furthermore, setting up companies and factories in the developing nations by developed countries affect badly to the economy of the developed countries and increase unemployment.

    2- Education and Health Systems
    Globalization contributed to develop the health and education systems in the developing countries. We can clearly see that education has increased in recent years, because globalization has a catalyst to the jobs that require higher skills set. This demand allowed people to gain higher education. Health and education are basic objectives to improve any nations, and there are strong relationships between economic growth and health and education systems. Through growth in economic, living standards and life expectancy for the developing nations certainly get better. With more fortunes poor nations are able to supply good health care services and sanitation to their people. In addition, the government of developing countries can provide more money for health and education to the poor, which led to decrease the rates of illiteracy. This is seen in many developing countries whose illiteracy rate fell down recently. It is truth that, living standards and life expectancy of developing countries increase through economic gains from globalization. According to the World Bank (2004) ” With globalization, more than 85 percent of the world’s population can expect to live for at least sixty years and this is actually twice as long as the average life expectancy 100 years ago”. In addition, globalization helped doctors and scientists to contribute to discover many diseases, which spread by human, animals and birds, and it helped them to created appropriate medicines to fight these deadly diseases. For example, HIV/ADIS, swine flu and birds’ flu whole world know about these diseases and they know how to avoid it. By globalization, there are many international organizations, such as, Non-governmental Organization (NGO), World Health Organization (WHO) and UNESCO, trying to eliminate illiteracy and deadly diseases in the world and save the life. In spite of these positive effects of globalization to the education and health fields in the developing countries. However, globalization could have negative impacts also in these fields; globalization facilitates the spread of new diseases in developing nations by travelers between countries. Due to increased trade and travel, many diseases like HIV/ADIS, Swine Flu, Bird Flu and many plant diseases, are facilitated across borders, from developed nations to the developing ones. This influences badly to the living standards and life expectancy these countries. According to the World Bank (2004) “The AIDS crisis has reduced life expectancy in some parts of Africa to less than 33 years and delay in addressing the problems caused by economic”. Another drawback of globalization is, globalized competition has forced many minds skilled workers where highly educated and qualified professionals, such as scientists, doctors, engineers and IT specialists, migrate to developed countries to benefit from the higher wages and greater lifestyle prospects for themselves and their children. This leads to decrease skills labour in the developing countries.
    3- Culture Effects
    Globalization has many benefits and detriment to the culture in the developing countries. Many developing countries cultures has been changed through globalization, and became imitate others cultures such as, America and European countries. Before globalization it would not have been possible to know about other countries and their cultures. Due to important tools of globalization like television, radio, satellite and internet, it is possible today to know what is happening in any countries such as, America, Japan and Australia. Moreover, people worldwide can know each other better through globalization. For example, it is easy to see more and more Hollywood stars shows the cultures different from America. In addition, today we can see clearly a heavily effect that caused by globalization to the young people in the different poor nations, it is very common to see teenagers wearing Nike T-Shirts and Adidas footwear, playing Hip-Hop music, using Apple ipad and iphone and eating at MacDonald, KFC and Domino’s Pizza . It is look like you can only distinguish them by their language. One the other hand, many developing countries are concerned about the rise of globalization because it might lead to destroy their own culture, traditional, identity, customs and their language. Many Arab countries such as Iraq, Syria, Lebanon and Jordan, as developing countries have affected negatively in some areas, their cultures, Developing Country Studies http://www.iiste.org customs and traditional have been changed. They wear and behave like developed nations, a few people are wearing their traditional cloths that the used to. Furthermore, globalization leads to disappearing of many words and expressions from local language because many people use English and French words. In addition, great changes have taken place in the family life, young people trying to leave their families and live alone when they get 18 years old, and the extended family tends to become smaller than before (Kurdishglobe, 2010).

    22. Should exports of primary products such as agricultural commodities be promoted?
    Yes it should because, Commodities thrive or decline based on the demand from the public. The great thing about agricultural commodities is that they are used to feed billions of people around the world. Without agricultural commodities, the world would starve. This means that trading agricultural commodities is both a positive thing to do for our fellow human beings and a lucrative, high-demand endeavour.
    On top of feeding the world, a staggering 26.7% of the world’s population are involved in farming these agricultural commodities. That is over 2 billion people, with nearly 900 million directly employed across the world’s 570 million farms directly. In Africa, 53% of the population are involved in agricultural produce, showing how much some regions rely on agriculture.
    If we did not trade in agricultural commodities, there would not be enough food to feed humanity, and many would no longer have employment. This would significantly increase poverty and starvation.
    Trading in agricultural commodities is a win-win. You help feed and employ people, while your finances grow.
    Should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    Yes all developing countries should attempt to industrialize by developing manufacturing industries. Industrialization leads to the following;
    Increase in National Income
    Higher Standard of Living
    Economic Stability
    Improvement in Balance of Payment
    Stimulated Progress in Other Sectors
    Increased Employment Opportunities
    Greater Specialization of Labor
    Rise in Agricultural Production.

    23. How did so many developing nations get into such serious foreign-debt problems?
    The debt arose as many developing countries borrowed heavily from private banks in developed nations to finance their growing capital needs and to pay for sharply rising crude oil bills during the 1970s. … The debt-service ratio measures the ratio of amortisation and interest payments to export earnings.
    what are the implications of debt problems for economic development?
    Whether in the private sector or government, a debt crisis in one country can and frequently does spread economic pain to other countries. This can happen through a tightening of financial conditions such as a spike in interest rates, a slowdown in trade and economic growth, or merely a steep decline in confidence.
    How do financial crises affect development?
    Developing countries were hit hard by the financial and economic crisis, although the impact was somewhat delayed. Every country had different challenges to master. The closer the developing countries are interconnected with the world economy, the crasser the effects. And the incipient recovery that is becoming noticeable is, for the time being, restricted to only a few countries and regions.
    The crisis was transmitted primarily by trade and financial flows forcing millions back into poverty. Attainment of the Millennium Development Goals is seriously jeopardised in many countries. Many developing countries did not and do not have the resources to stimulate the economy and protect their socially disadvantaged populations to the same extent as the industrialised countries. However, many countries have made considerable efforts to mitigate the effects. Developing countries have also increased their cooperation with one another and are urgently demanding a greater voice in global economic affairs.
    The industrialised countries are for the most part more concerned with their own problems. Their readiness to provide more extensive aid is limited. They are under pressure from the international institutions to relax their previous dominance in favour of the increasingly strong emerging countries. A shift in power and influence that was already noticeable before the financial crisis is deepening.

    24. What is the impact of foreign economic aid from rich countries?
    The study concludes that foreign aid retards and distorts the process of economic development of the recipient countries and results in dependence and exploitation. It also replaces domestic savings and flows of trade. It seems clear that most countries are economically dependent on the rich
    Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    Development aid is a financial aid given by governments, NGOs, global and regional unions, or private entities to support the development of developing countries, as a consequence also of Albania as one of them. Its main reason is decreasing poverty and encouraging development.
    Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    Providing aid stimulates the growth of the world economy along with promoting economic development within the region. It can help with market expansion. Providing aid to a country could mean the expansion of goods and resources that can be shared between the two countries.
    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions?
    Multinational corporation helps the technological growth of the country as well. They bring new innovations and technological advancements to the host country. They help modernize the industry in developing countries. MNCs also reduce the host countries dependence on imports.
    How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    The global factory is a structure through which multinational enterprises integrate their global strategies through a combination of innovation, distribution and production of both goods and services. The global factory is analysed within a Coasean framework with particular attention to ownership and location policies using methods that illustrate its power in the global system. Developing countries are constrained by the existence and power of global factories. Firms in developing countries are frequently constrained to be suppliers of labour intensive manufacturing or services into the global factory system. Breaking into this system is difficult for emerging countries. It requires either a strategy of upgrading or the establishment of new global factories under the control of focal firms from emerging countries. The implementation of these strategies is formidably difficult.
    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    Roles of Financial and Fiscal policy
    1. To Mobilize Resources:
    The foremost aim of fiscal policy in underdeveloped countries is to mobilize resources in the private and public sectors. Generally, the national income and per capita income is very low due to low rate of savings. Therefore, the governments of such countries through forced savings pushes the rate of investment and capital formation which in turn accelerates the rate of economic development.
    It also undertakes the policy of planned investment in the public sector. Private investments have the favourable effect of increasing investment, the curtailment of conspicuous consumption and investment in unproductive channels can help to check the inflationary trend in the economy. Moreover, these countries face the problem of foreign capital. Thus the remedy lies in increasing the incremental saving ratio, the marginal propensity to save through public finance, taxation and forced loans.
    To some extent, progressive taxation, heavy duty on luxury imports, ban on the manufacture of luxury and semi-luxury goods are other measures which help to mobilize the resources, Therefore, progressive taxation on windfall gains, on unearned incomes on capital gains, on expenditure and real estates etc. can go a long way in equitable distribution of wealth.
    2. To Accelerate the Rate of Growth:
    Fiscal policy helps to accelerate the rate of economic growth by raising the rate of investment in public as well as private sectors. Therefore, various tools of fiscal policy as taxation, public borrowing, deficit financing and surpluses of public enterprises should be used in a combined manner so that they may not adversely affect the consumption, production and distribution of wealth.
    In order to achieve balanced growth in different sectors of the economy, according to Prof. J. Chelliah, the most fruitful line of advance lies along the path of a balanced development of agriculture and industry. In short, investment in basic and capital goods industries and in social overheads is the pillars of economic development in an underdeveloped economy. Thus, top priority to such investment should be given to accelerate the all round growth of an economy.
    3. To Encourage Socially Optimal Investment:
    In underdeveloped countries, fiscal policy encourages the investment into those productive channels which are considered socially and economically desirable. This means optimal investment which promotes economic development and avoids wasteful and unproductive
    In short, aim of the fiscal policy should be to make investment on social and economic overheads such as transportation, communication, technical training, education, health and soil conservation. They tend to raise productivity and widen the market to enjoy external economies. At the same time, unproductive investment is checked and diverted towards productive and socially desirable channels.
    4. Inducement to Investment and Capital Formation:
    Fiscal policy plays crucial role in underdeveloped countries by making investment in strategic industries and services of public utility on one side and induces investment in private sector by giving assistance to new industries and introduces modern techniques of production. Thus, investment on social and economic overheads are helpful in increasing the social marginal productivity and thereby raising the marginal productivity of private investment and capital formation. Here, optimum pattern of investment can also go a long way to yield fruitful results of economic development.
    Economic development is a most dynamic process which involves changes in the size and quality of population, tastes, knowledge and social institutions. Keeping all factors in mind, if social marginal productivity in socially desirable projects is low, fiscal policy should be framed to raise social marginal productivity and to divert resources to that productive channels where the social marginal productivity is the highest.
    5. To Provide more Employment Opportunities:
    Since in less developed countries, population grows at a very fast rate, the aim of fiscal policy in such countries is to make high doses of expenditures which are helpful to raise employment opportunities. Generally under developed economies suffer from unemployment.
    6. Promotion of Economic Stability:
    Still another role played by the fiscal policy in developing countries is of maintaining reasonable internal and external economic stability. Generally, a developing country is prone to the efforts of international cyclical fluctuations. Such countries mainly export primary products and import manufactured and capital goods. However, in order to minimize the effects of international cyclical fluctuations, fiscal policy should be viewed from a longer perspective.
    It must aim at the diversification of all sectors of the economy. For bringing balanced growth and reducing the effects of cyclical fluctuations, a contra-cyclical fiscal policy of deficit budgeting in depression and surplus budgeting in inflation are most suitable measures.
    In a recession, public works programme through deficit financing brings fruitful results. No doubt, injection of additional purchasing power would tend to inflationary pressures which can be controlled with preventive measures. On the contrary, such a policy should be supplemented by appropriate monetary measures.

    7. To Check Inflationary Tendencies:
    Inflationary tendencies is one of the main problems of developing countries as these countries make heavy doses of investment for their development activities. Thus, there is always an imbalance between the demand for and the supply of real resources.
    With additional injection of purchasing power, the demand rises and supply remains inelastic on account of its structural rigidities, market imperfections and other bottlenecks which in turn lead to inflationary pressures on the economy. Aggregate demand as a result of rise in the income of the people exceeds the aggregate supply. Capital goods and consumption goods fail to keep pace with the rising income.
    Fiscal policy, therefore, can take several steps to control inflationary forces in the economy. They are:
    (i) Reducing the purchasing power of the people through Compulsory Deposit Scheme
    (ii) Mobilizing resources through public debt
    (iii) Levying of Expenditure Tax
    (iv) Imposing more taxes on rentier class
    (v) Raising the rate of Capital Gains Tax
    (vi) Encouraging the habit of saving among the people
    (vii) Raising the percentage deduction of provident fund
    (viii) Making of public investment in such production projects as have short gestation period,
    (ix) Encouraging more production
    (x) Mobilizing more resources by way of public borrowing and using the same in production projects.
    8. National Income and Proper Distribution:
    The importance of increasing national income and removing inequalities of income and wealth can hardly be exaggerated. According to Prof… Raja J. Chelliah, a mere increase in per capita income does not necessarily lead to an increase in the welfare of all sections of the people, unless an equitable distribution is usually taken to mean a reduction in the existing inequalities of income and wealth.
    The existence of extreme inequalities in income and wealth create social cleavages, lead to economic and political instability and the biggest hindrance in the way of economic development of an economy. As a result, few rich roll in wealth and misuse their income on conspicuous consumption and inventories, real estate, gold and speculation, while poor masses grow under poverty and misery.
    9. Subsidies in Consumption and Production:
    Fiscal instruments are also used in under developed economies to provide subsidized food and production inputs to the poor people. Government programmes like public distribution system, price support policy, procurement of food grains, marketing facilities to the producers, input supply schemes, etc. are all directed to help the poorer sections to enable them to be more productive so that the income level is raised.
    10. Reallocation of Resources:
    Allocation of resources are not proper in the underdeveloped countries. Much of the resources in private sector are directed to the production of those goods which meet the need of richer sections of society and yield higher profit. It is very important that the fiscal tools are employed in such a way as to divert resources from less useful production to more useful channels. This can be done by various tax incentive measures and government subsidy programmes.
    11. Incentive to Production:
    Increase in production and productivity can be influenced by fiscal policy to a greater extent. Through grant of tax holiday or tax concessions relating to output produced from desirable lines of production, the industrial activity can be enhanced. On the other hand, discriminatory fiscal policy against the output on undesirable lines of business activity will help more essential commodities to grow because the resources will be released for their use in such production.
    12. Balanced Growth:
    Most of the underdeveloped countries suffer acutely from regional imbalance in the matter of economic development. Private sector in these countries normally concentrates its production on those luxury goods which are consumed mostly by richer sections who live in the urban areas. Hence, backward areas will not be developed unless government interferes into the decision making relating to industrial location. By providing fiscal incentives to the private sector and by setting up industries in the public sector in these geographical areas, the government can achieve balanced development of the country.
    13. Reduction of Inequality:
    Since inequality of income and wealth is vast in the underdeveloped countries, fiscal policy has an important role to play in reducing inequality. Taxation of income and property at progressive rates, imposition of heavy taxes on goods consumed by the rich and exemption from tax or tax concession granted to commodities of mass consumption, government expenditure on relief programmes, supply of inputs for small industries and agricultural farms, provision of essential commodities to the poor at subsidized prices, etc. are the fiscal measures directed to the reduction of the gap between poverty and prosperity. Hence, the role of fiscal policy becomes significant to frame such policy to remove these inequalities of income and direct these misused resources into productive channels for economic development.

    To conclude, the main objective of fiscal policy in underdeveloped countries should be promoting capital formation, raising national income, reducing disparities of income and wealth, proper allocation of resources, controlling inflation and achieving of full employment.
    Do large military expenditures stimulate or retard economic growth
    Defense spending has a negative, indirect effect on economic growth via investment and export while the direct impact on growth seems to be rather small.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services.
    Its Potential
    Microfinance is a key strategy in reaching the Millennium Development Goals (MDGs) and in building global financial systems that meet needs of most poor people. Although microfinance has demonstrated the potential to reduce poverty, its impacts have varied. Perhaps as a result of these inconsistencies, few donors have prioritised microfinance in their strategies to achieve the MDGs. Microfinance can have positive effects everywhere, if services respond to the particular mission and social context of a microfinance institution (MFI), as well as to the needs of its clients. Microfinance provides financial services to millions ofthe world’s poor. Poor people, like the non-poor, may use financial servicesfor many purposes and in different ways throughout their lives, but they areparticularly vulnerable since their income is small and unstable. Thus it isdifficult for them to anticipate when the need for small but critical lump sums of money may suddenly arise. Through savings, credit, insurance or remittances,poor people can secure larger lump sums of money than that which they wouldnormally have access to. These lump sums help them to overcome the problem ofunstable income, for example by allowing them to pay school fees, pay forevents such as weddings and funerals, or cope with crises as a result ofillness or natural disaster. Lump sums of money can also be invested in income generating activities which help to reduce poverty.
    It’s Limitation
    1. Over-Indebtedness
    2. Higher Interest Rates in Comparison to Mainstream Banks
    3. Widespread Dependence on Banking System
    4. Inadequate Investment Validation
    5. Lack of Enough Awareness of Financial Services in the Economy
    6. Regulatory Issues
    7. Choice of Appropriate Model

  14. Avatar Akachukwu Christian nonso says:

    Name :Akachukwu Christian Nonso
    Dept:2018/249531
    course :Eco 361

    (14)do educational system in developing countries really promotes economic development,or are they simply a mechanism to enable certain select group of people to maintain position of wealth, power and influence.
    (ans)

    Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.
    It is the force behind technological advancement and development of specialized knowledge (technical expertise) is dependent on the quality of education being delivered by institutions of professional and higher learning.
    The value embedded in goods and services driving a knowledge economy have its roots in education (Ozturk 2008). Such value may be showcased or demonstrated in its utility, use, benefit, and esthetics, or, in prestige and pride. …
    … It is true that Knowledge Economy provides enough incentives for entrepreneurship which accounts for aggregate increase in national productivity, net exports and job creation. A knowledge economy is built upon and supported by human resources which is one of the most important resources employed in a knowledge economy that is manifested in human capital formation (Ozturk 2008). To that extent, however, to which knowledge economy stands on the shoulders of an educated society, it can aptly be said that education contributes immensely towards a nation’s economic growth and prosperity. …
    … In post-modern industrial knowledge economies, development of human resource is knowledge intensive, and therefore, it is considered as a capital resource and an input to production and manufacturing. Knowledge plays a crucial role in fueling the engines of current economic growth and social development (Ozturk 2008;Joshi 2009).
    The utility or usefulness of knowledge in society is universally well acknowledged (Hayek 1945) as a promoter of intellectual growth and human capital formation.

    (15). As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted.
    Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    (ans)
    Farmers having adequate price is not enough to promote agriculture, there are alot of things that need to be done by not only the government including private individuals and agencies.
    Government have the role of providing easy access to land for agricultural purpose, they can also provide farm implement ,fertilizer, seedlings e. t. c at cheaper rate will help to facilitate agricultural and rural development.
    They can also provide good road which will allow easy access for transportation of goods and services.
    Private individuals and agencies also have the role of facilitating rural and agricultural development by granting funds at lower rate .
    Having suitable price for agricultural products alone does not facilitates agriculture, there are things needed by the government, private individuals, agencies such as bank e.t.c

    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    (ans)
    Environmentally sustainable has to do with conserving natural resources and to develop alternate sources of power while reducing pollution and harm the environment.
    The sustainable development cost is the environmental costs caused by the environmental disruption in the process of socio-economic sustainable development, including the cost of man-made destruction resources or the difference costs due to environmental differences, including the unreasonable use of resources and the difference loss due to utilization .
    Sustainable development costs fully consider ecological ,social environment and responsibility costs, highlight the social responsibility of enterprise, emphasize that the manufacturing enterprises achieve maximization of value should include maximization of social and ecological values, realize the organic unity of micro and macro goals, the concept that emphasize heavy economic, neglect natural, social costs, are completely abandoned, cannot pursue lower manufacturing costs to improve own economic profits and ignore expenditure of social costs, ecological costs. The sustainable development cost that enterprises should pay is the outlay cost of social costs and ecological costs due to behavior of enterprises.

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?

    (ans)

    Free market and privatization are the effective way of developing the country, they both enable citizens to actively be productive in a nation’s, when a nation have a higher number of active citizens, even with an ineffective government that country will perform well, looking at China as a case study, they have a high number of active citizens who are into innovations and these has results to them being one of the developed countries in the world, apart from citizens being fully involved in development ,government have the role of providing infrastructural facilities that facilitates individual capacity, firm to ensure development in the economy.

    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?

    (ans) The major reason why they make poor development policies is because they do not have adequate knowledge of the policies before implementing them and they do not take account of policies made in the past and how it reflects the economy.

    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?

    (ans)

    It is desirable for the following reasons :-

    (a)

    1. Increased revenues
    One of the top advantages of international trade is that you may be able to increase your number of potential clients. Each country you add to your list can open up a new pathway to business growth and increased revenues.

    The 2016 FedEx Trade Index, a national survey of 1,004 small business leaders conducted by Morning Consult, shows that business leaders engaged in global trade say they’re growing faster and hiring more employees than small businesses who stay stateside.

    “Sixty-five percent of small businesses that trade say their revenue is increasing versus 46 percent of small businesses that do not trade,” the report said. “Small businesses that trade are also 20 percent more likely to say they are hiring more employees.” (Respondents included business owners and executive at companies with between two and 500 employees.)

    2. Decreased competition
    Your product and services may have to compete in a crowded market in the U.S, but you may find that you have less competition in other countries.

    3. Longer product lifespan
    Sales can dip for certain products domestically as Americans stop buying them or move to upgraded versions over time.

    (b)

    Countries that engage in international trade benefit from economic growth and a rising standard of living. This occurs in two ways. First, trade gives countries access to physical capital (technology, tools, and equipment) that they might not produce domestically. This physical capital often results in increased productivity, which is a key driver of economic growth and a rising standard of living within a country.3 Second, access to global markets also increases export opportunities for developing economies. For example, China has become a manufacturing powerhouse4 and India has become a leader in exporting services.5 Both countries have experienced growth and development that might not have happened without access to global markets. Economists suggest that trade provides an avenue for the poorest nations to escape poverty. Recent research suggests that the removal of trade barriers could close the income gap between rich and poor countries by 50 percent.

    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?

    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?

    (ans)

    (a) the government should adopt these policies when the country is over dependent on foreign products, when these occurs it is advisable for the government to adopt these policies which will help to foster development of the economy and overdependance of foreign products can lead to balance of payment deficit which hinder development.

    (b)The following are some of the pronounced effects or impacts of IMF and World Bank Programs in developing countries including Kenya, as a result of SAPs. They include impact on National sovereignty, Agriculture, Exportation of Raw materials, Education, Environment, Health, Corruption and Involuntary Resettlement .Above all the debt burden has continued to increase. Stiglitz has aptly captured the grim picture caused by the burden of debt as a result of IMF and World Bank Programs in developing countries. He noted that around the world, from Argentina to Moldava from Africa to Indonesia, debt poses a burdens developing countries. Occasionally, the consequences of debt are dramatic, as with debt crisis, but more commonly the debt burden show its face as countries struggle to avoid default. Money should flow from rich countries to poor ones, but partly because debt repayments have become so large in some years the flow of funds have been moving in opposite direction. 67 Kenyan public and publicly guaranteed debt increased from Kshs 1,229,406 million or 51.0 percent of GDP in June2009/ 2010 to Kshs 1,487,110 million which or 53.9 percent of GDP in June 2010/2011. External debt rose from Kshs 569,113 million or 23.6 percent of GDP to Kshs 722,888 million or 26.2 percent of GDP over the period under review. 68Similarly, external debt increased from Kshs 569, 1138 million in 2010 to Kshs 722,888million in 2011.As a percentage of GDP, external debt increased from 23percent to 26.2 percent. 69The increase in the external debt was due to the weakening of the Kenya shilling against other major currencies of the world .Government domestic debt consists of stock of Government securities which comprise Treasury Bills and Treasury Bonds, Long term Stocks, Government Overdraft at Central Bank of Kenya and Pre-1997 Government Debt. increase despite such programs having been put in place. 70 The increase of debt has been in the The IMF and World Bank argued that SAP’s were necessary to bring developing countries including those in East Africa from a crisis to economic recovery as the national wealth of nations would trickle down to the poor. Developing Countries undertook currency devaluation measures which increase export while they reduce the value of domestically produced goods. They were to liberalize trade and investment and high interest to attract foreign investment, IMF had insisted on Kenya for example, and other East African countries liberalizing its financial markets; believing that competition among banks would give lower interest rates. banking failures in Kenya between 1993 and 1994. 71As a result of this there were fourteen 72 There were inadequate bank legislation and supervision as local and indigenous banks grew rapidly. High interest rates which had resulted from following IMFs advice, among other problems led the countries’ economies to sink downwards. Further, these programs involved abolishing food and agricultural subsidies to reduce government expenditure even though the Developed countries subsidize their Agriculture. Deep cuts in social programs usually in areas of health, education, and housing including massive layoffs in the civil service. Further, a shift from growing diverse food crops for domestic consumption to specializing in the production of cash crops or other commodities like cotton, coffee, tea, copper for export. Lastly, the programs advocated for privatization of government held enterprises. The IMF/World Bank approach on lending to East African Countries was that of a colonial ruler. It was not interested in hearing the thoughts of its client countries on topics such as development strategies.

    21. What is meant of by globalization, and how is it affecting the developing countries?

    (ans)

    Globalization refers to the integration among societies and economies across the globe. The process of globalization ensures the integration individual national economies with the global economy.

    Globalization has led to social, economic, technical, cultural and ecological interdependence among nations. Globalization has a major impact on the economic scenario of individual countries and the global economy as well.

    The following are way globalization affects the economy :-

    1.Economic and Trade. Processes Field

    2. Education and Health Systems

    3- Culture Effects

    1- Economic and Trade Processes Field.

    Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers.

    They cannot share the same economic growth that developed countries had. However, with globalization the World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans. Many developing nations began to take steps to open their markets by removing tariffs and free up their economies. The developed countries were able to invest in the developing nations, creating job opportunities for the poor people.

    For example, rapid growth in India and China has caused world poverty to decrease (blogspot.com.2009). It is clear to see that globalization has made the relationships between developed countries and developing nations stronger, it made each country depend on another country. According to Thirlwall ” Developing countries depend on developed countries for resource flows and technology, but developed countries depend heavily on developing countries for raw materials, food and oil, and as markets for industrial goods”. One the most important advantages of globalization are goods and people are transported easier and faster as a result free trade between countries has increased, and it decreased the possibility of war between countries. Furthermore, the growth in the communication between the individuals and companies in the world helped to raise free trade between countries and this led to growth economy. However, globalization has many economy and trade advantages in the developing countries, we must also note the many disadvantages that globalization has created for the poor countries. One reason globalization increases the inequality between the rich and poor, the benefits globalization is not universal; the richer are getting rich and the poor are becoming poorer. Many developing countries do benefit from globalization but then again, many of such nations do lag behind.” In the past two decades, China and India have grown faster than the already rich nations. However, countries like Africa still have the highest poverty rates, in fact, the rural areas of China which do not tap on global markets also suffer greatly from such high poverty . On the other hand, developed countries set up their companies and industries to the developing nations to take advantages of low wages and this causing pollution in countries with poor regulation of pollution. Furthermore, setting up companies and factories in the developing nations by developed countries affect badly to the economy of the developed countries and increase unemployment.

    2- Education and Health Systems

    Globalization contributed to develop the health and education systems in the developing countries. We can clearly see that education has increased in recent years, because globalization has a catalyst to the jobs that require higher skills set. This demand allowed people to gain higher education. Health and education are basic objectives to improve any nations, and there are strong relationships between economic growth and health and education systems. Through growth in economic, living standards and life expectancy for the developing nations certainly get better. With more fortunes poor nations are able to supply good health care services and sanitation to their people. In addition, the government of developing countries can provide more money for health and education to the poor, which led to decrease the rates of illiteracy. This is seen in many developing countries whose illiteracy rate fell down recently. It is truth that, living standards and life expectancy of developing countries increase through economic gains from globalization. According to the World Bank (2004) ” With globalization, more than 85 percent of the world’s population can expect to live for at least sixty years and this is actually twice as long as the average life expectancy 100 years ago”. In addition, globalization helped doctors and scientists to contribute to discover many diseases, which spread by human, animals and birds, and it helped them to created appropriate medicines to fight these deadly diseases. For example, HIV/ADIS, swine flu and birds’ flu whole world know about these diseases and they know how to avoid it. By globalization, there are many international organizations, such as, Non-governmental Organization (NGO), World Health Organization (WHO) and UNESCO, trying to eliminate illiteracy and deadly diseases in the world and save the life. In spite of these positive effects of globalization to the education and health fields in the developing countries. However, globalization could have negative impacts also in these fields; globalization facilitates the spread of new diseases in developing nations by travelers between countries. Due to increased trade and travel, many diseases like HIV/ADIS, Swine Flu, Bird Flu and many plant diseases, are facilitated across borders, from developed nations to the developing ones. This influences badly to the living standards and life expectancy these countries. According to the World Bank (2004) “The AIDS crisis has reduced life expectancy in some parts of Africa to less than 33 years and delay in addressing the problems caused by economic”. Another drawback of globalization is, globalized competition has forced many minds skilled workers where highly educated and qualified professionals, such as scientists, doctors, engineers and IT specialists, migrate to developed countries to benefit from the higher wages and greater lifestyle prospects for themselves and their children. This leads to decrease skills labour in the developing countries.

    3- Culture Effects

    Globalization has many benefits and detriment to the culture in the developing countries. Many developing countries cultures has been changed through globalization, and became imitate others cultures such as, America and European countries. Before globalization it would not have been possible to know about other countries and their cultures. Due to important tools of globalization like television, radio, satellite and internet, it is possible today to know what is happening in any countries such as, America, Japan and Australia. Moreover, people worldwide can know each other better through globalization. For example, it is easy to see more and more Hollywood stars shows the cultures different from America. In addition, today we can see clearly a heavily effect that caused by globalization to the young people in the different poor nations, it is very common to see teenagers wearing Nike T-Shirts and Adidas footwear, playing Hip-Hop music, using Apple ipad and iphone and eating at MacDonald, KFC and Domino’s Pizza . It is look like you can only distinguish them by their language. One the other hand, many developing countries are concerned about the rise of globalization because it might lead to destroy their own culture, traditional, identity, customs and their language. Many Arab countries such as Iraq, Syria, Lebanon and Jordan, as developing countries have affected negatively in some areas, their cultures, Developing Country Studies customs and traditional have been changed. They wear and behave like developed nations, a few people are wearing their traditional cloths that the used to. Furthermore, globalization leads to disappearing of many words and expressions from local language because many people use English and French words. In addition, great changes have taken place in the family life, young people trying to leave their families and live alone when they get 18 years old, and the extended family tends to become smaller than before.

    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?

    (ans)

    They should all be promoted, exports of agricultural product provide foreign exchange which can be used by the government to facilitates development, it can be used for providing infrastructural facilities such as road, hospital, schools e. t. c

    It is also important for countries to be industrialized, it makes them citizens active productive which is essential for development.

    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?

    (ans)

    (b)Financial systems can contribute to economic development by providing people with useful tools for risk management, but when they fail to manage the risks they retain, they can create severe financial crises with devastating social and economic effects. The financial crisis that hit the world economy in 2008-2009 has transformed the lives of many individuals and families, even in advanced countries, where millions of people fell, or are at risk of falling, into poverty and exclusion. For most regions and income groups in developing countries, progress to meet the Millennium Development Goals by 2015 has slowed and income distribution has worsened for a number of countries. Countries hardest hit by the crisis lost more than a decade of economic time. As the efforts to strengthen the financial systems and improve the resilience of the global financial system continue around the world, the challenge for policy makers is to incorporate the lessons from the failures to take into consideration the complex linkages between financial, fiscal, real, and social risks and ensure effective risk management at all levels of society. The recent experience underscores the importance of: systematic, proactive, and integrated risk management by individuals, societies, and governments to prepare for adverse consequences of financial shocks; mainstreaming proactive risk management into development agendas; establishing contingency planning mechanisms to avoid unintended economic and social consequences of crisis management policies and building a better capacity to analyze complex linkages and feedback loops between financial, sovereign, real and social risks; maintaining fiscal room; and creating well-designed social protection policies that target the vulnerable, while ensuring fiscal sustainability.

    24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?

    Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?

    (ans)

    1 Developing country should seek foreign aid in terms of outright grants or in terms of long term loans at low interest rates. Also, loans should accompany minimum conditionality’s, if any.

    2. Developing country should refrain from accepting tied aid and must go for that assistance which provide them with greater freedom to utilize aid in such manner that their long-run development interests gets fulfilled in best manner.

    3. Foreign aid should include only transfer of financial resources and must not include any military or internal security reinforcement. This implies that acceptance of aid should not give undue influence to the donor country with respect to internal affairs of the recipient country.

    25.multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?

    (ans)

    (a) MNCs are typically larger and more productive than domestic firms, and are usually willing to invest in local markets. MNCs in many countries are playing an important role in not only buying new technologies, but also in hosting new firms through incubator programs. But they can do more: they can invest on a bigger scale in technology start-ups related to their line of business. In this setting, startups in developing countries can benefit hugely, not only from the availability of new sources of funding, but also from working within the fold of a larger and more productive firm with a record of investing heavily in research and development (R&D) and innovation. Simultaneously, MNCs can now outsource some of their corporate research and development efforts by investing in local startups.

    This approach might also solve the problem of coordination failure. Unlike many investment firms, MNCs are already there, and will remain there. These larger international companies have already shouldered large fixed costs to set up a foreign subsidiary, and given exiting would incur further fixed costs, they’re unlikely to leave with any haste. Given their larger scale, MNCs can hedge their risk capital portfolios by investing in startups across a wide spectrum of locations where they operate, using their local subsidiaries to monitor their investments. Thus, negative returns in a risky investment portfolio at the local level wont jeopardize their stay in the market. This will eventually increase the mass of startups, and potentially attract risk capital investors to that market.

    Potential entrepreneurs might worry this approach could exclude their new firms from future rounds of investment, or deny them the opportunity to sell their technology to an actor other than the multinational (such as a competitor, for instance). Nevertheless, incorporating a healthy dose of legal frameworks could reduce these concerns. For instance, contracts may be written to incorporate some form of “right of first refusal” clause, in which the MNCs can prevent the early selling of an incubated startup to a competitor only if the former matches the offer the latter is making.

    So why haven’t MNCs engage in these strategic bets, so far? In fact, they have. According to CBInsights.com, corporate venture capital has grown dramatically in the last few years, from investing $5.5 billion in 2011 to $12.3 billion in 2014 in the United States alone. Furthermore, multinational firms such as Google, Microsoft, and Citi have also created corporate incubators to host new firms in several locations across the globe. Scaling up this approach in developing countries can potentially be a key factor to spur entrepreneurship and innovation , perhaps, with some public support to provide proper institutional frameworks and to share some risks with these MNCs, particularly in places where markets are smaller.

    MNCs are believed to be highly beneficial for developing countries in terms of bringing employment opportunities and new technologies that spillover to domestic firms. Furthermore, MNCs often benefit from government subsidies, which could in future be linked to investment in local firms. Through their involvement in investing in local startups, MNCs can play an important role in building an entrepreneurial ecosystem in developing countries and, if done correctly, MNCs are typically larger and more productive than domestic firms, and are usually willing to invest in local markets. MNCs in many countries are playing an important role in not only buying new technologies, but also in hosting new firms through incubator programs. But they can do more: they can invest on a bigger scale in technology start-ups related to their line of business. In this setting, startups in developing countries can benefit hugely, not only from the availability of new sources of funding, but also from working within the fold of a larger and more productive firm with a record of investing heavily in research and development (R&D) and innovation. Simultaneously, MNCs can now outsource some of their corporate research and development efforts by investing in local startups.

    This approach might also solve the problem of coordination failure. Unlike many investment firms, MNCs are already there, and will remain there. These larger international companies have already shouldered large fixed costs to set up a foreign subsidiary, and given exiting would incur further fixed costs, they’re unlikely to leave with any haste. Given their larger scale, MNCs can hedge their risk capital portfolios by investing in startups across a wide spectrum of locations where they operate, using their local subsidiaries to monitor their investments. Thus, negative returns in a risky investment portfolio at the local level wont jeopardize their stay in the market. This will eventually increase the mass of startups, and potentially attract risk capital investors to that market.

    Potential entrepreneurs might worry this approach could exclude their new firms from future rounds of investment, or deny them the opportunity to sell their technology to an actor other than the multinational (such as a competitor, for instance). Nevertheless, incorporating a healthy dose of legal frameworks could reduce these concerns. For instance, contracts may be written to incorporate some form of “right of first refusal” clause, in which the MNCs can prevent the early selling of an incubated startup to a competitor only if the former matches the offer the latter is making.

    So why haven’t MNCs engage in these strategic bets, so far? In fact, they have. According to CBInsights.com, corporate venture capital has grown dramatically in the last few years, from investing $5.5 billion in 2011 to $12.3 billion in 2014 in the United States alone. Furthermore, multinational firms such as Google, Microsoft, and Citi have also created corporate incubators to host new firms in several locations across the globe. Scaling up this approach in developing countries can potentially be a key factor to spur entrepreneurship and innovation , perhaps, with some public support to provide proper institutional frameworks and to share some risks with these MNCs, particularly in places where markets are smaller.

    MNCs are believed to be highly beneficial for developing countries in terms of bringing employment opportunities and new technologies that spillover to domestic firms. Furthermore, MNCs often benefit from government subsidies, which could in future be linked to investment in local firms. Through their involvement in investing in local startups, MNCs can play an important role in building an entrepreneurial ecosystem in developing countries and, if done correctly.

    (b) Globalization has played an important role in fostering economic relations among nations across the world. In the era of globalization, countries have realized that economic co-operation with other nations is strategically important for the growth of the economy.

    The important aspects of globalization and international economic relations are –
    Globalization ensures easier movement of goods and services across nations. This is an absolute necessity for fostering international economic relations.
    Easier movement of people between countries has also been made possible by globalization which is conductive to international economic relations. This also helps people in one country to migrate to another for employment thereby addressing the problem of unemployment in many countries.
    Globalization leads to free trade between countries. Since the early days of globalization numerous bilateral trade agreements have been signed between countries.
    Globalization has ensured easier and faster flow of information across geographical boundaries. The success of economic relations is often dependant on information.
    Globalization has led to reduction in cultural barriers which has proved to be conductive for economic co-operations among nations.
    Movement of capital between countries due to globalization has also played an important role in international economic relations.
    Globalization has given rise to several multi-national corporations who undetake economic activity across geographical borders.
    Globalization has helped to address environmental issues which are strategic to international economic relations.
    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?

    (ans)

    The various tools of fiscal policy such as budget, taxation, public expenditure, public works and public debt can go a long way for maintaining full employment without inflationary and deflationary forces in underdeveloped economies.

    Obviously, taxation and public expenditure is a powerful instrument in the hands of public authority which greatly affect the changes in disposal income, consumption and investment.

    An anti-depression tax policy increases disposable income of the individual, promotes consumption and investment. This will ultimately result in increase in spending activities which in turn, increase effective demand of the people. On the contrary, during inflation, anti-inflationary policy measures help to plug the inflationary gap.

    During inflation, such measures are adopted which help to wipe off the excessive purchasing power and consumer demand. Tax burden is raised in such a manner as it may not retard new investment. Keeping in view all facts in mind, it is stated that fiscal policy plays very significant role for promoting economic development and stability of under developed countries.

    To Mobilize Resources: The foremost aim of fiscal policy in underdeveloped countries is to mobilize resources in the private and public sectors. Generally, the national income and per capita income is very low due to low rate of savings. Therefore, the governments of such countries through forced savings pushes the rate of investment and capital formation which in turn accelerates the rate of economic development.

    It also undertakes the policy of planned investment in the public sector. Private investments have the favourable effect of increasing investment, the curtailment of conspicuous consumption and investment in unproductive channels can help to check the inflationary trend in the economy. Moreover, these countries face the problem of foreign capital. Thus the remedy lies in increasing the incremental saving ratio, the marginal propensity to save through public finance, taxation and forced loans.

    To some extent, progressive taxation, heavy duty on luxury imports, ban on the manufacture of luxury and semi-luxury goods are other measures which help to mobilize the resources, Therefore, progressive taxation on windfall gains, on unearned incomes on capital gains, on expenditure and real estates etc. can go a long way in equitable distribution of wealth.

    Impact of military expenditures on development.

    spending according to the Keynesian approach is a component of government consumption, which stimulates economic growth by expanding demand for goods and services. Military spending affects economic growth through many channels. When aggregate demand is lower relative to prospective supply, rises in military spending tend to enlarge capacity utilization, raise profits, and consequently, enhance investment and aggregate output (Faini et al., 1984). Several prior studies have drawn findings that support the Keynesian military view of the positive influence of military expenditure on national output.

    In a study conducted by Lobont et al. (2019), it is ascertained that military spending has several positive effects on capital, labor, growth, and the effectual use of available resources in the economy as a whole.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?

    (ans)

    Microfinance is the provision that provides access to various financial services such as credit, savings, micro insurance, remittances, leasing to low-income clients including consumers and the self-employed, who traditionally lack access to banking and related services. Its main objective is to provide a permanent access to appropriate financial services including insurance, savings, and fund transfer. Micro finance becomes more widely accepted and moves into main stream, the supply of services to poor may also increase, improving the efficiency and outreach while lowering the costs.
    Potential
    Evidence from randomized evaluations in low- and middle-income countries shows that giving small loans in the form of microcredit did not lead to transformative impacts on income or long-term consumption on average, but it did help households better manage financial choices.
    Demand for many of the microcredit products was modest. People often used funds for consumption rather than entrepreneurial investments, suggesting that there were high non-entrepreneurial returns to credit. Innovations to target high-potential entrepreneurs and offer more flexible lending products may lead to more high-return entrepreneurial investments.
    Microcredit was designed to overcome credit market failures and help low-income borrowers take advantage of investment opportunities. It expanded access to credit around the world, typically in the form of small business loans with relatively high interest rates and immediate, biweekly loan repayments.
    As of 2013, 211 million people around the world had ever borrowed from a microcredit institution, of whom 114 million were living in extreme poverty
    Limitations.
    There are several potential explanations for the limited impact of traditional microcredit on income and long-term consumption, which this policy insight and subsequent ones will examine in turn.
    First , not all borrowers may have access to or want to take high-return investment opportunities. Indeed, loans targeted to specific borrowers—high-potential entrepreneurs—show some promise for increasing incomes.

    Furthermore, many borrowers use loans for consumption rather than investments, suggesting that there are other, non-entrepreneurial returns to these products.

    Microloans also tend to be costly to deliver and expensive for low-income borrowers, though product and market innovations can make it easier for banks to lend at lower costs.

    In addition, loans may not be structured in ways that facilitate making high-return investments. In these cases, product design modifications to better meet borrowers’ cash flow needs may help, such as changes to loan repayment timing or frequency.

    Finally, risk management issues may limit the impact of microcredit.

  15. Avatar Ihekwoaba Alex Ezihe says:

    Ihekwoaba Alex Ezihe
    Reg number;2018/243746

    14) Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.

    15) Farming is the fabric of rural society and, in many countries of the world, it is the main economic activity. Any sudden and profound changes which impacted on the farm sector could have severe consequences in terms of social and political stability in economically developing countries.

    2. Agriculture also plays an important part in rural development, especially due to land use, in countries where the sector is of less economic significance.

    3. The main potential contributions of farming to rural development are in terms of supporting employment, ancillary businesses, and environmental services. In peripheral regions, farming may be necessary to support the economic and social infrastructure.

    4. Rural development policies should exploit the contribution of farming, both in terms of improving on-farm activities and supporting ancillary services, to secure sustainable development for rural areas.

    5. In the context of agricultural reform, WTO rules should contain sufficient flexibility to allow countries to promote rural development, especially to preserve social and political stability.

    16) Environmental sustainability is defined as responsible interaction with the environment to avoid depletion or degradation of natural resources and allow for long-term environmental quality. The practice of environmental sustainability helps to ensure that the needs of today’s population are met without jeopardizing the ability of future generations to meet their needs.

    When we look at the natural environment, we see that it has a rather remarkable ability to rejuvenate itself and sustain its viability. For example, when a tree falls, it decomposes, adding nutrients to the soil. These nutrients help sustain suitable conditions so future saplings can grow.

    When nature is left alone, it has a tremendous ability to care for itself. However, when man enters the picture and uses many of the natural resources provided by the environment, things change. Human actions can deplete natural resources, and without the application of environmental sustainability methods, long-term viability can be compromised

    17). privatization in developing countries, with particular emphasis on new areas of research such as the distributional impacts of privatization. Overall, the literature now reflects a more cautious and nuanced evaluation of privatization. Thus, private ownership alone is no longer argued to automatically generate economic gains in developing economies; pre-conditions (especially the regulatory infrastructure) and an appropriate process of privatization are important for attaining a positive impact. These comprise a list which is often challenging in developing countries: well-designed and sequenced reforms; the implementation of complementary policies; the creation of regulatory capacity; attention to poverty and social impacts; and strong public communication. Even so, the studies do identify the scope for efficiency-enhancing privatization that also promotes equity in developing countries.

    18). Countries rarely succeed in the absence of state institutions that can establish and enforce rules, collect revenue, and provide public services. Wealthy countries have responded to this challenge by focusing the efforts of bilateral aid agencies and multilateral development banks on building and reforming public sector institutions in developing countries. 

    However, most of these externally-sponsored programs fail during implementation or falter in the out-years, with their achievements often consisting of shallow, cosmetic changes to “institutional forms” (how institutions are organized) rather than improvements in “institutional function” (the ability of public sector institutions to solve public problems). Developing countries create anti-corruption commissions with no intention of identifying or recovering public funds that are stolen; pass legislation that criminalizes human trafficking but fails to investigate or prosecute the most egregious violations of the law; create “one-stop shops” to simplify the process of legally registering a business without addressing more significant challenges to operating a business; and establish courts and appoint judges that are nominally independent while tacitly endorsing interference in the affairs of the judiciary.

    19). I. Introduction

    International Trade is usually referred as the exchange of goods, and services across

    international borders or territories. It is noticed that the initial stage of international trade is

    called “Mercantilism”. It has emerged since the seventeenth and eighteenth century in Europe.

    For centuries, international trade is not a very new phenomenon, it has existed since the

    ancient time, and the transaction of international trade has kept transforming in larger sizes

    and scales. After the end of World War II and Cold war, U.S takes a leading role to invite its

    war allies to form the international trade organization (ITO) in order to restore and promote

    the word economy. Noticeably, there are many international organizations have been

    established so far. On October 30, 1947, a multilateral agreement regulating international

    trades Called General Agreement on Tariffs and Trade (GATT) was formed to handle the

    problem of world trade relations. Until 1994 to the present, World Trade Organization (WTO)

    has been established replacing the GATT. Moreover, the United Nations Conference on

    Trade and Development (UNCTAD) is also created to provide trade-related technical

    assistance. Comparing between WTO and UNCTAD, the WTO mainly deals with the rules of

    international trade whereas UNCTAD deals with research and advocacy of trade relations for

    developing to promote their exports. Also, until to this globalization era, it is noticed that

    international trade gives consumers and countries the opportunity to be exposed to new

    markets and products. Interestingly, unlike the last centuries not only the products like food,

    clothes, spare parts, oil, jewelry, and other commodities are imported and exported across the

    borders, but services such as tourism, banking, consulting and transportation can also be

    traded in the global markets to accumulate the world states capital (Douglas A. Irwin, 2001).

    Although trade has brought general economic benefits for states; some economists still have a

    controversial debate over the contribution of international trade as it may bring harm too.

    20). “Foreign Exchange Control in the state regulation excluding the free play of economic forces for the Foreign Exchange Market”. The Government regulates the Foreign Exchange dealings by Consideration of national needs.

    To be more clear, “Foreign Exchange Control means the monopoly of the government in the purchase and sale of foreign currencies in order to restore the balance of payments equilibrium and disregard the market forces in the decision of monetary authority”. When tariffs and quotas do not help in correcting the adverse balance of trade and balance of payments the system of Foreign Exchange Control is restored to by Governments.

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    The Impact of Globalization in the Developing Countries

    Fairooz HAMDI

    Fairooz HAMDI

    PhD in management

    Published Jun 11, 2015

    + Follow

    Abstract

    This paper will discuss the benefits and drawbacks from the point of view that globalization made in the developing countries in the three important fields such as economic and trade processes, education and health systems and culture effects. It is consists of four paragraphs. In paragraph one, the benefits and detriment of globalization in the economic and trade processes field will be discussed. Then, in paragraph two, the impact of globalization on education and health systems in both sides will be shown. In the paragraph three, the positives and negatives of globalization on culture will be illustrated. Finally, paragraph four, will deal with conclusion and offer an opinion.

    Introduction

    Globalization is a process of global economic, political and cultural integration. It has made the world become a small village; the borders have been broken down between countries. ”The history of globalization goes back to the second half of the twentieth century, the development of transport and communication technology led to situation where national borders appeared to be too limiting for economic activity” (Economic Globalization in Developing Countries, 2002). Globalization is playing an increasingly important role in the developing countries. It can be seen that, globalization has certain advantages such as economic processes, technological developments, political influences, health systems, social and natural environment factors. It has a lot of benefit on our daily life. Globalization has created a new opportunities for developing countries. Such as, technology transfer hold out promise, greater opportunities to access developed countries markets, growth and improved productivity and living standards. However, it is not true that all effects of this phenomenon are positive. Because, globalization has also brought up new challenges such as, environmental deteriorations, instability in commercial and financial markets, increase inequity across and within nations. This paper evaluates the positive and negative impact of globalization on developing nations in the following proportions;

    1- Economic and Trade Processes Field

    2- Education and Health Systems

    3- Culture Effects

    22). The expansion of agricultural trade has not occurred at an even pace in the past two decades, but has reflected the influence of a number of global shocks: the commodity price booms during the 1970s; the oil price shocks of 1973 and 1979; and the sharp increases in interest rates in the early 1980s which inaugurated the international debt crisis and the subsequent slow growth and recession in developed countries and most developing-country regions. Two indicators highlight the difficult commodity-trade environment in the mid-1980s. First, this was the only period in which trade in agricultural products failed to expand faster than agricultural output (Figure 1). Second, real commodity prices, which had tended to move downwards in the previous two decades, fell dramatically in the 1980s. A comparison of the three years 1990-1992 with the years 1979-1981 shows a decline of 30 percent in the net barter terms of trade between agricultural commodities and imports of manufactures and crude petroleum.(1) The decline was close to 40 percent for the agricultural commodity exports of developing countries and 20 percent for those of developed countries (FAO, 1995b). At the same time, however, the trade
    patterns of many developing countries have changed significantly towards other sectors, notably manufactures and services.

    23). All these adverse developments occurred in the face of slowly expanding exports to developed coun­tries (as the latter faced the problem of slow growth), lower prices for their commodity exports, and higher interest rates. By borrowing heavily abroad, developing countries somehow managed to grow at a relatively rapid pace even during the second half of the 1970s. However, in the early 1980s, their huge and rapidly growing foreign debts caught up with them and large- scale defaults were avoided only by repeated large-scale intervention by the IMF.

    The World Bank uses two main criteria to judge whether a country’s level of debt is sus­tainable whether the debt to export ratio exceeds 200-250%; and whether the debt service ratio exceeds 20-25%. The debt-service ratio is parti­cularly crucial because this measures the amount of foreign exchange earnings that cannot be used to purchase imports and is, therefore, measure of the extent to which a government might decide to default on its repayment obligations.

    24). Foreign aid can involve a transfer of financial resources or commodities (e.g., food or military equipment) or technical advice and training. The resources can take the form of grants or concessional credits (e.g., export credits). The most common type of foreign aid is official development assistance (ODA), which is assistance given to promote development and to combat poverty. The primary source of ODA—which for some countries represents only a small portion of their assistance—is bilateral grants from one country to another, though some of the aid is in the form of loans, and sometimes the aid is channeled through international organizations and nongovernmental organizations (NGOs). For example, the International Monetary Fund (IMF), the World Bank, and the United Nations Children’s Fund (UNICEF) have provided significant amounts of aid to countries and to NGOs involved in assistance activities.

    Countries often provide foreign aid to enhance their own security. Thus, economic assistance may be used to prevent friendly governments from falling under the influence of unfriendly ones or as payment for the right to establish or use military bases on foreign soil. Foreign aid also may be used to achieve a country’s diplomatic goals, enabling it to gain diplomatic recognition, to garner support for its positions in international organizations, or to increase its diplomats’ access to foreign officials. Other purposes of foreign aid include promoting a country’s exports (e.g., through programs that require the recipient country to use the aid to purchase the donor country’s agricultural products or manufactured goods) and spreading its language, culture, or religion. Countries also provide aid to relieve suffering caused by natural or man-made disasters such as famine, disease, and war, to promote economic development, to help establish or strengthen political institutions, and to address a variety of transnational problems including disease, terrorism and other crimes, and destruction of the environment. Because most foreign aid programs are designed to serve several of these purposes simultaneously, it is difficult to identify any one of them as most important.

    25). The word “Multinational” is a combined word of “Multi” and “National”, which when combined refers to numerous countries. A Multinational Corporation is a corporation that has its facilities and other valuable assets in at least one country, which is other than its parent country. It is a organization or company that both produces and sells services and goods in a multitude of countries. Some MNCs have a budget which is greater than some small sized countries GDP’s. [1]

    Some of the major examples of MNCs today are Nokia, McDonalds, Microsoft, Exon Mobile and BP.

    One of the initial MNCs was the East India Company (1600 – 1874), which is an excellent examples of both the benefits and drawbacks of such ventures. On one hand there existed a dynamic profit making entity, on the other existed a company operating on foreign soil, under very little control of the British government, having, operating and running their own private armies, utilizing military power and ultimately taking over administrative functions of India.

    MNCs have come a long way since then and have seen a sharp increase in the past few decades. The numbers of active MNCs went from being roughly 7,000 in the 1970’s to 78,000 in 2006, being responsible for over half the global industrial output. [2]

    Multinational corporations usually bring with them foreign direct investment, which is direct investment in a country by the company for expanding their existing business base or for buying of raw goods and inputs from them.

    Multinational corporations were the vital factor in globalization, where local and national governments competed against each other in order to incentives and attract more MNCs and ultimately, investment in their countries. An example of such incentive is the Free Trade Zones, where goods may be manufactured, handled, landed or even exported without any intervention of the local custom authorities. Most of these free trade zones exist in developing countries such as Pakistan, Mexico, Sri Lanka, Madagascar, Brazil and India, as they are eager to attract more foreign investors. [3]

    26). The great depression of the 1930s has had a profound influence on both economic and political thinking. The consequences of this event turned out to be of such a dimension that broad consensus emerged on governments doing their best to prevent such disasters from happening again. But even beyond this extreme case, there is general agreement that a stable and predictable economic environment contributes substantially to social and economic welfare. In the short-run, households prefer to have economic stability with continuous employment and stable incomes, allowing them to maintain stable consumption over time. In the long-run, unnecessary economic fluctuations can reduce growth, for example by increasing the riskiness of investments. A highly volatile economic environment might also have a negative impact on the choice of education profiles and career paths. In short, by maintaining a stable macroeconomic environment, economic policy can thus contribute to economic growth and welfare.

    27). Microfinance is a model being applied in developing nations as a means of boosting local economies, with hopes of growing the global market.1 There are 2 billion people around the world who do not have a bank account, or lack the technology they need to access a financial institution, over 50 percent of which cite that their primary reason for not having a bank account is not having enough money.2 Microfinance institutions grant small business loans to individuals who would otherwise be unable to utilize a traditional bank services.3 They can also provide forms of insurance and savings accounts.4 An estimated 500 million individuals worldwide have received microfinance services

  16. Avatar NGADI GOD'SPROMISE CHICHOROBIM says:

    NAME: NGADI GOD’SPROMISE CHICHOROBIM
    REG NO:2018/242405
    DEPARTMENT: ECONOMICS
    COURSE: DEVELOPMENTAL ECONOMICS 1
    CODE: ECO 361
    14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    All things being equal, the Educational system in developing countries serves as one of the major force in driving the economy but in most cases this mechanism has lost its potency because of certain factors such as corruption, negligence, bribery, poor funding etc. Educational system is the bedrock for research. All inventions thrive through the educational sector. But in Nigeria, politicians have manipulated education and use the educated one’s to remain in power.
    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    Provision of mechanised tools for agriculture: Government should provide mechanised tools such as tractor, plough etc which will enable farmers move from subsistence to commercial farming.
    Provision of social amenities: pipe borne water, good roads, electricity should also be provided. This will foster easy movement of the agricultural produce from rural to urban areas.
    Formulation of policies: Good policies that serve as aid to boost development should be formulated by the government. E.g FADAMA Project etc
    Increase in the cost of agricultural produce does not stimulate food production. It only increases inflation.
    Rural institutional changes are needed because they serve as the tools used in development.
    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    Environmental sustainability equates to environmentally sustainable development, but what does that mean on a practical level? It means there must be a balanced relationship between the natural resources available to us and the human consumption of those resources:
    For renewable resources like crops or timber, the rate of harvest shouldn’t exceed the rate of regeneration. This is known as “sustainable yield.”
    For non-renewable resources like fossil fuels, the rate of depletion shouldn’t exceed the rate of development of renewable alternatives like solar or wind power.
    For pollution, the rates of waste generation shouldn’t exceed the capacity of the environment to assimilate that waste. This is known as “sustainable waste disposal.”
    In short, environmental sustainability states that the rates of renewable resource harvest, non-renewable resource depletion, and pollution assimilation can be naturally maintained indefinitely. The United Nations World Commission on Environment and Development goes further, defining environmental sustainability as behaving today in a way that ensures that future generations will have enough natural resources to maintain a quality of life equal to if not better than that of current generations.
    Achieving a balance between natural resources and human consumption that is both respectful of the natural world yet fuels our modern way of life, is one of the most important pieces in the climate-change puzzle. With unchecked resource depletion, we risk a global food crisis, energy crisis, and an increase in greenhouse gas emissions that will lead to a global warming crisis. On the other hand, with too many restrictions on the use of natural resources, we risk slowing technological and economic advancement.
    For the future of our planet and the humans who populate it, it’s vital to weigh the competing needs of environmental protection and human development so both the natural world and society are able to flourish. Striking this delicate balance is challenging—though not impossible—and issues surrounding sustainability, the environment, and society have been the focus of scientists, philosophers, politicians, and policy experts for decade

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    It is a mixture of both. Free markets and privatization is a double edged sword. Free market and privatization should be allowed to dominate the economy but Government still have roles to play.
    Reasons why free markets would foster development
    Increase in competition: firms would be allowed to compete within each other and this would foster creativity and improve the means of production
    Increase in employment opportunities: As a result of private individuals running the economy, job opportunities would increase and this would inadvertently reduce poverty rate and increase development.
    Reduction in importation: people would be motivated to look within their surroundings and make use of their resources into finished goods.
    Reasons why government still have a major role to play in their economics
    To prevent exploitation: every monopolist tends to exploit people inorder to maximize their individual desires. Government can step In to stop this.
    Provision of essential services: It is only the government that can cater for the welfare of her citizens.
    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    Poor planning for resources
    we do not make proper planning for our resources. It’s a huge contributor to why projects fail. Project management involves resource management, often taking other projects into consideration. Most of us know that financial resource planning is important.
    Unclear Goals and Objectives :
    One way to almost guarantee project failure is to begin work without clear project objectives and goals. After all, there’s no way to know whether you’ve succeeded when you aren’t completely sure what you’re trying to accomplish. Several popular frameworks for goal setting, such as SMART goals and CLEAR goals are there but the essence is that your goals must be measurable and realistic. Don’t just say you want to “lose weight,” say you want to lose fifteen pounds in the next four months. That’s both measurable and realistic. The projects you manage are more complex than that, which is why it’s even more critical to define your objectives clearly.
    Corrupt government :
    Many political leaders in the developing countries are corrupt. As a result they only adopt development policies that benefit their selfish interest instead of the masses thereby resulting to the adoption of development policies that are very poor in nature.
    Lack of visionary leadership :
    Many developing nations lack the necessary visionary leaders that will pilot the affairs of their nations and the resultant implication is that they end up adopting poor developmental policies.
    Weak institutions :
    Many developing countries are poor so they lack the resources to establishe strong development institutions that will help make sound development policies that will enhance their situations economically and socio-politically. As a result they end up adopting poor development policies.
    What can be done to improve on those choices :
    1. Eradicating corruption among they leaders.
    2. Voting in visionary leaders into powers.
    3. Having clear goals and objectives.
    4. Having enough resources in place.
    5. Building strong institutions that will help make and implement sound development policies

    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    International trade definition gives a hint to policy makers or economists to understand about international trade; meanwhile, it is noticed that the various definitions of international trade given by different economists can be an indicator to calculate the cost and benefit of doing international trade. According to Smriti Chand, (2015), he refers international trade as the exchange of capital, goods, and services across international borders or territories. According to Shawn Grimsley, (2015), international trade is about the outflow and inflow of international exchange that usually result from the inward (import) and outward (export) movement of goods and services. It is significantly created in order to increase the global state development in term of economic, and the interaction of trade or commerce, as well as the social and political relations between nations. Costs and Benefits of International Trade: According to Pung Sun & Almas Heshmati, (2010), the authors studied about the relationships and the contributions of international trade on economic growth in the globalization era. In addition, World Bank and IMF which annually publish a report on the market access in agriculture and on barriers to trade in textiles and clothing also raised that subsidies and anti-dumping procedures imposed by developed countries can harm the interest of exporters from developing countries. A part from protectionist policies, it is observed that developing countries may have less competitive on the international market since they seem to relatively receive less technology transfer than the developed countries.
    once different countries possess different factor endowment in producing goods, trade will occur among all those countries, in which they can enjoy the mutual benefit, even some countries might gain less than the others, but still they can maximized their benefit as much as they can. However, if we think about the cost and benefit between the poor and the rich we can say that, the developing countries to suffer more from the trade deficit as the trade deficit is too heavy for those from the developing countries, while the developed countries tend to enjoy more benefit from conducting the trade. Moreover, if we can say that developing countries seem to be able to earn a very low profit from the trade liberalization, as they do not have advanced technology just like the rich countries do, so what the developing countries can product are most likely to be garment product, food or agricultural products, while the rich countries can produce some kind of machinery, automobile, and as well as the technological product which can help the rich to earn way better than the developing can do. For example, Cambodia exports a total of 44 and 36 percent of garment to US and EU recently in the very 1st quarter of 2015 (World Bank, 2015), and by export those kind of products Cambodia did not gain much comparing to the developed countries. On the other hand, despise having to say that the developing countries have to suffer a lot more than the developed countries over the trade relations, but still the developing countries can also gain quite a handful satisfaction from it as well.
    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    The improved global economic environment for many developing countries — including the current upswing in some nations resulting from high demand for oil and other raw materials, and the expanded manufacturing prowess of others, such as China — needs to be turned into a dynamic process of economic growth and structural change that creates employment and raises living standards over the long term, a new UNCTAD report says.
    To do this, the Trade and Development Report 2006 (1), (TDR) counsels, Governments of developing countries should be actively involved in fostering and strengthening domestic businesses — in contrast to the 1980s and ´90s, when they were advised by the Bretton Woods Institutions to keep their hands off and let market forces do the work of “getting the prices right.” These countries also should not be overly restricted by international trade rules or by conditions imposed by international lenders from doing what´s best for their economies, the report says. Such freedom of action has become a major issue in recent years and is often referred to as “policy space” (see UNCTAD/PRESS/PR/2006/019)
    The report, also known as the TDR, urges Governments to take a pro-active stance in macroeconomic and industrial policies to accelerate private investment and technological upgrading and to stimulate the creative forces of markets: it is risk-taking, innovative entrepreneurial decisions that lead to new lines of production and the creation of new firms and jobs. Governments should also protect fledgling enterprises when necessary, including through the careful application of subsidies and tariffs, until domestic producers can meet international competition in the sale of increasingly sophisticated products.
    The TDR contends that monetary policy could play a more effective role in support of growth by focusing on the provision of low real interest rates, which would incite investment, and a competitive and stable exchange rate, which would promote domestic producers in world markets. To allow monetary policy to play that role, the report says, emerging-market economies should reduce their dependence on foreign capital inflows, as many of them have already done, and should identify additional non-monetary instruments for price stabilization, such as income policy or direct intervention into price and, especially, wage formation.
    The Trade and Development Report underlines that any prescription for economic development must respect the specific situation of each country. There is no “one-size-fits-all.” Nonetheless, it identifies some common factors that should be applied: policies supportive of innovative investment; adaptation of imported technology to local conditions; strengthening of industrial policy; and “strategic trade integration” — that is, the careful, managed introduction of domestic businesses into international markets.

    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    In the 1990s, the World Bank and IMF’s structural adjustment programs came under rising criticism from civil society for having, in general, negative social and economic impacts on marginalized people and for undermining democracy in recipient countries (for a comprehensive assessment of these negative consequences, see the Structural Adjustment Participatory Review International Network Report 2004, which was born of an unique five-year collaboration among citizen’s groups, developing country governments, and the World Bank). The policy conditions attached to these programs seemed unable to lever critical political and economic reforms. At the same time, there was an increasing awareness on the part of the donor community that broadened participation and political competition were crucial ingredients for aid effectiveness and economic progress. As a result, both bilateral and multilateral donors began to look for new development strategies, redefining their role not only in the transfer of financial resources, but also in contributing to good governance which, at least implicitly, also includes democratization – the issue on which we will focus here. In this context, a closer analysis of the instrument of poverty reduction strategies (PRS) is particularly warranted. Tied to a set of governance conditions, PRS have placed issues of poverty reduction and good governance at the center stage of the official agenda in a number of developing countries. Introduced in 1999, PRS related lending is currently the World Bank and IMF’s main program type for regulating access to debt relief and concessional financing. By replacing the former structural adjustment programs (SAPs), the PRS approach seeks to increase the participation of civil society in the design and implementation of national development strategies. As a result, the international financial organizations (IFIs) expect to see the voices of formerly excluded social groups help to formulate more effective development strategies leading to welfare-improving outcomes. Along with that the PRS approach induces political processes on which we will focus here. We argue that PRS can contribute to a democratic transition in recipient countries by empowering civil society and strengthening democratic accountability of governments towards their citizens and vis-à-vis other domestic political institutions. Whereas bilateral donors have shown fewer problems in autonomously redefining their role, the official mandate of the World Bank and the IMF does not allow them any political interference with recipient countries. In practice, however, their lending modalities do have political consequences for recipient nations (independently of whether this effect is intended by the international financial institutions or not). The design of loan conditionality is intrinsically highly political because it involves policies and processes which affect the welfare of most people (Killick 1995: 170) and thus changes the power balances between the political actors involved in the domestic democratization process. The question thus arises, whether IMF and World Bank programs encourage or inhibit democratization, and how their traditional and more recent forms of lending arrangements and accompanying conditions have fared in this respect. As the latter convincingly argue, the working class and the bourgeoisie are weakly developed in African and Asian countries. Instead, the state has taken a leading role in the capitalist development of the developing world which is highly influenced by international factors.

    21. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. Countries have built economic partnerships to facilitate these movements over many centuries. But the term gained popularity after the Cold War in the early 1990s, as these cooperative arrangements shaped modern everyday life. This guide uses the term more narrowly to refer to international trade and some of the investment flows among advanced economies, mostly focusing on the United States.
    Globalization compels businesses to adapt to different strategies based on new ideological trends that try to balance the rights and interests of both the individual and the community as a whole. This change enables businesses to compete worldwide and also signifies a dramatic change for business leaders, labor, and management by legitimately accepting the participation of workers and the government in developing and implementing company policies and strategies. Risk reduction via diversification can be accomplished through company involvement with international financial institutions and partnering with both local and multinational businesses.
    Globalization brings reorganization at the international, national, and sub-national levels. Specifically, it brings the reorganization of production, international trade, and the integration of financial markets. This affects capitalist economic and social relations, via multilateralism and microeconomic phenomena, such as business competitiveness, at the global level. The transformation of production systems affects the class structure, the labor process, the application of technology, and the structure and organization of capital. Globalization is now seen as marginalizing the less educated and low-skilled workers. Business expansion will no longer automatically imply increased employment. Additionally, it can cause a high remuneration of capital, due to its higher mobility compared to labor.

    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    Some developing countries climate favours the production of certain crops and animals products above some other countries of the world, so there is a need to encourage the exportation of these crops and products to other countries to earn foreign exchange which will be used to import other goods that are needed in order to attain industrialization.
    Better infrastructure to promote processed agricultural exports can unleash untapped farm export potential in these countries. So emphasis Should be laid on promoting farm exports. This would provide a much needed boost to the economies of these developing countries, therefore, paving the way for rapid economic development.
    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development? Some of the reasons many developing nations get into serious foreign-debt can be attributed to internal causes such as: Poor debt management, low government revenues due to inefficient tax policies, weak social and political institutions etc.
    Furthermore, these loans are often used for the consumption of goods, rather than for productive investments.
    In addition, there are some external causes such as: natural disasters like floods or storms. Structural problems, such as lack of diversity in economic and export structure, result in their economies being highly vulnerable to price and demand fluctuations on the world market.
    The existence of debt has both social and financial costs. Heavily indebted developing countries are prone to higher rates of infant mortality, disease, illiteracy, and malnutrition than other countries in the developing world.
    Excessive levels of foreign debt can hamper countries’ ability to invest in their economic future—whether it be via infrastructure, education, or health care—as their limited revenue goes to servicing their loans. This acts as a drag to any long-term economic growth and development plan.

    24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    Foreign aid as has been visibly seen in many developing countries has helped them to undertake many projects in their various countries and implement different capital projects and policies.
    Even though it is beneficial, borrowing always comes at a cost, therefore, if there is an alternative, countries should make use of it and avoid “see finish”. And in a situation where it is unavoidable, it should only be used for capital projects and projects that would yield large returns in the long run.

    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    Multinational corporations should be encouraged to invest because of the bubbling of their economies and the belief that in the foreseeable near future, they would undergo industrialization and develop themselves thus guaranteeing a return on their investment.
    The global factory is a structure through which multinational enterprises integrate their global strategies through a combination of innovation, distribution and production of both goods and services.
    As more nations, people, and cultures adapt to the ever changing international community, diplomats, politicians, and representatives must meet and deal with accordingly to the needs and wants of nations. Diplomacy can be exerted in many forms; through peace talks, written constitutions, field experiences, etc.
    Culture is a familiar term and remains unchanged by definition. However, globalization and international relations have constantly altered culture both positively and negatively. Globalization increases worldwide technology, and the readability of fast, effective communication and consumption of popular products. Globalization
    links cultures and international relations on a variety of levels; economics, politically, socially, etc.
    International relations have used globalization to reach its goal: of understanding cultures. International relations focus on how countries, people and organizations interact and globalization is making a profound effect on
    International relations. Understanding culture, globalization, and international relations is critical for the future of not only governments, people, and businesses, but for the survival of the human race.
    In today’s increasingly interdependent and turbulent world, many of the leading issues in the news concern international affairs. Whether it is the continuing impact of globalization,
    Globalization – the process of continuing integration of the countries in the world – is strongly underway in all parts of the globe. It is a complex interconnection between capitalism and democracy, which involves positive and
    negative features, that both empowers and disempowers individuals and groups. From the other hand Globalization is a popular term used by governments, business, academic and a range of diverse non-governmental organizations. It also, however, signifies a new paradigm within world politics and economic
    relations. While national governments for many years dictated the international, political and economic scene, international organizations such as the World Bank, International Monetary Fund and the World Trade Organization have now become significant role players. In this “Global Village” national governments have lost some of their importance and perhaps their powers in favor of these major international organizations.
    As a process of interaction and integration among people, companies and governments of different nations Globalization is a process driven by the International Trade and Investment and aided by Information technology. This process on the environment on culture, on political system, on economic development and prosperity, and on human physical well-being in societies around the world.

    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    Below are some of the roles of financial and fiscal policy on economic development
    1) improving employment opportunities
    2) the police reduces inflationary trends
    3) they help in credit control and also regulates interest rate
    4) these policies help in maintaining stabilization of price in the economy
    5) It also helps to increase the capital inflow in the economy .
    6)They help in reducing inequality gap and the reallocation of resources.

    B) large military expenditures is another form of government expenditure which helps to increase output. Also it is the military that makes sure that the country is not invaded by external forces if which they they invade will lead to economic setback and distress to the economy as such large military expenditures to a large extent improve economic growth.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Microfinance banks are those financial institution charged with the responsibility of providing funds ,loans, accept deposit from low income earners including consumer and small enterpreneur.
    IT’S POTENTIAL TO SPUR DEVELOPMENT:
    1) They gives financial access such as loan
    2) microfinance banks operates on collateral free loans
    3) There is always free use of loan i.e no Limited invitation on specific objective of obtaining a loan
    4) Encourages savings and reduces poverty
    5) Encourages self sufficiency and enterprenuership by giving loans who wish to start up small business.
    IT’S LIMITATIONS
    1) Low volume of loan/ small amount of loan
    2) there is a high interest rate.etc

  17. Avatar Nnamani Dorathy nchido 2018/245743 economic major says:

    Nnamani Dorathy nchido
    2018/ 245743
    Economics major
    liliannnamani@gmail.com

    Assignment and quiz

    Q14a
    Maybe but access to education can improve the economic outcomes of citizens and determine the prospects of future generations, especially in developing countries. However achieving these goals is complicated.
    Q14b
    Policymakers have implemented various measures to increase access to education but the results are mixed. For instance, adult literacy programs are a vehicle to improve literacy and numeracy skills but many developing countries have abandoned them as they do not achieve their primary objectives. In sub-Saharan Africa, apprenticeships are the most common form of non-academic training but they fail to generate high incomes. Teachers are perhaps the most important determinant of education quality, but certifying teachers may not always be the most effective way to guarantee high-quality teaching. So what measures work? And to what extent can schooling and higher education help developing countries to fight inequality and informality?
    Q15
    (a) Promoting poverty eradication in rural areas;
    (b) Promoting pro-poor planning and budgeting at the national and local levels;
    (c) Addressing basic needs and enhancing provision of and access to services as a precursor to improve livelihoods and as an enabling factor of people?s engagement in productive activities;
    (d) Providing social protection programmes to benefit, inter alia, the vulnerable households, in particular the aged, persons with disabilities and unemployed many of whom are in rural areas
    Q15b
    Food production or rural institution charge ( land redistribution,roads transport, education credits are needed sufficiently to stimulate food production.
    Q16
    The concept of sustainable development was emphasised by the United Nations Conference on Environment and Development , which defined bit as: ‘Development that meets the need of the present generation without compromising the ability of the future generation to meet their own needs.
    Environment sustainable development was emphasized to sustain the need of the environment for present generations without compromising the ability of the future generations to meet their own needs.
    Q16b
    They are economics cost of pursuing sustainable development, because the present talk about sustainable development in present and future while the former talk about the results of creativity, renovation and idea.
    Q16c
    The rich north, due to the release of harmful radioactive material to the environment.
    Q17
    private ownership and capitalism alone is no longer argued to automatically generate economic gains in developing economies there is need for government interference.
    Role of government in developing nations
    1.Comprehensive planning
    2.Institution of control
    3.Social and economic reform
    4.Defense and security
    5.Allocation of resources
    6.Economic planning
    Q18
    1.Bad Political Institutions
    Another theory posits that bad political institutions, such as a dictatorship, stop some nations from developing. As the authors explained, the elite class takes wealth away from the working class, leaving it with little incentive to accumulate wealth and adopt new technologies to improve product.
    2.Corruption
    3.Tribalism and nepotism
    4.Greed
    Q18b
    The health and education of their people investment in health care and immunization, provide for healthy and educated citizens who become agents of development, poverty eradication sound economic policies that foster enterprises and entrepreneurship.
    Q19
    Trade is central to ending global poverty, countries that are open to international trade tend to grow faster,innovate,improve productivities and provide higher income and more opportunities to their people open trade also benefits lower income countries.
    Q19b
    In economics gain from trade are the net benefits to economic agents from being allowed an increase in voluntary trading with each other. In technical terms they are the increase of consumer surplus plus producer surplus from lower tariffs or otherwise liberalizing trade.
    Q19c
    Comparative advantage is a powerful tool for understanding how we choose jobs in which to specialize, as well as which goods a whole country produces for export. Can one country produce everything so cheaply that other countries have no production options and no work opportunities for their citizens? Do large countries—which can produce more of everything—take unfair advantage of small countries when they trade?
    Q20
    If any import of goods adversely affects the health of human, animal, plants and other species, such goods also may be restricted to import by the government of importing country.
    To promote locally made product such as rice
    To prevent dumping from other countries
    Q20b
    The International Monetary Fund was instrumental in helping many countries to return to economic stability and financial viability, thereby restoring access to private sector financing. The IMF’s mission is to help countries with financing needs, and the IMF did this by designing policy adjustment programs and pooling financing from across its member countries. Thus the United States did not carry the full burden of providing financial support; instead almost 80% of financing came from other countries around the world.
    Q20c
    Structural adjustments are commonly thought of as free market reforms, and they are made conditional on the assumption that they will make the nation in question more competitive and encourage economic growth.
    Structural adjustment programs have demanded that borrowing countries introduce broadly free-market systems coupled with fiscal restraint—or occasionally outright austerity. Countries have been required to perform some combination of the following:
    Devaluing their currencies to reduce balance of payments deficits.
    Cutting public sector employment, subsidies, and other spending to reduce budget deficits.
    Privatizing state-owned enterprises and deregulating state-controlled industries.
    Easing regulations in order to attract investment by foreign businesses.
    Closing tax loopholes and improving tax collection domestically.
    Q21
    Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information.
    Q21b
    Developing countries from those among the industrialized nations may not have the same highly-accentuated beneficial effect from globalization as more wealthy countries, measured by GDP per capita, etc. Although free trade increases opportunities for international trade, it also increases the risk of failure for smaller companies that cannot compete globally. Additionally, free trade may drive up production and labor costs, including higher wages for a more skilled workforce, which again can lead to outsourcing jobs from countries with higher wages.
    Q22
    Yes
    Agriculture is the mainstay of many developing country economies, particularly least developed countries (LDCs). Significant export opportunities exist for these countries’ food and agricultural products, but success is not easy. World markets are increasingly competitive, and there is a multitude of standards to be met. Skills required in both production and trade are becoming more and more complex.
    Q22b
    Also all developing countries should industrialized in other to produce locally made product.it can also used the revenue realized from agriculture to establish the industrial rapidly.
    Q23
    The debt arose as many developing countries borrowed heavily from private banks in developed nation’s to finance their growing capital needs and to pay sharply rising crude oil bill during the 1960,the debt service ratio measures the ratio of amortization and interest payment to export earning.
    Foreign debt problems are again among the key causes of debt in low-income countries. However, the current situation differs significantly from previous debt crises. In particular, the creditors involved have mainly granted non-concessional loans and not concessional loans.
    Poor debt management and low government revenues due to inefficient tax policies and weaknesses in the rule of law are among the internal causes. Furthermore, the loans are often used for the consumption of goods, rather than for productive investments.
    Q23b
    it is important to know the threshold of the debt on the initial steps otherwise it can turn into a most disastrous factor for the nation. The study concludes that on the initial stage’s debts can be helpful for the growth of the businesses and countries however if they are not taken with plan and strategic approach, debt can develop even more crisis. It eventually put an impact on poor relationships with the well-developed regions which led to bad business opportunities. The best way to avoid the diverse effects is to strategize before using the debt amount according to the threshold.
    Q23c
    The crisis manifested itself in growing budget and trade deficits, currency devaluations, higher rates of inflation, increasing public debt and dwindling currency reserves.
    By the end of 2010, developing economies had lost an estimated US$2.6 trillion in output. Real GDP growth in emerging and developing economies fell from 8.3 per cent in 2008, to 6.1 per cent in 2008 and just 2.4 per cent in 2009. The economic downturn, coupled with high population growth, resulted in a per capita income drop of 20 per cent for the poorest 390 million people in Africa.
    Q24
    the main role of foreign aid in stimulating economic growth is to supplement domestic sources of finance such as savings, thus increasing the amount of investment and capital stock. As Morrissey (2001) points out, there are a number of mechanisms through which aid can contribute to economic growth, including: (a) increased investment, in physical and human capital; (b) increased capacity to import capital goods or technology; (c) lack of indirect effects that reduce investment or savings rates; and (d) transfer of technology that increases the productivity of capital and promotes endogenous technical change.
    Q24b
    Purpose of foreign aid
    Foreign aid can be used to accomplish the political aims of a government allowing it to obtain diplomatic recognitions to gain respect for it’s role in international institutions or to improve the accessibility of it’s diplomates to foreign countries foreign aid also seek to promote export.
    Q24c
    Condition for foreign aid
    Aid can also be classified according to the terms agreed upon by the donor and receiving countries. In this classification, aid can be a gift, a grant, a low or no interest loan, or a combination of these. The terms of foreign aid are oftentimes influenced by the motives of the giver: a sign of diplomatic approval, to reward a government for behaviour desired by the donor, to extend the donor’s cultural influence, to enhance infrastructure needed by the donor for the extraction of resources from the recipient country, or to gain other kinds of commercial access.
    Q25

    Yes, they should invest in poor economics of the nation’s in the world.
    Rapid growth and industrialization in the developing world has also given birth to new multinational companies from these countries, MUCS from these countries. MUCS from all parts of the world are to developing countries by lower costs, strong growth prospects and in many cases untapped natural resources.
    Q25b
    Globalization has enabled firms to specialize – and to increase the intensity of R&D, innovation and capital in their output.
    Globalization has made it easier for new companies to start competing with old incumbents.
    The trade sector has increased the number of people that it employs, both through exports and imports.
    Q26
    Monetary or financial policy
    In the euro area the Maastricht Treaty assigns to monetary policy the responsibility for maintaining price stability. The clear assignment of price stability as the overriding objective of the European Central Bank – specified by a quantitative definition – provides guidance to economic agents as to what can be expected from monetary policy. Without doubt this enhances the credibility of monetary policy, contributing to the anchoring of medium and long-term inflation expectations in the euro area.
    Stable inflation expectations eliminate an important source of macroeconomic instability, namely the possibility that economic shocks affecting inflation in the short-term become amplified via a corresponding adjustment in inflation expectations. In turn, the stability of these expectations contributes to economic welfare via a reduction of inflation risk premia contained, for example in nominal bond yields. By insuring price stability, monetary policy can thus make an important contribution to macroeconomic stability.
    The role of fiscal policy
    Fiscal policy can promote macroeconomic stability by sustaining aggregate demand and private sector incomes during an economic downturn and by moderating economic activity during periods of strong growth.
    An important stabilising function of fiscal policy operates through the so-called “automatic fiscal stabilisers”. These work through the impact of economic fluctuations on the government budget and do not require any short-term decisions by policy makers. The size of tax collections and transfer payments, for example, are directly linked to the cyclical position of the economy and adjust in a way that helps stabilising aggregate demand and private sector incomes. Automatic stabilisers have a number of desirable features.
    Q26b
    The economic cost of defense spending shows up in the national debt and in a dislocation of potential jobs from the private sector to the public. There is an economic distortion of any industry that the military relies on as resources are diverted to produce better fighter planes and weapons.
    All of these costs are necessary for a nation to bear if they are to defend themselves. We give up some butter to have guns.
    Q27
    Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; micro insurance; and payment systems, among other services.
    Q27b
    Poverty eradication through empowerment based on knowledge/education. In the field of education, lifelong learning is crucial in order to eradicate poverty: in some cases, families that live just over the poverty line (and apparently are not poor) turn suddenly into poverty for the crisis effects (loss of jobs). This fact leads to a situation in which they become poor and aged at the same time. For this reason, lifelong learning is the only tool to enable the “new poor” to find other solutions in order to avoid poverty and to “empower themselves”. In general terms, a good and sound educational system represents the first step to a good and satisfying job; people can have the chance to achieve a better life through a better education system, that gives them the knowledge they want and/or need to have, and a better job system, that gives them the means to find the place of work that better fits to their studies or abilities. Anyway, people living in poverty (with no or limited access to basic services), can be empowered only with the joint contribution of private and public institutions. – Poverty eradication among migrants through empowerment based on more integration and accessibility.

  18. 14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?

    Indeed, in many developing countries, education is in one sense a mechanism to maintain certain positions of wealth and influence. The amount of schooling received by an individual, although affected by many nonmarket factors, can be regarded as largely determined by demand and supply, like any other commodity or service. On the demand side, the two principal influences on the amount of schooling desired are (1) a more educated student’s prospects of earning considerably more income through future modern-sector employment (the family’s private benefits of education) and (2) the educational costs, both direct and indirect, that a student or family must bear. The amount of education demanded is thus in reality a derived demand for high-wage employment opportunities in the modern sector. This is because access to such jobs is largely determined by an individual’s education. As job opportunities for the uneducated are limited, individuals must safeguard their position by acquiring increasingly more education. The upshot is the chronic tendency for some developing nations to expand their higher-level educational facilities at a rate that is extremely difficult to justify either socially or financially in terms of optimal resource allocations. The social benefits of education (the payoff to society as a whole) for all levels of schooling fall short of the private benefits.
    In another sense, basic education, which has been steadily approaching the target of universal primary school enrollment, has made great contributions to development, broadly conceived. Moreover, despite the substantial distortions just reviewed, it seems clear that the expansion of educational opportunities has contributed to aggregate economic growth by (1) creating a more productive labor force and endowing it with increased knowledge and skills; (2) providing widespread employment and income-earning opportunities for teachers, school and construction workers, textbook and paper printers, school uniform manufacturers, and related workers; (3) creating a class of educated leaders to fill vacancies left by departing expatriates or otherwise vacant or prospective positions in governmental services, public corporations, private domestic and foreign businesses, and professions; and (4) providing the kind of training and education that would promote literacy and basic skills while encouraging “modern” attitudes on the part of diverse segments of the population. Even if alternative investments in the economy could have generated greater growth, this would not detract from the important contributions, noneconomic as well as economic, that education can make and has made to promoting aggregate economic growth.
    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted? Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    A major reason for the relatively poor performance of agriculture in low-income regions has been the neglect of this sector in the development priorities of their governments, which the initiatives just described are intended to overcome.
    An agriculture and employment-based strategy of economic development requires three basic complementary elements: (1) accelerated output growth through technological, institutional, and price incentive changes designed to raise the productivity of small farmers; (2) rising domestic demand for agricultural output derived from an employment-oriented urban development strategy; and (3) diversified, nonagricultural, labor-intensive rural development activities that directly and indirectly support and are supported by the farming community. To a large extent, therefore, agricultural and rural development has come to be regarded by many economists as the sine qua non of national development. Without such integrated rural development, in most cases, industrial growth either would be stultified or, if it succeeded, would create severe internal imbalances in the economy.
    Government has a role in agriculture and food production simply because of its necessary role in poverty alleviation—and a large majority of the world’s poor are still farmers. Poverty itself prevents farmers from taking advantage of opportunities that could help pull them out of poverty. Lacking collateral, they cannot get credit. Lacking credit, they may have to take their children out of school to work, transmitting poverty across generations. Lacking health and nutrition, they may be unable to work well enough to afford better health and nutrition. With a lack of information and missing markets, they cannot get insurance. Many programs to raise agricultural productivity among small farmers in Africa and elsewhere have suffered because of failure to provide adequate insurance (both financial credit and physical “buffer” stocks) against the risks of crop shortfalls, whether these risks are real or imagined. Lacking insurance, they cannot take what might seem favorable risks for fear of falling below subsistence. Without middlemen, they cannot specialize (and without specialization, middlemen lack incentives to enter). Institutional changes are therefore also required to stimulate food production.
    Being socially excluded because of ethnicity, caste, language, or gender, they are denied opportunities, which keeps them excluded. These poverty traps are often all but impossible to escape without assistance. In all of these areas, NGOs can and do step in to help, but government is needed to atleast play a facilitating role.
    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?

    The term sustainability reflects the need for careful balance between economic growth and environmental preservation. Environmental Sustainable development generally refers to meeting the needs of the present generation without compromising the needs of future generations. Implicit in this definition is the fact that future growth and overall quality of life are critically dependent on the quality of the environment.
    At one point, it was widely believed that as per capita incomes rose, pollution and other forms of environmental degradation would first rise and then fall in an inverted-U pattern. (This idea is referred to as the environmental Kuznets curve because Kuznets’s hypothesis that inequality would first rise and then fall as incomes increased, also traces such an inverted-U pattern.) According to the theory, as incomes rise, societies will have both the means and the willingness to pay for environmental protection. Indeed, there is good evidence that this inverted-U relationship holds for some local pollutants such as particulate matter in the air, sulfur dioxide, and nitrogen oxides. However, there is no convincing evidence that other environmental damage decreases with higher incomes. As we will see, this is a particular problem when it comes to global public goods, such as greenhouse gases. Even if the environmental Kuznets curve relationship does hold in the very long term, some damage, such as loss of biodiversity, may well prove to be irreversible.
    The poor are usually the main victims of environmental degradation. The poor suffer more from environmental decay because they must often live on degraded lands that are less expensive because the rich avoid them. Moreover, people living in poverty have less political clout to reduce pollution where they live. And living in less productive polluted lands gives the poor less opportunity to work their way out of poverty. But in some cases they are also its agents, typically as a result of the constraints of their poverty. Too often, again, high fertility is blamed for problems that are attributable to poverty itself.

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?

    Markets in developing economies are permeated by imperfections of structure and operation. Commodity and factor markets are often badly organized, and the existence of distorted prices often means that producers and consumers are responding to economic signals and incentives that are a poor reflection of the real cost to society of these goods, services, and resources. It is therefore argued that governments have an important role to play in integrating markets and modifying prices. Moreover, the failure of the market to price factors of production correctly is further assumed to lead to gross disparities between social and private valuations of alternative investment projects. In the absence of governmental interference, therefore, the market is said to lead to a misallocation of present and future resources or, at least, to an allocation that may not be in the best long-run social interests. This market failure argument is perhaps the most often quoted reason for the expanded role of government in less developed countries.
    Market failures can occur in situations in which social costs or benefits differ from the private costs or benefits of firms or consumers; public goods, externalities, and market power are the best-known examples. With public goods, “free riders” who do not pay for the goods cannot be excluded except at high cost; it is economically inefficient to exclude nonpaying individuals from consuming these goods. With externalities, consumers or firms do not have to pay all the costs of their activities or are unable to receive all the benefits. Coordination failures occur when several agents would be better off if they could cooperate on actions if all or most agents participate but worse off taking the action if too few participate. Moreover, economic development is a process of structural change. The market may be efficient in allocating resources at the margin, allowing certain industries to emerge and others to fail, but may be ineffective in producing large dis- continuous changes in the economic structure that may be crucial to the country’s long-term development. Unfortunately, we cannot jump to the conclusion that if economic theory says policy can fix market failures, it will do so in practice. Government failure may also occur in the many cases in which politicians, bureaucrats, and the individuals or groups who influence them give priority to their own private interests rather than the public interest.
    This however does not underscore the role of the government or public sector in solving development problems.

    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    As stated in the answer above, in many cases politicians, bureaucrats, and the individuals or groups who influence the government give priority to their own private interests rather than the public interest. Two interrelated sets of answers can be provided as to why many developing countries select poor development policies, one dealing with the gap between the theoretical economic benefits and the practical results of development planning and the other associated with more fundamental defects in the planning process, especially as it relates to administrative capacities, political will, and plan implementation.
    Theory versus Practice: The principal economic arguments for planning have often turned out to be weakly supported by the actual planning experience. The gap between the theoretical economic benefits of planning and its practical results in most developing countries has been quite large. The gap between public rhetoric and economic reality has been even greater. While supposedly concerned with eliminating poverty, reducing inequality, and lowering unemployment, many planning policies in developing countries have in fact unwittingly contributed to their perpetuation. Some of the major explanations for this have to do with failures of the planning process itself; these failures in turn arise out of certain specific problems.
    Deficiencies in Plans and Their Implementation: Plans are often overambitious. They try to accomplish too many objectives at once without consideration that some of the objectives are competing or even conflicting. They are often grandiose in design but vague on specific policies for achieving stated objectives. In this they have much in common with the excessive lists of 60 to 100 or more issue areas in conditionality agreements set out by the World Bank and the International Monetary Fund (IMF). Finally, the gap between plan formulation and implementation is often enormous (many plans, for reasons to be discussed, are never implemented).
    Insufficient and Unreliable Data
    Unanticipated Economic Disturbances, External and Internal
    Institutional Weaknesses
    Lack of Political Will
    Conflict, Post conflict, and Fragile States
    To improve these choices, development must be market-based, but there are large market failures that cannot be ignored. Government should not be in the business of direct production, as a general rule.
    Nevertheless, there is a broad, eclectic role for government in the following areas:
    • Providing a stable macro environment
    • Infrastructure
    • Public health
    • Education and training
    • Technology transfer (and for advanced developing economies)
    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    International trade has often played a central role in the historical experience of the developing world.
    But international trade and finance must be understood in a much broader perspective than simply the inter-country flow of commodities and financial resources. By opening their economies and societies to global trade and commerce and by looking outward to the rest of the world, developing countries invite not only the international transfer of goods, services, and financial re- sources but also the developmental or anti-developmental influences of the transfer of production technologies; consumption patterns; institutional and organizational arrangements; educational, health, and social systems; and the more general values, ideals, and lifestyles of the developed nations of the world. The impact of such technological, economic, social, and cultural transfers on the character of the development process can be either consistent or inconsistent with broader development objectives. Much will depend on the nature of the political, social, and institutional structure of the recipient country and its development priorities. Whether it is best for developing countries to look primarily outward (as single economies or as blocs) and promote more exports, either passively or actively; to emphasize looking inward and substitute domestic production for imports, as the protectionists and cultural nationalists propose; or to be simultaneously and strategically outward- and inward-looking in their international economic policies cannot be stated apriori. Individual nations must appraise their present and prospective situations in the world community realistically in the light of their specific development objectives. Only thus can they determine how to design the most beneficial trade strategy. Although participation in the world economy is all but inevitable, there is ample room for policy choice about what kind of participation to promote and what policy strategies to pursue.

    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems

    21. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is a process by which the economies of the world become more integrated, leading to a global economy and, increasingly, globaleconomic policymaking, for example, through international agencies such as
    the World Trade Organization (WTO). Globalization also refers to an emerging
    “global culture,” in which people consume similar goods and services across
    countries and use a common language of business, English; these changes facil-
    itate economic integration and are in turn further promoted by it. But in its core
    economic meaning, globalization refers to the increased openness of economies
    to international trade, financial flows, and direct foreign investment, topics of
    this and the following two chapters. The growing interconnection of all kinds
    across national governments and firms and directly between peoples is a process
    that affects everyone in the world, one that so far still seems more visible in the
    developed countries. But globalization can in many ways have a greater
    impact in developing countries.
    For some people, the term globalization suggests exciting business opportu-
    nities, efficiency gains from trade, more rapid growth of knowledge and inno-
    vation, and the transfer of such knowledge to developing countries facilitating
    faster growth, or the prospect of a world too interdependent to engage in war.
    In part, globalization may well turn out to be all of these things.
    For other people, however, globalization raises troubling concerns: that in-
    equalities may be accentuated both across and within countries, that environ-
    mental degradation may be accelerated, that the international dominance of
    the richest countries may be expanded and locked in, and that some peoples
    and regions may be left further behind. Nobel laureate Muhammad Yunus
    captured some of these sentiments when he wrote in 2008, “Global trade is
    like a hundred-lane highway criss-crossing the world. If it is a free-for-all high-
    way, with no stop lights, speed limits, size restrictions, or even lane markers;
    its surface will be taken over by the giant trucks from the world’s most power-
    ful economies.”2 Appropriate policies and agreements are needed to forestall
    such potential problems.
    Thus globalization carries benefits and opportunities as well as costs and
    risks. This is true for all peoples in all countries but especially for poor fami-
    lies in low-income countries, for whom the stakes are much higher. The poten-
    tial upside is perhaps also greatest for developing countries; globalization
    does present new possibilities for broad-based economic development. By
    providing many types of interactions with people in other countries, global-
    ization can potentially benefit poor countries directly and indirectly through
    cultural, social, scientific, and technological exchanges, as well as through
    conventional trade and finance. A faster diffusion of productive ideas, such as
    a shorter time between innovation and adoption of new technologies around
    the world, might help developing countries catch up more quickly. In short,
    globalization makes it possible, at least in principle, for the less developed
    countries to more effectively absorb the knowledge that is one of the founda-
    tions of the wealth of developed countries. In addition, as Adam Smith wrote
    in 1776, “the division of labor is limited by the extent of the market.” The
    larger the market that can be sold to, the greater the gains from trade and the
    division of labor. Moreover, the greater is the incentive for innovation, because
    the potential return is much larger.
    The potential downside of globalization is also greater for poorer coun-
    tries, if they become locked into a pattern of dependence, if dualism within
    developing countries sharpens, or if some of the poor are entirely bypassed by globalization.

    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    Financial policy deals with money, interest, and credit allocation. The financial sector provides six major functions that are important both at the firm level and at the level of the economy as a whole.
    1. Providing payment services. It is inconvenient, inefficient, and risky to
    carry around enough cash to pay for purchased goods and services. Financial institutions provide an efficient alternative. The most obvious examples are personal and commercial checking and check-clearing and credit and debit card services; each is growing in importance, in the modern sectors at least, even in low-income countries.
    2. Matching savers and investors. Although many people save, such as for retirement, and many have investment projects, such as building a factory or expanding the inventory carried by a family microenterprise, it would be only by the wildest of coincidences that each investor saved exactly as much as needed to finance a given project. Therefore, it is important that savers and investors somehow meet and agree on terms for loans or other forms of finance.
    3. Generating and distributing information. From a society wide viewpoint, one of the most important functions of the financial system is to generate and distribute information. Stock and bond prices in the daily newspapers of developing countries (and increasingly on the Internet as well) are a familiar example; these prices represent the average judgment of thousands, if not millions, of investors, based on the information they have available about these and all other investments. Banks also collect information about the firms that borrow from them; the resulting information is one of the most important components of the “capital” of a bank, although it is often unrecognized as such. In these regards, it has been said that financial markets represent the “brain” of the economic system.
    4. Allocating credit efficiently. Channeling investment funds to uses yielding the highest rate of return allows increases in specialization and the division of labor, which have been recognized since the time of Adam Smith as a key to the wealth of nations.
    5. Pricing, pooling, and trading risks. Insurance markets provide protection against risk, but so does the diversification possible in stock markets or in banks’ loan syndications.
    6. Increasing asset liquidity. Some investments are very long-lived; in some cases—a hydroelectric plant, for example—such investments may last a century or more. Sooner or later, investors in such plants are likely to want to sell them. In some cases, it can be quite difficult to find a buyer at the time one wishes to sell—at retirement, for instance. Financial development increases liquidity by making it easier to sell, for example, on the stock market or to a syndicate of banks or insurance companies.
    Fiscal policy focuses on government taxation and expenditures. Together, financial and fiscal policy represent the bulk of public-sector activities. Most stabilization attempts have concentrated on cutting government expenditures to achieve budgetary balance. But the burden of resource mobilization to finance essential public developmental efforts must come from the revenue side. Public domestic and foreign borrowing can fill some savings gaps. In the long run, it is the efficient and equitable collection of taxes on which governments must base their development aspirations. In the absence of well-organized and locally controlled money markets, most developing countries have had to rely primarily on fiscal measures to stabilize the economy and to mobilize domestic resources.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Microfinance is the supply of credit, saving vehicles, and other basic financial services made available to poor and vulnerable people who might otherwise have no access to them or could borrow only on highly unfavorable terms.
    Microfinance institutions (MFIs) specialize in delivering these services, in various ways and according to their own institutional rules.19 In the case of village banking, or group lending schemes, a group of potential borrowers forms an association to borrow funds from a commercial bank, a government development bank, an NGO, or a private institution. The group then allocates the funds to individual members, whose responsibility is to repay the group. The group itself guarantees the loan to the outside lender; it is responsible for repayment. The idea is simple: By joining together, a group of small borrowers can reduce the costs of borrowing and, because the loan is large, can gain access to formal commercial credit.
    Microfinance has some potentially important limitations. Microcredit was first conceived and is still largely marketed as financing for microenterprises, but most people probably prefer a regular wage and salary to running a risky microenterprise.
    Most people are willing to pay for insurance, and a predictable wage offers insurance against the vagaries of microenterprise proceeds. Typically, even laid-off professionals in rich countries go into self-employment only until they can find a suitable replacement job.
    Thus the primary problem may be the lack of available jobs paying a steady wage or salary—a problem compounded further when custom still prevents women from taking on outside employment that becomes available. To this extent, microcredit as classically conceived may prove to be in large measure a “transitional institution.” A related concern is that few micro entrepreneurs ever grow sufficiently to become bona fide small or medium-size enterprises (SMEs). BRAC found that most borrowers from its SME facility were middle-class entrepreneurs, rather than graduates from its microfinance activities. Of course, people will always need other forms of financial intermediation such as savings accounts and consumption loans. And some microenterprises will go on to generate additional employment.
    On the one hand, much funding for microfinance follows from the belief in its value as a poverty alleviation strategy, but the poor face many problems, some of which cannot be solved solely by relaxing credit constraints. With an already sizable fraction of public, philanthropic, and NGO activities geared to microfinance, it is plausible that other activities, such as agricultural training, become relatively underfunded as a result. On the other hand, some leading practitioners argue that the real purpose of MFIs is not to decrease poverty but to stimulate a better financial system (and hopefully to reduce poverty more indirectly). This is a worthy goal, but microfinance development is not the only way to achieve it. Improved systems for regulation and oversight, upgrading the financial system safety net, training of government financial officials, better tax collection to lower fiscal deficits, focusing financial services on the SME sector, and facilitating participation by foreign banks can all make plausible claims as more cost-effective strategies for improving the functioning of the financial system per se. Microfinance has several worthy purposes, and subsidies may help address market failures and poverty problems, but it cannot be assumed that microfinance is the most effective way to spend scarce poverty reduction funds before a careful analysis of the comparative impacts of alternative activities has been undertaken.
    In summary, microfinance is a powerful tool, but it needs to be complemented with other growth, poverty reduction, financial sector development, human capital, infrastructure building, and—last but by no means least conventional job creation policies. In the meantime, hundreds of millions of people depend in part on microenterprises, so helping them to become more efficient is an important objective; and the provision of lending, saving, and insurance services can provide broad benefits for people living in poverty.

  19. Avatar Agbo Peace Uchechukwu, Reg. No;2018/242343 says:

    NAME; AGBO PEACE UCHECHUKWU
    REG. NO; 2018/242343
    DEPARTMENT;ECONOMICS
    Assignment:
    14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    21. What is meant by globalization, and how is it affecting the developing countries?
    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Answers;
    Number 14;
    Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.
    Despite great progress in the past few years, children are denied education. We must understand that education and development go hand in hand. The Role of education in developing countries is a very important one as lack of education causes poverty and slow economic development of a country especially if the country is a developing country. Education is very important for everyone it’s a primary need of any individual, every girl or boy child should have the right to quality education so that they can have better chances in life, including employment opportunities, and better health.
    The role of education in poverty reduction is huge. Some advantages of education are: it boosts economic growth and increases the GDP of a country. It even reduces infant mortality rate, increases human life expectancy. Education is an important investment in a country as there are huge benefits. Education guarantees lifetime income; it promotes peace and reduces drop-out rates from schools and colleges and encourages healthy competition. Many children dropout form colleges as they are not aware of the advantages of college education.Education helps in making the right decisions at the time of conflicts.These days school students are restricted only to academics. We also need to ensure that school education equips children with necessary life skills. Special focus needs to be given the most vulnerable and groups (including children living in slums, children with disabilities, and girls) who are most likely to be affected because of lack of well-trained teachers, inadequate learning materials, and unsuitable education infrastructure. Good teachers are a very important ingredient in every Childs education. Educated girls and women tend to be healthier, earn more income and provide better health care for themselves and their future children and these benefit also are transmittes from generation to generation and across communities at large, making girl’s education one of the best investments a country can make.
    In India, a combination of discrimination, social attitudes, poverty, lack of political will, and poor quality of human and material resources leave children with disabilities more vulnerable to being excluded from education. It is essential that societies adapt their education systems to ensure that these children can get educated and have a better future.Children who have access to quality educational programs perform better and are successful in their lives. It is vital that the education system in developing countries must be built in such a way that students apply their minds in the development of their country.Access to education can improve the economic and financial lifestyle of citizens and determine the prospects of future generations, especially in developing countries. However, achieving these goals is complicated. Policymakers have implemented various measures to increase access to education but the results are mixed.

    Number 15a;
    In rural areas throughout the world, agriculture represents the predominant land use and a major component of the viability of rural areas. Farming and related activities make up the basic fabric of rural life, contributing significantly to the overall state of rural regions in terms of employment and business opportunities, infrastructure and quality of the environment.The degree to which farming represents a share of the rural economy, and hence its relative importance as a sector, determines its potential economic contribution to rural development. In some countries, farming may be the primary economic activity of a region and support the vast majority of the population in employment. In such regions, it is clear that overall social and political stability is inextricably linked with the condition of the agriculture sector. However, in most economically developed countries, farming accounts for a relatively small part of a diversified rural economy, and in addition the significance of agriculture in terms of the proportion of national wealth and employment is, in most regions, in decline. This does not lessen the potential role of farming in rural development in those countries, but the contribution of alternative economic activities, which may offer durable prospects for employment and economic progress, should also be included.Since the contribution of farming to rural development in different countries varies to a great extent, policy responses need to be correspondingly distinguished, with the aim of maximising benefits to society.Rural development is understood primarily in the economic sense of the process of assuring a progressive improvement in economic security of people in rural areas. Rural areas are usually defined in terms of maximum population density, with figures varying from 150 to 500 inhabitants per square kilometre, depending on the structure of society. Whileany economic activity in rural areas will have the potential to contribute to rural development, the particular roles farming may play fall into four broad categories:
    •Employment. In countries whose share of overall employment in agriculture is at high levels, for example where farmers represent over 50% of the workforce, farming is likely to be the key economic activity determining the progress of rural development. With such a substantial proportion of the labour force engaged in agriculture, any policy which led to a swift and artificial reduction in employment could have disastrous consequences for the labour-force and dependants, leading to social and political instability.
    •Related economy. The farm sector in every country supports a range of ancillary and service industries, generating economic activity in supply and distribution chains as well as processing industries. Where farming is the primary economic activity, the entire rural economy, including services such as health care, education and basic infrastructure, may depend on the profitability of the sector.
    •In remote and peripheral areas, where society has identified a legitimate priority to prevent depopulation, farming is likely to be one of a limited range of economic activities possible to maintain the economic viability of the region.
    •Throughout rural areas, farming may contribute to rural development by providing environmental and cultural services to society. These actions include support for rural development by means both of on-farm and non-farming activities for which the state of agriculture is nevertheless a critical factor.

    Number 15b;
    Higher prices of agricultural products are not sufficient enough to stimulate food production because even when these products are produced,good roads are needed to transport them to different places so also quality education. When farmers are properly educated,food production tends to yield more because they are being trained on how to use mechineries and inseticides . And land redistribution are also necessary for more and effective food production.

    Number 16a;
    The goal of environmental sustainability is to conserve natural resources and to develop alternate sources of power while reducing pollution and harm to the environment.Sustainable development is the practice of developing land and construction projects in a manner that reduces their impact on the environment by allowing them to create energy efficient models of self-sufficiency. This can take the form of installing solar panels or wind generators on factory sites, using geothermal heating techniques or even participating in cap and trade agreements. The biggest criticism of sustainable development is that it does not do enough to conserve the environment in the present and is based on the belief that the harm done in one area of the world can be counter balanced by creating environmental protections in the other.

    Number 16b;
    The global north of industrialized nations (the United States and western Europe) has contributed most to global warming.
    Number 17;
    Privatization is a process in which the private sector is involved in the ownership and management of the public sector or transfer of ownership and management in the private sector and economic democracy is been established by reducing government control in economic activities.
    These are the benefits of privatization;
    •Reduce Fiscal Burden; Privatization reduces the fiscal burden of the state by relieving it of the losses of the public enterprise and reducing the size of the bureaucracy.
    • Economic Democracy; Privatization helps to control government Monopoly. It helps to attract more resources from the private sector.It emerges from economic democracy by private participation in the economic sphere.
    •Financial Resources;The main advantage of privatization is to generate financial resources for the government to generate resources disinvestment of public sector enterprises.
    •Optimum Utilisation of Resources;It has been observed that the public sector has failed in the optimal use of national resources.The private sector may succeed in the optimum use of resources by maintaining efficiency.
    Although the private sector contributes to solving some economic problems,development should not be left to them alone. As a result of them not being able to handle everything pertaining to development ,government should make headways to economic development too in their policies.

    Number 18;
    Many of today’s poorest countries do not collect adequate revenues to build the human capital, infrastructure, and institutions needed for stronger growth and faster poverty reduction. In sub-Saharan Africa, for example, 15 of the 45 countries have revenues lower than 15 percent of GDP. Moreover, sub-Saharan Africa’s resource-rich countries have revenues that are more volatile and lower than countries that are resource-poor. Even with substantial foreign grants and loans, government spending by developing countries is lower than by advanced economies. In 2018, government spending in sub-Saharan Africa averaged 23 percent of GDP compared with 31.4 percent in middle-income countries and almost 39 percent in the advanced ones.

    Number 19;
    International trade allows countries to expand their markets and access goods and services that otherwise may not have been available domestically. As a result of international trade, the market is more competitive. This ultimately results in more competitive pricing and brings a cheaper product home to the consumer.

    Number 20;
    Governments can adopt a policy of foreign exchange control and raise tariffs if the possibility of increased competition from imported goods can threaten domestic industries thereby retarding development. Governments in developing countries can also raise tariffs and set quotas to protect infant industries in the economy. The government of a developing economy will impose tariffs on imported goods in industries in which it wants to foster growth. This increases the prices of imported goods and creates a domestic market for domestically produced goods while protecting those industries from being forced out by more competitive pricing. This will decrease unemployment and allow developing countries to shift from agricultural production to industrialization and this also have a positive influence on the balance of payments and growth prospects of developing nations.Structural Adjustments are a set of economic reforms that a country must adhere to in order to secure a loan from the International Monetary Fund (IMF) and/or the World Bank., Structural adjustments are often a set of economic policies,including reducing government spending, opening to free trade, and so on.These programmes by IMF and World Bank have many undesirable impacts on the growth prospects of heavily indebted countries due to the following reasons:Firstly, it create difficult economic conditions where government reduce spending but increase taxation rates.Secondly, the conditional loans act as a tool for neocolonialism creating a scenario where the rich countries bail out the poor indebted ones in exchange for reforms that open doors for exploitation by the rich countries.Finally, structural adjustments have the inclination of reducing the standard of living of these poor heavily indebted countries in the short run.In particular, these programmes undermine access to quality and affordable healthcare and adversely impact upon social determinants of health, such as income and food availability.

    Number 21;
    Globalization means the process of intensification of economic, political, social, and cultural relations across international borders. It describes the changes in societies and the world economy that results from dramatically increased international trade and cultural exchange.
    Globalization has reinforced the economic relegation of developing economies, increasing the incidence of poverty and economic inequalities.It has also induced illicit trade in narcotics, human smuggling, dumping and depletion of the environment by unscrupulous foreign entrepreneurs in developing countries.

    Number 22;
    I think the export of agricultural product should be promoted :
    Agriculture’s percentage share in a country’s economy is relatively high and is constantly witnessing tremendous growth and diversifies. Agriculture’s most important contribution is obviously that of providing employment. Each sector is differently affected by changes in agricultural production and prices.The positive impact of agriculture exports on growth is due to the importance of agriculture in terms of creating jobs and opportunities for the economy as a whole. Also, sufficient national investment in the agriculture sector leads to enlarging these opportunities and then improves the Chinese economic growth.

    Number 23;
    The financial crisis led to a global recession, and in 2008 and 2009 the UK suffered a severe downturn. Poor growth is the number one economic problem facing Britain today.” As the economy has shown virtually no growth, house prices have fallen and unemployment has risen.

    Number 24a;
    Foreign aid is defined as the voluntary transfer of resources from one country to another country. This transfer includes any flow of capital to developing countries. A developing country usually does not have a robust industrial base and is characterized by a low Human Development Index (HDI).Foreign aid can be in the form of a loan or a grant. It may be in either a soft or hard loan. This distinction means that if repayment of the aid requires foreign currency, then it is a hard loan. If it is in the home currency, then it’s a soft loan. The World Bank lends in hard loans, while the loans of its affiliates are soft loans. The term development cooperation, which is used, for example, by the World Health Organization (WHO), is used to express the idea that a partnership should exist between donor and recipient, rather than the traditional situation in which the relationship was dominated by the wealth and specialized knowledge of one side. Most development aid comes from the Western industrialized countries but some poorer countries also contribute aid. Aid may be bilateral: given from one country directly to another; or it may be multilateral: given by the donor country to an international organization such as the World Bank or the United Nations Agencies (UNDP, UNICEF, UNAIDS, etc.) which then distributes it among the developing countries. The proportion is currently about 70% bilateral 30% multilateral. About 80–85% of developmental aid comes from government sources as official development assistance (ODA). The remaining 15–20% comes from private organizations such as “non-governmental organizations” (NGOs), foundations and other development charities (e.g., Oxfam).
    It is difficult to determine the effect of aid on growth when aid is an integral part of an economy; there are few “experiments” in the level of foreign aid. Galiani et al. (2017) argue that there are points on a nation’s growth trajectory at which aid inflows drop because of the rules donors use to select recipient countries. They use the substantial changes in aid around this point to evaluate how aid affects growth, and they conclude that aid has a substantial positive effect. Although aid has had some negative effects on the growth and development of most African countries, research shows that development aid, in particular, actually does have a strong and favorable effect on economic growth and development. Development aid has a positive effect on growth because it may actually promote long term economic growth and development through promoting investments in infrastructure and human capital. More evidence suggests that aid had indeed, had a positive effect on economic growth and development in most African countries. According to a study conducted among 36 sub-saharan African countries in 2013, 27 out of these 36 countries have experienced strong and favorable effects of aid on GDP and investments, which is contrary to the believe that aid ineffective and does not lead to economic development in most African countries.

    Number 24b;
    Yes,i suggest that developing nations should keep seeking foreign aids because foreign aids also helps to promote exports. They are crucial to many economies, as they provide goods and servicesof a country and spread its literature, culture, or religion. Countries often provide aid to relieve the distress caused by man-made or natural disasters like drought, illness, and conflict.

    Number 24c:
    The conditions for foreign aid includes;
    • Conditions on aid might increase incentives for policy reform by developing country governments. Allocating aid to countries with good policy environments might increase the impact of aid spending.
    • Aid conditions might increase our ability to account for how the money was used and what effects it had. The developed countries can provide funds to open new schools and polytechnic institutions. These will not only increase the literacy rate, but will also provide vocational education.
    • Rich nations should help to improve the economy of poor countries. This can be done by promoting free trade.

    Number 25a;
    Yes, Multinational coorperation should encourage economic development in the developing nations.
    Multinational corporations are those large firms which are incorporated in one country but which own, control or manage production and distribution facilities in several countries. Therefore, these multinational corporations are also known as transnational corporations. They transact business in a large number of countries and often operate in diversified business activities. The movements of private foreign capital take place through the medium of these multinational corporations. Thus multinational corporations are important source of foreign direct investment (FDI).
    Besides, it is through multinational corporations that modern high technology is transferred to the developing countries. The important question about multinational corporations is why they exist. The multinational corporations exist because they are highly efficient. Their efficiencies in production and distribution of goods and services arise from internalising certain activities rather than contracting them out to other firms. Managing a firm involves which production and distribution activities it will perform itself and which activities it will contract out to other firms and individuals.
    In addition to this basic issue, a big firm may decide to set up and operate business units in other countries to benefit from advantages of location. For examples, it has been found that giant American and European firms set up production units to explore and refine oil in Middle East countries because oil is found there. Similarly, to take advantages of lower labour costs, and not strict environmental standards, multinational corporate firms set up production units in developing countries.

    Number 25b;
    Globalization allows companies to find lower-cost ways to produce their products. It also increases global competition, which drives prices down and creates a larger variety of choices for consumers. Lowered costs help people in both developing and already-developed countries live better on less money.

    Number 26;
    Fiscal policy can promote macroeconomic stability by sustaining aggregate demand and private sector incomes during an economic downturn and by moderating economic activity during periods of strong growth.

    Number 27;
    Microfinance, also called microcredit​, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.
    While institutions participating in the area of microfinance most often provide lending—microloans can range from as small as $100 to as large as $25,000—many banks offer additional services such as checking and savings accounts as well as micro-insurance products, and some even provide financial and business education. The goal of microfinance is to ultimately give impoverished people an opportunity to become self-sufficient.

  20. Avatar Agbo Peace Uchechukwu, Reg. No;2018/242343 says:

    NAME; AGBO PEACE UCHECHUKWU
    REG. NO; 2018/242343
    DEPARTMENT;ECONOMICS
    Assignment Questions:
    14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    21. What is meant by globalization, and how is it affecting the developing countries?
    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?

    Answers;
    Number 14;
    Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.
    Despite great progress in the past few years, children are denied education. We must understand that education and development go hand in hand. The Role of education in developing countries is a very important one as lack of education causes poverty and slow economic development of a country especially if the country is a developing country. Education is very important for everyone it’s a primary need of any individual, every girl or boy child should have the right to quality education so that they can have better chances in life, including employment opportunities, and better health.
    The role of education in poverty reduction is huge. Some advantages of education are: it boosts economic growth and increases the GDP of a country. It even reduces infant mortality rate, increases human life expectancy. Education is an important investment in a country as there are huge benefits. Education guarantees lifetime income; it promotes peace and reduces drop-out rates from schools and colleges and encourages healthy competition. Many children dropout form colleges as they are not aware of the advantages of college education.Education helps in making the right decisions at the time of conflicts.These days school students are restricted only to academics. We also need to ensure that school education equips children with necessary life skills. Special focus needs to be given the most vulnerable and groups (including children living in slums, children with disabilities, and girls) who are most likely to be affected because of lack of well-trained teachers, inadequate learning materials, and unsuitable education infrastructure. Good teachers are a very important ingredient in every Childs education. Educated girls and women tend to be healthier, earn more income and provide better health care for themselves and their future children and these benefit also are transmittes from generation to generation and across communities at large, making girl’s education one of the best investments a country can make.
    In India, a combination of discrimination, social attitudes, poverty, lack of political will, and poor quality of human and material resources leave children with disabilities more vulnerable to being excluded from education. It is essential that societies adapt their education systems to ensure that these children can get educated and have a better future.Children who have access to quality educational programs perform better and are successful in their lives. It is vital that the education system in developing countries must be built in such a way that students apply their minds in the development of their country.Access to education can improve the economic and financial lifestyle of citizens and determine the prospects of future generations, especially in developing countries. However, achieving these goals is complicated. Policymakers have implemented various measures to increase access to education but the results are mixed.

    Number 15a;
    In rural areas throughout the world, agriculture represents the predominant land use and a major component of the viability of rural areas. Farming and related activities make up the basic fabric of rural life, contributing significantly to the overall state of rural regions in terms of employment and business opportunities, infrastructure and quality of the environment.The degree to which farming represents a share of the rural economy, and hence its relative importance as a sector, determines its potential economic contribution to rural development. In some countries, farming may be the primary economic activity of a region and support the vast majority of the population in employment. In such regions, it is clear that overall social and political stability is inextricably linked with the condition of the agriculture sector. However, in most economically developed countries, farming accounts for a relatively small part of a diversified rural economy, and in addition the significance of agriculture in terms of the proportion of national wealth and employment is, in most regions, in decline. This does not lessen the potential role of farming in rural development in those countries, but the contribution of alternative economic activities, which may offer durable prospects for employment and economic progress, should also be included.Since the contribution of farming to rural development in different countries varies to a great extent, policy responses need to be correspondingly distinguished, with the aim of maximising benefits to society.Rural development is understood primarily in the economic sense of the process of assuring a progressive improvement in economic security of people in rural areas. Rural areas are usually defined in terms of maximum population density, with figures varying from 150 to 500 inhabitants per square kilometre, depending on the structure of society. Whileany economic activity in rural areas will have the potential to contribute to rural development, the particular roles farming may play fall into four broad categories:
    •Employment. In countries whose share of overall employment in agriculture is at high levels, for example where farmers represent over 50% of the workforce, farming is likely to be the key economic activity determining the progress of rural development. With such a substantial proportion of the labour force engaged in agriculture, any policy which led to a swift and artificial reduction in employment could have disastrous consequences for the labour-force and dependants, leading to social and political instability.
    •Related economy. The farm sector in every country supports a range of ancillary and service industries, generating economic activity in supply and distribution chains as well as processing industries. Where farming is the primary economic activity, the entire rural economy, including services such as health care, education and basic infrastructure, may depend on the profitability of the sector.
    •In remote and peripheral areas, where society has identified a legitimate priority to prevent depopulation, farming is likely to be one of a limited range of economic activities possible to maintain the economic viability of the region.
    •Throughout rural areas, farming may contribute to rural development by providing environmental and cultural services to society. These actions include support for rural development by means both of on-farm and non-farming activities for which the state of agriculture is nevertheless a critical factor.

    Number 15b;
    Higher prices of agricultural products are not sufficient enough to stimulate food production because even when these products are produced,good roads are needed to transport them to different places so also quality education. When farmers are properly educated,food production tends to yield more because they are being trained on how to use mechineries and inseticides . And land redistribution are also necessary for more and effective food production.

    Number 16a;
    The goal of environmental sustainability is to conserve natural resources and to develop alternate sources of power while reducing pollution and harm to the environment.Sustainable development is the practice of developing land and construction projects in a manner that reduces their impact on the environment by allowing them to create energy efficient models of self-sufficiency. This can take the form of installing solar panels or wind generators on factory sites, using geothermal heating techniques or even participating in cap and trade agreements. The biggest criticism of sustainable development is that it does not do enough to conserve the environment in the present and is based on the belief that the harm done in one area of the world can be counter balanced by creating environmental protections in the other.

    Number 16b;
    The global north of industrialized nations (the United States and western Europe) has contributed most to global warming.
    Number 17;
    Privatization is a process in which the private sector is involved in the ownership and management of the public sector or transfer of ownership and management in the private sector and economic democracy is been established by reducing government control in economic activities.
    These are the benefits of privatization;
    •Reduce Fiscal Burden; Privatization reduces the fiscal burden of the state by relieving it of the losses of the public enterprise and reducing the size of the bureaucracy.
    • Economic Democracy; Privatization helps to control government Monopoly. It helps to attract more resources from the private sector.It emerges from economic democracy by private participation in the economic sphere.
    •Financial Resources;The main advantage of privatization is to generate financial resources for the government to generate resources disinvestment of public sector enterprises.
    •Optimum Utilisation of Resources;It has been observed that the public sector has failed in the optimal use of national resources.The private sector may succeed in the optimum use of resources by maintaining efficiency.
    Although the private sector contributes to solving some economic problems,development should not be left to them alone. As a result of them not being able to handle everything pertaining to development ,government should make headways to economic development too in their policies.

    Number 18;
    Many of today’s poorest countries do not collect adequate revenues to build the human capital, infrastructure, and institutions needed for stronger growth and faster poverty reduction. In sub-Saharan Africa, for example, 15 of the 45 countries have revenues lower than 15 percent of GDP. Moreover, sub-Saharan Africa’s resource-rich countries have revenues that are more volatile and lower than countries that are resource-poor. Even with substantial foreign grants and loans, government spending by developing countries is lower than by advanced economies. In 2018, government spending in sub-Saharan Africa averaged 23 percent of GDP compared with 31.4 percent in middle-income countries and almost 39 percent in the advanced ones.

    Number 19;
    International trade allows countries to expand their markets and access goods and services that otherwise may not have been available domestically. As a result of international trade, the market is more competitive. This ultimately results in more competitive pricing and brings a cheaper product home to the consumer.

    Number 20;
    Governments can adopt a policy of foreign exchange control and raise tariffs if the possibility of increased competition from imported goods can threaten domestic industries thereby retarding development. Governments in developing countries can also raise tariffs and set quotas to protect infant industries in the economy. The government of a developing economy will impose tariffs on imported goods in industries in which it wants to foster growth. This increases the prices of imported goods and creates a domestic market for domestically produced goods while protecting those industries from being forced out by more competitive pricing. This will decrease unemployment and allow developing countries to shift from agricultural production to industrialization and this also have a positive influence on the balance of payments and growth prospects of developing nations.Structural Adjustments are a set of economic reforms that a country must adhere to in order to secure a loan from the International Monetary Fund (IMF) and/or the World Bank., Structural adjustments are often a set of economic policies,including reducing government spending, opening to free trade, and so on.These programmes by IMF and World Bank have many undesirable impacts on the growth prospects of heavily indebted countries due to the following reasons:Firstly, it create difficult economic conditions where government reduce spending but increase taxation rates.Secondly, the conditional loans act as a tool for neocolonialism creating a scenario where the rich countries bail out the poor indebted ones in exchange for reforms that open doors for exploitation by the rich countries.Finally, structural adjustments have the inclination of reducing the standard of living of these poor heavily indebted countries in the short run.In particular, these programmes undermine access to quality and affordable healthcare and adversely impact upon social determinants of health, such as income and food availability.

    Number 21;
    Globalization means the process of intensification of economic, political, social, and cultural relations across international borders. It describes the changes in societies and the world economy that results from dramatically increased international trade and cultural exchange.
    Globalization has reinforced the economic relegation of developing economies, increasing the incidence of poverty and economic inequalities.It has also induced illicit trade in narcotics, human smuggling, dumping and depletion of the environment by unscrupulous foreign entrepreneurs in developing countries.

    Number 22;
    I think the export of agricultural product should be promoted :
    Agriculture’s percentage share in a country’s economy is relatively high and is constantly witnessing tremendous growth and diversifies. Agriculture’s most important contribution is obviously that of providing employment. Each sector is differently affected by changes in agricultural production and prices.The positive impact of agriculture exports on growth is due to the importance of agriculture in terms of creating jobs and opportunities for the economy as a whole. Also, sufficient national investment in the agriculture sector leads to enlarging these opportunities and then improves the Chinese economic growth.

    Number 23;
    The financial crisis led to a global recession, and in 2008 and 2009 the UK suffered a severe downturn. Poor growth is the number one economic problem facing Britain today.” As the economy has shown virtually no growth, house prices have fallen and unemployment has risen.

    Number 24a;
    Foreign aid is defined as the voluntary transfer of resources from one country to another country. This transfer includes any flow of capital to developing countries. A developing country usually does not have a robust industrial base and is characterized by a low Human Development Index (HDI).Foreign aid can be in the form of a loan or a grant. It may be in either a soft or hard loan. This distinction means that if repayment of the aid requires foreign currency, then it is a hard loan. If it is in the home currency, then it’s a soft loan. The World Bank lends in hard loans, while the loans of its affiliates are soft loans. The term development cooperation, which is used, for example, by the World Health Organization (WHO), is used to express the idea that a partnership should exist between donor and recipient, rather than the traditional situation in which the relationship was dominated by the wealth and specialized knowledge of one side. Most development aid comes from the Western industrialized countries but some poorer countries also contribute aid. Aid may be bilateral: given from one country directly to another; or it may be multilateral: given by the donor country to an international organization such as the World Bank or the United Nations Agencies (UNDP, UNICEF, UNAIDS, etc.) which then distributes it among the developing countries. The proportion is currently about 70% bilateral 30% multilateral. About 80–85% of developmental aid comes from government sources as official development assistance (ODA). The remaining 15–20% comes from private organizations such as “non-governmental organizations” (NGOs), foundations and other development charities (e.g., Oxfam).
    It is difficult to determine the effect of aid on growth when aid is an integral part of an economy; there are few “experiments” in the level of foreign aid. Galiani et al. (2017) argue that there are points on a nation’s growth trajectory at which aid inflows drop because of the rules donors use to select recipient countries. They use the substantial changes in aid around this point to evaluate how aid affects growth, and they conclude that aid has a substantial positive effect. Although aid has had some negative effects on the growth and development of most African countries, research shows that development aid, in particular, actually does have a strong and favorable effect on economic growth and development. Development aid has a positive effect on growth because it may actually promote long term economic growth and development through promoting investments in infrastructure and human capital. More evidence suggests that aid had indeed, had a positive effect on economic growth and development in most African countries. According to a study conducted among 36 sub-saharan African countries in 2013, 27 out of these 36 countries have experienced strong and favorable effects of aid on GDP and investments, which is contrary to the believe that aid ineffective and does not lead to economic development in most African countries.

    Number 24b;
    Yes,i suggest that developing nations should keep seeking foreign aids because foreign aids also helps to promote exports. They are crucial to many economies, as they provide goods and servicesof a country and spread its literature, culture, or religion. Countries often provide aid to relieve the distress caused by man-made or natural disasters like drought, illness, and conflict.

    Number 24c:
    The conditions for foreign aid includes;
    • Conditions on aid might increase incentives for policy reform by developing country governments. Allocating aid to countries with good policy environments might increase the impact of aid spending.
    • Aid conditions might increase our ability to account for how the money was used and what effects it had. The developed countries can provide funds to open new schools and polytechnic institutions. These will not only increase the literacy rate, but will also provide vocational education.
    • Rich nations should help to improve the economy of poor countries. This can be done by promoting free trade.

    Number 25a;
    Yes, Multinational coorperation should encourage economic development in the developing nations.
    Multinational corporations are those large firms which are incorporated in one country but which own, control or manage production and distribution facilities in several countries. Therefore, these multinational corporations are also known as transnational corporations. They transact business in a large number of countries and often operate in diversified business activities. The movements of private foreign capital take place through the medium of these multinational corporations. Thus multinational corporations are important source of foreign direct investment (FDI).
    Besides, it is through multinational corporations that modern high technology is transferred to the developing countries. The important question about multinational corporations is why they exist. The multinational corporations exist because they are highly efficient. Their efficiencies in production and distribution of goods and services arise from internalising certain activities rather than contracting them out to other firms. Managing a firm involves which production and distribution activities it will perform itself and which activities it will contract out to other firms and individuals.
    In addition to this basic issue, a big firm may decide to set up and operate business units in other countries to benefit from advantages of location. For examples, it has been found that giant American and European firms set up production units to explore and refine oil in Middle East countries because oil is found there. Similarly, to take advantages of lower labour costs, and not strict environmental standards, multinational corporate firms set up production units in developing countries.

    Number 25b;
    Globalization allows companies to find lower-cost ways to produce their products. It also increases global competition, which drives prices down and creates a larger variety of choices for consumers. Lowered costs help people in both developing and already-developed countries live better on less money.

    Number 26;
    Fiscal policy can promote macroeconomic stability by sustaining aggregate demand and private sector incomes during an economic downturn and by moderating economic activity during periods of strong growth.

    Number 27;
    Microfinance, also called microcredit​, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.
    While institutions participating in the area of microfinance most often provide lending—microloans can range from as small as $100 to as large as $25,000—many banks offer additional services such as checking and savings accounts as well as micro-insurance products, and some even provide financial and business education. The goal of microfinance is to ultimately give impoverished people an opportunity to become self-sufficient.

  21. Avatar Roland Ifeanyi Godwin says:

    Name: Roland Ifeanyi Godwin
    Reg No: 2018/241822
    Department: Economics
    Course code: Eco 361
    Course Title: Development Economics 1

    1. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    Monetary specialists and various experts have gathered a ton of evidence that training grows workers’ effectiveness and as such extends their income, which consequently prompts lessens in dejection. There are similarly various non-monetary benefits of instruction, for instance, improved
    prosperity status and lessened bad behavior (Lochner, 2011). At the country level there is also a ton of evidence that training grows the pace of monetary turn of events (Hanushek and Woessmann, 2015). These assessments all element the advantage of additional fostering a country’s HR as a huge pathway toward desperation decline, and thusly they give the motivation for agrarian countries to place assets into the capacities and human resources of their general populations through expanding, and dealing with the nature of, their legitimate instruction systems. They don’t, regardless, exhibit which kinds of unequivocal endeavors should be pursued to deal with the idea of training in agrarian countries. While there has been a dumbfounding abatement in the amount of outof-school goofs off the world, from just about 100 million out of 2000 to 58 million out of 2012 (UIS and UNICEF, 2015), it is practically certain that the making scene has not refined the Millennium Development Goal (MDG) of far reaching fundamental training in 2015. UNESCO (2014) battles that the progression of getting away from more youthful understudies into school that occurred during the 2000s has definitely moved back, and there has been little headway since 2007, and that this is concurrent with a stagnation in help to training, which has not changed as a degree of true improvement help since 2002 (UIS and UNICEF, 2015). Additionally, various young people in agrarian countries who do go to class seem to learn little during their time in school (Glewwe and Kremer, 2006; Glewwe et al., 2013; Hanushek and Woessmann, 2015). Given the current overall aide environment, all around zeroed in on training help should be facilitated toward programs that have been shown by intensive evaluations to be incredible for achieving the MDG of general fundamental schooling and for dealing with the quality and sufficiency of the instruction that understudies get. There is abundant data concerning what issues and issues exist in the schooling region in horticultural countries and there is no lack of proposed ways to deal with address these issues. In any case, with confined resources system makers need information from incredible methodology influence appraisals to make convincing future endeavors. Fortunately, various exploratory examinations on training in non-modern countries have been driven over the latest 25 years with a ultimate objective to sort out which instruction approaches and undertakings “work”, and this assessment has accelerated in the past 5-10 years to the extent both sum and quality.
    .

    2. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted? Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc ) also needed?

    All rural increase work occurs inside a course of progress, and can’t be considered as a detached development. Increase activities and adventures and development experts are significant for the progression of country social orders. It is, consequently, basic to fathom the term improvement, and to see what its arrangement can mean for the course of commonplace expansion work. The term headway doesn’t insinuate one single marvel or development nor does it mean a general course of social change. Every single social request, natural and metropolitan, are evolving continually. This change impacts, for example, the overall population’s norms and characteristics, its associations, its methods for creation, the viewpoints of its kinfolk and the way it disperses its resources. A nation society’s family, customs and practices are seldom static yet are continually forming into new and different constructions. There are different speculations which hope to explain this course of social change (as progression, as friendly change or even as the objective of conflicting interests) and occurrences of each explanation can be found in different bits of the world. Progression is even more solidly associated with some kind of movement or intervention to affect the entire course of social change. It is an influential thought which suggests a change in, or an advancement away from, a previous situation. All friendly orders are changing, and rural increase attempts to encourage certain pieces of society to affect the nature and speed of the change. In the past two or three numerous years, different nations have been thought of and their level of headway not actually settled; this has prompted the usage of terms, for instance, made rather than non-modern nations. With everything taken into account, it is acknowledged that a couple of nations have advanced or changed more than others, and without a doubt these nations are regularly used as the model for other, making, nations to follow. This course of progression can take different designs and have a variety of objections.
    3. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    ESD is a long-standing and globally perceived idea. The idea has been certified by the 2002 World Summit for Sustainable Development and has been remembered for more than 60 bits of NSW enactment. Australia’s National Strategy for Ecologically Sustainable Development (1992) characterizes naturally manageable advancement as: ‘utilizing, monitoring and improving the local area’s assets with the goal that biological cycles, on which life depends, are kept up with, and the absolute personal satisfaction, presently and later on, can be expanded.’ ESD is likewise characterized in the Protection of the Environment Administration Act 1991 (NSW) and the Environment Protection and Biodiversity Conservation Act 1999 (Cth),and is alluded to in numerous other natural laws.

    ESD requires the powerful reconciliation of financial, natural, social and value contemplations in dynamic cycles. ESD expects to accommodate the necessities of present ages without compromising the capacity of people in the future to address their own issues. For various years, there have been worries that environmental change exchanges will basically disregard a vital rule of environmental change arrangement structures: the normal however separated liabilities. This perceives that all things considered:

    – Industrialized countries have radiated undeniably more ozone depleting substance discharges than non-industrial countries (regardless of whether some agricultural countries are just now expanding theirs) empowering a less expensive way to industrialization;

    – Rich nations subsequently face the greatest obligation and weight for activity to address environmental change; and Rich nations accordingly should uphold non-industrial countries adjust to stay away from the contaminating (for example simpler and less expensive) way to advancement—through financing and innovation move, for instance. This thought of environment equity is normally disregarded by numerous rich countries and their established press, making it simple to fault China, India and other agricultural nations, or gain assurance in the bogus adjusting contention that assuming they should be dependent upon emanation decreases, so should China and India. There might be a case for arising countries to be dependent upon some decrease targets, yet the weight of decreases should lie with industrialized nations. In the in the interim, rich countries have done very little inside the Kyoto convention to decrease discharges by any significant sum, while they are for arranging a follow on deal that carries more strain to non-industrial nations to consent to emanations targets. In actuality, the more they defer the more the helpless countries should save the Earth with their penances (and in the event that it works, as history shows, the rich and amazing will figure out how to revise history to guarantee they were the ones that saved the planet).

    4. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    There is a huge collection of writing about the financial impacts of privatization. In any case, since it was fundamentally written during the 1990s, there was commonly restricted accentuation on issues which have gone to the front all the more as of late, just as later advancements in the proof with regards to privatization itself, a lot of it from creating economies. This roused us to compose this paper, which sums up the proof with regards to the effect of late privatizations, as far as firms’ effectiveness as well as to the impacts on pay appropriation. Moreover, we are especially mindful of the course of privatization in agricultural nations, eminently concerning the administrative contraption empowering fruitful privatization encounters. At the point when governments stripped state-possessed ventures in created economies, particularly during the 1980s and 1990s, their destinations were typically to upgrade financial productivity by working on firm execution, to diminish government intercession and increment its income, and to present contest in cornered areas (Vickers and Yarrow 1988). A significant part of the prior proof with regards to the monetary effect of privatization concerned these subjects and depended on information from created nations and later, change nations. These discoveries have been united in two past studies, by Megginson and Netter (2001) and Estrin et al. (2009) separately. The previous evaluates the discoveries of experimental exploration on the impacts of privatization up to 2000, chiefly from created and center pay nations, while the last focuses on change economies including China, over the 1989 to 2006 period.1 However, the encounters from the influx of privatizations that have happened in agricultural nations previously and since these investigations warrant another assessment of the effect of privatization with regards to the advancement cycle. The tone of the privatization banter has advanced as of late in worldwide monetary organizations as privatization action has moved towards creating economies, and as a result of the troubles of execution and some privatization disappointments during the 1980s and 1990s (Jomo 2008). Therefore, more accentuation in approach making is currently being put on making the preconditions for fruitful privatization. Subsequently, instead of a straightforward supportive of privatization inclination normal for the Washington agreement (Boycko, Shleifer, and Vishny 1995), it is presently recommended that legislatures should initially give a superior administrative and institutional system, including a well-working capital market and the security of shopper and representative rights. As such, setting matters: proprietorship changes ought to be customized for the public financial conditions, with techniques for privatization being adjusted to neighborhood conditions. The customary privatization objective of working on the productivity of public undertakings likewise stays a significant objective in non-industrial nations, as does diminishing the sponsorships to state-claimed endeavors (SOEs).
    5. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    Large numbers of the present least fortunate nations don’t gather satisfactory incomes to assemble the human resources, framework, and establishments required for more grounded development and quicker destitution decrease. In sub-Saharan Africa, for instance, 15 of the 45 nations have incomes lower than 15% of GDP. Besides, sub-Saharan Africa’s asset rich nations have incomes that are more unstable and lower than nations that are asset poor. Indeed, even with considerable unfamiliar awards and advances, government spending by non-industrial nations is lower than by cutting edge economies. In 2018, government spending in sub-Saharan Africa arrived at the midpoint of 23% of GDP contrasted and 31.4 percent in center pay nations and just about 39% in the high level ones. Examinations between the present non-industrial nations and the present progressed economies can give goal however less so as far as suggestions about strategies and organizations. Of more noteworthy incentive for agricultural nations are correlations with cutting edge economies when they were less prosperous and would have been viewed as low-pay or lower center pay. Utilizing government going through a century prior by 14 of the present progressed economies (Advanced 14), we feature four examples for non-industrial nations. We foster these examples more meticulously in an approaching working paper. Governments can propel improvement even with low degrees of government spending. The present low-pay nations spend beyond twice on normal than the present progressed economies went through over a century prior. Certainly, this distinction mirrors the absence of the assessment instruments and frameworks we have today. From 1850 until the mid 1900s, customs obligations and extracts gave the greater part of government incomes, while the individual annual duty and VAT were not presented in nations until some other time. Additionally, society’s assumptions from the public authority were very different then, at that point. In 1900, for instance, spending on joblessness, wellbeing, annuities, and lodging added up to just 1.1 percent of GDP in the Scandinavian nations by and large and to 0.7 percent of GDP in the U.S. Indeed, even with low degree of government spending, financial improvement was energetic in the vast majority of the Advanced 14 at the turn of the twentieth century, with framework enhancements financed by private capital and the solid extension of essential and auxiliary instruction. Also, here lies the example for the present creating economies: While chipping away at fortifying homegrown tax assessment and raising more incomes to back open merchandise, the need should be on further developing the business climate to draw in private capital—assembling private money for improvement.

    6. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    As indicated by Smriti Chand, (2015), he alludes global exchange as the trading of capital, products, and administrations across global lines or regions. As indicated by Shawn Grimsley, (2015), global exchange is about the outpouring and inflow of worldwide trade that generally result from the internal (import) and outward (send out) development of labor and products. It is altogether made to build the worldwide state improvement in term of monetary, and the connection of exchange or trade, just as the social and political relations between countries.
    Expenses and Benefits of International Trade:
    As indicated by Pung Sun and Almas Heshmati, (2010), the creators learned with regards to the connections and the commitments of worldwide exchange on monetary development in the globalization period. In the mean time, the creator discovered the positive confirmations in regards to the leading of global exchange like working with capital amassing, mechanical construction overhauling, innovative advancement and institutional headway. Also, he added that worldwide exchange offers the states two merchandise freedom to acquire from global trade. To begin with, homegrown customers can purchase less expensive imported merchandise and makers can send out products at higher unfamiliar costs. Second, with the bringing down of tax and the evacuation of hindrances, everything nation could build the all out yield and social government assistance by utilizing similar benefits and specialization while doing global exchange. Other than the positive sides of worldwide exchange, as per Vlad Spanu, (2003), the creator discovered a few reactions on the industrialized nations, particularly U.S, European Union individuals and Japan identified with their protectionist strategies. What’s more, World Bank and IMF which yearly distribute a report available access in horticulture and on hindrances to exchange materials and attire additionally raised that endowments and hostile to unloading strategies forced by created nations can hurt the premium of exporters from agricultural nations. A section from protectionist approaches, it is seen that agricultural nations might have less cutthroat on the global market since they appear to moderately get less innovation move than the created nations.

    7. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    Eliminating value controls: illustrations from Ghana
    Ghana has utilized grouped value controls since 1962 for a few purposes: to restrict rents building to venders in the midst of shortage, to battle expansion, and to hold down costs of key things in the average cost for basic items. Be that as it may, value controls have demonstrated inadequate in the midst of outrageous shortage and fast swelling and have frequently exacerbated the issues achieved by cash overvaluation and expansionary financial and money related approaches. By 1970 almost 6,000 costs identifying with in excess of 700 item bunches were controlled. Endeavors to change the framework were turned around following a difference in government, and the Prices and Incomes Board was given authority over all cost and pay changes. In any case, with swelling arriving at 100% per year during the 1970s, incessant solicitations for value changes extraordinarily surpassed its regulatory limit. Deferrals of as long as a half year constrained firms to pick between gathering stocks, losing cash by selling at the old cost, or dodging the controls by and large. Quick swelling expanded the hole between market costs and official costs. Inability to change the conversion standard implied that imports through true channels cost as little as a 10th of their reasonable worth. Value controls kept makers from understanding this shortage lease, which would have given them additional motivator to create more. However, the powerlessness to implement controls at the retail level made exchanging an undeniably rewarding movement. Acquiring admittance to merchandise at the authority cost for resale practice known as kalabule turned into a significant kind of revenue. By the mid 1980s the market worth of government employees’ month to month portion of rice, milk, cleanser, etc (albeit not got consistently) could approach their month to month salary. Powers over the appropriation of scant merchandise turned out to be progressively significant. During the 1970s, military trucks shipped canned milk toward the north available to be purchased at a similar cost as in the southern urban areas of beginning. Yet, this incredibly expanded the benefits from carrying it to adjoining nations. Essentially, northern rice was carried out on the grounds that value controls made it difficult to take care of transport expenses for the south. The more tight the controls on a ware, the more difficult to find it became. The business sectors of Togo turned out to be very much supplied with cleanser, milk, materials, and different items that were made in Ghana and afterward pirated out, while alcohol and different extravagances with high shortage charges and less severe controls were acquired.
    8. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is a course of worldwide monetary, political and social coordination. It has caused the world to turn into a little town; the lines have been separated between nations. ”The historical backdrop of globalization returns to the second 50% of the 20th century, the improvement of transport and correspondence innovation prompted circumstance where public lines had all the earmarks of being excessively restricting for monetary action” (Economic Globalization in Developing Countries, 2002). Globalization is assuming an undeniably significant part in the agricultural nations. It very well may be seen that, globalization enjoys certain benefits like monetary cycles, innovative turns of events, political impacts, wellbeing frameworks, social and regular habitat factors. It has a great deal of advantage on our regular routine. Globalization has set out another open doors for non-industrial nations. For example, innovation move hold out guarantee, more prominent freedoms to get to created nations markets, development and further developed usefulness and expectations for everyday comforts. Notwithstanding, it isn’t a fact that all impacts of this marvel are positive. Since, globalization has additionally raised new difficulties, for example, ecological decays, shakiness in business and monetary business sectors, increment imbalance across and inside countries. This paper assesses the positive and adverse consequence of globalization on agricultural countries in the accompanying extents;
    a-Economic and Trade Processes Field
    b-Education and Health Systems
    c-Culture Effects

    a-Economic and Trade Processes Field
    Globalization assists agricultural nations to manage rest of the world increment their financial development, taking care of the neediness issues in their country. Before, non-industrial nations couldn’t tap on the world economy because of exchange obstructions. They can’t have the very monetary development that created nations had. Notwithstanding, with globalization the World Bank and International Management urge agricultural nations to go through market changes and revolutionary changes through enormous credits. Many non-industrial countries started to find ways to open their business sectors by eliminating duties and let loose their economies. The created nations had the option to put resources into the agricultural countries, setting out work open doors for the destitute individuals. For instance, quick development in India and China has made world neediness decline (blogspot.com.2009). It is obvious to see that globalization has made the connections between created nations and non-industrial countries more grounded, it made every nation rely upon another country. As indicated by Thirlwall (2003:13) ” Developing nations rely upon created nations for asset streams and innovation, yet created nations rely intensely upon agricultural nations for crude materials, food and oil, and as business sectors for mechanical merchandise”. One the main benefits of globalization are products and individuals are shipped simpler and quicker therefore streamlined commerce between nations has expanded, and it diminished the chance of battle between nations.

    b-Education and Health Systems
    Globalization added to foster the wellbeing and training frameworks in the agricultural nations. We can unmistakably see that instruction has expanded lately, on the grounds that globalization has an impetus to the positions that require higher abilities set. This interest permitted individuals to acquire advanced education. Wellbeing and training are essential destinations to work on any countries, and there are solid connections between monetary development and wellbeing and instruction frameworks. Through development in monetary, expectations for everyday comforts and future for the agricultural countries positively improve. With more fortunes helpless countries can supply great medical care administrations and sterilization to their kin

    c-Culture Effects

    Globalization has many advantages and impediment to the way of life in the non-industrial nations. Many agricultural nations societies has been changed through globalization, and became emulate others societies, for example, America and European nations. Before globalization it would not have been feasible to think about different nations and their societies. Because of significant apparatuses of globalization like TV, radio, satellite and web, today is feasible to realize what’s going on in any nations, for example, America, Japan and Australia.
    9. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    This inspects the job of the rural area in neediness lightening and in the supportable financial development and advancement of the most un-created nations (LDCs). It decides to give modern data and to create banter that will assist with manufacturing more grounded agreement on activities required for agribusiness to be concurred its legitimate spot in the LDCs. Agribusiness is the pillar of the LDC economies, supporting their food security, trade profit and provincial turn of events. However, their rural creation for the homegrown and fare markets has fallen behind, with development in per caput yield declining during the 1990s. Slow creation development and sharp yearly vacillations in yield have kept on being ongoing issues for the LDCs, comprising the primary driver of their relentless destitution and rising food frailty. The extent of undernourished in the all out LDC populace expanded from 38% to 40 percent between 1969-71 and 1996-98, while indisputably the number rose from 116 million to 235 million. As respects exchange, the LDCs have kept on being minimized in world farming business sectors, representing just 5% of worldwide horticultural fares in the mid 1970s and scarcely 1% in the last part of the 1990s. The terrible showing of farming in the LDCs is identified with the numerous inward and outer challenges that these nations face as they look to foster this area and accomplish their goals of further developing food security and expanding trade income. Their interior challenges incorporate low usefulness, unbending creation and exchange structures, a restricted abilities base, short future and low instructive capabilities, helpless foundation, and deficient institutional and strategy systems.
    THE ROLE OF AGRICULTURE IN THE DEVELOPMENT OF LDCS simultaneously, with the developing mix of business sectors from globalization and exchange progression, their economies need to work in an undeniably cutthroat outer climate. They keep on sending out a limited scope of essential items that are profoundly defenseless against unsteadiness of interest and weakening terms of exchange. What’s more, outer help to agribusiness in the LDCs has declined, with normal yearly ODA falling 20% from 1981-90 to 1991-99. Their failure to contend on world business sectors as well as on their home business sectors is reflected in their rising food import bills. Turning around this decrease and coordinating the LDCs into the world economy address huge difficulties: conquering minimization from worldwide business sectors; adjusting to innovative change; and adapting to another institutional climate. Be that as it may, the majority of the LDCs have tremendous undiscovered rural potential to address these difficulties, with significant degree for more powerful utilization of assets and higher efficiency. What is required in this way is a reestablished center around farming and provincial turn of events. Huge advancement in advancing financial development, lessening neediness and improving food security can’t be accomplished in a large portion of these nations without drawing all the more completely upon the possible useful limit of agribusiness and its commitment to generally speaking monetary turn of events. With the help of their advancement accomplices, the administrations of the LDCs might have to reconsider their farming and country improvement methodologies in case they are to accomplish their social and financial destinations, including that of decreasing the quantity of undernourished by 2015. The paper features components of a technique for activity by the LDCs – with the help of the global local area – that will assist them with taking advantage of their rural potential by fortifying their inventory abilities and seriousness, and in this manner make the most of the exchanging openings intrinsic in the multilateral exchanging framework. Progress is urgent on three fronts: raising and supporting efficiency and intensity; expanding creation and exchange; and further developing admittance to unfamiliar business sectors.
    10. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    Developing business sectors and non-industrial nations have about $11 trillion in outside obligation and about $3.9 trillion owing debtors administration due in 2020. Of this, about $3.5 trillion is for head reimbursements. Around $1 trillion is obligation administration due on medium-and long haul (MLT) obligation, while the rest of transient obligation, quite a bit of which is typical exchange finance. or on the other hand IDA), 2020 MLT obligation administration is about $36 billion, separated in generally equivalent extents between multilateral, two-sided (for the most part non-Paris Club), and business lenders. All non-industrial nation districts are conceivably genuinely influenced: Latin America has the most elevated obligation administration/sends out proportion, Africa has the most un-expanded fare blend, East Asia has the biggest outright measure of obligation administration. In ordinary conditions, the chief sums would basically be renegotiated in worldwide capital business sectors or offset by new distributions from existing loan specialists. Yet, conditions are not ordinary. Credit markets have fixed, spreads have risen, and numerous nations are confronted with extremely enormous decreases in unfamiliar trade incomes. Notwithstanding enormous worldwide financial vulnerability, it is difficult to anticipate which nations and locales will be generally powerless, and not all the weakness has been brought about by the pandemic. As of now, Venezuela, Argentina, and Lebanon have defaulted and face extended and harming legal actions with every leaser attempting to haggle exclusively, bringing about extra weight misfortunes for everybody until the circumstance is figured out. One sign that the issue is far reaching is that all around 90 nations have moved toward the IMF to get to crisis financing instruments. Unmistakably this isn’t only a low-pay or an African nation issue. There are a few calls for obligation stops (here, here and here) to facilitate the weight on non-industrial nations. Obligation takes steps to make a worldwide advancement crisis similarly as the pandemic is making a worldwide wellbeing crisis. Both could bring about friendly agitation and insecurity. Something should be done, so it is helpful to recap the illustrations from past obligation emergencies. Idealness and desperation are significant. Many non-industrial nations basically won’t have the unfamiliar trade to support their obligation this year, quite the individuals who are vigorously obliged, are item reliant (66% of all non-industrial nations as per UNCTAD), have depended on huge the travel industry receipts, or on settlements. A genuine illustration of the benefit of delaying is the arranged rollover of private bank credits to Korea in 1997-98, helped by controllers who made a deal to avoid considering the actions a specialized default.
    11. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes? Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    Unfamiliar guide is a post-war marvel which was acquainted with assistance the Third World nations to escape from the underdevelopment and destitution. The paper contends that unfamiliar guide programs started as a feature of the philosophical showdown known as the Cold War and that the thought processes behind help were in every case more political than financial. The target of this paper is to depict unfamiliar guide as the system which clarifies the connection between the rich and the helpless countries on the planet today, as such, the paper clarifies the connection between the Official Development Assistance and the degree of improvement. The examination is illustrative in nature. Both social and monetary markers were used to examine the exploration issue. On account of the restricted time factor, the prompt focal point of the investigation was on Guatemala and Peru as contextual analysis. The examination presumes that unfamiliar guide impedes and twists the course of financial advancement of the beneficiary nations and results in reliance and double-dealing. It additionally replaces homegrown investment funds and streams of exchange. Obviously most nations are monetarily subject to the rich. Moreover, from various perspectives the working of the worldwide entrepreneur economy obviously escalates the state of reliance. Giving guide for improvement appears to be practically the specific opposite. Influence has an impact in the relations between the rich and poor people. Going to the future, unfamiliar guide programs will undoubtedly change to mirror the new real factors of worldwide global relations.
    12. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    In this twenty-first century, MNC has turned into the focal establishment of agricultural countries. A critical number of MNCs began their tasks in non-industrial nations by the 1990s. The impacts of their tasks in non-industrial nations are presently evaluated uniquely in contrast to that was done previously. MNCs advantage from the lower work expenses and awards given by the public authority of non-industrial nations to draw in these MNCs. In addition, lower charge rates or assessment exceptions are additionally given to MNCs for a period in the non-industrial nations. Then again, these non-industrial nations can likewise acquire from the venture made by these MNCs. MNCs can help lessening destitution, driving financial development, making occupations that use nearby individuals, increase work expectations by paying preferred wages over neighborhood firms pay. Likewise, they can help monetary advancement by moving innovation and information, improve or develop foundation, increase individuals’ expectation of living. Generally, it may appear to be that the non-industrial nations acquire from speculations of MNCs. Is that truly evident? In spite of the fact that MNCs have become inescapable in the creating scene, there has consistently been a vulnerability about them, in both positive and negative ways. The vast majority of the MNCs exploit agricultural nations. They can be at real fault for making contamination or doing denial of basic freedoms. By the by, workers are paid low wages, as there are not many or no worker’s guilds to ensure their privileges or haggle with the MNCs. In this way, the hypothetical disagreement regarding the impacts of MNCs in agricultural nations is reflected in the contention. Evidently, two expansive positions can be gotten from these distinctions of assessment the positive and negative. A few advocates have created contentions that underline the positive consequences of unfamiliar direct speculation (FDI) by
    – Associate Professor, Department of Management Studies, University of Chittagong.
    – Professor, Department of Management Studies, University of Chittagong

    The Chittagong University Journal of Business Administration, Vol. 24, 2009, pp. 111-137 MNCs. They will concede a few increases from FDI. In actuality, others are reluctant to acknowledge a positive job for global capital under any conditions.
    13. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    The different apparatuses of monetary approach like spending plan, tax assessment, public use, public works and public obligation can go far for keeping up with full work without inflationary and deflationary powers in immature economies. Clearly, tax assessment and public use is an amazing instrument in the possession of public power which incredibly influence the progressions in removal pay, utilization and speculation. An enemy of gloom charge strategy builds extra cash of the individual, advances utilization and speculation. This will eventually bring about expansion in spending exercises which thusly, increment successful interest of individuals. Actually, during expansion, hostile to inflationary approach estimates help to plug the inflationary hole. During expansion, such measures are taken on which help to clear off the exorbitant buying force and customer interest. Taxation rate is brought up in such a way as it may not impede new speculation. Remembering in see all realities, it is expressed that financial approach assumes exceptionally critical part for advancing monetary turn of events and solidness of immature nations. It is shown by the accompanying focuses:

    a) To Mobilize Resources:
    The principal point of monetary approach in immature nations is to activate assets in the private and public areas. For the most part, the public pay and per capita pay is exceptionally low because of low pace of reserve funds. Hence, the legislatures of such nations through constrained reserve funds pushes the pace of speculation and capital arrangement which thus speeds up the pace of financial turn of events. It additionally attempts the approach of arranged interest in the public area. Private ventures have the good impact of expanding speculation, the abridgement of prominent utilization and interest in inefficient channels can assist with really looking at the inflationary pattern in the economy. Besides, these nations deal with the issue of unfamiliar capital. Along these lines the cure lies in expanding the steady saving proportion, the minor penchant to save through open money, tax collection and constrained credits. Somewhat, reformist tax collection, rock solid on extravagance imports, restriction on the assembling of extravagance and semi-extravagance merchandise are different measures which help to activate the assets, Therefore, reformist tax assessment on bonus gains, on unmerited livelihoods on capital additions, on consumption and genuine bequests and so forth can go far in fair appropriation of abundance.

    b) To Accelerate the Rate of Growth:
    Financial arrangement assists with speeding up the pace of monetary development by raising the pace of interest out in the open just as private areas. In this way, different instruments of monetary approach as tax assessment, public getting, shortfall financing and overflows of public undertakings ought to be utilized in a joined way so they may not unfavorably influence the utilization, creation and appropriation of riches. To accomplish adjusted development in various areas of the economy, as per Prof. J. Chelliah, the most productive line of advance lies along the way of a reasonable improvement of horticulture and industry. To put it plainly, interest in essential and capital products enterprises and in friendly overheads is the mainstays of monetary advancement in an immature economy. Consequently, main concern to such speculation ought to be given to speed up the inside and out development of an economy.

    c) To Encourage Socially Optimal Investment:
    In immature nations, monetary strategy energizes the interest into those useful channels which are thought about socially and financially alluring. This implies ideal venture which advances financial turn of events and maintains a strategic distance from inefficient and ineffective speculation. So, point of the financial approach ought to be to make venture on friendly and monetary overheads like transportation, correspondence, specialized preparing, schooling, wellbeing and soil preservation. They will in general raise efficiency and enlarge the market to appreciate outer economies. Simultaneously, useless venture is checked and redirected towards useful and socially positive channels.

    d) Inducement to Investment and Capital Formation:
    Financial arrangement assumes vital part in immature nations by making interest in essential businesses and administrations of public utility on one side and instigates interest in private area by offering help to new enterprises and presents current procedures of creation. Accordingly, venture on friendly and financial overheads are useful in expanding the social negligible usefulness and subsequently raising the minor efficiency of private speculation and capital development. Here, ideal example of venture can likewise go far to yield productive aftereffects of monetary turn of events. Monetary improvement is a most powerful interaction which includes changes in the size and nature of populace, tastes, information and social establishments. Remembering all elements, if social minimal efficiency in socially positive undertakings is low, financial strategy ought to be outlined to raise social negligible usefulness and to redirect assets to that useful channels where the social peripheral usefulness is the most elevated.

    Does Military Spending Stimulate or Retard Economic Performance?
    The United States is the middle of a significant development in its tactical spending, the fourth such extension since the finish of World War II. The tactical financial plan is projected to reach $400 billion in consistent (1996) dollars in Fiscal Year (FY) 2005, which is roughly the level the tactical spending plan came to at the pinnacle of every one of the three past post-World War II developments. These developments were trailed by drawdowns, giving military spending a repeating design without a vertical time pattern. Throughout a similar time-frame, obviously, the economy has developed significantly. Subsequently, the proportion of military spending to (GDP) generally considered as a proportion of the guard trouble, has fallen considerably, but with its own repeating design. Additionally, the portion of the national government spending plan spent on the guard work has likewise declined considerably. At whatever point military spending changes, there are conversations and discussions with regards to its monetary effects. Extensively talking, there are two arrangements of perspectives. One considers the to be as a channel on the economy, particularly through draining the private area of key innovative and administrative assets. Whatever benefits there are from interest incitement and mechanical side projects are overwhelmed, in this view, by the channel of assets that could, and ought to, be used for interest in human and actual capital and for innovative work.

    14. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    The most-referred to wellspring of proof on the effects of microfinance is the early arrangement of studies gathered by David Hulme and Paul Mosley (1996). The discoveries of these examinations are provocative: helpless families don’t profit from microfinance; it is just non-helpless borrowers (with salaries above destitution lines) who can do well with microfinance and appreciate sizable positive effects. More alarming is the tracking down that a greater part of those with beginning livelihoods underneath the destitution line really wound up with less gradual pay in the wake of getting miniature credits, when contrasted with a benchmark group which didn’t get such advances. Discoveries of the Hulme and Mosley studies infer that credit is just one factor in the age of pay or yield. There are other integral variables, significant for making credit more useful. Among them, the most significant is beneficiary’s innovative abilities. The discoveries of the MIT concentrate by Banerjee et al likewise highlight this factor. Most destitute individuals don’t have the fundamental instruction or experience to comprehend and oversee even low level business exercises. They are for the most part hazard opposed, regularly unfortunate of losing what small amount they have, and attempting to endure.

    References

    1. https://www.oecd.org/derec/sweden/Rapport-Education-developing-countries.pdf
    2. http://www.fao.org/3/t0060e/t0060e02.htm
    3. https://www.sciencedirect.com/science/article/pii/S0306919212001285
    4. https://www.globalissues.org/article/231/climate-justice-and-equity
    5. https://academic.oup.com/wbro/article/33/1/65/4951686
    6. https://www.brookings.edu/blog/future-development/2019/02/20/4-lessons-for-developing-countries-from-advanced-economies-past/
    7. https://openknowledge.worldbank.org/bitstream/handle/10986/5970/9780195205633_ch07.pdf?sequence=9&isAllowed=y
    8. https://www.linkedin.com/pulse/impact-globalization-developing-countries-fairooz-hamdi
    9. http://www.fao.org/3/y3997e/y3997e.pdf
    10. https://www.brookings.edu/blog/future-development/2020/04/13/what-to-do-about-the-coming-debt-crisis-in-developing-countries/
    11. https://spectrum.library.concordia.ca/3451/
    12. https://www.researchgate.net/publication/326398955_Impact_of_Multinational_Corporations_on_Developing_Countries
    13. https://www.economicsdiscussion.net/fiscal-policy/role-of-fiscal-policy-in-economic-development/4698
    14. https://www.researchgate.net/publication/228679899_Does_military_spending_stimulate_or_retard_economic_performance_revisiting_an_old_debate
    15. https://core.ac.uk/download/pdf/6301036.pdf

  22. Avatar Folarin Gift Funmilayo says:

    Name: Folarin Gift Funmilayo
    Reg No: 2018/241234
    Department: Education/Economics
    Course code: Eco 361
    Course Title: Development Economics 1

    1. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?

    Financial experts and different analysts have collected a lot of proof that education expands laborers’ efficiency and in this manner expands their earnings, which thus prompts diminishes in destitution. There are likewise numerous non-financial advantages of education, for example, improved
    wellbeing status and diminished wrongdoing (Lochner, 2011). At the nation level there is additionally a lot of proof that education expands the rate of financial development (Hanushek and Woessmann, 2015). These examinations all feature the benefit of further developing a country’s human resources as a significant pathway toward destitution decrease, and consequently they give the inspiration for agricultural nations to put resources into the abilities and human capital of their populaces through extending, and working on the quality of, their proper education frameworks. They don’t, in any case, demonstrate which sorts of explicit ventures ought to be sought after to work on the nature of education in agricultural nations. While there has been an astounding decrease in the quantity of outof-school kids around the world, from almost 100 million out of 2000 to 58 million out of 2012 (UIS and UNICEF, 2015), it is almost sure that the creating world has not accomplished the Millennium Development Goal (MDG) of widespread essential education in 2015. UNESCO (2014) contends that the advancement of escaping younger students into school that happened in the mid 2000s has drastically eased back, and there has been little advancement since 2007, and that this is simultaneous with a stagnation in help to education, which has not changed as a level of official improvement help since 2002 (UIS and UNICEF, 2015). Besides, numerous youngsters in agricultural nations who do go to class appear to learn little during their time in school (Glewwe and Kremer, 2006; Glewwe et al., 2013; Hanushek and Woessmann, 2015). Given the current worldwide guide climate, all around focused on education help ought to be coordinated toward programs that have been shown by thorough assessments to be powerful for accomplishing the MDG of general essential education and for working on the quality and adequacy of the education that understudies get. There is plentiful information concerning what issues and issues exist in the education area in agricultural nations and there is no deficiency of proposed approaches to address these issues. Nonetheless, with restricted assets strategy creators need data from great approach sway assessments to make compelling future ventures. Luckily, numerous experimental investigations on education in non-industrial nations have been led over the most recent 25 years with an end goal to figure out which education approaches and projects “work”, and this examination has sped up in the beyond 5-10 years as far as both amount and quality.
    2. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted? Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc ) also needed?

    All rustic augmentation work happens inside a course of improvement, and can’t be considered as a disconnected movement. Augmentation projects and ventures and expansion specialists are important for the advancement of country social orders. It is, hence, imperative to comprehend the term improvement, and to perceive what its understanding can mean for the course of provincial augmentation work. The term advancement doesn’t allude to one single wonder or movement nor does it mean an overall course of social change. All social orders, rustic and metropolitan, are changing constantly. This change influences, for instance, the general public’s standards and qualities, its organizations, its techniques for creation, the perspectives of its kin and the manner by which it disseminates its assets. A country society’s kin, customs and practices are rarely static yet are constantly developing into new and various structures. There are various hypotheses which look to clarify this course of social change (as advancement, as social transformation or even as the goal of clashing interests) and instances of every clarification can be found in various pieces of the world. Advancement is all the more firmly connected with some type of activity or mediation to impact the whole course of social change. It is a powerful idea which recommends a change in, or a development away from, a past circumstance. All social orders are changing, and rustic augmentation endeavors to foster certain parts of society to impact the nature and speed of the change. In the beyond couple of many years, various countries have been considered and their degree of advancement not really settled; this has led to the utilization of terms, for example, created instead of non-industrial countries. All in all, it is accepted that a few countries have progressed or changed more than others, and for sure these countries are frequently utilized as the model for other, creating, countries to follow. This course of advancement can take various structures and have an assortment of destinations.
    3. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    ESD is a long-standing and internationally recognised concept. The concept has been affirmed by the 2002 World Summit for Sustainable Development and has been included in over 60 pieces of NSW legislation. Australia’s National Strategy for Ecologically Sustainable Development (1992) defines ecologically sustainable development as: ‘using, conserving and enhancing the community’s resources so that ecological processes, on which life depends, are maintained, and the total quality of life, now and in the future, can be increased.’ ESD is also defined in the Protection of the Environment Administration Act 1991 (NSW) and the Environment Protection and Biodiversity Conservation Act 1999 (Cth),and is referred to in many other environmental laws.
    ESD requires the effective integration of economic, environmental, social and equity considerations in decision-making processes. ESD aims to provide for the needs of present generations without compromising the ability of future generations to meet their own needs.
    For a number of years, there have been concerns that climate change negotiations will essentially ignore a key principle of climate change negotiation frameworks: the common but differentiated responsibilities. This recognizes that historically:
    – Industrialized nations have emitted far more greenhouse gas emissions than developing nations (even if some developing nations are only now increasing theirs) enabling a cheaper path to industrialization;
    – Rich countries therefore face the biggest responsibility and burden for action to address climate change; and
    Rich countries therefore must support developing nations adapt to avoid the polluting (i.e. easier and cheaper) path to development—through financing and technology transfer, for example.
    This notion of climate justice is typically ignored by many rich nations and their mainstream media, making it easy to blame China, India and other developing countries, or gain credence in the false balancing argument that if they must be subject to emission reductions then so must China and India. There may be a case for emerging nations to be subject to some reduction targets, but the burden of reductions must lie with industrialized countries.
    In the meanwhile, rich nations have done very little within the Kyoto protocol to reduce emissions by any meaningful amount, while they are all for negotiating a follow on treaty that brings more pressure to developing countries to agree to emissions targets.
    In effect, the more they delay the more the poor nations will have to save the Earth with their sacrifices (and if it works, as history shows, the rich and powerful will find a way to rewrite history to claim they were the ones that saved the planet).

    4. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    There is a large body of literature about the economic effects of privatization. However, since it was mainly written in the 1990s, there was typically limited emphasis on issues which have come to the fore more recently, as well as more recent developments in the evidence about privatization itself, much of it from developing economies. This motivated us to write this paper, which summarizes the evidence about the impact of recent privatizations, not only in terms of firms’ efficiency but also with regard to the effects on income distribution. In addition, we are particularly attentive to the process of privatization in developing countries, notably with respect to the regulatory apparatus enabling successful privatization experiences.
    When governments divested state-owned enterprises in developed economies, especially in the 1980s and 1990s, their objectives were usually to enhance economic efficiency by improving firm performance, to decrease government intervention and increase its revenue, and to introduce competition in monopolized sectors (Vickers and Yarrow 1988). Much of the earlier evidence about the economic impact of privatization concerned these topics and was based on data from developed countries and later, transition countries. These findings have been brought together in two previous surveys, by Megginson and Netter (2001) and Estrin et al. (2009) respectively. The former assesses the findings of empirical research on the effects of privatization up to 2000, mainly from developed and middle-income countries, while the latter concentrates on transition economies including China, over the 1989 to 2006 period.1 However, the experiences from the wave of privatizations that have occurred in developing countries before and since these studies warrant a new examination of the impact of privatization in the context of the development process.
    The tone of the privatization debate has evolved in recent years in international financial institutions as privatization activity has shifted towards developing economies, and as a consequence of the difficulties of implementation and some privatization failures in the 1980s and 1990s (Jomo 2008). As a result, more emphasis in policy-making is now being placed on creating the preconditions for successful privatization. Thus, in place of a simple pro-privatization bias characteristic of the Washington consensus (Boycko, Shleifer, and Vishny 1995), it is now proposed that governments should first provide a better regulatory and institutional framework, including a well-functioning capital market and the protection of consumer and employee rights. In other words, context matters: ownership reforms should be tailor-made for the national economic circumstances, with strategies for privatization being adapted to local conditions. The traditional privatization objective of improving the efficiency of public enterprises also remains a major goal in developing countries, as does reducing the subsidies to state-owned enterprises (SOEs).

    5. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    Many of today’s poorest countries do not collect adequate revenues to build the human capital, infrastructure, and institutions needed for stronger growth and faster poverty reduction. In sub-Saharan Africa, for example, 15 of the 45 countries have revenues lower than 15 percent of GDP. Moreover, sub-Saharan Africa’s resource-rich countries have revenues that are more volatile and lower than countries that are resource-poor. Even with substantial foreign grants and loans, government spending by developing countries is lower than by advanced economies. In 2018, government spending in sub-Saharan Africa averaged 23 percent of GDP compared with 31.4 percent in middle-income countries and almost 39 percent in the advanced ones.
    Comparisons between today’s developing countries and today’s advanced economies can provide aspiration but less so in terms of recommendations about policies and institutions. Of greater value for developing countries are comparisons with advanced economies when they were less prosperous and would have been considered low-income or lower middle-income. Using government spending a century ago by 14 of today’s advanced economies (Advanced 14), we highlight four lessons for developing countries. We develop these lessons in greater detail in a forthcoming working paper.
    Governments can advance development even with low levels of government spending.
    Today’s low-income countries spend more than twice on average than today’s advanced economies spent more than a century ago. To be sure, this difference reflects the lack of the tax instruments and systems we have today. From 1850 until the early 1900s, customs duties and excises provided the bulk of government revenues, while the personal income tax and VAT were not introduced in countries until later. Moreover, society’s expectations from the government were much different then. In 1900, for example, spending on unemployment, health, pensions, and housing amounted to only 1.1 percent of GDP in the Scandinavian countries on average and to 0.7 percent of GDP in the U.S. Even with low level of government spending, economic development was brisk in most of the Advanced 14 at the turn of the 20th century, with infrastructure improvements financed by private capital and the strong expansion of primary and secondary education. And here lies the lesson for today’s developing economies: While working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be on improving the business environment to attract private capital—mobilizing private finance for development.

    6. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    According to Smriti Chand, (2015),
    he refers international trade as the exchange of capital, goods, and services across
    international borders or territories. According to Shawn Grimsley, (2015), international trade is about the outflow and inflow of international exchange that usually result from the inward (import) and outward (export) movement of goods and services. It is significantly created in order to increase the global state development in term of economic, and the interaction of trade or commerce, as well as the social and political relations between nations.

    Costs and Benefits of International Trade:
    According to Pung Sun & Almas Heshmati, (2010), the authors studied about the relationships and the contributions of international trade on economic growth in the globalization era. Meanwhile, the author found out the positive evidences regarding to the conducting of international trade such as facilitating capital accumulation, industrial structure upgrading, technological progress and institutional advancement. Moreover, he added that international trade offers the states two goods opportunity to gain from international exchange. First, domestic consumers can buy cheaper imported goods and producers can export goods at higher foreign prices. Second, with the lowering of tariff and the removal of barriers, all country could increase the total output and social welfare by making the best use of comparative advantages and specialization while doing international trade. Besides the positive sides of international trade, according to Vlad Spanu, (2003), the author found out some criticisms on the industrialized countries, especially U.S, European Union members and Japan related to their protectionist policies. In addition, World Bank and IMF which annually publish a report on the market access in agriculture and on barriers to trade in textiles and clothing also raised that subsidies and anti-dumping procedures imposed by developed countries can harm the interest of exporters from developing countries. A part from protectionist policies, it is observed that developing countries may have less competitive on the international market since they seem to relatively receive less technology transfer than the developed countries.

    7. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    Removing price controls: lessons from Ghana
    Ghana has used assorted price controls since 1962 for several purposes: to limit rents accruing to sellers in times of scarcity, to combat inflation, and to keep down prices of key items in the cost of living. But price controls have proved ineffective in times of extreme scarcity and rapid inflation and have often exacerbated the problems brought about by currency overvaluation and expansionary fiscal and monetary policies. By 1970 nearly 6,000 prices relating to more than 700 product groups were controlled. Efforts to liberalize the system were reversed following a change of government, and the Prices and Incomes Board was given authority over all price and wage changes. But with inflation reaching 100 percent a year during the 1970s, frequent requests for price adjustments greatly exceeded its administrative capacity. Delays of up to six months forced firms to choose between accumulating stocks, losing money by selling at the old price, or evading the controls altogether. Rapid inflation increased the gap between market prices and official prices. Failure to adjust the exchange rate meant that imports through official channels cost as little as a tenth of their market value. Price controls prevented producers from realizing this scarcity rent, which would have given them extra incentive to produce more. But the inability to enforce controls at the retail level made trading an increasingly lucrative activity. Obtaining access to goods at the official price for resale practice known as kalabule became an important source of income. By the early 1980s the market value of civil servants’ monthly allocation of rice, milk, soap, and so forth (although not received regularly) could equal their monthly take-home pay. Controls over the distribution of scarce goods became increasingly important. During the 1970s, military trucks transported canned milk to the north for sale at the same price as in the southern cities of origin. But this greatly increased the profits from smuggling it to neighboring countries. Similarly, northern rice was smuggled out because price controls made it impossible to cover transport costs to the south. The tighter the controls on a commodity, the scarcer it became. The markets of Togo became well stocked with soap, milk, textiles, and other products that were made in Ghana and then smuggled out, while liquor and other luxuries with high scarcity premiums and less stringent controls were brought in.
    8. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is a process of global economic, political and cultural integration. It has made the world become a small village; the borders have been broken down between countries. ”The history of globalization goes back to the second half of the twentieth century, the development of transport and communication technology led to situation where national borders appeared to be too limiting for economic activity” (Economic Globalization in Developing Countries, 2002). Globalization is playing an increasingly important role in the developing countries. It can be seen that, globalization has certain advantages such as economic processes, technological developments, political influences, health systems, social and natural environment factors. It has a lot of benefit on our daily life. Globalization has created a new opportunities for developing countries. Such as, technology transfer hold out promise, greater opportunities to access developed countries markets, growth and improved productivity and living standards. However, it is not true that all effects of this phenomenon are positive. Because, globalization has also brought up new challenges such as, environmental deteriorations, instability in commercial and financial markets, increase inequity across and within nations. This paper evaluates the positive and negative impact of globalization on developing nations in the following proportions;
    a- Economic and Trade Processes Field
    b- Education and Health Systems
    c- Culture Effects

    a- Economic and Trade Processes Field
    Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers. They cannot share the same economic growth that developed countries had. However, with globalization the World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans. Many developing nations began to take steps to open their markets by removing tariffs and free up their economies. The developed countries were able to invest in the developing nations, creating job opportunities for the poor people. For example, rapid growth in India and China has caused world poverty to decrease (blogspot.com.2009). It is clear to see that globalization has made the relationships between developed countries and developing nations stronger, it made each country depend on another country. According to Thirlwall (2003:13) ” Developing countries depend on developed countries for resource flows and technology, but developed countries depend heavily on developing countries for raw materials, food and oil, and as markets for industrial goods”. One the most important advantages of globalization are goods and people are transported easier and faster as a result free trade between countries has increased, and it decreased the possibility of war between countries.
    b- Education and Health Systems
    Globalization contributed to develop the health and education systems in the developing countries. We can clearly see that education has increased in recent years, because globalization has a catalyst to the jobs that require higher skills set. This demand allowed people to gain higher education. Health and education are basic objectives to improve any nations, and there are strong relationships between economic growth and health and education systems. Through growth in economic, living standards and life expectancy for the developing nations certainly get better. With more fortunes poor nations are able to supply good health care services and sanitation to their people
    c- Culture Effects
    Globalization has many benefits and detriment to the culture in the developing countries. Many developing countries cultures has been changed through globalization, and became imitate others cultures such as, America and European countries. Before globalization it would not have been possible to know about other countries and their cultures. Due to important tools of globalization like television, radio, satellite and internet, it is possible today to know what is happening in any countries such as, America, Japan and Australia

    9. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    This examines the role of the agricultural sector in poverty alleviation and in the sustainable economic growth and development of the least-developed countries (LDCs). It sets out to provide up-to-date information and to generate debate that will help forge stronger consensus on actions needed for agriculture to be accorded its rightful place in the LDCs. Agriculture is the mainstay of the LDC economies, underpinning their food security, export earnings and rural development. Yet, their agricultural production for the domestic and export markets has lagged behind, with growth in per caput output declining in the 1990s. Slow production growth and sharp annual fluctuations in output have continued to be chronic problems for the LDCs, constituting the main causes of their persistent poverty and rising food insecurity. The proportion of undernourished in the total LDC population increased from 38 percent to 40 percent between 1969-71 and 1996-98, while the absolute number rose from 116 million to 235 million. As regards trade, the LDCs have continued to be marginalized in world agricultural markets, accounting for only 5 percent of global agricultural exports in the early 1970s and barely 1 percent in the late 1990s. The poor performance of agriculture in the LDCs is related to the many internal and external difficulties that these countries face as they seek to develop this sector and achieve their objectives of improving food security and increasing export earnings. Their internal difficulties include low productivity, rigid production and trade structures, a limited skills base, short life expectancy and low educational qualifications, poor infrastructure, and inadequate institutional and policy frameworks. 4 THE ROLE OF AGRICULTURE IN THE DEVELOPMENT OF LDCS At the same time, with the growing integration of markets from globalization and trade liberalization, their economies have to operate in an increasingly competitive external environment. They continue to export a narrow range of primary commodities that are highly vulnerable to instability of demand and deteriorating terms of trade. In addition, external assistance to agriculture in the LDCs has declined, with average annual ODA falling 20 percent from 1981-90 to 1991-99. Their inability to compete not only on world markets but also on their home markets is reflected in their rising food import bills. Reversing this decline and integrating the LDCs into the world economy represent enormous challenges: overcoming marginalization from global markets; adapting to technological change; and coping with a new institutional environment. But most of the LDCs have enormous untapped agricultural potential to meet these challenges, with considerable scope for more effective use of resources and higher productivity. What is needed therefore is a renewed focus on agricultural and rural development. Significant progress in promoting economic growth, reducing poverty and enhancing food security cannot be achieved in most of these countries without drawing more fully upon the potential productive capacity of agriculture and its contribution to overall economic development. With the support of their development partners, the governments of the LDCs may need to rethink their agricultural and rural development strategies if they are to achieve their social and economic objectives, including that of reducing the number of undernourished by 2015. The paper highlights elements of a strategy for action by the LDCs – with the support of the international community – that will help them exploit their agricultural potential by strengthening their supply capabilities and competitiveness, and thus take full advantage of the trading opportunities inherent in the multilateral trading system. Progress is crucial on three fronts: raising and sustaining productivity and competitiveness; diversifying production and trade; and improving access to foreign markets
    10. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    Emerging markets and developing countries have about $11 trillion in external debt and about $3.9 trillion in debt service due in 2020. Of this, about $3.5 trillion is for principal repayments. Around $1 trillion is debt service due on medium- and long-term (MLT) debt, while the remainder is short-term debt, much of which is normal trade finance. or IDA), 2020 MLT debt service is about $36 billion, divided in roughly equal proportions between multilateral, bilateral (mostly non-Paris Club), and commercial creditors.
    All developing country regions are potentially seriously affected: Latin America has the highest debt service/exports ratio, Africa has the least diversified export mix, East Asia has the largest absolute amount of debt service.
    In normal circumstances, the principal amounts would simply be refinanced in global capital markets or offset by new disbursements from existing lenders. But circumstances are not normal. Credit markets have tightened, spreads have risen, and many countries are faced with very large reductions in foreign exchange revenues. In the face of huge global economic uncertainty, it is hard to predict which countries and regions will be most vulnerable, and not all the vulnerability has been caused by the pandemic. Already, Venezuela, Argentina, and Lebanon have defaulted and face lengthy and damaging legal proceedings with each creditor trying to negotiate individually, resulting in dead-weight losses for everyone until the situation is sorted out.
    One indication that the problem is widespread is that already 90 countries have approached the IMF to access emergency financing instruments. It seems clear that this is not just a low-income or an African country problem.
    There are several calls for debt standstills (here, here and here) to ease the burden on developing countries. Debt threatens to create a global development emergency in much the same way as the pandemic is creating a global health emergency. Both could result in social unrest and instability. Something will have to be done, so it is useful to recap the lessons from previous debt crises.
    Timeliness and urgency are important. Many developing countries simply will not have the foreign exchange to service their debt this year, notably those who are heavily indebted, are commodity dependent (two-thirds of all developing countries according to UNCTAD), have relied on large tourism receipts, or on remittances. A good example of the value of buying time is the negotiated rollover of private bank credits to Korea in 1997-98, aided by regulators who agreed not to call the measures a technical default.

    11. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes? Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    Foreign aid is a post-war phenomenon which was introduced to help the Third World countries to escape from the underdevelopment and poverty. The paper argues that foreign aid programmes originated as part of the ideological confrontation known as the Cold War and that the motives behind aid were always more political than economic. The objective of this paper is to portray foreign aid as the mechanism which explains the relationship between the rich and the poor nations in the world today, in other words, the paper explains the relationship between the Official Development Assistance and the level of development. The research is explanatory in nature. Both social and economic indicators were utilized to investigate the research problem. Because of the limited time factor, the immediate focus of the analysis was on Guatemala and Peru as case study. The study concludes that foreign aid retards and distorts the process of economic development of the recipient countries and results in dependence and exploitation. It also replaces domestic savings and flows of trade. It seems clear that most countries are economically dependent on the rich. Furthermore, in many ways the working of the international capitalist economy clearly intensifies the condition of dependence. Giving aid for development seems almost the exact reverse. Power does play a part in the relations between the rich and the poor. Turning to the future, foreign aid programmes are bound to change to reflect the new realities of global international relations.
    12. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    In this twenty-first century, MNC has become the central institution of developing nations. A significant number of MNCs started their operations in developing countries by the 1990s. The effects of their operations in developing countries are now assessed quite differently from that was done in the past. MNCs benefit from the lower labor costs and grants given by the government of developing countries in order to attract these MNCs. Moreover, lower tax rates or tax exemptions are also given to MNCs for a period in the developing countries. On the other hand, these developing countries can also gain from the investment made by these MNCs. MNCs can help reducing poverty, driving economic growth, creating jobs that utilize local people, raise employment standards by paying better wages than local firms pay. In addition, they can boost economic development by transferring technology and knowledge, improve or build up infrastructure, raise people’s standard of living. Overall, it might seem that the developing countries gain from investments of MNCs. Is that really true? Although MNCs have become omnipresent in the developing world, there has always been an uncertainty about them, in both positive and negative ways. Most of the MNCs take advantage of developing countries. They can be guilty of making pollution or doing human rights abuse. Nevertheless, laborers are paid low wages, as there are few or no trade unions to protect their rights or negotiate with the MNCs. Thus, the theoretical dispute over the effects of MNCs in developing countries is mirrored in the conflict. Apparently, two broad positions can be derived from these differences of opinion- the positive and negative. Some proponents have developed arguments that emphasize the positive results of foreign direct investment (FDI) by
    1 Associate Professor, Department of Management Studies, University of Chittagong.
    2 Professor, Department of Management Studies, University of Chittagong
    The Chittagong University Journal of Business Administration, Vol. 24, 2009, pp. 111-137 MNCs. They are willing to admit some gains from FDI. On the contrary, others are unwilling to accept a positive role for multinational capital under any circumstances
    13. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    The various tools of fiscal policy such as budget, taxation, public expenditure, public works and public debt can go a long way for maintaining full employment without inflationary and deflationary forces in underdeveloped economies.
    Obviously, taxation and public expenditure is a powerful instrument in the hands of public authority which greatly affect the changes in disposal income, consumption and investment.
    An anti-depression tax policy increases disposable income of the individual, promotes consumption and investment. This will ultimately result in increase in spending activities which in turn, increase effective demand of the people. On the contrary, during inflation, anti-inflationary policy measures help to plug the inflationary gap.
    During inflation, such measures are adopted which help to wipe off the excessive purchasing power and consumer demand. Tax burden is raised in such a manner as it may not retard new investment. Keeping in view all facts in mind, it is stated that fiscal policy plays very significant role for promoting economic development and stability of under developed countries.
    It is illustrated by the following points:
    a) To Mobilize Resources:
    The foremost aim of fiscal policy in underdeveloped countries is to mobilize resources in the private and public sectors. Generally, the national income and per capita income is very low due to low rate of savings. Therefore, the governments of such countries through forced savings pushes the rate of investment and capital formation which in turn accelerates the rate of economic development.
    It also undertakes the policy of planned investment in the public sector. Private investments have the favourable effect of increasing investment, the curtailment of conspicuous consumption and investment in unproductive channels can help to check the inflationary trend in the economy. Moreover, these countries face the problem of foreign capital. Thus the remedy lies in increasing the incremental saving ratio, the marginal propensity to save through public finance, taxation and forced loans.
    To some extent, progressive taxation, heavy duty on luxury imports, ban on the manufacture of luxury and semi-luxury goods are other measures which help to mobilize the resources, Therefore, progressive taxation on windfall gains, on unearned incomes on capital gains, on expenditure and real estates etc. can go a long way in equitable distribution of wealth.
    b) To Accelerate the Rate of Growth:
    Fiscal policy helps to accelerate the rate of economic growth by raising the rate of investment in public as well as private sectors. Therefore, various tools of fiscal policy as taxation, public borrowing, deficit financing and surpluses of public enterprises should be used in a combined manner so that they may not adversely affect the consumption, production and distribution of wealth.
    In order to achieve balanced growth in different sectors of the economy, according to Prof. J. Chelliah, the most fruitful line of advance lies along the path of a balanced development of agriculture and industry. In short, investment in basic and capital goods industries and in social overheads is the pillars of economic development in an underdeveloped economy. Thus, top priority to such investment should be given to accelerate the all round growth of an economy.
    c) To Encourage Socially Optimal Investment:
    In underdeveloped countries, fiscal policy encourages the investment into those productive channels which are considered socially and economically desirable. This means optimal investment which promotes economic development and avoids wasteful and unproductive investment.
    In short, aim of the fiscal policy should be to make investment on social and economic overheads such as transportation, communication, technical training, education, health and soil conservation. They tend to raise productivity and widen the market to enjoy external economies. At the same time, unproductive investment is checked and diverted towards productive and socially desirable channels.
    d) Inducement to Investment and Capital Formation:
    Fiscal policy plays crucial role in underdeveloped countries by making investment in strategic industries and services of public utility on one side and induces investment in private sector by giving assistance to new industries and introduces modern techniques of production. Thus, investment on social and economic overheads are helpful in increasing the social marginal productivity and thereby raising the marginal productivity of private investment and capital formation. Here, optimum pattern of investment can also go a long way to yield fruitful results of economic development.
    Economic development is a most dynamic process which involves changes in the size and quality of population, tastes, knowledge and social institutions. Keeping all factors in mind, if social marginal productivity in socially desirable projects is low, fiscal policy should be framed to raise social marginal productivity and to divert resources to that productive channels where the social marginal productivity is the highest.

    Does Military Spending Stimulate or Retard Economic Performance?
    The United States is the midst of a major expansion in its military spending, the fourth such expansion since the end of World War II. The military budget is projected to reach $400 billion in constant (1996) dollars in Fiscal Year (FY) 2005, which is approximately the level the military budget reached at the peak of each of the three previous post-World War II buildups. These buildups were followed by drawdowns, giving military spending a cyclical pattern without an upward time trend.
    Over the same time period, of course, the economy has grown substantially. Thus, the ratio of military spending to gross domestic product (GDP) commonly thought of as a measure of the defense burden, has fallen substantially, albeit with its own cyclical pattern. Similarly, the share of the federal government budget spent on the defense function has also declined substantially. Whenever military spending changes, there are discussions and debates as to its economic impacts. Broadly speaking, there are two sets of views. One sees the military as a drain on the economy, especially in the form of depleting the private sector of key technological and managerial resources. Whatever benefits there are from demand stimulation and technological spin-offs are swamped, in this view, by the drain of
    resources that could, and should, be utilized for investment in human and physical capital and for research and development.
    14. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    The most-cited source of evidence on the impacts of microfinance is the early set of studies collected by David Hulme and Paul Mosley (1996). The findings of these studies are provocative: poor households do not benefit from microfinance; it is only non-poor borrowers (with incomes above poverty lines) who can do well with microfinance and enjoy sizable positive impacts. More troubling is the finding that a vast majority of those with starting incomes below the poverty line actually ended up with less incremental income after getting micro-loans, as compared to a control group which did not get such loans. Findings of the Hulme and Mosley studies imply that credit is only one factor in the generation of income or output. There are other complementary factors, crucial for making credit more productive. Among them, the most important is recipient’s entrepreneurial skills. The findings of the MIT study by Banerjee et al also point to this factor.8 Most poor people do not have the basic education or experience to understand and manage even low level business activities. They are mostly risk-averse, often fearful of losing whatever little they have, and struggling to survive.

    References

    1. https://www.oecd.org/derec/sweden/Rapport-Education-developing-countries.pdf
    2. http://www.fao.org/3/t0060e/t0060e02.htm
    3. https://www.sciencedirect.com/science/article/pii/S0306919212001285
    4. https://www.globalissues.org/article/231/climate-justice-and-equity
    5. https://academic.oup.com/wbro/article/33/1/65/4951686
    6. https://www.brookings.edu/blog/future-development/2019/02/20/4-lessons-for-developing-countries-from-advanced-economies-past/
    7. https://openknowledge.worldbank.org/bitstream/handle/10986/5970/9780195205633_ch07.pdf?sequence=9&isAllowed=y
    8. https://www.linkedin.com/pulse/impact-globalization-developing-countries-fairooz-hamdi
    9. http://www.fao.org/3/y3997e/y3997e.pdf
    10. https://www.brookings.edu/blog/future-development/2020/04/13/what-to-do-about-the-coming-debt-crisis-in-developing-countries/
    11. https://spectrum.library.concordia.ca/3451/
    12. https://www.researchgate.net/publication/326398955_Impact_of_Multinational_Corporations_on_Developing_Countries
    13. https://www.economicsdiscussion.net/fiscal-policy/role-of-fiscal-policy-in-economic-development/4698
    14. https://www.researchgate.net/publication/228679899_Does_military_spending_stimulate_or_retard_economic_performance_revisiting_an_old_debate
    15. https://core.ac.uk/download/pdf/6301036.pdf

  23. Avatar NGADI GOD'S PROMISE CHICHOROBIM says:

    NAME: NGADI GOD’SPROMISE CHICHOROBIM
    REG NO:2018/242405
    DEPARTMENT: ECONOMICS
    COURSE: DEVELOPMENTAL ECONOMICS 1
    CODE: ECO 361
    14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    All things being equal, the Educational system in developing countries serves as one of the major force in driving the economy but in most cases this mechanism has lost its potency because of certain factors such as corruption, negligence, bribery, poor funding etc. Educational system is the bedrock for research. All inventions thrive through the educational sector. But in Nigeria, politicians have manipulated education and use the educated one’s to remain in power.
    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    Provision of mechanised tools for agriculture: Government should provide mechanised tools such as tractor, plough etc which will enable farmers move from subsistence to commercial farming.
    Provision of social amenities: pipe borne water, good roads, electricity should also be provided. This will foster easy movement of the agricultural produce from rural to urban areas.
    Formulation of policies: Good policies that serve as aid to boost development should be formulated by the government. E.g FADAMA Project etc
    Increase in the cost of agricultural produce does not stimulate food production. It only increases inflation.
    Rural institutional changes are needed because they serve as the tools used in development.
    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    Environmental sustainability equates to environmentally sustainable development, but what does that mean on a practical level? It means there must be a balanced relationship between the natural resources available to us and the human consumption of those resources:
    For renewable resources like crops or timber, the rate of harvest shouldn’t exceed the rate of regeneration. This is known as “sustainable yield.”
    For non-renewable resources like fossil fuels, the rate of depletion shouldn’t exceed the rate of development of renewable alternatives like solar or wind power.
    For pollution, the rates of waste generation shouldn’t exceed the capacity of the environment to assimilate that waste. This is known as “sustainable waste disposal.”
    In short, environmental sustainability states that the rates of renewable resource harvest, non-renewable resource depletion, and pollution assimilation can be naturally maintained indefinitely. The United Nations World Commission on Environment and Development goes further, defining environmental sustainability as behaving today in a way that ensures that future generations will have enough natural resources to maintain a quality of life equal to if not better than that of current generations.
    Achieving a balance between natural resources and human consumption that is both respectful of the natural world yet fuels our modern way of life, is one of the most important pieces in the climate-change puzzle. With unchecked resource depletion, we risk a global food crisis, energy crisis, and an increase in greenhouse gas emissions that will lead to a global warming crisis. On the other hand, with too many restrictions on the use of natural resources, we risk slowing technological and economic advancement.
    For the future of our planet and the humans who populate it, it’s vital to weigh the competing needs of environmental protection and human development so both the natural world and society are able to flourish. Striking this delicate balance is challenging—though not impossible—and issues surrounding sustainability, the environment, and society have been the focus of scientists, philosophers, politicians, and policy experts for decade

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    It is a mixture of both. Free markets and privatization is a double edged sword. Free market and privatization should be allowed to dominate the economy but Government still have roles to play.
    Reasons why free markets would foster development
    Increase in competition: firms would be allowed to compete within each other and this would foster creativity and improve the means of production
    Increase in employment opportunities: As a result of private individuals running the economy, job opportunities would increase and this would inadvertently reduce poverty rate and increase development.
    Reduction in importation: people would be motivated to look within their surroundings and make use of their resources into finished goods.
    Reasons why government still have a major role to play in their economics
    To prevent exploitation: every monopolist tends to exploit people inorder to maximize their individual desires. Government can step In to stop this.
    Provision of essential services: It is only the government that can cater for the welfare of her citizens.
    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    Poor planning for resources
    we do not make proper planning for our resources. It’s a huge contributor to why projects fail. Project management involves resource management, often taking other projects into consideration. Most of us know that financial resource planning is important.
    Unclear Goals and Objectives :
    One way to almost guarantee project failure is to begin work without clear project objectives and goals. After all, there’s no way to know whether you’ve succeeded when you aren’t completely sure what you’re trying to accomplish. Several popular frameworks for goal setting, such as SMART goals and CLEAR goals are there but the essence is that your goals must be measurable and realistic. Don’t just say you want to “lose weight,” say you want to lose fifteen pounds in the next four months. That’s both measurable and realistic. The projects you manage are more complex than that, which is why it’s even more critical to define your objectives clearly.
    Corrupt government :
    Many political leaders in the developing countries are corrupt. As a result they only adopt development policies that benefit their selfish interest instead of the masses thereby resulting to the adoption of development policies that are very poor in nature.
    Lack of visionary leadership :
    Many developing nations lack the necessary visionary leaders that will pilot the affairs of their nations and the resultant implication is that they end up adopting poor developmental policies.
    Weak institutions :
    Many developing countries are poor so they lack the resources to establishe strong development institutions that will help make sound development policies that will enhance their situations economically and socio-politically. As a result they end up adopting poor development policies.
    What can be done to improve on those choices :
    1. Eradicating corruption among they leaders.
    2. Voting in visionary leaders into powers.
    3. Having clear goals and objectives.
    4. Having enough resources in place.
    5. Building strong institutions that will help make and implement sound development policies

    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    International trade definition gives a hint to policy makers or economists to understand about international trade; meanwhile, it is noticed that the various definitions of international trade given by different economists can be an indicator to calculate the cost and benefit of doing international trade. According to Smriti Chand, (2015), he refers international trade as the exchange of capital, goods, and services across international borders or territories. According to Shawn Grimsley, (2015), international trade is about the outflow and inflow of international exchange that usually result from the inward (import) and outward (export) movement of goods and services. It is significantly created in order to increase the global state development in term of economic, and the interaction of trade or commerce, as well as the social and political relations between nations. Costs and Benefits of International Trade: According to Pung Sun & Almas Heshmati, (2010), the authors studied about the relationships and the contributions of international trade on economic growth in the globalization era. In addition, World Bank and IMF which annually publish a report on the market access in agriculture and on barriers to trade in textiles and clothing also raised that subsidies and anti-dumping procedures imposed by developed countries can harm the interest of exporters from developing countries. A part from protectionist policies, it is observed that developing countries may have less competitive on the international market since they seem to relatively receive less technology transfer than the developed countries.
    once different countries possess different factor endowment in producing goods, trade will occur among all those countries, in which they can enjoy the mutual benefit, even some countries might gain less than the others, but still they can maximized their benefit as much as they can. However, if we think about the cost and benefit between the poor and the rich we can say that, the developing countries to suffer more from the trade deficit as the trade deficit is too heavy for those from the developing countries, while the developed countries tend to enjoy more benefit from conducting the trade. Moreover, if we can say that developing countries seem to be able to earn a very low profit from the trade liberalization, as they do not have advanced technology just like the rich countries do, so what the developing countries can product are most likely to be garment product, food or agricultural products, while the rich countries can produce some kind of machinery, automobile, and as well as the technological product which can help the rich to earn way better than the developing can do. For example, Cambodia exports a total of 44 and 36 percent of garment to US and EU recently in the very 1st quarter of 2015 (World Bank, 2015), and by export those kind of products Cambodia did not gain much comparing to the developed countries. On the other hand, despise having to say that the developing countries have to suffer a lot more than the developed countries over the trade relations, but still the developing countries can also gain quite a handful satisfaction from it as well.
    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    The improved global economic environment for many developing countries — including the current upswing in some nations resulting from high demand for oil and other raw materials, and the expanded manufacturing prowess of others, such as China — needs to be turned into a dynamic process of economic growth and structural change that creates employment and raises living standards over the long term, a new UNCTAD report says.
    To do this, the Trade and Development Report 2006 (1), (TDR) counsels, Governments of developing countries should be actively involved in fostering and strengthening domestic businesses — in contrast to the 1980s and ´90s, when they were advised by the Bretton Woods Institutions to keep their hands off and let market forces do the work of “getting the prices right.” These countries also should not be overly restricted by international trade rules or by conditions imposed by international lenders from doing what´s best for their economies, the report says. Such freedom of action has become a major issue in recent years and is often referred to as “policy space” (see UNCTAD/PRESS/PR/2006/019)
    The report, also known as the TDR, urges Governments to take a pro-active stance in macroeconomic and industrial policies to accelerate private investment and technological upgrading and to stimulate the creative forces of markets: it is risk-taking, innovative entrepreneurial decisions that lead to new lines of production and the creation of new firms and jobs. Governments should also protect fledgling enterprises when necessary, including through the careful application of subsidies and tariffs, until domestic producers can meet international competition in the sale of increasingly sophisticated products.
    The TDR contends that monetary policy could play a more effective role in support of growth by focusing on the provision of low real interest rates, which would incite investment, and a competitive and stable exchange rate, which would promote domestic producers in world markets. To allow monetary policy to play that role, the report says, emerging-market economies should reduce their dependence on foreign capital inflows, as many of them have already done, and should identify additional non-monetary instruments for price stabilization, such as income policy or direct intervention into price and, especially, wage formation.
    The Trade and Development Report underlines that any prescription for economic development must respect the specific situation of each country. There is no “one-size-fits-all.” Nonetheless, it identifies some common factors that should be applied: policies supportive of innovative investment; adaptation of imported technology to local conditions; strengthening of industrial policy; and “strategic trade integration” — that is, the careful, managed introduction of domestic businesses into international markets.

    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    In the 1990s, the World Bank and IMF’s structural adjustment programs came under rising criticism from civil society for having, in general, negative social and economic impacts on marginalized people and for undermining democracy in recipient countries (for a comprehensive assessment of these negative consequences, see the Structural Adjustment Participatory Review International Network Report 2004, which was born of an unique five-year collaboration among citizen’s groups, developing country governments, and the World Bank). The policy conditions attached to these programs seemed unable to lever critical political and economic reforms. At the same time, there was an increasing awareness on the part of the donor community that broadened participation and political competition were crucial ingredients for aid effectiveness and economic progress. As a result, both bilateral and multilateral donors began to look for new development strategies, redefining their role not only in the transfer of financial resources, but also in contributing to good governance which, at least implicitly, also includes democratization – the issue on which we will focus here. In this context, a closer analysis of the instrument of poverty reduction strategies (PRS) is particularly warranted. Tied to a set of governance conditions, PRS have placed issues of poverty reduction and good governance at the center stage of the official agenda in a number of developing countries. Introduced in 1999, PRS related lending is currently the World Bank and IMF’s main program type for regulating access to debt relief and concessional financing. By replacing the former structural adjustment programs (SAPs), the PRS approach seeks to increase the participation of civil society in the design and implementation of national development strategies. As a result, the international financial organizations (IFIs) expect to see the voices of formerly excluded social groups help to formulate more effective development strategies leading to welfare-improving outcomes. Along with that the PRS approach induces political processes on which we will focus here. We argue that PRS can contribute to a democratic transition in recipient countries by empowering civil society and strengthening democratic accountability of governments towards their citizens and vis-à-vis other domestic political institutions. Whereas bilateral donors have shown fewer problems in autonomously redefining their role, the official mandate of the World Bank and the IMF does not allow them any political interference with recipient countries. In practice, however, their lending modalities do have political consequences for recipient nations (independently of whether this effect is intended by the international financial institutions or not). The design of loan conditionality is intrinsically highly political because it involves policies and processes which affect the welfare of most people (Killick 1995: 170) and thus changes the power balances between the political actors involved in the domestic democratization process. The question thus arises, whether IMF and World Bank programs encourage or inhibit democratization, and how their traditional and more recent forms of lending arrangements and accompanying conditions have fared in this respect. As the latter convincingly argue, the working class and the bourgeoisie are weakly developed in African and Asian countries. Instead, the state has taken a leading role in the capitalist development of the developing world which is highly influenced by international factors.

    21. What is meant by globalization, and how is it affecting the developing countries?
    Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. Countries have built economic partnerships to facilitate these movements over many centuries. But the term gained popularity after the Cold War in the early 1990s, as these cooperative arrangements shaped modern everyday life. This guide uses the term more narrowly to refer to international trade and some of the investment flows among advanced economies, mostly focusing on the United States.
    Globalization compels businesses to adapt to different strategies based on new ideological trends that try to balance the rights and interests of both the individual and the community as a whole. This change enables businesses to compete worldwide and also signifies a dramatic change for business leaders, labor, and management by legitimately accepting the participation of workers and the government in developing and implementing company policies and strategies. Risk reduction via diversification can be accomplished through company involvement with international financial institutions and partnering with both local and multinational businesses.
    Globalization brings reorganization at the international, national, and sub-national levels. Specifically, it brings the reorganization of production, international trade, and the integration of financial markets. This affects capitalist economic and social relations, via multilateralism and microeconomic phenomena, such as business competitiveness, at the global level. The transformation of production systems affects the class structure, the labor process, the application of technology, and the structure and organization of capital. Globalization is now seen as marginalizing the less educated and low-skilled workers. Business expansion will no longer automatically imply increased employment. Additionally, it can cause a high remuneration of capital, due to its higher mobility compared to labor.

    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    Some developing countries climate favours the production of certain crops and animals products above some other countries of the world, so there is a need to encourage the exportation of these crops and products to other countries to earn foreign exchange which will be used to import other goods that are needed in order to attain industrialization.
    Better infrastructure to promote processed agricultural exports can unleash untapped farm export potential in these countries. So emphasis Should be laid on promoting farm exports. This would provide a much needed boost to the economies of these developing countries, therefore, paving the way for rapid economic development.
    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development? Some of the reasons many developing nations get into serious foreign-debt can be attributed to internal causes such as: Poor debt management, low government revenues due to inefficient tax policies, weak social and political institutions etc.
    Furthermore, these loans are often used for the consumption of goods, rather than for productive investments.
    In addition, there are some external causes such as: natural disasters like floods or storms. Structural problems, such as lack of diversity in economic and export structure, result in their economies being highly vulnerable to price and demand fluctuations on the world market.
    The existence of debt has both social and financial costs. Heavily indebted developing countries are prone to higher rates of infant mortality, disease, illiteracy, and malnutrition than other countries in the developing world.
    Excessive levels of foreign debt can hamper countries’ ability to invest in their economic future—whether it be via infrastructure, education, or health care—as their limited revenue goes to servicing their loans. This acts as a drag to any long-term economic growth and development plan.

    24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    Foreign aid as has been visibly seen in many developing countries has helped them to undertake many projects in their various countries and implement different capital projects and policies.
    Even though it is beneficial, borrowing always comes at a cost, therefore, if there is an alternative, countries should make use of it and avoid “see finish”. And in a situation where it is unavoidable, it should only be used for capital projects and projects that would yield large returns in the long run.

    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    Multinational corporations should be encouraged to invest because of the bubbling of their economies and the belief that in the foreseeable near future, they would undergo industrialization and develop themselves thus guaranteeing a return on their investment.
    The global factory is a structure through which multinational enterprises integrate their global strategies through a combination of innovation, distribution and production of both goods and services.
    As more nations, people, and cultures adapt to the ever changing international community, diplomats, politicians, and representatives must meet and deal with accordingly to the needs and wants of nations. Diplomacy can be exerted in many forms; through peace talks, written constitutions, field experiences, etc.
    Culture is a familiar term and remains unchanged by definition. However, globalization and international relations have constantly altered culture both positively and negatively. Globalization increases worldwide technology, and the readability of fast, effective communication and consumption of popular products. Globalization
    links cultures and international relations on a variety of levels; economics, politically, socially, etc.
    International relations have used globalization to reach its goal: of understanding cultures. International relations focus on how countries, people and organizations interact and globalization is making a profound effect on
    International relations. Understanding culture, globalization, and international relations is critical for the future of not only governments, people, and businesses, but for the survival of the human race.
    In today’s increasingly interdependent and turbulent world, many of the leading issues in the news concern international affairs. Whether it is the continuing impact of globalization,
    Globalization – the process of continuing integration of the countries in the world – is strongly underway in all parts of the globe. It is a complex interconnection between capitalism and democracy, which involves positive and
    negative features, that both empowers and disempowers individuals and groups. From the other hand Globalization is a popular term used by governments, business, academic and a range of diverse non-governmental organizations. It also, however, signifies a new paradigm within world politics and economic
    relations. While national governments for many years dictated the international, political and economic scene, international organizations such as the World Bank, International Monetary Fund and the World Trade Organization have now become significant role players. In this “Global Village” national governments have lost some of their importance and perhaps their powers in favor of these major international organizations.
    As a process of interaction and integration among people, companies and governments of different nations Globalization is a process driven by the International Trade and Investment and aided by Information technology. This process on the environment on culture, on political system, on economic development and prosperity, and on human physical well-being in societies around the world.

    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    Below are some of the roles of financial and fiscal policy on economic development
    1) improving employment opportunities
    2) the police reduces inflationary trends
    3) they help in credit control and also regulates interest rate
    4) these policies help in maintaining stabilization of price in the economy
    5) It also helps to increase the capital inflow in the economy .
    6)They help in reducing inequality gap and the reallocation of resources.

    B) large military expenditures is another form of government expenditure which helps to increase output. Also it is the military that makes sure that the country is not invaded by external forces if which they they invade will lead to economic setback and distress to the economy as such large military expenditures to a large extent improve economic growth.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Microfinance banks are those financial institution charged with the responsibility of providing funds ,loans, accept deposit from low income earners including consumer and small enterpreneur.
    IT’S POTENTIAL TO SPUR DEVELOPMENT:
    1) They gives financial access such as loan
    2) microfinance banks operates on collateral free loans
    3) There is always free use of loan i.e no Limited invitation on specific objective of obtaining a loan
    4) Encourages savings and reduces poverty
    5) Encourages self sufficiency and enterprenuership by giving loans who wish to start up small business.
    IT’S LIMITATIONS
    1) Low volume of loan/ small amount of loan
    2) there is a high interest rate.etc

  24. Avatar Benjamin Gift Ihunanya 2018/241855 says:

    4. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    Educational system promotes economic development as it :
    Provides an avenue for better decision making.
    Encourages Innovation and invention…
    It increases the standard of living as people are more informed about their environment and their impact on it.
    Reduces ignorance and increases assertiveness.

    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?
    Agricultural and rural development can be best promoted through :
    Effective participation of rural people and rural communities in the management of their own social, economic and environmental objectives by empowering people in rural areas, particularly women and youth.
    Provision of infrastructural facilities in rural area . This will help to reduce emigration of labour from rural areas. It will also encourage agricultural productivity as farmers will have easy access to market , supply of agricultural input , storage facilities and lot more.
    Subsidy on exportation of agricultural products. This will create an incentive for farmers to increase output thereby creating employment opportunities in rural areas as most rural areas as agrarian in nature which will eventually lead to reduction in unemployment and poverty rate thereby leading to economic development.
    Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    Higher agricultural prices is not sufficient to stimulate food production, as food production also depends on
    Infrastructure such as good roads, safe drinking water.
    Adequate power supply.
    market network. Availability of market or market size.
    Modern communication services
    Storage facilities.

    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    Environmental sustainability development is development that ensures future generations have the natural resources available to live an equal, if not better, way of life as current generations. The developed countries(the rich north) are the major cause of environmental damage due to industrialization while developing countries(the poor south) bear the cost of the damage as they lack initiative on management of environmental damage.

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?
    Government in developing countries have roles to play in development as economic privitisation will only seek to satisfy the selfish interest and not the good of all. Government needs to;
    Provide some basic social goods such as bridges , airports , security , law , etc to facilitate development.
    Maintain law and order.
    Provide security both internal and external security.
    Oversee price regulation to avoid economic exploitation.
    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    Level of ignorance.
    Selfish interest of political and economic leaders .
    Level of education.
    Developing countries imitate foreign policies that do not align with their economic condition.
    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?
    International trade is desirable from the point of view of the development of poor nation’s as it creates access to capital goods, wider market for their products, technological advancement e.t.c. International trade also has it adverse effect on poor nation’s as it;
    Creates an avenue for poor countries to be used as dumping site for developed nations.
    Creates an avenue for industrial exploitation of poor nations as resources are gotten from them at little or no cost.
    Developed countries gain more from trade than developing countries. Though developing countries gain less from trade , trade helps attract foreign investment which can help in development.
    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    Government’s of developing countries can adopt policy of foreign exchange control if the following conditions are met.
    Import substitution policy has been fully implemented and is functional.
    The country has the resources and capacity to produce the goods.
    The country can sufficiently meet its own demand.
    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    International Monetary Fund ” stabilisation programs” and World Bank ” structural adjustment program” are inappropriate for developing countries and rely excessively on compressing domestic aggregate demand.It also involve currency devaluation , damages market confidence and has negative effect on growth. In particular, these programmes undermine access to quality and affordable healthcare and adversely impact upon social determinants of health, such as income and food availability.
    21. What is meant by globalization, and how is it affecting the developing countries?
    Globalisation is the integration of the world’s economies , cultures and people. Globalisation has some economic benefits to developing countries such as technology transfer hold out promise, greater opportunities to access developed countries markets, growth and improved productivity and living standards. However, it is not true that all effects of this phenomenon are positive. Because, globalization has also brought up new challenges such as, environmental deteriorations, instability in commercial and financial markets, increase inequity across and within nations.
    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?
    Exports of primary products such as agricultural commodities should be promoted in developing countries due to the following reasons ;
    It provides a source of income to Farmers.
    It will also earn valuable foreign exchange .
    It increases production .
    It creates employment opportunities .
    It leads to specialisation production. Developing countries endowed with natural ability in agriculture should promote exportation of agricultural products as it fosters development.

    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    Foreign debts problems can be internal and external.
    Internal in the aspect of poor debt management and low government revenues due to inefficient tax policies and weaknesses in the rule of law are among the internal causes. Furthermore, the loans are often used for the consumption of goods, rather than for productive investments.
    In addition, there are external shocks, such as falling commodity prices since 2011 or natural disasters like floods or storms.
    Structural problems, such as a poorly diversified economic and export structure, result in their economies being highly vulnerable to price and demand fluctuations on the world market.
    Financial crisis affects development as it ;
    Slows down achievement of developmental goals.
    Worsens income distribution.
    Increases unemployment rate.
    Increases poverty rate etc.
    24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    foreign economic aid retards and distorts the process of economic development of the recipient countries and results in dependence and exploitation. It also replaces domestic savings and flows of trade. It seems clear that most developing countries are economically dependent on the rich. Furthermore, in many ways the working of the international capitalist economy clearly intensifies the condition of dependence. Giving aid for development seems almost the exact reverse. Developing countries should seek economic independence.
    Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    The developed countries should continue to offer economic aid to developing countries for inclusive growth , to provide ‘soft-loans’ — grant funding, concessional loans, debt relief — to the poorest developing countries who could not afford to borrow on the terms that could be offered by the International Bank for Reconstruction and Development (IBRD).
    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?
    Multinational corporations should be encouraged to invest in the economies of poor nation’s as it ;
    Increases output, GDP .
    Creates employment opportunities for the countries resident .
    Facilitates development.
    Conditions that motivates multinational corporations includes : lower costs, strong growth prospects, and in many cases untapped natural resources. In other areas which are typically key drivers of foreign investment – political and macroeconomic stability, quality of infrastructure, and rule of law
    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    Fiscal policy promotes development through ;
    Low budget deficits. Small budget deficits also reduce the risk of economic crises caused by concerns about the government’s ability to service its debt.
    Low levels of public debt, which in turn is essential for reducing poverty and improving social outcomes.
    It prevent interest bills from rising to levels that squeeze critical social spending and ensure that the stock of debt remains at levels consistent with a country’s capacity to service this debt.
    Indeed, the macroeconomic stability associated with the absence of such crises yields numerous benefits, including higher rates of investment, growth, and educational attainment.
    Large military expenditure stimulate economic growth as there exist a positive relationship between large millitary expenditure and economic development as large millitary expenditure signifies more job opportunities in the millitary .In addition to supporting the troops, military expenditure creates a considerable infrastructure to support the active-duty personnel.There are the private businesses that spring up as a result of the military spending, including everything from weapons manufacturers to the restaurants that pop up near military bases.
    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Micro finance are financial institutions saddled with the responsibility of providing medium and small scale loan to low income earners.
    Micro finance seek to eradicate poverty by providing the following services : a) Microcredit, b) Micro Savings, c) Micro-Insurance d)Money Transfers for the poor.
    The limitations to spurring grassroots development are :
    The economic environment the micro finance institution is founded .
    Inadequate Capital.
    Inadequate professionalism.
    LaBenjamin Gift Ihunanya 2018/241855ck of coordination and cooperation.

  25. Avatar Uweh ifeanyi Shedrack says:

    Name: uweh ifeanyi Shedrack
    Reg no:. 241857
    Department: economics major
    uwehifeanyi@gmail.com
    Assignment:
    14. Education in every sense is one of the fundamental factors of development. … Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.
    15. Rural development is understood primarily in the economic sense of the process of assuring a progressive improvement in economic security of people in rural areas. Rural areas are usually defined in terms of maximum population density, with figures varying from 150 to 500 inhabitants per square kilometre, depending on the structure of society.1 Whileany economic activity in rural areas will have the potential to contribute to rural development, the particular roles farming may play fall into four broader categories:
    16.. Sustainable development is the practice of developing land and construction projects in a manner that reduces their impact on the environment by allowing them to create energy efficient models of self-sufficiency. This can take the form of installing solar panels or wind generators on factory sites, using geothermal heating techniques or even participating in cap and trade agreements. Sustainable development has 3 goals: to minimize the depletion of natural resources, to promote development without causing harm to the environment and to make use of environmentally friendly practices found around the world.
    17.The government still have a major role to play in the economy. The following are some of the roles the government need to play.

    Their role is all the more remarkable in the following respects:

    (i) Comprehensive Planning:

    In an under-developed economy, there is a circular constellation of forces tending to act and react upon one another in such a way as to keep a poor country in a stationary state of under-development equilibrium. The vicious circle of under-developed equilibrium can be broken only by a comprehensive government planning of the process of economic development. Planning,Commissions have been set up and institu­tional framework built up.
    (ii) Institution of Controls:
    A high rate of investment and growth of output cannot be attained, in an under-developed country, simply as a result of the functioning of the market forces. The operation of these forces is hindered by the existence of economic rigidities and structural disequilibria. Economic development is not a spontaneous or automatic affair on the contrary, it is evident that there are automatic forces within the system tending to keep it moored to a low level. Thus, if an underdeveloped country does not wish to remain caught up in a vicious circle, the Government must interfere with the market forces to break that circle. That is why various controls have been instituted, e.g., price control, exchange control, control of capital issues, industrial licensing.
    (iii) Social and Economic Overheads:
    In the initial phase, the process of development, in an under-developed country, is held up primarily by the lack of basic social and economic overheads such as schools, technical institutions and research institutes, hospitals and railways, roads, ports, harbours and bridges, etc. To provide them requires very large investments.
    Such investments will lead to the creation of external economies, which in their turn will provide incentives to the development of private enterprise in the field of industry as well as of agriculture. The Governments, therefore, go all out inbuilding up the infrastructure of the economy for initiating the process of economic growth. Private enterprise will not undertake investments in social overheads. The reason is that the returns from them in the form of an increase in the supply of technical skills and higher standards of education and health can be realised only over a long period. Besides, these returns will accrue to the whole society rather than to those entrepreneurs who incur the necessary large expenditure on the creation of such costly social over-heads. Therefore, investment in them is not profitable from the standpoint of the private entrepreneurs, howsoever productive it may be from the broader interest of the society. This indicates the need for direct participation of the government by way of investment in social overheads, so that the rate of development is quickened.
    18.What can be done to improve on those choices :

    1. Eradicating corruption among they leaders.
    2. Voting in visionary leaders into powers.
    3. Having clear goals and objectives.,
    4. Having enough resources in place.
    5. Building strong institutions that will help make and implement sound development policies.
    19.Advantages of trade :
    Involvement in the buying and selling of goods and services across international boundaries. International trade has come to play a major role in economic activities and economic performance of countries all over the world.
    1. Increases in domestic production and consumption as a result of specialisation
    2. Economies of scale in production
    3. Greater choice for consumers
    4. Increased competition and greater efficiency in production
    5. Lower prices for consumers
    6. Acquiring needed resources
    7. Free trade and more efficient allocation of resources
    20.. The exchange control is necessary and should be adopted to check the flight of capital. This is specially important when a country’s currency is under speculative pressure. In such cases tariffs and quotas would not be effective. Exchange control being direct method would successfully present the flight of capital of hot money.

    2. Exchange control is effective only when the balance of payment is disturbed due to some temporary reasons such as fear of war, failure of crops or some other reasons. But if there are some other underlying reasons, exchange control device would not be fruitful.

    3. Exchange Control is necessary when the country wants to discriminate between various sources of supply. Country may allow foreign exchange liberally for imports from soft currency area and imports from hard currency areas will be subject to light import control. This practice was adopted after Second World War due to acute dollar shortage. Even in India, many import licenses were given for use in rupee currency areas only, i.e., countries with which India had rupee-trade arrangements. Thus in above cases, the exchange control is adopted. In such cases quotas and tariffs do not help in restoring balance of payment equilibrium.

    20. II Impact of international monetary fund of stabilization program :

    The IMF assists member nations in several different capacities.
    1. Provides Loans to Member Nations:
    Its most important function is its ability to provide loans to member nations in need of a bailout. The IMF can attach conditions to these loans, including prescribed economic policies, to which borrowing governments must comply.6
    2. Fills Deficit Gaps
    If a country has a balance of payments deficit, the IMF can step in to fill the gap.
    3. Technical Support and Assistance
    It serves as a council and adviser to countries attempting a new economic policy. It also publishes papers on new economic topics. The IMF has created a few new ways for it to help countries during this difficult time. For starters, the IMF has worked with countries to adjust existing lending agreements. The lending and extended payment time period aim to give countries more time and space to implement adjustment policies in a safe and organized manner. Policies for lending are varied on a country-by-country basis.
    4. Another way the IMF has stepped up to help countries in need is by enhancing its liquidity and approving a Short Term Liquidity Line (SLL) to strengthen financial safety for countries all around the globe. The SLL was created to provide “swap-like” liquidity support for countries for up to 12 months. SLL allows repeated purchases and repurchases on agreements, at a low cost. The SLL has a unique fee structure, that is more affordable than other options like the Flexible Credit Line.
    ,21.Globalization is defined as a process that, based on international strategies, aims to expand business operations on a worldwide level, and was precipitated by the facilitation of global communications due to technological advancements, and socioeconomic, political and environmental developments.

    21. II How it is affecting developing countries :
    1. The goal of globalization is to provide organizations a superior competitive position with lower operating costs, to gain greater numbers of products, services, and consumers. This approach to competition is gained via diversification of resources, the creation and development of new investment opportunities by opening up additional markets and accessing new raw materials and resources. Diversification of resources is a business strategy that increases the variety of business products and services within various organizations.

    2. Diversification strengthens institutions by lowering organizational risk factors, spreading interests in different areas, taking advantage of market opportunities, and acquiring companies both horizontal and vertical in nature.
    3. Globalization compels businesses to adapt to different strategies based on new ideological trends that try to balance the rights and interests of both the individual and the community as a whole. This change enables businesses to compete worldwide and also signifies a dramatic change for business leaders, labor, and management by legitimately accepting the participation of workers and the government in developing and implementing company policies and strategies. Risk reduction via diversification can be accomplished through company involvement with international financial institutions and partnering with both local and multinational businesses.
    22;Export of agricultural product should be promoted :
    Agriculture’s percentage share in a country’s economy is relatively high and is constantly witnessing tremendous growth and diversifies. Agriculture’s most important contribution is obviously that of providing employment. Each sector is differently affected by changes in agricultural production and pricee control.
    The positive impact of agriculture exports on growth is due to the importance of agriculture in terms of creating jobs and opportunities for the economy as a whole. Also, sufficient national investment in the agriculture sector leads to enlarging these opportunities and then improves the Chinese economic growth.
    23;How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?
    Developing countries get into serious debt problem because of their inability to finance the repayment of their loan with their foreign exchange earnings. The implications of debt problem for economic development includes heightened long-term interest rates, higher distortionary tax rates, inflation, and a general constraint on countercyclical fiscal policies, which may lead to increased volatility and lower growth rates.
    Financial crisis has an adverse effect on economic development of a nation because when a nation experiences financial crisis, it becomes difficult to increase its exchange rate and meet up with it’s financial obligations and this spurs economic growth.
    Question 24:
    What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    The impact of foreign aid on economic development is that foreign aid retards and distorts the process of economic development of the recipient countries and results in dependence and exploitation. It also replaces domestic savings and flows of trade. It seems clear that most countries are economically dependent on the rich. Furthermore, in many ways the working of the international capitalist economy clearly intensifies the condition of dependence.
    Developing countries should discontinue seeking foreign aid because this will increase their dependency on Rich developed nations;
    B) Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?
    Developed nations should continue offering foreign aid to developing countries who are in dire need of it to expand their economic base, to enable them attain development.
    26;What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    The 2 types of fiscal policies (expansionary policy and contractionary policy) can be economically utilized to the benefit of the public. each policy has its specific purpose and so at the right point in time, the right policy either expansionary policy or contractionary policy can be put in place to promote Economic development.
    27;Question 27
    What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    Answer
    Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services.
    Microfinance is important because it provides resources and access to capital to the financially underserved, such as those who are unable to get checking accounts, lines of credit, or loans from traditional banks.
    Without microfinance, these groups may have to resort to using risky loans or payday advances with extremely high interest rates or even borrow money from family and friends. Microfinance helps them invest in their businesses and, as a result, invest in themselves.

  26. Avatar Nwokobia Adaeze says:

    NAME: Nwokobia Adaeze
    REG NO: 2018/241865
    DEPARTMENT: Economics
    Email: nwokobiaadaeze@gmail.com
    14. Education is very important for the development of any society. This is because it facilitates positive exposure and proper rationality which helps them to exercise their civil rights appropriately and make better decisions. When a high percentage of the population is educated, there would be proper regulation, therefore efficient allocation of resources. Unfortunately, in developing countries, access to education is limited because of high poverty rates. Therefore, it is selective to privileged people who can afford it which indirectly maintain the previous positions if wealth, power and influence.

    15. In rural areas, agriculture is the prevailing source of income which is performed by crude and obsolete methods which makes output and productivity low. Introduction of mechanized farming is an effective step. This would increase overall output and income which could potentially increase export. Provisions of social amenities to facilitate farming such as construction of road, provision of water supply etc would also promote development of the rural area.

    16.Environmentally sustainable development refers to the conservation of natural resources to prevent depletion and damages to the environment by introducing alternative and safer methods of creating and using energy. There is no economic cost of pursuing sustainable development. In fact it extremely benefital because sustainable development is self efficient and it saves us from irreversible costs I e damaging the eco system. Everyone is responsible for environmental damage because all countries creates some degree of pollution or over utilizes resources.

    17.Capitalization would definitely solve some of the problems in developing countries. The system would become more effective due to the forces of competition and demand and supply would allocate resources efficiently. Due to the selfish interest of the private sector, government activities would be needed to prevent exploitation and provide public goods that citizens aren’t willing to produce.

    18.Corruption is the major problem in developing countries. Policies are created to satisfy the government interest firstly before the needs of the society. Even if efficient policies are created, it is not properly executed due to embezzlement, injustice,etc. The enforcement of the rule of law would improve situations like this. Also, exercising voting rights justly can indirectly contribute to these choices.

    19. International trade is desirable because it’s an opportunity to boost any economy. The issue with developing countries is that our balance of trade is always at a deficit. We import more than we export and produce. This doesn’t aid the economy as it makes us a dumping ground and less sufficient . Whoever has a balance of trade surplus benefits in international trade because productivity and income would be high.

    20.Government should adopt those policies when there is constant budget of trade deficit. Government should also make sure that the country sufficient to meet up with domestic demand of those goods and services because those policies would not be feasible if provisions are not made.

    21.Globalization is the process of the world economy becoming dominated by capitalist models, according to the World System Theory. Globalization is positively impacting on developing countries because it promotes efficient distribution of resources.

    22.Exportation of primary products should be focused on more because we have the resources to produce them. Growth of the industrial sector should commence when we are capable to do so. It wouldn’t be possible to develop our manufacturing company when we lack the basics i.e technical know how, plants etc and favourable economic conditions to foster industrialization. Industrialization growth can only be feasible when we have developed our agricultural sector.

    23.For a developing country such as Nigeria, corruption, poor allocation/management of resources and overdependence on the oil sector has led us into series of international debt. When government borrows money, a good amount of it either embezzled or poorly allocated to less relevant projects which does not generate enough returns to pay back. For the oil sector, the economy deteriorated due to the falling prices in the stock market. With oil being our major source of income, it has affected us negatively and also encouraged consistent borrowing.

    24.The impact of foreign aid is meant to be positive, due to mismanagement of these aids, it has generated a big problem indebt. Developing countries should only borrow money to invest in potential projects which would yield positive returns. Corruption should be controlled for proper utilization of these aids.

    25. According to Peter J Buckley, the global factory is a structure through which multinational enterprises integrate their global strategies through a combination of innovation, distribution and production of both goods and services. The global factory is analysed within a Coasean framework with particular attention to ownership and location policies using methods that illustrate its power in the global system. Developing countries are constrained by the existence and power of global factories. Firms in developing countries are frequently constrained to be suppliers of labour intensive manufacturing or services into the global factory system. Breaking into this system is difficult for emerging countries. It requires either a strategy of upgrading or the establishment of new global factories under the control of focal firms from emerging countries. The implementation of these strategies is formidably difficult.

    26.Financial and financial policies are used to regulate money circulation in an economy. Fiscal policies involves the usage of government expenditures and taxes while financial policies involves the central bank using financial instruments such as interest rates, open market operations etc to regulate money supply. These policies attempts to keep the economy stable by preventing inflation or deflation. Large military expenditure stimulate economic growth if it is productive. This would ensure national security which would facilitate the economic stability.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?Microfinance refers to the financial services provided to poor individuals or groups who are typically excluded from traditional banking. Most microfinance institutions focus on offering credit in the form of small working capital loans, which are sometimes called microloans or microcredit. Microfinance in plays a major role in the development of a country. It aims at assisting communities of the economically excluded to achieve greater level of asset creation and income security at the household and community level. The utmost significance of microfinance in is that it dispenses the access to the capital to small entrepreneurs. Micro finance bank also faces some challenges such as higher Interest Rates in comparison to mainstream banks widespread dependence, over-indebtedness, inadequate investment validation, lack of enough awareness of financial services in the Economy and among others.

  27. Avatar Joseph chinonso Lucky 2018/241859 says:

    Name: Joseph Chinonso Lucky
    Reg no.: 2018/241859
    Department: Economics

    14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?

    *Answer
    From historical records we can say that education has really promoted economic development in developing countries using Nigeria as a case study. Education is not a mechanism to enable certain people maintain positions in Neither wealth nor power. Education has immensely augmented development in the following way;
    1. Education increases the accessibility of people to modern and scientific ideas
    2. It creates the awareness of available opportunities and mobility of labour
    3. It increases the efficiency and ability of people to absorb new technology.
    4. Education helps individuals to gain knowledge, skills and attitudes which will enable them to understand changes in society and scientific advancements
    5. Investment in Education is one of the main sources of human capital which facilitates inventions and innovations.
    6. Available educated labour force facilitates adaptation of advanced technology in a country.

    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?

    Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?

    *Answer.
    Agricultural and rural development can be promoted by
    1. Settling of cooperative societies where the farmers will access loans that will be repayable on a long term.
    2. Government at all levels should have a policy of subsiding fertilizers for these rural farmers to enable them enhance on the production of agricultural products
    3. Since half of the people in developing countries still reside in rural areas, government should set up some of these agricultural institutions there to educate them on agricultural production and research
    4. Modern agricultural tools and equipment should be introduced to the farmers in the rural areas. This will be so doing bolster agricultural development and help in the development of the rural populace
    5. Modern and well equipped schools and trained teachers should be transferred to the rural areas to enhance their quality time life through education of the children I’m such areas.
    6. Government should introduce the construction of more dams in these rural areas to enable farmer access water for irrigation purposes which will enable them produce agricultural products all year round thereby fostering development.

    *Question.
    Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?
    *Answer.
    Rural institutional changes are really needed to stimulate food production. Access to land is necessary in agricultural production because farm products can only find its way to the markets through good road network.
    And when these roads are accessible, the transporters finds its way to these rural areas to more the products of such farmers to the urban countries. Education is another aspect that is essential because the rural farmers are trained on the use of machinery for agricultural production.
    With the education of these people, it becomes easier to acquaint them on the technical aspect of the use of farm equipments and also help in the area of bargain.

    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?

    *Answer
    ecologically sustainable development is ‘using, conserving and enhancing the community’s resources so that ecological processes, on which life depends, are maintained, and the total quality of life, now and in the future
    Sustainable development is the practice of developing land and construction projects in a manner that reduces their impact on the environment by allowing them to create energy efficient models of self-sufficiency.
    the goal of environmental sustainability is to conserve natural resources and to develop alternate sources of power while reducing pollution and harm to the environment. Many of the projects that are rooted in environmental sustainability will involve replanting forests, preserving wetlands and protecting natural areas from resource harvesting. The biggest criticism of environmental sustainability initiatives is that their priorities can be at odds with the needs of a growing industrialized society.
    THE ECONOMIC COST;
    just because the goals of sustainable development sound lofty and beneficial that doesn’t mean it’s automatically an admirable pursuit. Sustainable development can be costly and may lead to job loss in some areas, so it isn‘t without downsides. Explore the advantages and disadvantages of sustainable development to learn more about how the concept could help or hinder our progress as a society
    One of the main obstacles that the application of sustainable policies finds itself in is the duality that exists between the need for solutions and strategies that transcend borders.
    expenditures, including the costs of water, energy, and infrastructure development and maintenance. increased economic activity and property values. savings and lowered operating costs. uncertainty, such as potential rises in energy and water costs.

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?

    *Answer.
    Mixed economy is the Answer to development problems. There should be free market where private investors and business men should participate in the production process with the government overseeing and regulating their activities.
    The Government still have a role to play.

    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?

    *Answer.
    Growth Policies for Economically-Challenged Countries
    Many economically-challenged or low-income countries are geographically located in Sub-Saharan Africa. Other pockets of low income are found in the former Soviet Bloc, and in parts of Central America and the Caribbean.

    There are macroeconomic policies and prescriptions that might alleviate the extreme poverty and low standard of living. However, many of these countries lack the economic and legal stability, along with market-oriented institutions, needed to provide a fertile climate for domestic economic growth and to attract foreign investment. Thus, macroeconomic policies for low income economies are vastly different from those of the high income economies. The World Bank has made it a priority to combat poverty and raise overall income levels through 2030. One of the key obstacles to achieving this is the political instability that seems to be a common feature of low-income countries.
    Low-income countries must adopt government policies that are market-oriented and that educate the workforce and population. After this is done, low-income countries should focus on eradicating other social ills that inhibit their growth. The economically challenged are stuck in poverty traps. They need to focus more on health and education and create a stable macroeconomic and political environment. This will attract foreign aid and foreign investment. Middle-income countries strive for increases in physical capital and innovation, while higher-income countries must work to maintain their economies through innovation and technology.

    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?

    *Answer.
    Trade is an indispensable part of human life. It is an important tool for national development. Countries that are open to international trade tend to grow faster, and improve productivity and this provides higher income and more opportunities for innovation to their people. But this does not imply that every country involved in international trade would be better off. While international trade also benefits lower-income poor nations by offering consumers more affordable goods and services, it also comes with its own setbacks.

    Most times, the developed nations benefit even more from international trade and the developing nations do not benefit as much. Developing nations seem to attract foreign investors through this process, but in the process they stand a chance to become a dumping ground. International trade encourages the principle of comparative cost advantage and several other economic theories. But this concept seems to be on the side of wealthier countries since developing countries struggle to compete in the global market.

    Poor nations face several challenges in foreign trade procedures due to:

    -Transportation hindrances
    -Technological problems
    -Anticompetitive behavior by major market players or cartels that stifle innovation, productivity, or market growth

    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?

    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?

    *Answer
    The process in which governments adopt the policy of foreign exchange control, raising tariffs or setting quotas on the importation of certain goods can be classified under a term known as ” Trade protectionism”.Trade protectionism is defined as a nation, or sometimes a group of nations working in conjunction as a trade bloc, creating trade barriers with the specific goal of protecting its economy from the possible perils of international trading. would adopt a trade protectionist policy.It is generally regarded as government intervention since it is a government that has control over its borders and the flow of goods, products, and commodities in and out of a country.
    Conditions that can make governments in developing countries adopt the policy of trade protectionism includes ;
    i).Protecting jobs and industries is a political argument for trade protectionism from the viewpoint that protecting worker’s livelihood and the industries and the firms that employ them are vital to a nation’s economic growth and well-being. The premise is that without trade protectionism a nation could lose long-established industries and companies that first made a product in a particular nation. This will eventually result in the loss of jobs, rising unemployment, and eventual decrease of a nation’s gross domestic product (GDP).
    ii).Protecting consumers is an argument used by policymakers to protect consumers from unsafe imported products. Consumer advocates, domestic manufacturers, and certain policymakers claim that foreign-made goods may fail to follow requirements for product safety in the manufacturing and distribution process. This could result in serious illness, unsafe products, and even possibly death of the consumer. Domestic manufacturers argue that if they must follow government-imposed safety and production requirements then foreign producers must also do so.
    iii).The infant industry argument was first put forth by Alexander Hamilton in 1792. This idea states that new manufacturers have an extremely difficult time competing against well-established, well-funded, extremely profitable companies in developed countries. In order that infant industries and new companies gain market-share and a competitive edge against well-established firms, governments must put into place short-term support mechanisms for these infant industries until they have reached a level so they can compete with foreign companies. It can also be argued that a developing nation in attempting to diversify its economy, must protect its infant industries. Government intervention of an infant industry may come in the form of tariffs, subsidies, administrative trade policies, or quotas.

    — Structural adjustment loans are provided to countries in dire fiscal or macroeconomic straits.The World Bank promotes long-term economic development and poverty reduction by providing technical and financial support to help countries reform certain sectors or implement specific projects—such as building schools and health centers, providing water and electricity, fighting disease, and protecting the environment.
    The IMF provides broad support to low-income countries (LICs) through surveillance and capacity-building activities, as well as concessional financial support to help them achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction.Surveillance is a formal system that IMF use to monitor member country policies as well as national, regional, and global economic and financial developments in order to maintain stability and prevent crises in the international monetary system.
    Therefore,there is a positive impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries.The IMF keeps track of the economy globally and in member countries, lends to countries with balance of payments difficulties, and gives practical help to members.
    The World Bank works in every major area of development that will lead to economic growth in a developing country.They provide a wide array of financial products and technical assistance, and also help countries share and apply innovative knowledge and solutions to the challenges they face.

    21. What is meant by globalization, and how is it affecting the developing countries?

    *Answer.
    Globalization is a process of global economic, political and cultural integration. It has made the world become a small village; the borders have been broken down between countries. Globalization, or globalisation, is the process of interaction and integration among people, companies, and governments worldwide. Globalization has accelerated since the 18th century due to advances in transportation and communication technology.
    It’s effects on developing countries are:

    1- Economic and Trade Processes Field
    Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers. They cannot share the same economic growth that developed countries had. However, with globalization the World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans. Many developing nations began to take steps to open their markets by removing tariffs and free up their economies. The developed countries were able to invest in the developing nations, creating job opportunities for the poor people.

    2- Education and Health Systems
    Globalization contributed to develop the health and education systems in the developing countries. We can clearly see that education has increased in recent years, because globalization has a catalyst to the jobs that require higher skills set. This demand allowed people to gain higher education. Health and education are basic objectives to improve any nations, and there are strong relationships between economic growth and health and education systems. Through growth in economic, living standards and life expectancy for the developing nations certainly get better. With more fortunes poor nations are able to supply good health care services and sanitation to their people.

    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?

    *Answer
    exports of primary product should be promoted because it helps to generate revenue, promote economic growth of a country and also increase exchange rate. Also developing countries should develop their own manufacturing industries to produce locally made products and not always buying foreign goods.

    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?

    *Answer.
    High foreign debt hampers the development of these countries because the money has to be used for interest and principal payments and is not, therefore, available for key investments, such as infrastructure or social spending.
    Long-standing internal and external problems are again among the key causes of debt in low-income countries. However, the current situation differs significantly from previous debt crises. In particular, the creditors involved have mainly granted non-concessional loans and not concessional loans.
    Poor debt management and low government revenues due to inefficient tax policies and weaknesses in the rule of law are among the internal causes. Furthermore, the loans are often used for the consumption of goods, rather than for productive investments.
    What is new about the current debt situation is that the creditors – and therefore the debt structure – have changed significantly. Developing countries have significantly increased their borrowing at market conditions, especially from new lenders such as China and India, and from private creditors. According to the United Nations Conference on Trade and Development (UNCTAD), public debt at market conditions as a share of total debt doubled between 2007 and 2016 in low-income countries, rising to 46 percent.  Compared to the concessional loans from traditional bilateral (notably lenders in the OECD Development Assistance Committee) and multilateral creditors such as the IMF and WB, these loans have higher interest and shorter maturities. This further jeopardises the debt sustainability of developing countries.
    In order to prevent a renewed debt crisis in developing countries, it is of primary importance to establish good debt management practices. The capacity for public debt management needs to be improved and an appropriate debt structure established which takes into account loan maturities and the ratios of domestic and foreign currency. Good debt management also provides greater transparency and more complete data on the debt situation in developing countries. The good debt management measures implemented to date by lenders, such as the Debt Management Facility of the World Bank, the International Monetary Fund and UNCTAD’s Debt Management and Financial Analysis System Programme, must be further expanded and improved. Another important element is establishing a set of uniform principles for responsible lending and borrowing. There have been various proposals so far from the United Nations, the G20, the OECD and the Institute of International Finance (a global association of private financial institutions).
    In the event of a debt crisis, it will be difficult to coordinate with such a heterogeneous group of creditors. As a result, the use of collective clauses in bond contracts should be extended now to simplify any future restructuring of government bonds.
    Given the expected rise in global interest rates and the shorter maturities of non-concessionary loans, there will continue to be considerable risks for the debt sustainability of developing countries in the future. It is high time that action is taken and agreements at international level reached in order to stop another debt crisis occurring.

    24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?

    Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?

    *Answer
    Aids from already developed countries can have positive and negative impacts. Some of them are:
    Aids Agriculture.
    Foreign support directed towards agriculture helps farmers and increase food production, which leads to better quality of life and higher quantity of food.
    Encourage Development.
    Industrial development projects supported by foreign aid create more jobs, improve infrastructure and overall development of the local community.
    Tap Natural Resources.
    Some less developed countries do not have the ability to maximize their otherwise rich natural resources, but with foreign support, this is possible.
    Promote Sanitation.
    Less privileged communities benefit from foreign aid aimed at providing clean water and sanitation facilities, which reduces risk of contracting infections and diseases.
    Likewise negative impacts are:
    Increase Dependency.
    Less economically developed countries (LEDCs) may become increasingly dependent on donor countries, and become heavily indebted.
    Risk of Corruption.
    There is likelihood that foreign financial support do not reach their rightful recipients, but go to the hands of corrupt political officials.
    Economic/Political Pressure.
    A donor country may place economic and political pressure on the receiving country, forcing them to return the favor.
    Hidden Agenda of Foreign-Owned Corporations.
    Foreign aid is sometimes given to a country or recipient to benefit foreign-owned corporations and entities. So the help is not actually directed to the less fortunate, but to its own people.
    In the case of Nigeria, it should stop seeking for foreign aid. This is because it would only aggravate the current condition and increase the level of dependency.
    Developed countries should continue to offer aids because they can make profitable trade-offs.

    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?

    *Answer
    Multinational corporations are believed to be highly beneficial to developing countries in terms of providing employment opportunities and technology. They also benefit from government subsidies.
    Globalization encouraged us to create better systems to track international trade. Technology encourages efficiency in global trade and reduce cost of time.
    And production processes became more efficient due to globalization.

    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?

    *Answer
    Mobilize resources
    Accelerate the rate of growth
    Encourage social optimal investment

    Role of Fiscal Policy in Developing Countries!

    The fiscal policy in developing countries should apparently be conducive to rapid economic development. In a poor country, fiscal policy can no longer remain a compensatory fiscal policy. It has a tough role to play in a developing economy and has to face the problem of growth-cum-stability.

    The main goal of fiscal policy in a newly developing economy is the promotion of the highest possible rate of capital formation. Underdeveloped countries are encompassed by vicious circle of poverty on account of capital deficiency; in order to break this vicious circle, a balanced growth is needed. It needs accelerated rate of capital formation.

    Since private capital is generally shy in these countries, the government has to fill up the lacuna. A mounting public expenditure is also required in building social overhead capital. To accelerate the rate of capital formation, the fiscal policy has to be designed to raise the level of aggregate savings and to reduce the actual and potential consumption of the people.

    Another objective of fiscal policy, in a poor country is to divert existing resources from unproductive to productive and socially more desirable uses. Hence, fiscal policy must be blended with planning for development.

    An important aim of fiscal policy in a developing economy is to create an equitable distribution of income and wealth in the society. Here, however, a difficulty arises. The aims of rapid growth and attainment of equality in income are two paradoxical goals because growth needs more savings and equitable distribution causes reduction of aggregate savings as the propensity to save of the richer section is always high and that of the poor income group low.

    As such, if high economic growth is the objective, the question arises as to what extent inequalities should be reduced. Of course, many a time, under the goal of socialism, the government unduly resorts to reduction of inequalities at the cost of growth which may lead to the distribution of poverty rather than prosperity. A reconciliation of these two contradictory goals of growth and reduction of inequalities can definitely bring forth better results.

    Furthermore, fiscal policy in a poor country has an additional role of protecting the economy from high inflation domestically and unhealthy developments abroad. Though inflation to some extent is inevitable in the process of growth, fiscal measures must be designed to curb inflationary forces. Relative price stability constitutes an important objective.

    The approach to fiscal policy in an economy which is developing must be aggregative as well as segmental. The former may lead to overall economic expansion and reduce the general pressure of unemployment; but due to the existence of bottlenecks though general price stability may be maintained, sectoral price rise may inevitably be found.

    These sectoral imbalances are to be corrected by appropriate segmental fiscal measures which would remove frictions and immobility’s turn demands into proper directions, seek to eliminate bottlenecks and other obstacles to growth.

    As such, if high economic growth is the objective, the question arises as to what extent inequalities should be reduced. Of course, many a time, under the goal of socialism, the government unduly resorts to reduction of inequalities at the cost of growth which may lead to the distribution of poverty rather than prosperity. A reconciliation of these two contradictory goals of growth and reduction of inequalities can definitely bring forth better results.

    Furthermore, fiscal policy in a poor country has an additional role of protecting the economy from high inflation domestically and unhealthy developments abroad. Though inflation to some extent is inevitable in the process of growth, fiscal measures must be designed to curb inflationary forces. Relative price stability constitutes an important objective.

    The approach to fiscal policy in an economy which is developing must be aggregative as well as segmental. The former may lead to overall economic expansion and reduce the general pressure of unemployment; but due to the existence of bottlenecks though general price stability may be maintained, sectoral price rise may inevitably be found.

    These sectoral imbalances are to be corrected by appropriate segmental fiscal measures which would remove frictions and immobility’s turn demands into proper directions, seek to eliminate bottlenecks and other obstacles to growth.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?

    *Answer.
    Microfinance, also called microcredit​, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. The goal of microfinance is to ultimately give impoverished people an opportunity to become self-sufficient. Since, micro finance has proven to be an effective tool for poverty reduction. Microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services.
    According to researchers and policy makers, microfinance encourages entrepreneurship, empowers the poor (particularly women in developing countries), increases access to health and education, and builds social capital among vulnerable communities.
    Micro finance has the following limitations:
    -Over-Indebtedness.
    -Higher Interest Rates in Comparison to Mainstream Banks.
    -Widespread Dependence on Banking System.
    -Inadequate Investment Validation.
    -Lack of Enough Awareness of Financial Services in the Economy.

  28. Avatar Nwokobia Adaeze says:

    NAME: Nwokobia Adaeze
    REG NO: 2018/241865
    DEPARTMENT: Economics
    14. Education is very important for the development of any society. This is because it facilitates positive exposure and proper rationality which helps them to exercise their civil rights appropriately and make better decisions. When a high percentage of the population is educated, there would be proper regulation, therefore efficient allocation of resources. Unfortunately, in developing countries, access to education is limited because of high poverty rates. Therefore, it is selective to privileged people who can afford it which indirectly maintain the previous positions if wealth, power and influence.

    15. In rural areas, agriculture is the prevailing source of income which is performed by crude and obsolete methods which makes output and productivity low. Introduction of mechanized farming is an effective step. This would increase overall output and income which could potentially increase export. Provisions of social amenities to facilitate farming such as construction of road, provision of water supply etc would also promote development of the rural area.

    16.Environmentally sustainable development refers to the conservation of natural resources to prevent depletion and damages to the environment by introducing alternative and safer methods of creating and using energy. There is no economic cost of pursuing sustainable development. In fact it extremely benefital because sustainable development is self efficient and it saves us from irreversible costs I e damaging the eco system. Everyone is responsible for environmental damage because all countries creates some degree of pollution or over utilizes resources.

    17.Capitalization would definitely solve some of the problems in developing countries. The system would become more effective due to the forces of competition and demand and supply would allocate resources efficiently. Due to the selfish interest of the private sector, government activities would be needed to prevent exploitation and provide public goods that citizens aren’t willing to produce.

    18.Corruption is the major problem in developing countries. Policies are created to satisfy the government interest firstly before the needs of the society. Even if efficient policies are created, it is not properly executed due to embezzlement, injustice,etc. The enforcement of the rule of law would improve situations like this. Also, exercising voting rights justly can indirectly contribute to these choices.

    19. International trade is desirable because it’s an opportunity to boost any economy. The issue with developing countries is that our balance of trade is always at a deficit. We import more than we export and produce. This doesn’t aid the economy as it makes us a dumping ground and less sufficient . Whoever has a balance of trade surplus benefits in international trade because productivity and income would be high.

    20.Government should adopt those policies when there is constant budget of trade deficit. Government should also make sure that the country sufficient to meet up with domestic demand of those goods and services because those policies would not be feasible if provisions are not made.

    21.Globalization is the process of the world economy becoming dominated by capitalist models, according to the World System Theory. Globalization is positively impacting on developing countries because it promotes efficient distribution of resources.

    22.Exportation of primary products should be focused on more because we have the resources to produce them. Growth of the industrial sector should commence when we are capable to do so. It wouldn’t be possible to develop our manufacturing company when we lack the basics i.e technical know how, plants etc and favourable economic conditions to foster industrialization. Industrialization growth can only be feasible when we have developed our agricultural sector.

    23.For a developing country such as Nigeria, corruption, poor allocation/management of resources and overdependence on the oil sector has led us into series of international debt. When government borrows money, a good amount of it either embezzled or poorly allocated to less relevant projects which does not generate enough returns to pay back. For the oil sector, the economy deteriorated due to the falling prices in the stock market. With oil being our major source of income, it has affected us negatively and also encouraged consistent borrowing.

    24.The impact of foreign aid is meant to be positive, due to mismanagement of these aids, it has generated a big problem indebt. Developing countries should only borrow money to invest in potential projects which would yield positive returns. Corruption should be controlled for proper utilization of these aids.

    25. According to Peter J Buckley, the global factory is a structure through which multinational enterprises integrate their global strategies through a combination of innovation, distribution and production of both goods and services. The global factory is analysed within a Coasean framework with particular attention to ownership and location policies using methods that illustrate its power in the global system. Developing countries are constrained by the existence and power of global factories. Firms in developing countries are frequently constrained to be suppliers of labour intensive manufacturing or services into the global factory system. Breaking into this system is difficult for emerging countries. It requires either a strategy of upgrading or the establishment of new global factories under the control of focal firms from emerging countries. The implementation of these strategies is formidably difficult.

    26.Financial and financial policies are used to regulate money circulation in an economy. Fiscal policies involves the usage of government expenditures and taxes while financial policies involves the central bank using financial instruments such as interest rates, open market operations etc to regulate money supply. These policies attempts to keep the economy stable by preventing inflation or deflation. Large military expenditure stimulate economic growth if it is productive. This would ensure national security which would facilitate the economic stability.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?Microfinance refers to the financial services provided to poor individuals or groups who are typically excluded from traditional banking. Most microfinance institutions focus on offering credit in the form of small working capital loans, which are sometimes called microloans or microcredit. Microfinance in plays a major role in the development of a country. It aims at assisting communities of the economically excluded to achieve greater level of asset creation and income security at the household and community level. The utmost significance of microfinance in is that it dispenses the access to the capital to small entrepreneurs. Micro finance bank also faces some challenges such as higher Interest Rates in comparison to mainstream banks widespread dependence, over-indebtedness, inadequate investment validation, lack of enough awareness of financial services in the Economy and among others.

  29. Avatar Orungbemi Timothy Anuoluwapo 2018/241848 says:

    Reply to the questions above
    (14) Education should be the bedrock of development she’s off no joy that educational system in developing countries are really below standard and they do not actually promote development as education is not taken serious in developing countries for example Nigeria. Most times it is seen as a formality and not necessarily a means to develop the country. To acquire proper or standard education most people actually travel to developed countries and these people are mainly people who are wealthy powerful and influential giving them an edge over those who are not up to their standard academically by so doing they maintain their position of wealth power and influence.

    (15) One thing that should be done is investment the government to invest more in agriculture especially in rural areas where agriculture is the main source of income.
    Another thing is to make farmers get access to agriculture incentives and credit facilities
    Rural development can best be promoted when social amenities such as good roots power supply for an adequate water supply etca provided in rural areas.
    Another way to develop rural areas is by giving rural artisans funds  necessary to develop themselves.

    (16) Sustainable development is an approach to economic planning that attempts to foster economic growth while preserving the quality of the environment for future generations.

    The poor south suffers more because they do not have available resources to curb the problems emanating from environmental damage

    Higher agricultural price is not sufficient to stimulate food production as increase in agricultural prices will also increase the cost of living even affecting the Farmers and reducing agricultural production even if higher agricultural prices help, agricultural produce have to be transported, farmers have to be educated on new ways to grow crops and credit facilities to increase the number of production should be made available. Therefore rural institutions changes are very much needed to stimulate food production

    (16)

    (17) Free markets and economic privatization are important to developments yet the government involvement plays a vital role in developing her country. Therefore mixed economy is the best economy in terms of developing underdeveloped countries. If a developing country is being privatised development will take place because most of these private owners will be interested in accumulating wealth (maximizing profits) rather than developing the nation, therefore the government regulating private ownership will help check the excesses and the government providing amenities to the public will aid development.

    Private institutions pay tax to the government who use the tax in providing social amenities thereby promoting development. Therefore the government needs to play an active role in developing her country

    (18) Due to lack of proper assessment of the economic situation developing countries have selected poor development policies. Though there have been some process which would have worked but due to poor planning and some cases of corruption these policies failed.

    Proper research and assessment of the country’s economy should be done. Also government transparency and reason for the policy should be made known. Another way to improve these choices is to seek the masses or population opinion especially economy expert before making policy.

    (19) In the wise of exporting more than importing expanding international trade is more suitable for the development of poor Nations as revenue generated from exporting can be used in developing this nations. When poor nations exports more than they import they get more gain as income is generated but if they import more than the exports then developing nations are at loss thereby international trade is more of an advantage to the developed nation

    (20) In a situation whereby there are  more of imports than exports or when resources produced have been expected rather than being utilised the government of developing countries might adopt the policy of foreign exchange control and raising of tarrifs. Also in situations when goods that can be produced in the country are being imported government can set quotas for their importation. By doing these the balance of payment problems can be solved.

    The international monetary fund ‘stabilization problems’ and world Bank ‘structural adjustment’ have impacted less-developed countries by providing credit facilities straightening their capacity to design and implement sound economic policies they monitor the monetary and financial system economic and financial policies of these countries provides technical assistance and training areas of core expertise including fiscal monetary and exchange rate policies they regulate and supervise financial systems of these countries.

    (21) Globalisation means the speed up of movement and exchange of human beings goods and services capital technologies or cultural practices all over the planet.

    It affects the developing countries in the following ways:

    Promote and increase interactions between developing countries and developed countries especially in trading

    Helps to develop education and health system in developing countries giving developing countries health facilities and educational policies

    Globalization helps developing countries by changing the way of thinking and their cultural values and teaching Western and better ways of living example large family size

    Helps developing countries introduced to improve technologies for economic benefits

    Globalisation affect developing countries in ecological aspect by addressing environmental degradation that has been immense in developing countries Tanzania for example.

    (22) One important source of income for developing countries is agriculture and agriculture is the Bane of industrialisation as most products to be industrialized are agricultural products ranging from food to cash crops to cotton etc. Therefore production and export of agricultural produce should be promoted before industrilisatio

    (23) In a bid to foster the economy, poor economy policy, corruption, lack of adequate or proper use of resources, deficit balance of Payment e.t.c, many developing countries tend lend which puts most of them in serious foreign debt which most times make them puppet to their developed lenders also affecting government expenditure negativly which affects provision of social amenities and industrilisatio thereby leading to under development
    Financial crises leads to the following :
    (a) Unemployment
    (b) Poverty
    (c) Brain drain
    (d) Lack of industrilisatio
    (e) Poor health facility
    (f) Poor education system
    (g) Lack of social amenities e.t.c
    all these hinders development as without the list above development will not take place

    (24) Foreign economic aid helps developing countries in period of crises most especially which help solve problems
    Developing countries should only seek aid only when there is urgent need of as in a situation where there is health issues or lack of enough fund to fund the country’s budget
    Developed countries should continue to offer aid only when the developing countries are in dire need of it especially when fund needed to run their countries is unavailable

    (25) Multinational corporations should invest in economies of poor nations when these countries resources are useful to them and they are not being utilized by the developing countries instead of importing the resources and exporting finished product back to save cost
    Global factory and globalization of trade and finance have influenced economic relations as it promotes international trade, technological improvement in developing countries, boost Industrilisation foster relationship between developed and developing countries

    (26) The role of financial and fiscal policy in promoting development includes the following:
    (a) to mobilize resources in the private public sector
    (b) helps to accelerate the rate of economic growth by raising the rate of investment in the public as well as private sector
    (c) fiscal policy encourages investment into productive channels which are considered socially and economically desirable
    (d) used in providing more employment opportunities

    Military expenditure stimulate economic growth as safe nation free from terrorism, bandits, and security safe, will be able to trade freely without interruption thereby prompting economic growth

    (27) Microfinance refers to the foremost institution providing banking services to low income individuals or groups who otherwise would have no other access to financial services. It is also called micro credit

  30. Avatar Orungbemi Timothy Anuoluwapo 2018/241848 says:

    Reply to the questions above
    (14)Do education should be the bedrock of development she’s off no joy that educational system in developing countries are really below standard and they do not actually promote development as education is not taken serious in developing countries for example Nigeria. Most times it is seen as a formality and not necessarily a means to develop the country. To acquire proper or standard education most people actually travel to developed countries and these people are mainly people who are wealthy powerful and influential giving them an edge over those who are not up to their standard academically by so doing they maintain their position of wealth power and influence.

    (15) One thing that should be done is investment the government to invest more in agriculture especially in rural areas where agriculture is the main source of income.
    Another thing is to make farmers get access to agriculture incentives and credit facilities
    Rural development can best be promoted when social amenities such as good roots power supply for an adequate water supply etca provided in rural areas.
    Another way to develop rural areas is by giving rural artisans funds  necessary to develop themselves.

    (16) Sustainable development is an approach to economic planning that attempts to foster economic growth while preserving the quality of the environment for future generations.

    The poor south suffers more because they do not have available resources to curb the problems emanating from environmental damage

    Higher agricultural price is not sufficient to stimulate food production as increase in agricultural prices will also increase the cost of living even affecting the Farmers and reducing agricultural production even if higher agricultural prices help, agricultural produce have to be transported, farmers have to be educated on new ways to grow crops and credit facilities to increase the number of production should be made available. Therefore rural institutions changes are very much needed to stimulate food production

    (16)

    (17) Free markets and economic privatization are important to developments yet the government involvement plays a vital role in developing her country. Therefore mixed economy is the best economy in terms of developing underdeveloped countries. If a developing country is being privatised development will take place because most of these private owners will be interested in accumulating wealth (maximizing profits) rather than developing the nation, therefore the government regulating private ownership will help check the excesses and the government providing amenities to the public will aid development.

    Private institutions pay tax to the government who use the tax in providing social amenities thereby promoting development. Therefore the government needs to play an active role in developing her country

    (18) Due to lack of proper assessment of the economic situation developing countries have selected poor development policies. Though there have been some process which would have worked but due to poor planning and some cases of corruption these policies failed.

    Proper research and assessment of the country’s economy should be done. Also government transparency and reason for the policy should be made known. Another way to improve these choices is to seek the masses or population opinion especially economy expert before making policy.

    (19) In the wise of exporting more than importing expanding international trade is more suitable for the development of poor Nations as revenue generated from exporting can be used in developing this nations. When poor nations exports more than they import they get more gain as income is generated but if they import more than the exports then developing nations are at loss thereby international trade is more of an advantage to the developed nation

    (20) In a situation whereby there are  more of imports than exports or when resources produced have been expected rather than being utilised the government of developing countries might adopt the policy of foreign exchange control and raising of tarrifs. Also in situations when goods that can be produced in the country are being imported government can set quotas for their importation. By doing these the balance of payment problems can be solved.

    The international monetary fund ‘stabilization problems’ and world Bank ‘structural adjustment’ have impacted less-developed countries by providing credit facilities straightening their capacity to design and implement sound economic policies they monitor the monetary and financial system economic and financial policies of these countries provides technical assistance and training areas of core expertise including fiscal monetary and exchange rate policies they regulate and supervise financial systems of these countries.

    (21) Globalisation means the speed up of movement and exchange of human beings goods and services capital technologies or cultural practices all over the planet.

    It affects the developing countries in the following ways:

    Promote and increase interactions between developing countries and developed countries especially in trading

    Helps to develop education and health system in developing countries giving developing countries health facilities and educational policies

    Globalization helps developing countries by changing the way of thinking and their cultural values and teaching Western and better ways of living example large family size

    Helps developing countries introduced to improve technologies for economic benefits

    Globalisation affect developing countries in ecological aspect by addressing environmental degradation that has been immense in developing countries Tanzania for example.

    (22) One important source of income for developing countries is agriculture and agriculture is the Bane of industrialisation as most products to be industrialized are agricultural products ranging from food to cash crops to cotton etc. Therefore production and export of agricultural produce should be promoted before industrilisatio

    (23) In a bid to foster the economy, poor economy policy, corruption, lack of adequate or proper use of resources, deficit balance of Payment e.t.c, many developing countries tend lend which puts most of them in serious foreign debt which most times make them puppet to their developed lenders also affecting government expenditure negativly which affects provision of social amenities and industrilisatio thereby leading to under development
    Financial crises leads to the following :
    (a) Unemployment
    (b) Poverty
    (c) Brain drain
    (d) Lack of industrilisatio
    (e) Poor health facility
    (f) Poor education system
    (g) Lack of social amenities e.t.c
    all these hinders development as without the list above development will not take place

    (24) Foreign economic aid helps developing countries in period of crises most especially which help solve problems
    Developing countries should only seek aid only when there is urgent need of as in a situation where there is health issues or lack of enough fund to fund the country’s budget
    Developed countries should continue to offer aid only when the developing countries are in dire need of it especially when fund needed to run their countries is unavailable

    (25) Multinational corporations should invest in economies of poor nations when these countries resources are useful to them and they are not being utilized by the developing countries instead of importing the resources and exporting finished product back to save cost
    Global factory and globalization of trade and finance have influenced economic relations as it promotes international trade, technological improvement in developing countries, boost Industrilisation foster relationship between developed and developing countries

    (26) The role of financial and fiscal policy in promoting development includes the following:
    (a) to mobilize resources in the private public sector
    (b) helps to accelerate the rate of economic growth by raising the rate of investment in the public as well as private sector
    (c) fiscal policy encourages investment into productive channels which are considered socially and economically desirable
    (d) used in providing more employment opportunities

    Military expenditure stimulate economic growth as safe nation free from terrorism, bandits, and security safe, will be able to trade freely without interruption thereby prompting economic growth

    (27) Microfinance refers to the foremost institution providing banking services to low income individuals or groups who otherwise would have no other access to financial services. It is also called micro credit

  31. Avatar Nwosu Joshua chukwunweike says:

    Reg no: 2018/250479
    Department: Economics major
    Course code: Eco 361
    14-Education raises peoples productivity and creativity and promotes entrepreneurship and technological advances. It plays a very crucial role in securing economic and social progress and improving income development without substantial investment in human capital.

    15- it can be promoted by the improvement of water harvesting,cultivating drought resistant crops,ecological restoration, combined with better local governance, financial instrument, integration resource and better urban – rural linkages could help ruarl communities around the world to become more sustainable. When rising  foodprices stimulate food production, they may generate new jobs that can improve welfare. The urban middle class relies on non agricultural employment for it’s livelihood and so is likely to be more affected by rising food prices than the poorest population segments.

    16- Is the responsibility to conserve natural resources and protect global ecosystem to support health and well being,now and in the future.

    17- privatization objective of improving the efficiency of public enterprises also remains a major goal in developing countries as does reducing the subsides to state owned enterprises. The next section examines the effects of privatization in terms of firms efficiency and performance.

    18- Because they do not have proper education system, negotiations strategic political relations not standard ,have no reform system of food and aid distribution. They can disclose these to the world bank to evaluate the success of developed countries.

    19- Trade is central to ending global poverty. Countries that are open to international trade tends to grow faster,innovate,improve productivity and provide higher income and more opportunities to their people.open trade also benefits lower income households by offering consumer more affordable goods and services.

    20- Some of the most common ways that a government may attempt to influence a country’s economic activities are by adjusting the cost of borrowing money,managing the money supply and controlling the use of credit,collectively these policies are referred to as monetary policy.

    21-Globalization means the speedup of movements and exchanges (of human beings, goods, and services, capital, technologies or cultural practices) all over the planet. One of the effects of globalization is that it promotes and increases interactions between different regions and populations around the globe.

    22-International trade has a major impact on U.S. agriculture. Exports are crucial, providing a market for a major share of crop production and a growing share of meat output.

    23-Some of the major risk factors which increase the probability of the external debt crises in developing countries include high level of inflation, relatively large share of short term debt in external debt, denomination of the debt in foreign currency, decrease of the terms of trade over time, unsustainable total debt …

    24-Foreign aid negatively impacts economic growth in LIDCs while it positively impacts economic growth in HIDCs. We also find that higher unemployment rates, higher inflation, and higher levels of corruption reduce economic growth in both LIDCs and HIDCs.

    25-MNCs employee vast numbers of the local population reducing this gap, creating jobs and employment and revenue means for the populace. … Job creation is direct, while the increased stimulus in demand and supply is the indirect employmentsThe multinational corporations exist because they are highly efficient. Their efficiencies in production and distribution of goods and services arise from internalising certain activities rather than contracting them out to other firms.

    26-Fiscal policy helps to accelerate the rate of economic growth by raising the rate of investment in public as well as private sectors. … In short, investment in basic and capital goods industries and in social overheads is the pillars of economic development in an underdeveloped economy.Both monetary and fiscal policies are used to regulate economic activity over time. They can be used to accelerate growth when an economy starts to slow or to moderate growth and activity when an economy starts to overheat. In addition, fiscal policy can be used to redistribute income and wealth.

    27-A large size of microfinance studies from various disciplines suggest that microfinance has significant impact on poverty reduction as well as household wellbeing at deferent levels such as asset acquisition, household nutrition, health, food security, children education, women’s empowerment, and social cohesion 
    Here are Challenges faced by Microfinance Institutions
    Over-Indebtedness
    Higher Interest Rates in Comparison to Mainstream Banks
    Widespread Dependence on Indian Banking System
    Inadequate Investment Validation
    Lack of Enough Awareness of Financial Services in the Economy
    Regulatory Issues

  32. Avatar Okoye Arinzechukwu Mac-stanley says:

    2018/243825
    Eco 361

    14. Do educational systems in developing
    countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?

    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?
    Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?

    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?

    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?

    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?

    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?

    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?

    21. What is meant by globalization, and how is it affecting the developing countries?

    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?

    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?

    24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?

    Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?

    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?

    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development.

    Answers
    14. It enhances individuals’ productivity, directly increasing economic output [10]. (2) Human capital builds the foundation of any economic system and simultaneously sharpens the nation’s economic identity. It is necessary to professionally manage, strengthen, and increase the performance of an economy. …
    … If feasible, this dynamism will lead to increasingly higher research and development (R&D) activities. This results in creating innovative technologies within a nation [2]. …
    … The most substantial development is represented in tertiary and higher education [15]. Tertiary education enhances access to basic science, self-developed, and imported technologies and plays a significant role in establishing key institutions, as, e.g., government, law, financial system, etc. [2]. Throughout each educational level (primary-, secondary-, and tertiary level), input quality is crucial.

    15. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
    a. Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries
    Make cities and human settlements inclusive, safe, resilient and sustainable
    a. Support positive economic, social and environmental links between urban, peri-urban and rural areas by
    strengthening national and regional development planning.

    16, By environmental sustainability development we mean development in a way that the environment is considered. Going through developmental changes in such a way that we cause little or no harm to the environment.
    Personally,I feel pursuing sustainable development would cost less than the current development strategies but output would be reduced greatly.
    The rich north are responsible for the environmental damage as advanced infrastructures and industries erected by them destroy the environment during production or use.

    17. I feel they should work hand in hand. Free market economy with little government intervention. Because the government provide alot to be overlooked (public welfare, subsidy etc) while the private will hand the main economical activities.

    18. Many poor countries develop poor policies because of many reasons but below I would look at 3 major ones.
    • Copying developed countries without really knowing the problem.
    • Poor planning and lack of research
    • inexperienced leaders.
    Proper planning on the current issues at hand and how to fix them should be carried out by the government with Experienced professional to put minds together and come to a consensus. Countries should face their own problems and avoid copying from developed countries as our problems differ.

    19. No it’s not because alot of developing countries become over reliable on import and tend to focus on what they can export.

    20. The government should increase tariffs and import restrictions inorder to discourage people From exporting anyhow without trying to create there own or improvising. This should be done when the balance of payment is unfavorable or when the imports and exceeding the exports.

    21. Globalization is a concept which entails no restrictions, constant interaction and recognition internationally.
    Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. … Many developing nations began to take steps to open their markets by removing tariffs and free up their economies.

    22. I feel they need both. Exporting primary products while trying to develop and industrialize internally so as to increase development and foster international trade

    23. They get into serious foreign debt problem when they over borrow and misuse such funds.
    Implications of debt problems for economic development include the inability to borrow more and inflation as there would be alot of money being pumped into the economy without money leaving the economy.
    Financial crisis affects development because the funds necessary for the development process would be lacking and therefore nothing can be done.

    24. Foreign aid has both a negative and positive side as the loans are taking to better ourselves it also makes us indebted to them and also caused excess money to be in circulation.
    Developing countries should only collect loans when they have alot of things they want to use them for and when they know it would be fully utilized and that they would bring about our betterment. We should also strive to live for ourselves and reduce dependence on other countries for financial assistance. I’m not saying we should borrow but I’m saying we should try our best avoid it and we should only do it when we in dier need.

    25. Multi national companies employee vast numbers of the local population reducing this gap, creating jobs and employment and revenue means for the populace. Job creation is direct, while the increased stimulus in demand and supply is the indirect employment effect. They are believed to be highly beneficial for developing countries in terms of bringing employment opportunities and new technologies that spillover to domestic firms. Furthermore, they often benefit from government subsidies, which could in future be linked to investment in local firms.

    26. Financial and fiscal policies play a huge role in development as they control the supply of money in the economy to avoid deflation and inflation. Large military retards economic growth. It’s needed to be kept at a medium amount as the military is needed but as developing countries the only things we use the military for is to fight insurgency and internal crimes.

    27. Microfinance is an economic development tool whose objective is to assist the poor to work their way out of poverty. Its main objective is to provide a permanent access to appropriate financial services including insurance, savings, and fund transfer. It is rather an important tool for the eradication of poverty. It has great potential as foreign help is attimes what is needed to kick start the development process. Some the challenges microfinance banks in Nigeria face are, regular changes in government policies, lack of requisite human capital, infrastructural inadequacies and socio-cultural misconceptions. In addition to these, the banks are further inhibited by corruption, frauds and forgeries and poor corporate governance.

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  34. Avatar Ochonwu lotachi Vivian says:

    NAME: OCHONWU LOTACHI VIVIAN
    REG. NO: 2018/248806
    DEPARTMENT: ECONOMICS (MAJOR)
    COURSE CODE:Eco 361

    QUESTION 14
    Educational systems in developing countries really promote economic development and are not simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power and influence.

    A balanced education system promotes not only economic development but productivity and ge nerates individual income per capita, promotes entrepreneurship and technological advances.
    Education is truly one of the most powerful instruments for reducing poverty and inequality and it sets the foundation for sustained economic growth.

    Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.

    Understanding how education and training interact with the economy can help explain why some workers, businesses, and economies flourish, while others falter.
    successful economy has a workforce capable of operating industries at a level where it holds a competitive advantage over the economies of other countries.

    countries have placed greater emphasis on developing an education system that can produce workers able to function in new industries, such as science and technology. This is partly because older industries in developed economies have become less competitive, and thus are less likely to continue dominating the industrial landscape. Also, a movement to improve the basic education of the population emerged, with a growing belief that all people had the right to an education.
    A country’s economy becomes more productive as the proportion of educated workers increases since educated workers can more efficiently carry out tasks that require literacy and critical thinking. However, obtaining a higher level of education also carries a cost. A country doesn’t have to provide an extensive network of colleges or universities to benefit from education; it can provide basic literacy programs and still see economic improvements.

    Question 15
    As more than half the people in developing countries still reside in rural areas, agricultural and rural development can be best promoted by:

    Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries.

    Transport Facilities:
    To facilitate the farmers to produce new farm inputs and enable them to sell their product in markets, villages should be linked with mandies.
    It would help to raise their income which in turn stimulates the farmer’s interest to adopt better farm technology with sufficient income.

    Institutional Credit:
    To save the farmers from the clutches of moneylenders, adequate credit facilities should be made available at reasonable cheap rates in rural areas. The land mortgage banks and co-operative credit societies should be strengthened to provide loans to the cultivators. Moreover, integrated scheme of rural credit must be implemented.

    Proper Marketing Facilities:
    Marketing infrastructure should be widened and strengthened to help the farmers to sell their products at better prices. There should be proper arrangements for unloading of the produce in the markets. Besides, price support policy must be adopted and minimum prices should be guaranteed to the peasants.

    Agricultural Education:
    In a bid to guide and advise the farmers regarding the adoption of new technology arrangements should be made for agricultural education and extension services. It would assist the farmers to take proper crop-care leading to increase in crop productivity.

    Provision of Better Manure Seeds:
    The farmers should be made familiar with the advantage of chemical fertilizer through exhibitions and these inputs should be made easily available through co-operative societies and panchayats. Liberal supplies of insecticides and pesticides should be distributed at the cheap rates all over the country side.

    Land Reforms:
    It is also suggested that efforts should be made to plug the loopholes in the existing land legislations so that the surplus land may be distributed among the small and marginal farmers. The administrative set-up should be streamlined and corrupt elements should also be punished. It will help to implement the law properly.

    Co-operative Farming:
    To check the sub-division and fragmentation of holding, the movement of co-operative farming should be launched. Co-operative farming would result in the adoption of modern technology on so-called big farms. In this way, agriculture will become profitable occupation through economies of large-scale farming.

    Development of Cottage and Small Scale Industries:
    In rural areas, more emphasis should be made to set up cottage and small scale industries. This will raise the income of the peasants and keep them busy during the off season.

    Question 16

    By “environmentally sustainable development” we mean responsible interacting with the planet to maintain natural resources and avoid jeopardizing for future generations to meet their needs.

    Sustainable development is an organizing principle for meeting human development goals while simultaneously sustaining the ability of natural systems to provide the natural resources and ecosystem services on which the economy and society depend. The desired result is a state of society where living conditions and resources are used to continue to meet human needs without undermining the integrity and stability of the natural system. Sustainable development can be defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

    Today’s highly industrialized economies — the United States and Europe — got a big head start on burning fossil fuels. But China and other developing nations have ramped up output in recent years.

    In total, the United States pumped more carbon dioxide into the atmosphere than any other nation between 1850 and 2014, the latest year for which the center’s data is available. The European Union, including Britain, was the second-largest source of fossil-fuel emissions over that period; China came in third.

    But China is today’s biggest emitter, by a mile.

    The rapidly industrializing country overtook the United States as the world’s biggest source of carbon emissions in the mid-2000s, and has doubled its output since then.

    In 2014, China released 10.3 billion metric tons of carbon dioxide from fossil fuels and industry; the United States released more than 5.2 billion metric tons that year.

    (Carbon emissions from both countries decreased slightly by 2016, according to the latest data from the related Global Carbon Project. But 2017 estimates suggest that Chinese emissions ticked back up last year.)

    Question 17

    Free market and Economic privatization the answer to Development problems
    And governments in Developing countries still major role to play.

    With a view to minimizing government intervention in the economy, all the South Asiancountries are pursuing privatization and de-regulation policies
    Bangladesh has been the first SouthAsian country to embark on the privatization program but the pace of de-regulation and opening ofthe economy to the rest of the world have moved quite slowly. Sri Lanka took the lead in openingher economy to the rest of the world, but de-regulation and privatization have been the relativelyrecent phenomena. Nepal had also initiated the privatization and de-regulation processes in theEighties but without much success. India has taken the policy initiatives aimed at liberalising theeconomy in recent years and privatization policy is being pursued without any degree of conviction.With the de-regulation measures over the last fifteen years and the privatization of more than halfthe public enterprises during the last one year have made Pakistan the most liberal market economyin the South Asia.While the South Asian countries have de-regulated their economies and have beensuccessful even in privatising some of the public enterprises, the rationale of these policies is notvery clear. South Asian governments have rarely examined if the environment for successfulprivatization and realising the objectives of privatization exists in their countries or not and as suchit is hardly surprising that they have done very little to improve the environments. Similarly, whilethe unnecessary regulations must be removed, indiscriminate de-regulation, rather than opting forbetter governance especially when the role of private sector is expanding, may prove counterproductive. Therefore, objectives of both the de-regulation and privatization policies need to beexplicitly stated and the policy measures formulated accordingly.

    Objectives of Privatization
    1. Increase productivity
    2. Reduce budget deficitary deficit
    3. Broad basing equity capital

    The shortcomings of the free market mechanism under which there is no role of government in the economic development of a nation.

    Due to the failure of the free market mechanism, the intervention of government became indispensible for the growth of an economy.

    Now, the question arises of determining the extent of government in regulating and managing economic activities.

    The roles of government differs both in capitalist economy, socialist and mixed economy.

    CAPITALIST ECONOMY
    a. Regulating and controlling various economic situations, such as inflation and deflation, by formulating and implementing various fiscal and monetary measures

    b. Controlling the power of monopolistic and large corporations to elude various economic problems, such as unemployment and inequitable distribution of resources

    c. Possessing the ownership of public utilities, such as railways, education, medical care, water, and electricity, which are required by an economy as a whole

    d. Prohibiting discrimination among individuals and providing them equal educational and job opportunities

    e. Limiting restrictive trade practices and power of trade unions

    f. Maintaining law and order, administering justice, and safeguarding the freedom of individuals in an economy

    g. Supporting private ventures in an economy

    h. Creating central planning body that helps in the development of an economy on a larger scale

    i. Handling problems to environment, extinction of natural resources, and growth of population

    Therefore, we can conclude that the major role of government in a capitalist economy is to control and encourage the free market mechanism. In addition, the government should encourage private ventures for safeguarding the future of an economy.

    Question 18

    Why so many Developing countries select poor Development policies and what can be done to improve this choices.

    Although globalization and trade present new opportunities, it is not without challenges. Developing countries may struggle to compete on a global scale for many reasons.

    Inefficient or inadequate systems of transportation, logistics, or customs;
    Poor connectivity in telecommunications, financial markets or information technology;
    Complicated regulatory environments that discourage new investments;
    Anticompetitive behavior by major market players or cartels that stifle innovation, productivity, or market growth.
    The increasing complexity of trade has serious implications for the world’s poor, who often are disproportionately disconnected from global, regional – or even local – markets.

    · In low-income countries, investing in agriculture has a greater impact on reducing poverty than investing in other sectors, as it offers the most direct route for rural people to benefit from their main assets: land and labour. Investment in small-scale family farming and in the livelihoods of fishers, forest dwellers and herders, is an engine for sustainable poverty reduction.

    · However, promoting agriculture is not enough. Key policy approaches to end poverty also include boosting social policies, promoting coherence between agriculture and social protection; strengthening the capacity of producer organizations and rural institutions; and increasing investment in rural infrastructure, research and services to create new income generating opportunities in the off-farm sector for the rural poor.

    · Integrate policies to reduce rural poverty: it is crucial to provide policy support across government ministries, including Ministries of agriculture, public infrastructure and services, social affairs, employment, health, education, finance, planning and environment.

    · Globally, 60% of employed women work in the agricultural sector. Policies to achieve rural poverty reduction must be gender-equitable and gender-sensitive and strengthen rural women’s economic empowerment.

    · Leave no one behind: FAO helps family farmers, small fishers, forest dwellers, pastoralists, rural women and youth, and indigenous peoples make a living through.

    Question 19
    International trade is desire from the point of view developing poor nations.

    Through the globalization process over the past decades, international trade has become quite important in order to accomplish or maintain high living standards all over the world.

    Even though trade with other countries has many advantages, it also implies some problems.
    Gains from trade and how the gains are distributed among nations

    In economics, gains from trade are the net benefits to economic agents from being allowed an increase in voluntary trading with each other. In technical terms, they are the increase of consumer surplus plus producer surplus from lower tariffs or otherwise liberalizing trade.

    Classical economists maintain that there are two methods to measure the gains from trade: 1) international trade increases national income which helps us to get low priced imports; 2) gains are measured in terms of trade. To measure the gains from the trade, comparison of a country’s cost of production with a foreign country’s cost of production for the same product is required. However, it is very difficult to acquire the knowledge of cost of production and cost of imports in a domestic country. Therefore, terms of trade method is preferable to measure the gains from trade.

    Advantages of International Trade
    Bigger variety of products for the local population
    Higher level of competition with decreasing prices
    Fierce competition leads to high level of technological progress
    Companies can expand their target market
    Companies can buy cheap resources from countries with weak currencies
    Low production costs
    Supply with important medical equipment
    Countries can specialize in certain products
    International cooperation
    Trade partners can support each other
    International trade can increase total global welfare
    Higher tax revenue
    Access to international industry experts
    Hedging against business risks in certain markets
    Countries may refrain from serious conflicts due to economic interests
    Access to foreign investments

    Static and Dynamic Gains of International Trade

    The gains from trade can be clad into static and dynamic gains from trades. Static Gains means the increase in social welfare as a result of maximized national output due to optimum utilization of country’s factor endowments or resources. Dynamic gains from trade, are those benefits which accelerate economic growth of the participating countries.

    Static gains are the result of the operation of the theory of comparative cost in the field of foreign trade. On this principle countries make the optimum use of their available resources so that their national output is greater which also raises the level of social welfare in the country. When there is an introduction of foreign trade in the economy the result is called the static gains from trade.

    Dynamic gains from trade relate to economic development of the economy. Specialization of the country for the production of best suited commodities which result in a large volume of quality production which promotes growth. Thus the extension of domestic market to foreign market will accelerate economic growth.

    Question 20
    Governments in the developing countries should adopt a policy of foreign exchange control, raise tariffs, or set quotas on the importation of certain “non essential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    Impact of international monetary fund “stabilization programs” and world bank “structural adjustment” leading on the balance of payments and growth prospects of heavily indebted less developed countries.

    Trade in goods and services typically forms the largest part of an economy’s current account. The current account also includes primary and secondary income flows. Primary income refers to international payments to factors of production, such as investment income and compensation to employees. Secondary income includes transfer payments flowing between countries, such as personal remittances, pension payments and overseas’s aid.

    An increasing trade deficit may be a symptom of long-term de-industrialisation. The UK started to lose its manufacturing base in the 1970s, and this process has continued over the last 30 years.

    An increasing trade deficit may be a symptom of long-term de-industrialisation. The UK started to lose its manufacturing base in the 1970s, and this process has continued over the last 30 years.
    countries need to adjust whenever they have balance of payments deficits that cannot be financed on acceptable terms, whether these deficits are temporary and self-correcting, or “fundamental.” One difficulty here is that the ability of developing countries to finance even temporary deficits has diminished. Many of them suffer from much reduced access to net new commercial bank loans, static or declining real levels of aid and direct investment, often only the slimmest margins of international liquidity, and diminished access to the Fund’s compensatory financing and stand-by credits.
    is also the prospect of reduced support from the World Bank’s soft-loan window, the International Development Agency (IDA). Adjustment, it seems, is coming to the short end of the market.

    Structural adjustment programs (SAPs) consist of loans (structural adjustment loans; SALs) provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their purpose is to adjust the country’s economic structure, improve international competitiveness, and restore its balance of payments.

    The IMF and World Bank (two Bretton Woods institutions) require borrowing countries to implement certain policies in order to obtain new loans (or to lower interest rates on existing ones). These policies are typically centered around increased privatization, liberalizing trade and foreign investment, and balancing government deficit. The conditionality clauses attached to the loans have been criticized because of their effects on the social sector.

    The proponents of structural adjustment, including international lending agencies such as the IMF and World Bank, argued that reforms were necessary to restore growth and curtail inflation. The opponents of adjustment claimed its macroeconomic results were not a foregone conclusion and, regardless of them, such changes would drastically affect the already precarious position of the poor. We use data from sixteen Latin American cases to examine the socioeconomic impacts of structural adjustment. Adjustment was weakly associated with growth, and reform did seem to reduce inflation. Counterintuitively, the extent of structural adjustment appears to be negatively associated with both poverty and inequality. Finally, empirical data show that low levels of growth or even mere economic stability are the best remedy for poverty and inequality.

    SAPs are created with the stated goal of reducing the borrowing country’s fiscal imbalances in the short and medium term or in order to adjust the economy to long-term growth.[3] By requiring the implementation of free market programmes and policy, SAPs are supposedly intended to balance the government’s budget, reduce inflation and stimulate economic growth.

    Question 21

    ia. Ignorance and non-chalant attitude towards the necessities in the country.
    b. Poor government policy and structure.
    c. Unaccounted funds for economic project.
    d. Misappropriated funds by public servants as well as mismanagement of the economy.
    iia. The country as a whole will collapse.
    b. Income inequality where money lies in the hands of few people in the society,promoting abject poverty.
    c. Money laundering,looting,and exploitation.
    d. Disequilibrium in the balance of payment.
    e. Inflation
    f. Underdevelopment of infrastructural facilities.
    g. Losses in foreign investors.
    Question 22
    .Although aid has had some negative effects on the growth and development of most African countries, research shows that development aid, in particular, actually does have a strong and favorable effect on economic growth and development. Development aid has a positive effect on growth because it may actually promote long term economic growth and development through promoting investments in infrastructure and human capital. More evidence suggests that aid had indeed, had a positive effect on economic growth and development in most African countries. According to a study conducted among 36 sub-saharan African countries in 2013, 27 out of these 36 countries have experienced strong and favorable effects of aid on GDP and investments, which is contrary to the believe that aid ineffective and does not lead to economic development in most African countries. Research also shows that aid per capita supports economic growth for low income African countries such as Tanzania, Mozambique and Ethiopia, while aid per capita does not have a significant effect on the economic growth of middle income African countries such as Botswana and Morocco. Aid is most beneficial to low income countries because such countries use aid.
    Its negative impact includes:
    a.Foreign aid kills local industries in developing countries.
    b. Donor countries offer foreign aid to poor countries while bargaining for economic influence of the poor or receiving countries, and policy standards that allow donor countries to control economic systems of poor countries, for the benefit of the donor countries.
    c. While development aid is an important source of investment for poor and often insecure societies, aid’s complexity and the ever-expanding budgets leave it vulnerable to corruption, yet discussing it remains difficult as for many it is a taboo subject.
    d. According to critics, foreign aid does not promote faster growth but may hold it back by substituting for domestic savings and investment.
    e. The growth of the modern sector is the focus of aid. As a result, it increases the gap in
    living standards between the rich and the poor in Third World countries.
    f. If the aid given is concerned with unproductive fields or old technology, it will have the
    effect of increasing inflation in the country.
    g. The most prominent objection is that donor countries interfere with the economic and
    political activities of the recipient country.
    Question 23
    a. Increased Investment
    b.Technological Transfers
    c. Transfer of skills
    d. Increase in Tax revenue
    e. Reduces gap between capital and labor
    f. Encourages competition
    g. Improves Balance of Payments
    Question 23
    a. Both monetary and fiscal policies are used to regulate economic activity over time. They can be used to accelerate growth when an economy starts to slow or to moderate growth and activity when an economy starts to overheat. In addition, fiscal policy can be used to redistribute income and wealth.
    bi. Increased military spending leads to slower economic growth.Military spending tends to have a negative impact on economic growth.
    ii. Over a 20-year period, a 1% increase in military spending will decrease a country’s economic growth by 9%.
    iii. Increased military spending is especially detrimental to the economic growth of wealthier countries.

    Question 24
    Impact of foreign economic aid from rich countries.
    Conditions and purposes of seeking for economic aid by developing countries and conditions and purposes of offering foreign economic aid by developed countries.

    Foreign aid, the international transfer of capital, goods, or services from a country or international organization for the benefit of the recipient country or its population. Aid can be economic, military, or emergency humanitarian (e.g., aid given following natural disasters).

    Foreign aid can involve a transfer of financial resources or commodities (e.g., food or military equipment) or technical advice and training. The resources can take the form of grants or concessional credits (e.g., export credits). The most common type of foreign aid is official development assistance (ODA), which is assistance given to promote development and to combat poverty. The primary source of ODA—which for some countries represents only a small portion of their assistance—is bilateral grants from one country to another, though some of the aid is in the form of loans, and sometimes the aid is channeled through international organizations and nongovernmental organizations (NGOs). For example, the International Monetary Fund (IMF), the World Bank, and the United Nations Children’s Fund (UNICEF) have provided significant amounts of aid to countries and to NGOs involved in assistance activities.

    Countries often provide foreign aid to enhance their own security. Thus, economic assistance may be used to prevent friendly governments from falling under the influence of unfriendly ones or as payment for the right to establish or use military bases on foreign soil. Foreign aid also may be used to achieve a country’s diplomatic goals, enabling it to gain diplomatic recognition, to garner support for its positions in international organizations, or to increase its diplomats’ access to foreign officials. Other purposes of foreign aid include promoting a country’s exports (e.g., through programs that require the recipient country to use the aid to purchase the donor country’s agricultural products or manufactured goods) and spreading its language, culture, or religion. Countries also provide aid to relieve suffering caused by natural or man-made disasters such as famine, disease, and war, to promote economic development, to help establish or strengthen political institutions, and to address a variety of transnational problems including disease, terrorism and other crimes, and destruction of the environment. Because most foreign aid programs are designed to serve several of these purposes simultaneously, it is difficult to identify any one of them as most important.

    Foreign aid is defined as the voluntary transfer of resources from one country to another country. The foreign aid has both advantages and disadvantages. The effect of foreign aid on growth is the subject of ongoing debate. It is difficult to determine the effect of aid on growth when aid is an integral part of an economy.there are few “experiments” in the level of foreign aid. While most economists like Jeffery Sachs hold the view of aid as the driver for economic growth and development, others argue that aid has rather led to increasing poverty and decreasing economic growth of poor countries. Economists like Dambisa Moyo argue that aid does not lead to development, but rather creates problems including corruption, dependency, limitations on exports and dutch disease, which negatively affect the economic growth and development of most African countries and other poor countries across the globe.

    In the decade following the financial crisis of 2007–2008 and the subsequent European sovereign debt crisis beginning in late 2009, academics and economists have been exploring the relationship between government debt and economic growth.

    The literature on the debt-growth relationship since the publication of “Growth in a Time of Debt” to evaluate the claim that high government-debt-to-GDP ratios have negative or significant (or both) effects on the growth rate of an economy. In addition, we assess the claim that there is a nonlinear threshold, around 90 percent of GDP, above which debt has a significant deleterious impact on growth rates. With several European countries taking action to successfully reduce their debt-to-GDP ratios in recent years, it is important for Americans to broaden their understanding of the potential negative effects of debt on growth potential, particularly in light of America’s current fiscal trajectory.

    Question 25
    Why multinational corporations should be encouraged to invest in the economics of poor nations under the following conditions:

    Besides, it is through multinational corporations that modern high technology is transferred to the developing countries. The important question about multinational corporations is why they exist. The multinational corporations exist because they are highly efficient. Their efficiencies in production and distribution of goods and services arise from internalising certain activities rather than contracting them out to other firms. Managing a firm involves which production and distribution activities it will perform itself and which activities it will contract out to other firms and individuals.

    In addition to this basic issue, a big firm may decide to set up and operate business units in other countries to benefit from advantages of location. For examples, it has been found that giant American and European firms set up production units to explore and refine oil in Middle East countries because oil is found there. Similarly, to take advantages of lower labour costs, and not strict environmental standards, multinational corporate firms set up production units in developing countries.

    Multinationals provide an inflow of capital into the developing country. E.g. the investment to build the factory is counted as a capital flow on the financial account of the balance of payments. This capital investment helps the economy develop and increase its productive capacity.

    The Harrod-Domar model of growth suggests that this level of investment is important for determining the level of economic growth. One of the best ways to increase the level of economic growth is to provide an inflow of capital from abroad.

    The inflows of capital help to finance a current account deficit. (Basically, this means that foreign investment enables developing countries to buy imports.)

    Multinational corporations provide employment. Although wages seem very low by Western standards, people in developing countries often see these new jobs as preferable to working as a subsistence farmer with even lower income.
    Even liberal economists like Paul Krugman and Jeffrey Sachs have defended ‘sweatshop labour’ arguing that although employers are paying too low wages. Often sweatshop labour is better than the alternative of scavenging or no paid employment. Economies in south-east Asia have seen rising wages in recent decades – showing that low wage economies can develop.

    Multinational firms may help improve infrastructure in the economy. They may improve the skills of their workforce. Foreign investment may stimulate spending in infrastructure such as roads and transport.

    Multinational firms help to diversify the economy away from relying on primary products and agriculture – which are often subject to volatile prices and supply.

    Question 26
    Role of financial and fiscal policy in promoting development.
    Large military expenditures (stimulate/retard) economic growth.

    The various tools of fiscal policy such as budget, taxation, public expenditure, public works and public debt can go a long way for maintaining full employment without inflationary and deflationary forces in underdeveloped economies.

    Obviously, taxation and public expenditure is a powerful instrument in the hands of public authority which greatly affect the changes in disposal income, consumption and investment.

    An anti-depression tax policy increases disposable income of the individual, promotes consumption and investment. This will ultimately result in increase in spending activities which in turn, increase effective demand of the people. On the contrary, during inflation, anti-inflationary policy measures help to plug the inflationary gap.

    During inflation, such measures are adopted which help to wipe off the excessive purchasing power and consumer demand. Tax burden is raised in such a manner as it may not retard new investment. Keeping in view all facts in mind, it is stated that fiscal policy plays very significant role for promoting economic development and stability of under developed countries.

    The roles are as follows:
    1. To mobilize resources.
    2. To accelerate the rate of growth.
    3. To encourage socially optimal investment.
    4. Promotion of economic stability.
    5. Reallocation of resources.
    6. To check inflationary tendencies
    7. Subsidies in consumption and production.
    8. Inducement to Investment and capital formation.

    The debate over how military spending impacts a country’s economy has been fiercely argued, and the results of studies trying to understand this relationship have been mixed. Early researchers ran into trouble due to inadequate time frame or country data. Others have studied only certain types of countries or periods in time, leading to results that could arguably be caused by other social, political, or economic factors. Past research, for example, was highly influenced by military spending data in the Cold War era. After the Cold War, the reduced military spending was matched with an era of strong economic growth, which provided for a very different economic environment than what was seen during periods of high military spending during the Cold War era. To overcome past limitations, this study analyzes military spending by a large and diverse group of countries over the span of 45 years, with special attention to global events that may otherwise influence major economies.

    Increased military spending leads to slower economic growth.
    Military spending tends to have a negative impact on economic growth.
    Over a 20-year period, a 1% increase in military spending will decrease a country’s economic growth by 9%.
    Increased military spending is especially detrimental to the economic growth of wealthier countries.

    Question 27

    Microfinance is Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services.[1][2] Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient.

    Poverty is the state of not having enough material possessions or income for a person’s basic needs. Poverty may include social, economic, and political elements.
    The world social summit identified imperative of mankind and called on governments to address the root causes of poverty, provide for basic needs for all and ensure that the poor have access to productive resources, including credit, education and training.

    The primary objective of microfinance is to enhance outreach to disadvantaged sectors of the economy through financial inclusion. It is linked to the empowerment of the poor by the provision of financial emancipation and a simple way to provide loans and other financial services to improverished individuals to enhance their income generating capacity and to Foster economic activities in low income segments.

    Microfinance provides financial services to millions ofthe world’s poor. Poor people, like the non-poor, may use financial servicesfor many purposes and in different ways throughout their lives, but they areparticularly vulnerable since their income is small and unstable. Thus it isdifficult for them to anticipate when the need for small but critical lump sumsof money may suddenly arise. Through savings, credit, insurance or remittances,poor people can secure larger lump sums of money than that which they wouldnormally have access to. These lump sums help them to overcome the problem ofunstable income, for example by allowing them to pay school fees, pay forevents such as weddings and funerals, or cope with crises as a result ofillness or natural disaster. Lump sums of money can also be invested in incomegenerating activities which help to reduce poverty.

    The main challenges on microfinance are:

    1. Higher Interest Rates in comparison to mainstream banks widespread dependence, over-indebtedness, inadequate investment validation, lack of enough awareness of financial services in the Economy and among others. High interest rates often sink consumers further into debt and poverty.

    2. Lack of Sustainability
    An underlying issue in the microfinance discourse is the question of sustainable action. Despite the business model of MFIs and awareness of “best practices,” nearly all programs remain substantially subsidized. According to a UN study, only 10% of micro-lending organizations are self-sufficient.

    3. No Business Training
    Another pitfall that microfinance ventures may suffer from is the failure to assist and empower borrowers through training. Few micro-lending organizations provide any type of formal business training to their recipients, as they assume that all loan recipients are entrepreneurs and that they understand how to succeed in business. However, this is rarely the case.

    4. Lack of Awareness About Social Factors
    In order to design services which are relevant and useful to poor people, microfinance initiatives should understand local social and economic structures as well as macro-level trends. For example, the social perception of entrepreneurial qualities is an important factor in the receptivity to MFIs. In societies that place low status on economic individualism.

  35. Avatar Ochonwu lotachi Vivian says:

    INAME: OCHONWU LOTACHI VIVIAN
    REG. NO: 2018/248806
    DEPARTMENT: ECONOMICS (MAJOR)
    COURSE CODE:Eco 361

    QUESTION 14
    Educational systems in developing countries really promote economic development and are not simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power and influence.

    A balanced education system promotes not only economic development but productivity and ge nerates individual income per capita, promotes entrepreneurship and technological advances.
    Education is truly one of the most powerful instruments for reducing poverty and inequality and it sets the foundation for sustained economic growth.

    Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.

    Understanding how education and training interact with the economy can help explain why some workers, businesses, and economies flourish, while others falter.
    successful economy has a workforce capable of operating industries at a level where it holds a competitive advantage over the economies of other countries.

    countries have placed greater emphasis on developing an education system that can produce workers able to function in new industries, such as science and technology. This is partly because older industries in developed economies have become less competitive, and thus are less likely to continue dominating the industrial landscape. Also, a movement to improve the basic education of the population emerged, with a growing belief that all people had the right to an education.
    A country’s economy becomes more productive as the proportion of educated workers increases since educated workers can more efficiently carry out tasks that require literacy and critical thinking. However, obtaining a higher level of education also carries a cost. A country doesn’t have to provide an extensive network of colleges or universities to benefit from education; it can provide basic literacy programs and still see economic improvements.

    Question 15
    As more than half the people in developing countries still reside in rural areas, agricultural and rural development can be best promoted by:

    Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries.

    Transport Facilities:
    To facilitate the farmers to produce new farm inputs and enable them to sell their product in markets, villages should be linked with mandies.
    It would help to raise their income which in turn stimulates the farmer’s interest to adopt better farm technology with sufficient income.

    Institutional Credit:
    To save the farmers from the clutches of moneylenders, adequate credit facilities should be made available at reasonable cheap rates in rural areas. The land mortgage banks and co-operative credit societies should be strengthened to provide loans to the cultivators. Moreover, integrated scheme of rural credit must be implemented.

    Proper Marketing Facilities:
    Marketing infrastructure should be widened and strengthened to help the farmers to sell their products at better prices. There should be proper arrangements for unloading of the produce in the markets. Besides, price support policy must be adopted and minimum prices should be guaranteed to the peasants.

    Agricultural Education:
    In a bid to guide and advise the farmers regarding the adoption of new technology arrangements should be made for agricultural education and extension services. It would assist the farmers to take proper crop-care leading to increase in crop productivity.

    Provision of Better Manure Seeds:
    The farmers should be made familiar with the advantage of chemical fertilizer through exhibitions and these inputs should be made easily available through co-operative societies and panchayats. Liberal supplies of insecticides and pesticides should be distributed at the cheap rates all over the country side.

    Land Reforms:
    It is also suggested that efforts should be made to plug the loopholes in the existing land legislations so that the surplus land may be distributed among the small and marginal farmers. The administrative set-up should be streamlined and corrupt elements should also be punished. It will help to implement the law properly.

    Co-operative Farming:
    To check the sub-division and fragmentation of holding, the movement of co-operative farming should be launched. Co-operative farming would result in the adoption of modern technology on so-called big farms. In this way, agriculture will become profitable occupation through economies of large-scale farming.

    Development of Cottage and Small Scale Industries:
    In rural areas, more emphasis should be made to set up cottage and small scale industries. This will raise the income of the peasants and keep them busy during the off season.

    Question 16

    By “environmentally sustainable development” we mean responsible interacting with the planet to maintain natural resources and avoid jeopardizing for future generations to meet their needs.

    Sustainable development is an organizing principle for meeting human development goals while simultaneously sustaining the ability of natural systems to provide the natural resources and ecosystem services on which the economy and society depend. The desired result is a state of society where living conditions and resources are used to continue to meet human needs without undermining the integrity and stability of the natural system. Sustainable development can be defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

    Today’s highly industrialized economies — the United States and Europe — got a big head start on burning fossil fuels. But China and other developing nations have ramped up output in recent years.

    In total, the United States pumped more carbon dioxide into the atmosphere than any other nation between 1850 and 2014, the latest year for which the center’s data is available. The European Union, including Britain, was the second-largest source of fossil-fuel emissions over that period; China came in third.

    But China is today’s biggest emitter, by a mile.

    The rapidly industrializing country overtook the United States as the world’s biggest source of carbon emissions in the mid-2000s, and has doubled its output since then.

    In 2014, China released 10.3 billion metric tons of carbon dioxide from fossil fuels and industry; the United States released more than 5.2 billion metric tons that year.

    (Carbon emissions from both countries decreased slightly by 2016, according to the latest data from the related Global Carbon Project. But 2017 estimates suggest that Chinese emissions ticked back up last year.)

    Question 17

    Free market and Economic privatization the answer to Development problems
    And governments in Developing countries still major role to play.

    With a view to minimizing government intervention in the economy, all the South Asiancountries are pursuing privatization and de-regulation policies
    Bangladesh has been the first SouthAsian country to embark on the privatization program but the pace of de-regulation and opening ofthe economy to the rest of the world have moved quite slowly. Sri Lanka took the lead in openingher economy to the rest of the world, but de-regulation and privatization have been the relativelyrecent phenomena. Nepal had also initiated the privatization and de-regulation processes in theEighties but without much success. India has taken the policy initiatives aimed at liberalising theeconomy in recent years and privatization policy is being pursued without any degree of conviction.With the de-regulation measures over the last fifteen years and the privatization of more than halfthe public enterprises during the last one year have made Pakistan the most liberal market economyin the South Asia.While the South Asian countries have de-regulated their economies and have beensuccessful even in privatising some of the public enterprises, the rationale of these policies is notvery clear. South Asian governments have rarely examined if the environment for successfulprivatization and realising the objectives of privatization exists in their countries or not and as suchit is hardly surprising that they have done very little to improve the environments. Similarly, whilethe unnecessary regulations must be removed, indiscriminate de-regulation, rather than opting forbetter governance especially when the role of private sector is expanding, may prove counterproductive. Therefore, objectives of both the de-regulation and privatization policies need to beexplicitly stated and the policy measures formulated accordingly.

    Objectives of Privatization
    1. Increase productivity
    2. Reduce budget deficitary deficit
    3. Broad basing equity capital

    The shortcomings of the free market mechanism under which there is no role of government in the economic development of a nation.

    Due to the failure of the free market mechanism, the intervention of government became indispensible for the growth of an economy.

    Now, the question arises of determining the extent of government in regulating and managing economic activities.

    The roles of government differs both in capitalist economy, socialist and mixed economy.

    CAPITALIST ECONOMY
    a. Regulating and controlling various economic situations, such as inflation and deflation, by formulating and implementing various fiscal and monetary measures

    b. Controlling the power of monopolistic and large corporations to elude various economic problems, such as unemployment and inequitable distribution of resources

    c. Possessing the ownership of public utilities, such as railways, education, medical care, water, and electricity, which are required by an economy as a whole

    d. Prohibiting discrimination among individuals and providing them equal educational and job opportunities

    e. Limiting restrictive trade practices and power of trade unions

    f. Maintaining law and order, administering justice, and safeguarding the freedom of individuals in an economy

    g. Supporting private ventures in an economy

    h. Creating central planning body that helps in the development of an economy on a larger scale

    i. Handling problems to environment, extinction of natural resources, and growth of population

    Therefore, we can conclude that the major role of government in a capitalist economy is to control and encourage the free market mechanism. In addition, the government should encourage private ventures for safeguarding the future of an economy.

    Question 18

    Why so many Developing countries select poor Development policies and what can be done to improve this choices.

    Although globalization and trade present new opportunities, it is not without challenges. Developing countries may struggle to compete on a global scale for many reasons.

    Inefficient or inadequate systems of transportation, logistics, or customs;
    Poor connectivity in telecommunications, financial markets or information technology;
    Complicated regulatory environments that discourage new investments;
    Anticompetitive behavior by major market players or cartels that stifle innovation, productivity, or market growth.
    The increasing complexity of trade has serious implications for the world’s poor, who often are disproportionately disconnected from global, regional – or even local – markets.

    · In low-income countries, investing in agriculture has a greater impact on reducing poverty than investing in other sectors, as it offers the most direct route for rural people to benefit from their main assets: land and labour. Investment in small-scale family farming and in the livelihoods of fishers, forest dwellers and herders, is an engine for sustainable poverty reduction.

    · However, promoting agriculture is not enough. Key policy approaches to end poverty also include boosting social policies, promoting coherence between agriculture and social protection; strengthening the capacity of producer organizations and rural institutions; and increasing investment in rural infrastructure, research and services to create new income generating opportunities in the off-farm sector for the rural poor.

    · Integrate policies to reduce rural poverty: it is crucial to provide policy support across government ministries, including Ministries of agriculture, public infrastructure and services, social affairs, employment, health, education, finance, planning and environment.

    · Globally, 60% of employed women work in the agricultural sector. Policies to achieve rural poverty reduction must be gender-equitable and gender-sensitive and strengthen rural women’s economic empowerment.

    · Leave no one behind: FAO helps family farmers, small fishers, forest dwellers, pastoralists, rural women and youth, and indigenous peoples make a living through.

    Question 19
    International trade is desire from the point of view developing poor nations.

    Through the globalization process over the past decades, international trade has become quite important in order to accomplish or maintain high living standards all over the world.

    Even though trade with other countries has many advantages, it also implies some problems.
    Gains from trade and how the gains are distributed among nations

    In economics, gains from trade are the net benefits to economic agents from being allowed an increase in voluntary trading with each other. In technical terms, they are the increase of consumer surplus plus producer surplus from lower tariffs or otherwise liberalizing trade.

    Classical economists maintain that there are two methods to measure the gains from trade: 1) international trade increases national income which helps us to get low priced imports; 2) gains are measured in terms of trade. To measure the gains from the trade, comparison of a country’s cost of production with a foreign country’s cost of production for the same product is required. However, it is very difficult to acquire the knowledge of cost of production and cost of imports in a domestic country. Therefore, terms of trade method is preferable to measure the gains from trade.

    Advantages of International Trade
    Bigger variety of products for the local population
    Higher level of competition with decreasing prices
    Fierce competition leads to high level of technological progress
    Companies can expand their target market
    Companies can buy cheap resources from countries with weak currencies
    Low production costs
    Supply with important medical equipment
    Countries can specialize in certain products
    International cooperation
    Trade partners can support each other
    International trade can increase total global welfare
    Higher tax revenue
    Access to international industry experts
    Hedging against business risks in certain markets
    Countries may refrain from serious conflicts due to economic interests
    Access to foreign investments

    Static and Dynamic Gains of International Trade

    The gains from trade can be clad into static and dynamic gains from trades. Static Gains means the increase in social welfare as a result of maximized national output due to optimum utilization of country’s factor endowments or resources. Dynamic gains from trade, are those benefits which accelerate economic growth of the participating countries.

    Static gains are the result of the operation of the theory of comparative cost in the field of foreign trade. On this principle countries make the optimum use of their available resources so that their national output is greater which also raises the level of social welfare in the country. When there is an introduction of foreign trade in the economy the result is called the static gains from trade.

    Dynamic gains from trade relate to economic development of the economy. Specialization of the country for the production of best suited commodities which result in a large volume of quality production which promotes growth. Thus the extension of domestic market to foreign market will accelerate economic growth.

    Question 20
    Governments in the developing countries should adopt a policy of foreign exchange control, raise tariffs, or set quotas on the importation of certain “non essential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    Impact of international monetary fund “stabilization programs” and world bank “structural adjustment” leading on the balance of payments and growth prospects of heavily indebted less developed countries.

    Trade in goods and services typically forms the largest part of an economy’s current account. The current account also includes primary and secondary income flows. Primary income refers to international payments to factors of production, such as investment income and compensation to employees. Secondary income includes transfer payments flowing between countries, such as personal remittances, pension payments and overseas’s aid.

    An increasing trade deficit may be a symptom of long-term de-industrialisation. The UK started to lose its manufacturing base in the 1970s, and this process has continued over the last 30 years.

    An increasing trade deficit may be a symptom of long-term de-industrialisation. The UK started to lose its manufacturing base in the 1970s, and this process has continued over the last 30 years.
    countries need to adjust whenever they have balance of payments deficits that cannot be financed on acceptable terms, whether these deficits are temporary and self-correcting, or “fundamental.” One difficulty here is that the ability of developing countries to finance even temporary deficits has diminished. Many of them suffer from much reduced access to net new commercial bank loans, static or declining real levels of aid and direct investment, often only the slimmest margins of international liquidity, and diminished access to the Fund’s compensatory financing and stand-by credits.
    is also the prospect of reduced support from the World Bank’s soft-loan window, the International Development Agency (IDA). Adjustment, it seems, is coming to the short end of the market.

    Structural adjustment programs (SAPs) consist of loans (structural adjustment loans; SALs) provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their purpose is to adjust the country’s economic structure, improve international competitiveness, and restore its balance of payments.

    The IMF and World Bank (two Bretton Woods institutions) require borrowing countries to implement certain policies in order to obtain new loans (or to lower interest rates on existing ones). These policies are typically centered around increased privatization, liberalizing trade and foreign investment, and balancing government deficit. The conditionality clauses attached to the loans have been criticized because of their effects on the social sector.

    The proponents of structural adjustment, including international lending agencies such as the IMF and World Bank, argued that reforms were necessary to restore growth and curtail inflation. The opponents of adjustment claimed its macroeconomic results were not a foregone conclusion and, regardless of them, such changes would drastically affect the already precarious position of the poor. We use data from sixteen Latin American cases to examine the socioeconomic impacts of structural adjustment. Adjustment was weakly associated with growth, and reform did seem to reduce inflation. Counterintuitively, the extent of structural adjustment appears to be negatively associated with both poverty and inequality. Finally, empirical data show that low levels of growth or even mere economic stability are the best remedy for poverty and inequality.

    SAPs are created with the stated goal of reducing the borrowing country’s fiscal imbalances in the short and medium term or in order to adjust the economy to long-term growth.[3] By requiring the implementation of free market programmes and policy, SAPs are supposedly intended to balance the government’s budget, reduce inflation and stimulate economic growth.

    Question 21

    ia. Ignorance and non-chalant attitude towards the necessities in the country.
    b. Poor government policy and structure.
    c. Unaccounted funds for economic project.
    d. Misappropriated funds by public servants as well as mismanagement of the economy.
    iia. The country as a whole will collapse.
    b. Income inequality where money lies in the hands of few people in the society,promoting abject poverty.
    c. Money laundering,looting,and exploitation.
    d. Disequilibrium in the balance of payment.
    e. Inflation
    f. Underdevelopment of infrastructural facilities.
    g. Losses in foreign investors.
    Question 22
    .Although aid has had some negative effects on the growth and development of most African countries, research shows that development aid, in particular, actually does have a strong and favorable effect on economic growth and development. Development aid has a positive effect on growth because it may actually promote long term economic growth and development through promoting investments in infrastructure and human capital. More evidence suggests that aid had indeed, had a positive effect on economic growth and development in most African countries. According to a study conducted among 36 sub-saharan African countries in 2013, 27 out of these 36 countries have experienced strong and favorable effects of aid on GDP and investments, which is contrary to the believe that aid ineffective and does not lead to economic development in most African countries. Research also shows that aid per capita supports economic growth for low income African countries such as Tanzania, Mozambique and Ethiopia, while aid per capita does not have a significant effect on the economic growth of middle income African countries such as Botswana and Morocco. Aid is most beneficial to low income countries because such countries use aid.
    Its negative impact includes:
    a.Foreign aid kills local industries in developing countries.
    b. Donor countries offer foreign aid to poor countries while bargaining for economic influence of the poor or receiving countries, and policy standards that allow donor countries to control economic systems of poor countries, for the benefit of the donor countries.
    c. While development aid is an important source of investment for poor and often insecure societies, aid’s complexity and the ever-expanding budgets leave it vulnerable to corruption, yet discussing it remains difficult as for many it is a taboo subject.
    d. According to critics, foreign aid does not promote faster growth but may hold it back by substituting for domestic savings and investment.
    e. The growth of the modern sector is the focus of aid. As a result, it increases the gap in
    living standards between the rich and the poor in Third World countries.
    f. If the aid given is concerned with unproductive fields or old technology, it will have the
    effect of increasing inflation in the country.
    g. The most prominent objection is that donor countries interfere with the economic and
    political activities of the recipient country.
    Question 23
    a. Increased Investment
    b.Technological Transfers
    c. Transfer of skills
    d. Increase in Tax revenue
    e. Reduces gap between capital and labor
    f. Encourages competition
    g. Improves Balance of Payments
    Question 23
    a. Both monetary and fiscal policies are used to regulate economic activity over time. They can be used to accelerate growth when an economy starts to slow or to moderate growth and activity when an economy starts to overheat. In addition, fiscal policy can be used to redistribute income and wealth.
    bi. Increased military spending leads to slower economic growth.Military spending tends to have a negative impact on economic growth.
    ii. Over a 20-year period, a 1% increase in military spending will decrease a country’s economic growth by 9%.
    iii. Increased military spending is especially detrimental to the economic growth of wealthier countries.

    Question 24
    Impact of foreign economic aid from rich countries.
    Conditions and purposes of seeking for economic aid by developing countries and conditions and purposes of offering foreign economic aid by developed countries.

    Foreign aid, the international transfer of capital, goods, or services from a country or international organization for the benefit of the recipient country or its population. Aid can be economic, military, or emergency humanitarian (e.g., aid given following natural disasters).

    Foreign aid can involve a transfer of financial resources or commodities (e.g., food or military equipment) or technical advice and training. The resources can take the form of grants or concessional credits (e.g., export credits). The most common type of foreign aid is official development assistance (ODA), which is assistance given to promote development and to combat poverty. The primary source of ODA—which for some countries represents only a small portion of their assistance—is bilateral grants from one country to another, though some of the aid is in the form of loans, and sometimes the aid is channeled through international organizations and nongovernmental organizations (NGOs). For example, the International Monetary Fund (IMF), the World Bank, and the United Nations Children’s Fund (UNICEF) have provided significant amounts of aid to countries and to NGOs involved in assistance activities.

    Countries often provide foreign aid to enhance their own security. Thus, economic assistance may be used to prevent friendly governments from falling under the influence of unfriendly ones or as payment for the right to establish or use military bases on foreign soil. Foreign aid also may be used to achieve a country’s diplomatic goals, enabling it to gain diplomatic recognition, to garner support for its positions in international organizations, or to increase its diplomats’ access to foreign officials. Other purposes of foreign aid include promoting a country’s exports (e.g., through programs that require the recipient country to use the aid to purchase the donor country’s agricultural products or manufactured goods) and spreading its language, culture, or religion. Countries also provide aid to relieve suffering caused by natural or man-made disasters such as famine, disease, and war, to promote economic development, to help establish or strengthen political institutions, and to address a variety of transnational problems including disease, terrorism and other crimes, and destruction of the environment. Because most foreign aid programs are designed to serve several of these purposes simultaneously, it is difficult to identify any one of them as most important.

    Foreign aid is defined as the voluntary transfer of resources from one country to another country. The foreign aid has both advantages and disadvantages. The effect of foreign aid on growth is the subject of ongoing debate. It is difficult to determine the effect of aid on growth when aid is an integral part of an economy.there are few “experiments” in the level of foreign aid. While most economists like Jeffery Sachs hold the view of aid as the driver for economic growth and development, others argue that aid has rather led to increasing poverty and decreasing economic growth of poor countries. Economists like Dambisa Moyo argue that aid does not lead to development, but rather creates problems including corruption, dependency, limitations on exports and dutch disease, which negatively affect the economic growth and development of most African countries and other poor countries across the globe.

    In the decade following the financial crisis of 2007–2008 and the subsequent European sovereign debt crisis beginning in late 2009, academics and economists have been exploring the relationship between government debt and economic growth.

    The literature on the debt-growth relationship since the publication of “Growth in a Time of Debt” to evaluate the claim that high government-debt-to-GDP ratios have negative or significant (or both) effects on the growth rate of an economy. In addition, we assess the claim that there is a nonlinear threshold, around 90 percent of GDP, above which debt has a significant deleterious impact on growth rates. With several European countries taking action to successfully reduce their debt-to-GDP ratios in recent years, it is important for Americans to broaden their understanding of the potential negative effects of debt on growth potential, particularly in light of America’s current fiscal trajectory.

    Question 25
    Why multinational corporations should be encouraged to invest in the economics of poor nations under the following conditions:

    Besides, it is through multinational corporations that modern high technology is transferred to the developing countries. The important question about multinational corporations is why they exist. The multinational corporations exist because they are highly efficient. Their efficiencies in production and distribution of goods and services arise from internalising certain activities rather than contracting them out to other firms. Managing a firm involves which production and distribution activities it will perform itself and which activities it will contract out to other firms and individuals.

    In addition to this basic issue, a big firm may decide to set up and operate business units in other countries to benefit from advantages of location. For examples, it has been found that giant American and European firms set up production units to explore and refine oil in Middle East countries because oil is found there. Similarly, to take advantages of lower labour costs, and not strict environmental standards, multinational corporate firms set up production units in developing countries.

    Multinationals provide an inflow of capital into the developing country. E.g. the investment to build the factory is counted as a capital flow on the financial account of the balance of payments. This capital investment helps the economy develop and increase its productive capacity.

    The Harrod-Domar model of growth suggests that this level of investment is important for determining the level of economic growth. One of the best ways to increase the level of economic growth is to provide an inflow of capital from abroad.

    The inflows of capital help to finance a current account deficit. (Basically, this means that foreign investment enables developing countries to buy imports.)

    Multinational corporations provide employment. Although wages seem very low by Western standards, people in developing countries often see these new jobs as preferable to working as a subsistence farmer with even lower income.
    Even liberal economists like Paul Krugman and Jeffrey Sachs have defended ‘sweatshop labour’ arguing that although employers are paying too low wages. Often sweatshop labour is better than the alternative of scavenging or no paid employment. Economies in south-east Asia have seen rising wages in recent decades – showing that low wage economies can develop.

    Multinational firms may help improve infrastructure in the economy. They may improve the skills of their workforce. Foreign investment may stimulate spending in infrastructure such as roads and transport.

    Multinational firms help to diversify the economy away from relying on primary products and agriculture – which are often subject to volatile prices and supply.

    Question 26
    Role of financial and fiscal policy in promoting development.
    Large military expenditures (stimulate/retard) economic growth.

    The various tools of fiscal policy such as budget, taxation, public expenditure, public works and public debt can go a long way for maintaining full employment without inflationary and deflationary forces in underdeveloped economies.

    Obviously, taxation and public expenditure is a powerful instrument in the hands of public authority which greatly affect the changes in disposal income, consumption and investment.

    An anti-depression tax policy increases disposable income of the individual, promotes consumption and investment. This will ultimately result in increase in spending activities which in turn, increase effective demand of the people. On the contrary, during inflation, anti-inflationary policy measures help to plug the inflationary gap.

    During inflation, such measures are adopted which help to wipe off the excessive purchasing power and consumer demand. Tax burden is raised in such a manner as it may not retard new investment. Keeping in view all facts in mind, it is stated that fiscal policy plays very significant role for promoting economic development and stability of under developed countries.

    The roles are as follows:
    1. To mobilize resources.
    2. To accelerate the rate of growth.
    3. To encourage socially optimal investment.
    4. Promotion of economic stability.
    5. Reallocation of resources.
    6. To check inflationary tendencies
    7. Subsidies in consumption and production.
    8. Inducement to Investment and capital formation.

    The debate over how military spending impacts a country’s economy has been fiercely argued, and the results of studies trying to understand this relationship have been mixed. Early researchers ran into trouble due to inadequate time frame or country data. Others have studied only certain types of countries or periods in time, leading to results that could arguably be caused by other social, political, or economic factors. Past research, for example, was highly influenced by military spending data in the Cold War era. After the Cold War, the reduced military spending was matched with an era of strong economic growth, which provided for a very different economic environment than what was seen during periods of high military spending during the Cold War era. To overcome past limitations, this study analyzes military spending by a large and diverse group of countries over the span of 45 years, with special attention to global events that may otherwise influence major economies.

    Increased military spending leads to slower economic growth.
    Military spending tends to have a negative impact on economic growth.
    Over a 20-year period, a 1% increase in military spending will decrease a country’s economic growth by 9%.
    Increased military spending is especially detrimental to the economic growth of wealthier countries.

    Question 27

    Microfinance is Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services.[1][2] Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient.

    Poverty is the state of not having enough material possessions or income for a person’s basic needs. Poverty may include social, economic, and political elements.
    The world social summit identified imperative of mankind and called on governments to address the root causes of poverty, provide for basic needs for all and ensure that the poor have access to productive resources, including credit, education and training.

    The primary objective of microfinance is to enhance outreach to disadvantaged sectors of the economy through financial inclusion. It is linked to the empowerment of the poor by the provision of financial emancipation and a simple way to provide loans and other financial services to improverished individuals to enhance their income generating capacity and to Foster economic activities in low income segments.

    Microfinance provides financial services to millions ofthe world’s poor. Poor people, like the non-poor, may use financial servicesfor many purposes and in different ways throughout their lives, but they areparticularly vulnerable since their income is small and unstable. Thus it isdifficult for them to anticipate when the need for small but critical lump sumsof money may suddenly arise. Through savings, credit, insurance or remittances,poor people can secure larger lump sums of money than that which they wouldnormally have access to. These lump sums help them to overcome the problem ofunstable income, for example by allowing them to pay school fees, pay forevents such as weddings and funerals, or cope with crises as a result ofillness or natural disaster. Lump sums of money can also be invested in incomegenerating activities which help to reduce poverty.

    The main challenges on microfinance are:

    1. Higher Interest Rates in comparison to mainstream banks widespread dependence, over-indebtedness, inadequate investment validation, lack of enough awareness of financial services in the Economy and among others. High interest rates often sink consumers further into debt and poverty.

    2. Lack of Sustainability
    An underlying issue in the microfinance discourse is the question of sustainable action. Despite the business model of MFIs and awareness of “best practices,” nearly all programs remain substantially subsidized. According to a UN study, only 10% of micro-lending organizations are self-sufficient.

    3. No Business Training
    Another pitfall that microfinance ventures may suffer from is the failure to assist and empower borrowers through training. Few micro-lending organizations provide any type of formal business training to their recipients, as they assume that all loan recipients are entrepreneurs and that they understand how to succeed in business. However, this is rarely the case.

    4. Lack of Awareness About Social Factors
    In order to design services which are relevant and useful to poor people, microfinance initiatives should understand local social and economic structures as well as macro-level trends. For example, the social perception of entrepreneurial qualities is an important factor in the receptivity to MFIs. In societies that place low status on economic individualism.

  36. Avatar Onyedekwe Henry Chinedu. says:

    Onyedekwe Henry Chinedu
    2018/242306
    Economics Department

    Question 14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?

    answer:-

    Education plays a vital role in the development of any nation. For an economy to grow, its labour force has to be equipped with various necessary skills which may be either intellectual skills or manual skill. This skills help shape the labour force and increases the productivity of the nation.
    Without education, the members of the nation will be made up of illiterates and there will be little no possibility of innovations in such a nations.

    Question 15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?
    Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?

    answer:-
    The development of the rural areas will go a long way to solve many economic problems of the urban areas as well as the country as a whole. Therefore it is important that the government focuses more on the development of the rural areas especially to aid agriculture. There can be done by;

    Providing Finance: The government(CBN) can promote agriculture in the rural areas by granting loans to farmers at a low rate of interest. This will encourage more members of the rural areas to participate in agriculture, hence boosting its productivity and development.

    Provision of Modern Machines: The introduction of modern implement such as Tractor, harvesters, planters etc, can increase the agricultural productivity of the rural areas.
    With these more agricultural activities can be done within a little period of time, than with primitive implement.

    It is reasonable to say that the higher the price of agricultural produce, the higher the supply, as this conforms to the law of supply. Nevertheless a high price level is not good for any nation, as it can cripple its economy. Having said this increasing the price of agricultural produce is not the best way to stimulate food production. Instead the government can stimulate food production by doing the following:

    1. Providing good roads: This will ease the transportation of agricultural products as well as agricultural implements.

    2. Finance provision: Without financial support from the government agricultural activities in Nigeria cannot thrive properly. Therefore to increase the food production, capital has to be provided.

    3. Education: Most farmers are not enlightened about the use of modern implement. It is important for rural farmers to be given adequate enlightenment on the use of modern agricultural implement. This can go a long way to boost agricultural productivity.

    Question 16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damaged, the rich North or the poor South?

    answer:

    Environmentally sustainable development explains how a nation can be efficiently productive while reducing pollution and harm to the environment.

    The major economic cost of pursuing sustainable development is Environmental pollution.

    It is important for the government to ensure that while economic development are being carried out in a country, Pollution as well as other environmental hazards are put in check.
    In a country where there is excess pollution(land, air, water), there is a threat to the lives of all organisms and labour living in that area. Therefore environmental damage is borne by both the rich and poor.

    Question 17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?

    answer:-

    It is true that in a free market, there exist efficiency of economics as goods and services are produced based on demand which creates incentives to cut loss and avoid waste. And also there is a higher possibility of economic growth. Nevertheless there exist a huge disadvantage of adopting capitalism in a country.

    We know that humans are rational, we only indulge in productive activities which we will benefit from. Capitalism sees to it that other non productive but highly necessary amenities are not provided as no one wants to spend on something he or she cannot profit from. For instance, the provision of road may not be common in a capitalist state, there is no way a person can charge fees for the use of a road which he or she constructed, hence no one would want to use his resources to provide road.

    It is at this point the government comes in. The government will take responsibility of providing these amenities, as they are deemed necessary for growth.

    Hence the government has a major role to play in every economy.

    Question 18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?

    answer:-
    In a country like Nigeria where different development policies has been adopted, aimed at boosting development in the country, yet the country still struggles to attain development. This is to say that the development policies adopted are poor and unsuitable for the workings of the country.

    This could be as a result of the poor knowledge of the workings of the economy or even unskilled economist who run the economy. Therefore it is important that the economy of a country like Nigeria should be studied and controlled in its own way, and approach different from that of other developed countries. No particular economic approach can be used in all economy.

    Question 19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?

    answer:-
    International Trade provides goods and services which are not found (or are not in suitable supply) in a country. For a country to grow, it should participate in trade, as no particular country has all resources. That being said, it is important for any economy to ensure that its balance of payment is favorable. It would not favour a developing economy if its imports are greater that its exports as it weakens the economy.

    Hence expanded international trade is favorable to poor nations if they have a favorable balance of payment. Otherwise it is not.

    Trade favours all nations who participate in it, as I have stated earlier, it provides resources to those nations who needs it and also serves as a source of income to others.

    Question 20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?

    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?

    answer:-
    Before the government can embark on any form of restrictions on importation, the government must see to it that those goods and services which she has restricted is produced within the economy at an easy and more sustainable rate.
    The IMF provides technical assistance training to help member countries build better economic institutions and strengthen related human capacities. This includes, for example, designing and implementing more effective policies for taxation and administration, expenditure management, monetary and exchange rate policies, banking and financial system supervision and regulation, legislative frameworks, and economic statistics.

    The IMF also provides loans to member countries that are experiencing actual or potential balance-of-payments problems.

    21. What is meant by globalization, and how is it affecting the developing countries?

    answer:-

    Globalization according to investopedia describes an interdependence of nations around the globe fostered through free trade.
    It is the spread of products, technology, information, and jobs across nations.

    Proponents of globalization believe it allows developing countries to catch up to industrialized nations through increased manufacturing, diversification, economic expansion, and improvements in standards of living.

    Outsourcing by companies brings jobs and technology to developing countries, which help them to grow their economies. Trade initiatives increase cross-border trading by removing supply-side and trade-related constraints.

    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?

    answer:-

    For a country like Nigeria, it is important that we promote the export of agricultural products.

    looking at the theory of comparative advantage, It is more profitable if Nigeria focuses more on the export of its major source of income which is agriculture.

    This will provide more revenue for the country and increase its financial base.

    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?

    answers:-

    Some of the reasons why developing nations get into foreign debt problems include:

    (i) Aggravation of BOP deficit by oil crisis.

    (ii) Persistent inflationary pressures.

    (iii) Large scale lending by Western banks in the wake of conditions of recession within the developed countries.
    (iv) Limited productive use of resources.

    (v) Low export earnings.

    (vi) Decline in the flow of concessional assistance and consequent greater reliance on costly commercial borrowing.

    (vii) Deterioration in the terms of trade for primary producing countries.

    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?

    answer:-

    Multinationals provide an inflow of capital into the developing country. E.g. the investment to build the factory is counted as a capital flow on the financial account of the balance of payments. This capital investment helps the economy develop and increase its productive capacity.

    The Harrod-domer model of growth suggests that this level of investment is important for determining the level of economic growth. One of the best ways to increase the level of economic growth is to provide an inflow of capital from abroad.

    The inflows of capital help to finance a current account deficit. (Basically, this means that foreign investment enables developing countries to buy imports.)

    Multinational corporations provide employment. Although wages seem very low by Western standards, people in developing countries often see these new jobs as preferable to working as a subsistence farmer with even lower income.

    Even liberal economists like Paul Krugman and Jeffrey Sachs have defended ‘sweatshop labour’ arguing that although employers are paying too low wages. Often sweatshop labour is better than the alternative of scavenging or no paid employment. Economies in south-east Asia have seen rising wages in recent decades – showing that low wage economies can develop.

    Multinational firms may help improve infrastructure in the economy. They may improve the skills of their workforce. Foreign investment may stimulate spending in infrastructure such as roads and transport.

    Multinational firms help to diversify the economy away from relying on primary products and agriculture – which are often subject to volatile prices and supply.

    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    answer:-

    The various tools of fiscal policy such as budget, taxation, public expenditure, public works and public debt can go a long way for maintaining full employment without inflationary and deflationary forces in underdeveloped economies.

    Obviously, taxation and public expenditure is a powerful instrument in the hands of public authority which greatly affect the changes in disposal income, consumption and investment.

    An anti-depression tax policy increases disposable income of the individual, promotes consumption and investment. This will ultimately result in increase in spending activities which in turn, increase effective demand of the people. On the contrary, during inflation, anti-inflationary policy measures help to plug the inflationary gap.

    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
    answer:-

    Microfinance aims to alleviate poverty by providing poor people with a route into entrepreneurship. This award-winning paper offers a critical analysis of the role such market-based approaches to poverty reduction play in developing countries. It finds their impact can be less positive than is often thought.
    Global poverty is big business. In the United States alone the poverty industry, comprising payday loan centres, pawnbrokers, credit card companies and microfinance providers, is worth tens of billions of dollars and it’s from the poorest in society that this money is generated.

    Around the world it’s estimated there are 1.2 and 1.5 billion people living in extreme poverty. Many millions who face the most crippling levels of poverty reside in so-called developing countries and it’s in these territories that people have increasingly turned to microfinance. In essence, microfinance involves the provision of small loans to the poor with the aim of lifting them out of poverty. According to many researchers and policy makers, microfinance encourages entrepreneurship, empowers the poor (particularly women in developing countries), increases access to health and education, and builds social capital among vulnerable communities.

    For more than twenty years microfinance has been viewed as a key poverty reduction strategy. However, more recently its real value and impact have been questioned, with both economic and social problems linked to it.

  37. Avatar Ajuluchukwu Joy Ifeoma. 2018/241840 says:

    Name: Ajuluchukwu Joy Ifeoma
    Reg no: 2018/241840
    Department: Economics
    14. Do educational systems in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?
    Answer:
    Education promotes economic development in many ways ,it is one of the important tools of development . Education brings about an improvement in human capital, it enhances productivity, creativity and promotes entrepreneurship and technological advancement. It also plays an important in securing economic and social progress and improving income distribution.
    Education is not just a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence.
    Because it enables people to attain some certain level they would not have attained without education. It spurs people to wealth by improving their standard and status to make them employable.

    15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?
    Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed?

    Agriculture and rural development can be promoted through Increase in output and productivity of agriculture, focusing majorly on food crops such as rice, wheat and maize as well as livestock.
    Supporting the development of agriculture, agri-business and agro-industries particularly for small farmers and entrepreneurs, enabling them to respond to market opportunities, build resilience and attract investment.
    Raising the standard of living of the rural people through increased investment in infrastructure, human resources and services for employment and income generation and Improve market access for small-scale producers and promote inclusive growth.
    Higher agricultural price is not sufficient to stimulate food production rural institutional changes is needed.
    • Land redistribution is needed to enable farmers access large farm land to encourage production.
    • Construction of motor able road for easy transportation of farm produce
    • Educating farmers on improved method of agriculture and the use improved seedlings.
    • Granting of credit to farmer to encourage large scale production in the rural areas.
    16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?
    Environmental Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
    The cost of sustainable development is a function of the impact it will have on future generation. The cost of sustainable development is the environmental costs caused by the environmental disruption in the process of socio-economic sustainable development, including the cost of man-made destruction of resources or the difference costs due to environmental differences, including the unreasonable use of resources.
    I think the poor south bear the responsibility of environmental damage because when companies that contributes more to environmental hazards through emission of carbon into the atmosphere and other forms of pollution are taxed they would include it in the their production cost which will increase the price of product for the consumers.

    17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies?

    Free market and economic privatization is important is important to development but government have a major role to play in the economies .
    The role of government is to provide socio-economic facilities also called social overhead capital or socio-economic infrastructure such as road, airports, seaports, bridges, water supply, and electricity facilities.
    Government should produce certain goods and services , subcidization and regulation of private producers.

    18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
    The following are reasons why developing countries select poor development policies;
    Low level of education: Most leaders in developing countries are not properly educated and this has led to the formulation of poor policies.
    Imitation of foreign policies: Developing countries adopt foreign policies into their system even though these policies do not align with their economic conditions.
    Selfish interest: Most leaders in developing countries formulate policies that favour them only and this gives room for an unbalanced economy.
    In order to improve these policies, the following should be done:
    Governments can advance development even with low levels of government spending.
    Developing countries need to focus on building fiscal and market institutions before rising spending needs and not after they materialize.
    Government officials should be properly educated.

    19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?

    As trade had been emerged since a very long time ago, it doesn’t mean that each and every countries who are involving in conducting the trade can be better off; however, as far as we can say most of the time only for those who are in the developed countries that can truly enjoy the benefit from trade, while most of the developing countries have to suffer more since they gain less benefit than those of the rich countries. On the other hand, even developing countries seem to gain less benefit from conducting the trade, but in return they are able to attract more foreign investors to come to their countries which can be of help to them as they can one more step able to fasten their development, as well as they don’t seem to gain less benefit than the cost at all.

    20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems?
    What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?
    Government in development countries should adopt a policy of foreign-exchange control, raise tariffs, or set quotas when they can produce those imported goods.

    The IMF stabilization program emphasizes mainly on the internal economic policies of heavily indebted countries. The 4 basic components include
    1 abolition or liberalization of foreign exchange and import controls;
    2) devaluation of the official exchange rate;
    3) stringent domestic anti-inflation program and
    4) greater hospitality to foreign investment and a general opening up of the economy to international commerce. Through these policies, imf has helped to reduce heavy debt on developing countries.
    Structural adjustment programs have demanded that borrowing countries introduce broadly free-market systems coupled with fiscal restraint—or occasionally outright austerity. Countries have been required to perform some combination of the following:

    1. Devaluing their currencies to reduce balance of payments deficits.
    2. Cutting public sector employment, subsidies, and other spending to reduce budget deficits.
    3. Privatizing state-owned enterprises and deregulating state-controlled industries.
    4. Easing regulations in order to attract investment by foreign businesses.
    5. Closing tax loopholes and improving tax collection domestically.
    These set of policies has helped in reduction of high debt on developing countries.

    21. What is meant by globalization, and how is it affecting the developing countries?

    Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information.

    Globalization has both negative and positive effect on developing countries. One of the positive effect of globalization is that goods and people are transported easily as a result free trade between countries, and it brought a reduction in the possibility of war between countries. Also, the growth in the communication between the individuals and companies in the world helped to raise free trade between countries and this led to growth economy.
    The negative effect is that globalization increases the inequality between the rich and poor, the benefits of globalization is not universal; the richer are getting rich and the poor are becoming poorer. developed countries set up their companies and industries to the developing nations to take advantages of low wages and this causing pollution in countries with poor regulation of pollution.
    Health and education are basic objectives to improve any nations, and there are strong relationships between economic growth and health and education systems. Standard of living and life expectancy of developing countries increased through economic gains from globalization. Another negative effect of globalization is globalized competition which has forced many skilled workers that are highly educated and qualified professionals, such as scientists, doctors, engineers and IT specialists, migrate to developed countries because the higher wages and greater lifestyle prospects for themselves and their children. This leads to decrease skills labour in the developing countries.
    Globalization promotes cultural diffusion, on the other hand it lead to the disappearing of some cultural identities such as dressing and language.

    22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible?

    Export of primary product such as agricultural commodities should be promoted in developing countries as it will serve as a source of foreign exchange, bring about the expansion of the market, help the country to gain technical knowledge, gain new ideas ,skills and techniques to enable them improve the qualities of goods and services.

    23. How did so many developing nations get into such serious foreign-debt problems, and what are the implications of debt problems for economic development? How do financial crises affect development?

    Developing countries got into serious foreign-debt problem as a result of poor debt management and low government revenues emanating from inefficient tax policies. Structural problems such as poorly diversified economy which makes the economies highly vulnerable to fluctuation in price and demand on the world market.

    The loans obtained are often used for consumption rather than productive investment.
    The implication of debt problem is that it hinders countries` capacity to invest in their financial prospects, whether through education, infrastructure, or health care, because their small income is spent on repayment of loans. It is a challenge to economic development in the long term
    The effect of financial crisis is that it brings a significant decrease in the value of asset, as a result of decrease in the value of asset businesses will have trouble meeting their financial obligations, and financial institutions lack sufficient cash or convertible assets to fund projects and meet immediate needs.

    . 24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes?
    Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?

    Foreign aid has increased developing countries’ indebtedness whose high servicing costs have diverted resources away from development and social projects.

    25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations?

    Multinational corporations (MNCs) are businesses that operate in multiple countries. They run manufacturing plants or provide services in at least two nations.
    MNCs are thought to be extremely advantageous to emerging countries in terms of creating jobs and introducing new technology that benefit native businesses. Furthermore, MNCs frequently receive government subsidies, which may be related to local firm investment in the future.

    This strategy may potentially be able to address the issue of coordination failure. Unlike many investing firms, MNCs have already established themselves and will continue to do so. These larger international corporations having already incurred significant fixed expenses in establishing a foreign company, and because departing would incur more fixed costs, they are unlikely to leave quickly.

    MNCs can hedge their risk capital portfolios by investing in startups across a wide range of regions where they operate, employing their local subsidiaries to oversee their investments, thanks to their larger size. Negative returns in a risky investment portfolio at the local level, therefore, will not imperil their market survival. This will eventually lead to an increase in the number of companies, as well as the opportunity for risk capital investors to enter the market.

    26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
    Financial policies are important to help ensure that every business runs smoothly. Financial policies help ensure proper management of a governmental entity.
    The various tools of fiscal policy such as budget, taxation, public expenditure, public works and public debt can go a long way for maintaining full employment without inflationary and deflationary forces in underdeveloped economies. Taxation and public expenditure is a powerful instrument in the hands of public authority which greatly affect the changes in disposal income, consumption and investment.
    Fiscal policy plays very significant role for promoting economic development and stability of under developed countries.

    Military expenditure both stimulates and retard economic development.
    Expenditure on military retard economic growth by reducing the resources available for productive investment, that is investment effect. On the other hand military expenditure are the introduction of modern skills, strengthen economic infrastructure and reduce the unemployment rate.
    27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?

    Microfinance is a banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.
    The potential of microfinance is as follows:
    • It encourages self sufficiency and entrepreneurship.
    • It seeks to reduce poverty through giving micro loans to the poor so as to enable them start up a business and earn income.
    • Microfinance allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices.
    • They solve the problem of gender income disparities by providing women the finance needed to start up a business.

    Limitations of microfinance are:
    • Over-Indebtedness.
    • Higher Interest Rates in Comparison to Mainstream Banks.
    • Widespread Dependence on Indian Banking System.
    • Inadequate Investment Validation.
    • Lack of Enough Awareness of Financial Services in the Economy. …
    • Regulatory Issues.
    • Choice of Appropriate Model.

  38. Avatar Urama isaac Anenechukwu says:

    NAME: URAMA ISAAC ANENECHUKWU
    DEPARTMENT: ECONOMICS
    REGISTRATION NUMBER: 2018/243823
    LEVEL: 300L
    COURSE TITLE: DEVELOPMENT ECONOMICS 1
    COURSE CODE: ECO 361
    ANSWER TO QUESTION NUMBER 14.
    Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.
    Education plays a significant role in economic development as follows:
    1. Education increases the accessibility of people to modern and scientific ideas.
    2. It increases the efficiency and ability of people to absorb new technology.
    3. It creates awareness of the available opportunities and mobility of labour.
    4. Education helps individuals to gain knowledge, skills and attitude which would enable them to understand changes in society and scientific advancements.
    5. Investment in education is one of the main sources of human capital which facilitates inventions and innovations.
    6. Available educated labour force facilitates adaptation of advanced technology in a country.

    ANSWER TO QUESTION NUMBER 15.
    Agriculture and rural development can be promoted through the following ways:
    •Increase output and productivity of agriculture, focusing on major food crops such as rice, wheat and maize as well as livestock;
    •Support the development of agriculture, agri-business and agro-industries particularly for small farmers and entrepreneurs, enabling them to respond to market opportunities, build resilience and attract investment;
    •Raise rural living standards through increased investment in infrastructure, human resources and services for employment and income generation;
    •Improve market access for small-scale producers and promote inclusive growth.

    ARE HIGHER AGRICULTURAL PRICES SUFFICIENT TO STIMULATE FOOD PRODUCTION, OR ARE RURAL INSTITUTIONAL CHANGES (LAND REDISTRIBUTION, ROADS, TRANSPORT, EDUCATION, CREDIT, ETC.) ALSO NEEDED?
    •Rising food prices are likely to alleviate poverty and inequality in areas where poor people are net food producers (produce more food then they consume).
    •Rising food prices are likely to be welfare-enhancing in areas where women are farmers, because female spending patterns tend to be more child-friendly.
    Foreign aid is usually associated with official development assistance, which in turn is a subset of the official development finance, and normally targeted to the poorest countries (World Bank,1998). When rising food prices stimulate food production, they may generate new jobs (and related income) that can improve welfare.
    •The urban middle class relies on non-agricultural employment for its livelihood and so is likely to be more affected by rising food prices than the poorest population segments.

    ANSWER TO QUESTION NUMBER 16.
    Australia’s National Strategy for Ecologically Sustainable Development (1992) defines ecologically (environmentally) sustainable development as: Using, conserving and enhancing the community’s resources so that ecological processes, on which life depends, are maintained, and the total quality of life, now and in the future, can be increased.

    ARE THERE SERIOUS ECONOMIC COSTS OF PURSUING SUSTAINABLE DEVELOPMENT AS OPPOSED TO SIMPLE OUTPUT GROWTH?
    The discipline of economics arguably should play a central role in meeting the sustainable development challenge. The core question at the heart of sustainable development is how to allocate the finite resources of the planet to meet “the needs of the present, without compromising the ability of future generations to meet their own needs”. A central focus of economics is how to allocate scarce resources to meet desired goals. More specifically, economics studies the production, distribution, and consumption of goods and services, which are both a key driver of development (increasing standards of living through providing food, housing, and other basic human requirements) and a main cause of current changes in earth systems. Economics, combined with other social and behavioral sciences, is crucial for understanding how it might be possible to shift human behavior toward achieving sustainable development. Economics has well-developed fields in development economics, ecological economics, environmental economics, and natural resource economics, with large bodies of research relevant to the sustainable development challenge. The application of economic principles and empirical findings should be a central component in the quest to meet the aspirations of humanity for a good life given the finite resources of the earth.

    WHO BEARS THE MAJOR RESPONSIBILITY FOR GLOBAL ENVIRONMENTAL DAMAGE—THE RICH NORTH OR THE POOR SOUTH?
    Addressing climate change is a collective responsibility. Early climate negotiations at the United Nations recognized a shared responsibility for climate change but—driven by a principle of “common but differentiated responsibilities”—relied on developed countries, and not developing ones, to cut greenhouse gas emissions. Developed countries had released most of the greenhouse gases to date, the thinking went, and their advanced economies could better absorb the costs. Now all countries—including developing ones—need to address climate change. But the historical difference in responsibility is echoed in current climate debates, as developing countries such as India face the challenges of a growing economy alongside a changing climate.

    ANSWER TO QUESTION NUMBER 17.
    By privatizing, the role of the government in the economy is reduced, thus there is less chance for the government to negatively impact the economy (Poole, 1996).
    Privatization can have a positive secondary effect on a country’s fiscal situation. As Easterly discusses, privatization should not be used to finance new government expenditures and pay off future debts. Instead, privatization enables countries to pay a portion of their existing debt, thus reducing interest rates and raising the level of investment. By reducing the size of the public sector, the government reduces total expenditure and begins collecting taxes on all the businesses that are now privatized. This process can help bring an end to a vicious cycle of over-borrowing and continuous increase of the national debt4 (Poole, 1996).
    Along with creating incentives, privatization gives ownership to a larger percentage of the population. Given the level of established property rights, individuals become more motivated and driven to work on and invest in their property since they are directly compensated for their efforts. Therefore, privatization will cause an increase in investment for yet another reason (Poole, 1996). Furthermore, state ownership leads to crowding-out of investment from the private sector. In order to retain a monopoly in a particular industry, state enterprises prevent the private sector from getting to credit (Cook and Uchida, 2003). Additionally, privatization leads to an increase in foreign direct investment which can potentially play a significant factor in the quest for growth. Foreign investment has “positive spillovers of improved technology, better management skills, and access to international production networks” (World Bank, 2002).
    Easterly stresses the importance of the possible benefits from technological improvements as well as the spillover effect created from new innovations. In fact, Easterly presents the theory
    and examples of how underdeveloped countries might have an advantage over developed countries when it comes to new technology. He points out the possibility that underdeveloped
    countries have less invested in old technology, and are therefore more willing to invest in new technology. Thus, foreign direct investment could potentially have multiple positive effects on the growth of underdeveloped countries.

    ANSWER TO QUESTION NUMBER 18.
    Sny of today’s poorest countries do not collect adequate revenues to build the human capital, infrastructure, and institutions needed for stronger growth and faster poverty reduction. In sub-Saharan Africa, for example, 15 of the 45 countries have revenues lower than 15 percent of GDP. Moreover, sub-Saharan Africa’s resource-rich countries have revenues that are more volatile and lower than countries that are resource-poor. Even with substantial foreign grants and loans, government spending by developing countries is lower than by advanced economies. In 2018, government spending in sub-Saharan Africa averaged 23 percent of GDP compared with 31.4 percent in middle-income countries and almost 39 percent in the advanced ones.

    Comparisons between today’s developing countries and today’s advanced economies can provide aspiration but less so in terms of recommendations about policies and institutions. Of greater value for developing countries are comparisons with advanced economies when they were less prosperous and would have been considered low-income or lower middle-income. Using government spending a century ago by 14 of today’s advanced economies (Advanced 14), we highlight four lessons for developing countries. We develop these lessons in greater detail in a forthcoming working paper.

    ANSWER TO QUESTION NUMBER 19.
    International trade allows countries to expand their markets and access goods and services that otherwise may not have been available domestically. As a result of international trade, the market is more competitive. This ultimately results in more competitive pricing and brings a cheaper product home to the consumer.

    Gains from trade are relatively larger for a small country.  Owning to small size, the scope of gains from specialisation and exchange are limited whereas large country has scope for both.  Trade provide an opportunity for the small country to specialise in the production of those commodities in which it has comparative advantage and exchange them in world market.  The more world market prices differ from domestic market, more will be its gains.
    When a country participate trade it firstly takes the status as a demander. Another status of a trader, supplier, is just derived there from. It is the relative extensibility of reciprocal demand that actually determines the real terms of trade and consequently the distribution of possible total gains from trade between the two trade partners. Suppose India has a comparative advantage in wheat and enormous demand for auto. And U.S.A. has a comparative advantage in auto and enormous demand for wheat. The equilibrium terms of trade depend on both Indian demand for auto and wheat as well as U.S.A. demand for these two goods.

    ANSWER TO QUESTION NUMBER 20.
    “Foreign Exchange Control” is a method of state intervention in the imports and exports of the country, so that the adverse balance of payments may be corrected”. Here the government restricts the free play of inflow and outflow of capital and the exchange rate of currencies.
    The following are conditions where exchange control can be resorted:
    I. The exchange control is necessary and should be adopted to check the flight of capital. This is specially important when a country’s currency is under speculative pressure. In such cases tariffs and quotas would not be effective. Exchange control being direct method would successfully present the flight of capital of hot money.

    II. Exchange control is effective only when the balance of payment is disturbed due to some temporary reasons such as fear of war, failure of crops or some other reasons. But if there are some other underlying reasons, exchange control device would not be fruitful.

    III. Exchange Control is necessary when the country wants to discriminate between various sources of supply. Country may allow foreign exchange liberally for imports from soft currency area and imports from hard currency areas will be subject to light import control. This practice was adopted after Second World War due to acute dollar shortage.

    Even in India, many import licenses were given for use in rupee currency areas only, i.e., countries with which India had rupee-trade arrangements. Thus in above cases, the exchange control is adopted. In such cases quotas and tariffs do not help in restoring balance of payment equilibrium.

    ANSWER TO QUESTION NUMBER 21.
    Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information.
    Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers. They cannot share the same economic growth that developed countries had. However, with globalization the World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans. Many developing nations began to take steps to open their markets by removing tariffs and free up their economies. The developed countries were able to invest in the developing nations, creating job opportunities for the poor people. For example, rapid growth in India and China has caused world poverty to decrease (blogspot.com.2009). It is clear to see that globalization has made the relationships between developed countries and developing nations stronger, it made each country depend on another country. According to Thirlwall (2003:13) ” Developing countries depend on developed countries for resource flows and technology, but developed countries depend heavily on developing countries for raw materials, food and oil, and as markets for industrial goods”. One the most important advantages of globalization are goods and people are transported easier and faster as a result free trade between countries has increased, and it decreased the possibility of war between countries. Furthermore, the growth in the communication between the individuals and companies in the world helped to raise free trade between countries and this led to growth economy. However, globalization has many economy and trade advantages in the developing countries, we must also note the many disadvantages that globalization has created for the poor countries. One reason globalization increases the inequality between the rich and poor, the benefits globalization is not universal; the richer are getting rich and the poor are becoming poorer. Many developing countries do benefit from globalization but then again, many of such nations do lag behind.” In the past two decades, China and India have grown faster than the already rich nations. However, countries like Africa still have the highest poverty rates, in fact, the rural areas of China which do not tap on global markets also suffer greatly from such high poverty (blogspot.com.2009). On the other hand, developed countries set up their companies and industries to the developing nations to take advantages of low wages and this causing pollution in countries with poor regulation of pollution. Furthermore, setting up companies and factories in the developing nations by developed countries affect badly to the economy of the developed countries and increase unemployment.

    ANSWER TO QUESTION NUMBER 22.
    Promoting agricultural exports is a continuous process. To promote the agricultural exports, the Government has introduced a comprehensive Agriculture Export Policy with the following vision:
    “Harness export potential of Indian agriculture, through suitable policy instruments, to make India a global power in agriculture, and raise farmers’ income.”
    Inter-alia, the objectives of the Agriculture Export policy are as under:
    I. To diversify our export basket, destinations and boost high value and value added agricultural exports, including focus on perishables.
    II. To promote novel, indigenous, organic, ethnic, traditional and non-traditional Agri products exports.
    III. To provide an institutional mechanism for pursuing market access, tackling barriers and dealing with sanitary and phytosanitary issues.
    IV. To strive to double India’s share in world agri exports by integrating with global value chains.
    V. Enable farmers to get benefit of export opportunities in overseas market.

    The Government has also brought out a new Central Sector Scheme – ‘Transport and Marketing Assistance for Specified Agriculture Products’ – for providing assistance for the international component of freight, to mitigate the freight disadvantage for the export of agriculture products, and marketing of agricultural products.

    The Department of Commerce also has several schemes to promote exports, including exports of agricultural products, viz. Trade Infrastructure for Export Scheme (TIES), Market Access Initiatives (MAI) Scheme, Merchandise Exports from India Scheme (MEIS) etc. In addition, assistance to the exporters of agricultural products is also available under the Export Promotion Schemes of Agricultural & Processed Food Products Export Development Authority (APEDA), Marine Products Export Development Authority (MPEDA), Tobacco Board, Tea Board, Coffee Board, Rubber Board and Spices Board.

    ANSWER TO QUESTION NUMBER 23.
    Over the past two decades, many firms and governments of developing countries borrowed billions of dollars from banks in the developed countries. But while the 19th century railway companies were able to repay their debts, it become apparent in the 1980s that some of the countries that had borrowed heavily—particularly Brazil, Argentina and Mexico, could not repay what they owed. The resulting crisis threatened the economic prospects of the developing coun­tries and the financial viability of many banks in the rich countries. The 1970s saw large-scale external borrowing by developing countries from international banks. By 1982, the accumulated debt of developing countries totalled $600 billion. Increase in US interest rates from 1979 and the appreciation of the dollar put pressure on the abil­ity of the developing countries to service their debts.
    During the 1970s and early 1980s develo­ping countries accumulated a huge foreign debt which they subsequently found difficult to ser­vice (i.e., repay along with interest). This debt burden seriously hampered their development planning during the 1980s. The debt arose as many developing countries borrowed heavily from private banks in developed nations to finance their growing capital needs and to pay for sharply rising crude oil bills during the 1970s.
    All these adverse developments occurred in the face of slowly expanding exports to developed coun­tries (as the latter faced the problem of slow growth), lower prices for their commodity exports, and higher interest rates. By borrowing heavily abroad, developing countries somehow managed to grow at a relatively rapid pace even during the second half of the 1970s. However, in the early 1980s, their huge and rapidly growing foreign debts caught up with them and large- scale defaults were avoided only by repeated large-scale intervention by the IMF.
    The World Bank uses two main criteria to judge whether a country’s level of debt is sus­tainable whether the debt to export ratio exceeds 200-250%; and whether the debt service ratio exceeds 20-25%. The debt-service ratio is parti­cularly crucial because this measures the amount of foreign exchange earnings that cannot be used to purchase imports and is, therefore, measure of the extent to which a government might decide to default on its repayment obligations. Many develop­ing countries, particularly in Africa, are in a debt crisis situation with debt-export and debt-service ratios much above the World Bank limits of sustainability.
    Facing default several developing countries were forced to renegotiate their debt repayment schedules and interest payments with their credi­tor banks in the developed countries, with the help of IMF and as directed by it.

    ANSWER TO QUESTION NUMBER 24.
    Foreign aid, economic growth and economic development are burning issues confronting development economists and researchers today. This is simply because some of the researchers support the view that foreign aid lead to growth while others argue that aid does not contribute to economic growth and thus have a negative impact on economic development in the recipient country. Foreign aid is usually associated with official development assistance, which in turn is a subset of the official development finance, and normally targeted to the poorest countries (World Bank,1998). Foreign aid has a strong positive impact on economic growth in less developed countries (LDCs) for both periods 1960-1970 and 1970-1980 when state intervention is not taken into account. When the state intervention variable is included in the regression, the effect of foreign aid gets statistically weak over time. Moreover, foreign aid negatively affects the domestic savings rate whereas per capita income, country’s size and exports positively affect it (Singh, 1985).
    In general, aid is found to have a positive impact on economic growth through several mechanisms (i) aid increases investment (ii) aid increases the capacity to import capital goods or technology (iii) aid does not have an adverse impact on investment and savings (iv) aid increases the capital productivity and promotes endogenous technical change (Morrissey, 2001).

    ANSWER TO QUESTION NUMBER 25.
    In this twenty-first century, MNC has become the central institution of developingnations. A significant number of MNCs started their operations in developing countries bythe 1990s. The effects of their operations in developing countries are now assessed quitedifferently from that was done in the past. MNCs benefit from the lower labor costs andgrants given by the government of developing countries in order to attract these MNCs.Moreover, lower tax rates or tax exemptions are also given to MNCs for a period in thedeveloping countries. On the other hand, these developing countries can also gain from theinvestment made by these MNCs. MNCs can help reducing poverty, driving economicgrowth, creating jobs that utilize local people, raise employment standards by payingbetter wages than local firms pay. In addition, they can boost economic development bytransferring technology and knowledge, improve or build up infrastructure, raise people’sstandard of living. Overall, it might seem that the developing countries gain frominvestments of MNCs. Is that really true? Although MNCs have become omnipresent inthe developing world, there has always been an uncertainty about them, in both positiveand negative ways. Most of the MNCs take advantage of developing countries. They canbe guilty of making pollution or doing human rights abuse. Nevertheless, laborers are paidlow wages, as there are few or no trade unions to protect their rights or negotiate with theMNCs. Thus, the theoretical dispute over the effects of MNCs in developing countries ismirrored in the conflict. Apparently, two broad positions can be derived from thesedifferences of opinion- the positive and negative. Some proponents have developedarguments that emphasize the positive results of foreign direct investment (FDI) by MNCs. They are willing to admit some gains from FDI. On the contrary, others areunwilling to accept a positive role for multinational capital under any circumstances. In this perspective, this paper takes an attempt to address the gap by examining thecontentious argument whether MNCs nurture development and, for the present purposes,discussion is limited to development in those countries known as “Developing Countries”.Accordingly, a literature review has been done on the MNCs activities in developingcountries. Also, some definitions of MNCs have been given. Thereafter, some of thebenefits accruing to developing countries through investments by MNCs and some of thepossible undesirable consequences that may blight development in developing countrieshave been examined. In support of the proposed study, three case studies are presented in the last section that shows the positive, negative, and mixed effects of MNCs ondeveloping countries.
    With globalization and market liberalization, the outward FDI flows from developing countries have notably not been restricted to other developing countries fromthe same region. Moreover, developing country corporations have likewise embarked on anew sectoral scope, shifting away from massively labor intensive industries to knowledge-based industries such as automobiles, electronics and telecommunications. Thus, developing country MNCs have turned away from searching to satisfy basic utilitarianneeds: that is, needs for natural resources and markets. At their globalising stage, theyhave gone abroad, no longer looking for basic resources; instead they have focused theirefforts on more ambitious endeavours such as the search for new markets, developed new strategic assets and obtained higher efficiencies and economies of scale. All these are to befound in the ever-expansive literature.

    ANSWER TO QUESTION NUMBER 26.
    Fiscal policy can foster growth and human development through a number of different channels. These include the macroeconomic (for example, through the influence of the budget deficit on growth) as well as the microeconomic (through its influence on the efficiency of resource use). Economic development is a most dynamic process which involves changes in the size and quality of population, tastes, knowledge and social institutions. Keeping all factors in mind, if social marginal productivity in socially desirable projects is low, fiscal policy should be framed to raise social marginal productivity and to divert resources to that productive channels where the social marginal productivity is the highest.

    ANSWER TO QUESTION NUMBER 27.
    Microfinance, also called microcredit, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. Microfinance services are provided to unemployed or low-income individuals because most of those trapped in poverty, or who have limited financial resources, do not have enough income to do business with traditional financial institutions.
    ROLE OF MICROFINANCE ON POVERTY REDUCTION
    Attempts to alleviate poverty were carried out worldwide through micro finance programmes that are aimed at helping the poor to accumulate their own capital and invest in employment generating activities. What is meant by poverty and how it is measured and who constitute the poor are aggressively contested issues. In the poverty discussion, the question whether poverty is largely about material needs or whether it is about a much broader set of needs that permit well-being. According to (Sida 2005), Poverty has a multiple and complex causes, the poor are not just deprived of basic resources but also they lack access to information that is vital to their lives and livelihoods that is: information about market prices for the goods they produce, information about health, information about the structure and services of public institutions, information about their rights, they lack political prominence and voice in the institutions and power relations that shapes up their lives, they lack access to knowledge, education and skills for development that could improve their livelihoods, they often lack access to markets and institutions, both governmental and societal that could provide them with needed resources and services. They lack access to and information about income-earning opportunities etc. The majority of the poor in developing countries especially women lack access to the basic financial services which are essential for them to manage their lives. The poor are excluded from the opportunities of financial services only the informal alternatives that are considered unsuitable left to them. Microfinance is therefore considered as a vital tool to break the vicious circle of poverty which is characterized by low incomes, low savings and low investment. According to (Hulme et al. 1996) most institutions regard low income households as “too poor to save”. In order to generate higher incomes, high savings and more investments, Capital is only one ingredient in the mix of factors necessary for a successful enterprise. Most importantly it requires: entrepreneurial skills and efficient markets to reduce poverty. According to (Ismawan 2000) the real idea of microfinance is to help the weakest members of civil society who in this case is the poor. A rural micro- entrepreneur may need access to one or more of the following: transport, communications, power, water, storage facilities, a legal system for enforcing contracts and settling disputes.
    Apart from infrastructure, micro entrepreneurs need access to information about market trends and skills to run their macro enterprises. (Weber 1958) who argues that hard work, skills and enthusiasm are essential ingredients for an enterprise to be successful. (Ismawan, 2000) calls for differentiation between two categories of the poor, some are able to increase their income by themselves, create business activities that would enable them to move above the poverty line. Those in the second category are unable to do so and would need permanent financial support from microfinance. The latter category would include the poor who have no capacity to undertake any economic activity, either because they lack personal skills or because they are so destitute that they are in no position to develop any meaningful economic activity in the environment in which they live. Those in the first category are described as the “entrepreneurial poor”. The entrepreneurial poor do not need assistance for themselves, but they do need help in setting up an activity that will eventually increase their income. In particular they need assistance in accessing the resources to develop this activity, and to some extent managerial assistance. The non-