1. In the Harrod-Domar model, if the savings rate is 20% and the incremental capital output ratio is five, abstracting from depreciation, what is the implied growth rate?
2. Why must projects be appraised? What do we learn from project appraisals?
3. How does the Washington Consensus differ from the Santiago Consensus?
4. What economic benefits might a developing country gain by reducing corruption? Discuss only economic benefits and provide examples from specific developing countries.
5. Briefly explain the major argument of the factor endowment trade theory.
6. Provide a concise statement about the relationship between a developing country’s emphasis on the export of traditional commodities and: (a) export earnings stability; (b) comparative advantage; (c) terms of trade.
7. State three country characteristics that encourage and three that discourage economic integration among developing countries.
8. What is an overvalued exchange rate? What factors may cause a country’s currency to become overvalued?
9. Explain what is meant by capital flight. How would you distinguish capital flight from the normal desire of investors to diversify their portfolios by investing abroad?
10. What economic variables would you need to consider in order to distinguish between a developing country with a short-term balance of payments problem and one in a debt crisis? Explain what data you would need to look at and why.
11. Why may the debt crisis be only “sleeping” rather than “dead?”
12. It has been argued that tied aid leads to inefficiencies in the recipient country’s economy. Explain how this could occur.
13. State three major potential advantages of foreign direct investment for a developing country. State three major potential disadvantages.
14. Explain the motives of developed countries in providing foreign aid.
15. Why does multinational corporation investment not necessarily offer the advantage of domestic employment expansion?
16. What are the main forms through which foreign capital flows into LDCs? Discuss the evolution of the various forms across the last decade.
17. Compare and contrast the workings of the organized and unorganized money markets in developing countries.
18. What are some of the major characteristics of financial repression? To what degree may financial liberalization be expected to address the issue of inadequate saving?
19. In what ways do the actual and potential roles of central banks differ between developed and developing countries?
20. What is a development bank? What are some of the reasons they have not had greater success?
21. Describe the costs and benefits of privatization of state-owned enterprises. In which cases would privatization seem most advisable?
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