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

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.

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.

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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.

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.

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
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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.

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.

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

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

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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

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.

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.

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.
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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

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

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.

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.

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.

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

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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.

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.

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.

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-entrepreneurial poor require direct and continuous assistance to survive. The transfer of resources in terms of credit does not only give the poor access to resources but also the economic empowerment and increased self-reliance.
TO HELP THE POOR OUT OF POVERTY:
It is argued that stimulating economic growth, making markets work better for the poor and building their capacity is the key out of their poverty situation. There is need to change the whole context of the lives of the poor and economic activities which do not produce enough surplus to lift their standard of living. Some critics argue that the necessary infrastructure has been put in place in some areas for microfinance to trigger economic growth but very little success has been recorded which makes the problem of poverty and the poor very tricky. Indeed, microfinance is not a panacea to the problem of poverty but improved access to capital and other financial services are significant to the poor. The problem is that market failures weaken the effectiveness of microfinance, this is because if the market is no efficient then it will not enable the producers to sell their goods and services and therefore they will be unable to make enough revenue to reinvest back to business at the same time be able to pay back their loans in time and this will lead to depression thus creating unemployment, but efficient market operation.
REFERENCES
https://www.researchgate.net/publication/24116294_The_Role_of_Education_in_Economic_Development_A_Theoretical_Perspective#:~:text=Education%20in%20every%20sense%20is%20one%20of%20the%20fundamental%20factors%20of%20development.&text=Education%20raises%20people's%20productivity%20and,progress%20and%20improving%20income%20distribution.

https://www.topperlearning.com/answer/explain-the-role-of-education-in-economic-development/vdtqucg77

http://www.fao.org/asiapacific/perspectives/agriculture/en/

https://www.pnas.org/content/116/12/5233

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 beOen 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.

Name: Isiguzo Purity Ezinne.
Reg.no: 2018/242353
Email add: isipurity4real@gmail.com

ANSWER
(15) Higher agricultural prices fulfills a necessary condition for stimulating food production, but not a Sufficient condition, as rural institutional changes, such as land redistribution, good roads, transport, quality education, credit facilities, e.t.c. are also highly needed.

(16) Sustainability is a broad term that describes managing resources without depleting them for future generations.

While, Sustainable development describes the processes for improving long-term economic well-being and quality of life without compromising future generations’ ability to meet their needs.

Therefore, Environmental sustainability development is the responsibility to conserve natural resources and protect global ecosystems to support health and wellbeing, now and in the future.

B) Yes, there are serious economic costs of pursuing sustainable development as opposed to simple output growth. Such economic costs
could include environmental costs caused by 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.

C) The Rich North bears the major responsibility for global environmental damage.

The proportional index ranked Singapore, Korea, Qatar, Kuwait, Japan, Thailand, Bahrain, Malaysia, Philippines and Netherlands as having the highest proportional environmental impact, whereas Brazil, USA, China, Indonesia, Japan, Mexico, India, Russia, Australia and Peru had the highest absolute impact.

(17) Free markets and economic privatization is not the answer to development problems, as the Governments in developing countries still have alot of (major) roles to play in the improvement of their economies.

Such roles includes but not limited to- Providing the legal and social framework within which the economy operates, maintaining competition in the marketplace, providing public goods and services, redistributing income, corrects for externalities, and takes certain actions to stabilize the economy e.t.c.

(18) The Low- quality public sector institutions, is a major problem behind the selection of poor development policies in developing countries, as they fail to establish and enforce rules, collect revenue and provide effective public services.

B) 1- Efforts should be made by bilateral aid agencies and multinational development banks on building and reforming the public sector institutions in developing countries.

2- There should be improvements in institutional functions (i.e the ability of publics sector institutions to solve public problems).

3- Anti-corruption commission should be created and empowered for identifying and recovering stolen public funds.

These and more are to be done inorder to improve on the choices of poor development policies, in developing countries.

(19) Yes, expanded international trade is desirable from the point of view of the development of poor nations as countries that are open to international trade tend 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 consumers more affordable goods and services.

But there has to be some sort of restrictions, to some extent guiding importations of goods and services into a country, so as to avoid situatuons like dumping, over-reliance on import goods thereby subduing infant industries in the home country, depletion of natural resources and negative pollution externalities e.t.c.

B) Both consumers and producers gain from international trade by consuming more and producing more than the pre-trade level.

C) The advantages from international trade are distributed among nations through- Lowering competition and lowering of world prices, which provides benefits to consumers by raising the purchasing power of their own income, and leads to a rise in consumer surplus.

Also, its advantages are distributed among nations by increased revenues,
decreased competition,
easier cash-flow management,
better risk management,
benefiting from currency exchange,
access to export financing, and disposal of surplus goods, e.t.c

(20) Foreign exchange control or tariffs are to be imposed on unnecessary goods in cases where infant industries are to be protected as well as in situation of dumpage.

(21) 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.

B) Impacts of globalization on developing countries-

Globalization helps developing countries to deal with the rest of the world, thereby increasing their economic growth and solving the poverty problems in their country.

Globalization creates greater opportunities for firms in less industrialized countries to tap into more and larger markets around the world. Thus, businesses located in developing countries have more access to capital flows, technology, human capital, cheaper imports, and larger export markets.

Many developing nations began to take steps to open their markets by removing tariffs and freeing up their economies.

Globalization also gives organizations the opportunity to take advantage of lower labor costs in developing countries, while leveraging the technical expertise and experience of more developed economies.

With globalization, different parts of a product may be made in different regions of the world.

(22) Over the years, the exportation of primary products such as, agricultural commodities hasn’t proved to being the lasting solution to the development problems of developing economies using Nigeria as a case study, therefore I propose that attempts should be made to industrialize our economy by developing our manufacturing industries as rapidly as possible, as this could also facilitate improvements in the primary- agricultural sector, in cases of economic diversification.

(23) Developing nations get into serious foreign-debt problems by borrowing 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.

B) The implications of debt problems for economic development-

It negatively affect capital stock accumulation and economic growth via 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.

C) How financial crisis affects development-

While the Global Financial Crisis originated in developed countries, developing countries were not immuned to its effects.

The crisis manifested itself in growing budget and trade deficits, currency devaluations, higher rates of inflation, increasing public debt and dwindling currency reserves and these negatively affects development.

(24) The impact of foreign economic aid from rich countries are of two sides/ effects, the positive and negative-

The positive impacts-

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.

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, e.t.c

Negative Impacts-

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.

B) As the adage goes- “Rome was not built in a day” and also, “a tree cannot make a forest”, as such, I am of the opinion that developing countries should continue to seek foreign aid as it typically aims to support security as well as the economic, social, and political development of the recipient countries and their people.

C) Developing countries 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 conditionalities, if any.

D) The Purpose of receipt should be-
For humanitarian reasons, to improve the country’s international image,and to continue building a positive working relationships with other countries.

-Yes, developed countries should continue to offer such aids.

Under the conditions that these foreign aids have to be used strictly to fund or to monitor elections, to facilitate judicial reforms, and to assist the activities of human rights organizations and labour groups, e.t.c

For the purpose of-
Seeking to promote the exports. They are crucial to many economies, as they provide goods and services of 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, e.t.c.

(25) Yes, multinational corporations should be encouraged to invest in the economies of poor nations.
MNCs from all parts of the world are usually attracted to developing countries by lower costs, strong growth prospects, and in many cases untapped natural resources.

B) Under the conditions of-
producing the same quality of goods at lower costs, leading to reduced prices and increase the purchasing power of consumers worldwide.

C) 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.

While,
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.

(26) The roles of financial and fiscal policy in promoting development-

The foremost aim of fiscal policy in underdeveloped countries is to mobilize resources in the private and public sectors.

Secondly, the aim of fiscal policy is to make investment on social and economic overheads such as transportation, communication, technical training, education, health and soil conservation.

Thirdly, Fiscal policy helps to accelerate the rate of economic growth by raising the rate of investment in public as well as private sectors.

B) Large military expenditures retard economic growth, in my own opinion.

Military spending tends to have a negative impact on economic growth, as 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.

(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.

B) The potential of microfinance for reducing poverty and spurring grassroots development-

The World Bank estimates that more than 500 million people have directly or indirectly benefited from microfinance-related operations. The International Finance Corporation (IFC), part of the larger World Bank Group, estimates that, as of 2014, more than 130 million people have directly benefited from microfinance-related operations.

Additionally, the IFC has helped establish or improve credit reporting bureaus in 30 developing nations. It has also advocated for adding relevant laws in 33 countries that govern financial activities. The benefits of microfinance extend beyond the direct effects of giving people a source for capital.

Entrepreneurs who create successful businesses, in turn, create jobs, trade, and overall economic improvement within a community.

C) Limitation of Microfinance for reducing poverty and spurring grassroots development-

While microfinance interest rates are generally lower than conventional banks’, critics have charged that these operations are making money off of the poor. Also, many major financial institutions and other large corporations have launched for-profit microfinance departments raising concerns that, out of a desire to make money, these larger bankers will charge higher interest rates that may create a debt trap for low-income borrowers.

Additionally, some have argued that the individual microloans are not enough money to provide a realistic path to independence. Finally, critics have said that the presence of interest payments, however low, is still a burden.

Name: Nwoko Nnamdi Netochukwu
Reg. No: 2018/245660
Dept: Economics

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.
It is not simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence, it actually gives all a chance at effecting real change towards growth and development in an economy.

15. Here are some ways in which agriculture and rural development can be promoted:
a. Literacy: teaching farmers modern and better ways of doing things.
b. Enforcement of law and order: Ensuring security in rural areas will enable farmers confidently leave to their farms to work. e.g the Fulani herdsmen and Farmers rift have caused many to stop farming.
c. Infrastructure development like irrigation, good roads, electricity etc.
d. Availability of credit: With more funds and skills on how to use it, they can achieve more.
Rural institutions are also needed. Because road, transportation,credit, irrigation e.t.c will help to stimulate effective agricultural progress that will impact positively on economic development of the nation and not just a general rise in agricultural prices.

16. Environmentally sustainable development 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.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 decades

17. Privatization directly shifts the focus from political goals to economic goals, which leads to development of the market economy enabling countries to pay a portion of their existing debt, thus reducing interest rates and raising the level of investment.
Privatization generally helps governments save money and increase efficiency. In general, government agencies generally run operations and industries within the public sector. Free markets will generally reduce the burden of the government.

18. Faulty policy design can stem from many causes: a poor understanding of the problem, inadequate knowledge of the implementation context, unclear and even contradictory goals.
What can be done to improve policy making:
1. Identify need:
Policies should be developed after identifying a need it resolves.
2. Identify who will take lead responsibility
Delegate responsibility to an individual, working group, sub-committee or staff members, according to the expertise required.
3.Gather information: inessence, research.
4. Draft policy
Ensure that the wording and length or complexity of the policy are appropriate to those who will be expected to implement it.

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. 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 for this alone but developed countries are seen to truly be reaping the benefits of trade while 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. 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 can be seen 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. 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 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 development.
ii. Protecting consumers and infant industries from dumping.

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.

21. Globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale. 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. 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.

22. Exportation of primary products should be reduced or discouraged in developing countries. Over the years, they’ve remained at a loss in the international market because what they have to offer in the market is of less quality. These developed countries rejected some shipments from developing countries because they fail to meet standard and if they do buy these primary products, they do so at a cheaper rate and transform these products into manufactured goods and then return it to the international market for sale, at a higher price, to developing countries. This is how it has been over the years: industrialized economies continue to suck wealth away from developing countries in the name of “Trade”.
However, before any developing country should halt its sale of primary products in the international market, it must put certain institutional mechanisms in place. These inclusive institutions will ensure sustained industrial growth and development. With this, developing countries can transform their own primary products, in their industries, to in-demand industrial outputs.

23. The heavy debt overhang is as a result of many developing countries(Nigeria) borrowing heavily from 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. An interest rate policy designed to reduce short-term capital flows and exchange rate volatility, and expansion of demand in surplus countries. As a result of weak policy coordination at the global level, developing countries paid a high price for adjustment, which set the stage for the debt crises of the 1980s.
Some of the major risk factors which increase the probability of the external debt crises in developing countries include high level of inflation, weak currency, 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 boosts growth. Politically, these aids have 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.
Conditions for continual search of foreign aid by developing countries
i. 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 and favourable conditionalities, if any.
ii. 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.
iii. 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.
Purpose of seeking aids
i. 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.
ii. Promotes favourable balance of payment
iii. Helps the government set up basic infrastructure.

25. Multinational corporations (MNCs) from all parts of the world are usually attracted to developing countries by lower costs, strong growth prospects, and in many cases untapped natural resources. Foreign direct investment (FDI) to low-income countries has also grown significantly faster than in high-income 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.
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 International Economic Relations field focuses on the consequences of the economic interaction among countries. 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

26. The roles of fiscal policy includes:
a. resource mobilization: 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.
b. undertaking 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.
c. accelerate economic growth: Fiscal policy helps to accelerate the rate of economic growth by raising the rate of investment in public as well as private sectors.

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.
And this may be detrimental for nations with little resources and revenue.

27. Microfinance is a term used to describe a range of financial services, such as savings, loans, insurance and money transfers that targets some the world’s poorest and most vulnerable people achieve brighter futures. The main goal is providing equal access to financial services to help people become self-supporting.
Its Limitations include:
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 and Regulatory Issues.

Okoye Arthur‐Kingsley Kanayo
2018/241820
Economics
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?
           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.
In summary, the public sector is delicate in every economy.
18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
          In developing countries, poor economic growth and development policies are associated with low education standard, political instability, underdeveloped financial systems, high government deficits, and insufficient infrastructure.
Policies to improve poor development choices by developing countries are : Improved macroeconomic conditions; which will create stable economic climate of low inflation and positive economic growth
Improvement of institutional quality
Increasing access to Education
Improving the role and status of women
Enacting strategems to enhance agricultural food productivity.

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?
      Meaning of International Trade: 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. 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?
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?
If domestic industries cannot compete against foreign industries, the government will restrict trade to help the domestic industries develop. Governments may also restrict trade to foster business at home rather than encouraging business to move out of the country. These protectionist policies encourage prices to stay high and help domestic industries to develop. With the trade restrictions the demand for goods produced within the economy will increase, thereby fostering growth.
It has become a common practice for developing countries with serious economic problems, including huge international indebtedness and other internal economic dislocations, to blame international financial institutions, notably the International Monetary Fund (IMF) and the World Bank for their problems.
The relationship between the IMF and Nigeria very much typifies what has been described above. To the averagely articulate Nigerian, the Fund is responsible for aggravating an already bad economic situation (at least sufficient sentiments have been aroused to achieve that purpose). On the other hand, government officials, businessmen and the “experts” who know about the intricacies of the international economy, privately and publicly believe strongly that in the final analysis, the Nigerian military leaders still have to seek an accommodation with the Fund and perhaps other foreign financial institutions if the country is to get out of its present economic predicament. In essence, there is a sort of waiting game between the Fund and Nigeria, with each side waiting for the other to make the appropriate move. The IMF believes that all things considered, Nigeria qualifies for the Fund’s assistance if only there is a little more focus in the right direction to satisfy the Fund’s performance criteria. The Nigerian Government on its part believes that the country has, through its present “stringent economic management,” satisfied the Fund’s requirements and consequently has qualified for a more generous assistance from the Fund.
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 become a whirl wind blowing across the world due to acceleration in information and communication technology thereby fostering more interactions as it shrinks the geographical boundaries of all countries into a global village. The unequal effect of globalization has preponderantly distorted third world economic development. There is lack of infrastructure in every sector of the economy. Poverty, accompanied with its consummate terminal deceases has been rife. The agricultural sector is drastically affected. The education sector is poorly funded. Income per capita has been on the downward trend with no meaningful result from policy changes. Corruption due to bad government has become the order of the day as workers strive to survive with meager income that cannot cover consumption, let alone savings and investments. The Nigerian situation has generally been a calamity as the various macroeconomic indices applied by the government has not been able to positively turn around the economy in this globalizing world.
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?
On one hand export of primary product would generate capital for the industrialization process to proceed, on the other hand rapid promotion of industrialization would lead to economic
growth. Developing countries should start the industrialization process as soon 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?
The origin of the current debt problem of developing countries can be traced to the huge balance of payments surpluses of the oil exporting countries in the early 1970s with counterpart deficits elsewhere. The factors that caused the supply of capital to increase created its own demand. Private banks were eager to lend their surplus funds and there was no deficiency of demand
A debt brings in a deleterious effect on the country’s economic growth. This is manifested through different channels like higher long-term interest rates, higher distortionary taxation, higher inflation and greater uncertainty and vulnerability to crises.
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?
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?
Yes, multinational corporations should be encouraged to invest, because they don’t only provide funds, but they are there with the infant business every step of the way. 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.
Developing countries are attracting and contributing to a growing share of global investment, write Pierre Guislain and Peter Kusek
The economic crisis slashed global FDI flows by around 40 percent in 2009, affecting, albeit to a varying extent, all countries, all sectors, and all forms of investment. Mergers and acquisitions in high-income countries were the quickest to contract soon after the sub-prime mortgage crisis in 2007. Gradually the contagion spread and affected new, greenfield investment, and expanded geographically from the Western industrial countries to the emerging markets and developing economies. Still, developing countries faired marginally better during the crisis. According to UNCTAD, a UN agency, FDI flows to developing countries in 2009 declined by 35 percent, slightly less than the 41 percent fall in high-income countries. As the graph below indicates, they still show a robust increase over the levels of five or more years ago.
Strong growth in FDI to developing countries
The contribution of developing countries to the global economy is rapidly increasing. In 2004, less than a fifth of the value of the world’s economic output was produced in developing countries. By 2008, this figure reached almost 30 percent. In other words, over the last 20 years developing countries have grown faster than developed economies. The global economy grew at 3.5 percent per year during the five-year period prior to the financial crisis. During this same period, the GDP of high-income countries rose only by 2.4 percent each year, while developing economies expanded three times as fast, at 7.3 percent. The gap between growth rates of developing and high-income countries has widened steadily since 1999 (see graph overleaf).
Developing countries increase FDI;
Rapid growth and industrialization in the developing world has also given birth to new multinational companies (MNC) from these countries. Brands such as Samsung, Hyundai, Cemex, Embraer, Infosys, Tata, Lenovo, PETRONAS or Standard Bank have now become ubiquitous. According to UNCTAD’s 2009 World Investment Report, seven of the world’s 100 largest MNCs now come from developing countries. Their relative size has also grown rapidly. In 2007, assets of the 100 largest MNCs from developing countries rose by 29 percent from their level in 2006. In comparison, this figure reached only 16 percent for the 100 largest MNCs worldwide. Developing country MNCs are increasingly becoming significant market players in their domestic, regional as well as global markets, leading to rapid growth in South-South FDI.
MNCs from all parts of the world are usually attracted to developing countries by 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, among others – most developing countries still have a lot of catching up to do. By some measures, however, developing countries are making quite a bit of progress. According to the Doing Business project of the World Bank Group, between June 2008 and May 2009 low- and lower-middle-income countries introduced twice as many reforms in their business environments as high- and upper-middle-income countries. By this measure, the top 10 reforming countries over the last few years have mostly been developing countries, such as Egypt, Rwanda, Colombia or the Kyrgyz Republic.
Developing countries are not a homogenous: group, however. The larger the country, the more opportunity for business, and hence more opportunity for investment: top performers are the BRIC countries as well
as other large economies such as Mexico or Turkey.
While China does very well on an absolute basis (first data column), its FDI per capita and FDI as a share of GDP are relatively low compared to the other leading recipients of FDI in the developing world. Bulgaria, Chile, and Romania stand out on a per capita basis (second data column). In addition to these three countries, in Russia, Thailand, Egypt, and Malaysia, FDI constitutes a relatively large share of the domestic economies.
Sub-Saharan Africa’s vibrant development:
FDI to low-income countries has also grown significantly faster than in high-income countries. Average inflow to low-income economies during the five-year period before the crisis (2003-2007) was more than 100 percent higher than during the five year period at the turn of the decade (1998-2002). The comparable figure for the high-income economies is only 14 percent. Two key factors are simultaneously at play here. Firstly, many developing economies are starting from a low base, so even a couple of large investments can easily double or treble a country’s performance over the year before. Secondly, and more encouragingly, multinational companies are increasingly confident about returns on investment in developing countries, including Sub-Saharan Africa.
According to the Africa Competitiveness Report 2009 published by the World Economic Forum, Africa’s FDI stock nearly doubled between 2003 and 2007, and annual GDP growth averaged 5.9 percent during 2001-2008. Furthermore, most African economies have steadily improved their competitiveness during this period. The report notes that the most significant improvements have been in goods market efficiency, greater market openness, quality and quantity of higher education and training, and greater sophistication of business practices. On the other hand, infrastructure, macroeconomic stability, and health conditions have either not improved, or have regressed in some African countries.
This positive trend for Africa is echoed by the Doing Business report. Last year the report found that Sub-Saharan Africa was the second fastest reforming region in the world, after Eastern Europe and Central Asia. Two out of every three countries in Africa made at least one reform, many of which were supported by World Bank Group advice.
The recent financial and economic crises have changed, at least temporarily, investors’ outlook and perception of risk. Results of a recently conducted investor survey of political risk, reported in the 2009 World Investment and Political Risk report by the Multilateral Investment Guarantee Agency, paints a mixed picture. On the one hand, the report states that “the global economic downturn … has exacerbated specific political risks in the most vulnerable investment destinations.” On the other hand, the study concludes that “… [the economic crisis] does not appear to have led to a reassessment of emerging market risk across the board… As the global economy recovers, concerns over longer-term political risks will remain prominent, even though some of the perils directly related to the fallout of the crisis recede.” Political risk is of course only one determinant of FDI decisions.
Investment flows to rebound:
Most recent indicators signal that 2010 will be a slightly better year for FDI than 2009. UNCTAD’s Global Investment Trends Monitor report from early 2010 predicts that gradually rising profits of multinational corporations and an uptake in the global demand for goods and services “will ultimately encourage companies to revise upward their international investment plans for 2010 onward, which in turn should give rise to growing FDI flows.” A slightly more nuanced picture of the future FDI flows is provided by the sentiment of senior executives polled by the consultancy A.T. Kearney for its regular FDI Confidence Index. Business leaders give high marks to the largest BRIC economies, but are less sanguine about investment prospects in other emerging markets. Several advanced high-income economies last year rose in the index, pushing down the ranks many middle-income developing countries which had done well during the bullish years before the crisis.
One of the principal implications of these trends for the 100+ developing countries which do not yet feature prominently on most multinational companies’ investment maps is that they will have to try even harder to get on investors’ radar screens. Competition for foreign companies’ attention has heightened, and investors’ business decisions are more carefully calculated than before. What are then some of the key actions that developing countries can take to become more attractive destinations for FDI?
Improving FDI competitiveness:
In the short-run, developing countries can send convincing signals to the business community that they are open and ready for investment through actions which do not require significant amounts of time or resources:
» First, countries can improve their business environments by removing regulatory and administrative red tape, which is often an impediment to entry and operation of companies. Onerous start-up procedures, excessive licensing and permit requirements, and time-consuming export and import processes can make a country less attractive to FDI. The World Bank Group’s forthcoming Investing Across Borders report compares many of these barriers across countries.
» Second, while focusing on new investments, countries should not forget about the companies which have already invested in their economies. Reinvested earnings account for over 30 percent of global FDI flows. Especially given the recent decrease in new FDI projects, countries should pay due attention to investor aftercare and retention, and work directly with existing companies to help resolve problems, strengthen retention, and encourage expansions.
» Third, targeting and promoting specific sectors for FDI can have a powerful effect. Naturally, different countries target different sectors depending on their comparative advantages and industrial composition of their economies. Sectors with strong growth potential and relevance for many developing economies include clean energy, agribusiness, business process outsourcing, healthcare, and tourism.
In the medium- and long-run, countries should aim to improve their overall competitiveness for sustained investment and economic growth. Here the strategic needs of each country will be different and dictated by a mix of socio-economic realities and political priorities.

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.
These tools promote job creation, they help mobilize resources, they encourage investment and so many other positive benefits.
Large military expenditures could retard economic growth, especially in a country like Nigeria which dwells in insecurity regardless the expenditures.
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.
27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
       Microfinance, also known as 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.
Collateral-free loans
Most of the microfinance companies seek no collateral for providing financial credit. The minimum paperwork and hassle-free processing make them a suitable option for quick fundraising.
Disburse quick loan under urgency
The financial crisis is inherently unpredictable as it could creep up at any point in time without intimating anybody. Thanks to microfinance companies that can provide secure and collateral-free funds to an individual in the demanding situation to meet their financial need.
Help people to meet their financial needs
The renowned financial institute provides unparalleled services when it comes to loans or credit. But the worst part is that they are not accessible to low-income groups. Microfinance companies, however, offer different proposition altogether. They are dedicated to serving a poor and unemployed individual by providing them easy financial credit.
Provide an extensive portfolio of loans
Microfinance companies are not only limited to providing emergency credit but also capable of disbursing housing loans, business loans, and working capital loans with minimum formalities and processing. 
Promote self-sufficiency and entrepreneurship
Microfinance companies can provide much-need funds to an individual for setting up a healthy business that seeks minimum investment and offers sustainable profit in the long run. Thus, these companies ensure entrepreneurship and self-sufficiency among the lower-income group.
Disadvantages
Harsh repayment criteria
In the absence of the legit working protocol and compliances, Microfinance Companies could adopt a harsh repayment approach that someone would not prefer in the state of the financial crisis. Easy debt never comes with relaxed conditions, and that is something true with microfinance companies as well. Since these companies work under strict compliances, they could manipulate their customer for repayment unethically.
Small Loan amount. 
Unlike mainstream financial banks, Microfinance Companies offers a smaller loan amount. Since these banks don’t ask for collateral against the credit, the disbursement of the large loan amount is practically impossible in their case.
High-interest rate
Another problem with Microfinance Companies is that they were unable to render low-interest based loans. This is because they don’t follow traditional banks’ footprint, where the accumulation of funds is easy.

Name: Onyeabo Michael Chukwuebuka
Reg. number: 2018/248280.
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?

ANS: Education is one of the most important aspects of development in every economy. Without significant investments in human capital, no country can achieve long-term economic progress.

Education improves people’s productivity and creativity, as well as encouraging entrepreneurship and technological advancements. Furthermore, it is critical for ensuring economic and social progress as well as increasing income distribution.

So, education is not just simply a mechanism to enable certain groups or classes of people to maintain positions of wealth, power, and influence but as well a mechanism for 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?

ANS: Agriculture and rural development can best be promoted by promoting agricultural practice such as providing incentives, seeds, pesticides, insecticides, credit and modern implements to farms. For easy distribution of farm produce, roads and other infrastructure must be provided.

Higher agricultural price is not sufficient to stimulate food production as rural institutional changes (land redistribution, roads, transport, education, credit, etc.) are needed to increase productivity.

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 development involves the using, conserving, and improving the community’s resources so that natural processes, on which life depends, can be preserved and the overall quality of life can be improved now and in the future.

As far as I’m concerned there is economic cost to the pursuit of sustainable department, since depletion of environmental resources have negative relationship with the availability of such environmental resources for future generation.

The rich north contribute more damage to the environment due to their high production activities and the waste of chemical and carbon which are hazardous to human health. The poor south bears the consequences of the demand due to lack of infrastructure and proper faculties.

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: In free market economy everybody chases his or her own interests, so who produces the public goods? With this I say that free market is not the answer to development problems.

The government presence is needed to produce public goods, maintenance of law, equitable redistribution of income, etc.

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

ANS: Many developing countries select such poor development Policies simply because of the level of corruption as it is in the case of Nigeria.
It is not as if they don’t know the right developmental policies to adopt but corruption and selfishness of these political leaders are stumbling blocks.

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: The role of trade in eradicating global poverty is crucial. Countries that are more open to foreign commerce tend to grow quicker, innovate, enhance productivity, and provide their citizens with more wealth and opportunity.

Lower-income households will gain from increased commerce because more affordable goods and services will be available. Integrating into the global economy through commerce and global value chains contributes to local and global economic growth and poverty reduction.

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: Exchange control is only successful when the balance of payments is disrupted for a short period of time, such as fear of war, crop failure, or other factors. However, if there are other underlying causes, using an exchange control device will be ineffective.

To prevent capital flight, exchange controls are important and should be implemented. When a country’s currency is under speculative pressure, this is especially crucial. Tariffs and quotas would be ineffective in such circumstances.
21. What is meant by globalization, and how is it affecting the developing countries?

ANS: Globalization is defined as a process that, based on international tactics, tries to grow commercial activities on a global scale. It was triggered by technology improvements, as well as economical, political, and environmental developments, which facilitated global communications.

Globalization helps developing countries to communicate and trade with rest of the world which enhance increase in economic growth, poverty reduction in the country.

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: One of the reason why developing countries are poor today is Because they export primary products at lower price and end up buying the manufactured good at higher prices. So, developing countries developing countries should attempt to industrialize by developing their own manufacturing industries.

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: Many developing Countries are in serious debt mainly because of poor debt management, insufficient government income due to ineffective tax systems, and flaws in the rule of law. Furthermore, rather than being used for productive investments, the loans are frequently used for consumer goods consumption.

High debt decreases growth primarily by lowering investment efficiency. Doubling debt from any beginning debt level will reduce per capita income growth by around 1% point.

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: 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?

ANS: 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?

ANS: In underdeveloped countries, the primary role of fiscal and financial policy is to mobilize resources from both the private and governmental sectors. Because of the low rate of savings, the national income and per capita income are both quite low. As a result, governments in such countries boost the rate of investment and capital formation, which in turn accelerates the rate of economic development, through forced savings (involuntarily limiting current consumption while saving money).

Low economic growth in developing countries is attributed to high military spending, and supporters of this assertion argue that increased military spending depletes resources for other productive sectors such as education, health care, and development projects, resulting in low economic growth and development.

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

ANS: Microfinance is a type of banking that is offered to unemployed or low-income individuals or groups that would otherwise be unable to obtain financial services. Microfinance enables people to take out acceptable small business loans safely and in accordance with ethical lending principles.

Microfinance bank has the potential of spurring grassroots development through financial inclusion and financial literacy, deposit mobilization and credit delivery to finance micro- enterprises, boosting small-scale enterprises/agriculture by financing them or by acting as channels for on-lending to them.
However, microfinance bank has some limitations for reducing poverty, which includes:

1. High interest rates: When compared to a personal loan through a bank, the interest rates are much higher. If you meet the necessary standards to obtain a loan directly from a bank, it would be unwise to take out a microfinance loan.
2. Loan Size: Even if you wanted a large loan, you wouldn’t be able to receive one because loan sizes are limited and typically extremely small.
3. The third and most serious drawback is that you must guarantee that each and every member of your group will repay the instalments. If one of the group members is unable to do so, the remaining members are expected to pool funds to cover the instalment.

Name: Nzenwa Ngozi Beatrice
Reg No: 2018/249548
Department: Social Science Education
Unit: Economics Education
Email: paulbeatrice3417@gmail.com

14. In a developing country like Nigeria the educational system is not really promoting economic development as it ought to due to poor educational system in the country. Meanwhile, education is one of the important tool that can be used in promoting economic development because of the following; education has a way of exposing one to modern and scientific ideas thereby, renewing or upgrading their method of thinking and reasoning which will in return lead to economic improvement and development; it increases an individual productivity and creativity giving room for entrepreneurship and technological advancement leading to economic and social progress and improvement in income distribution.
Studies have all revealed that increase in national income and per capita income is a function of education and that differences among nations can better be explained by differences in the endowment of human, rather than physical capital. The impact of education should not be overlooked; when people are educated they are better informed.

15. Truly, majority of the people in developing countries reside in rural areas. Therefore, it is expected that governments take some measures in promoting agricultural and rural development by introducing education and enlightenment on mechanized system of farming, also ensuring that provision on how to engage in domestic trade commence before placing boundaries on international trade to avoid lack and insufficiency of products; providing good transport system that can enable the transfer of goods from rural areas to other areas where the goods are needed; provision of capital for farmers to purchase land and seedlings needed for farming; provision of good social amenities and infrastructure that can help develop rural areas. All these are needed to advance and promote agricultural system especially in the rural areas, aside focusing on the prices of agricultural product to stimulate food production.

16. According to the United Nations (UN) World Commission on Environment and Development, environmental sustainability is about acting in a way that ensures future generations have the natural resources available to live an equal, if not better, way of life as current generations. International Union for Conservation of Nature (IUCN) also defines environmental sustainability as the capacity to improve the quality of human life while living within the carrying capacity of the earth’s supporting ecosystems. Paul Hawken also defines Environmental sustainability as stabilizing the currently disruptive relationship between earth’s two most complex systems: human culture and the living world. Personally, environmental sustainable development refers to the process of maintaining a positive impact in our natural world despite our current interaction with it so as to ensure positive influence on our future generation. Pursuing sustainable development will result to economic growth.
The whole world bears the major responsibility for global environmental damage because according to InforMEA, Environmental damage or degradation is the deterioration of the environment through depletion of resources such as air, water and soil; the destruction of ecosystems and the extinction of wildlife. It is defined as any change or disturbance to the environment perceived to be deleterious or undesirable. Based on the definition above, every living thing experience the effect of environmental damage including the rich and the poor because environmental damage leads to increased poverty, overcrowding, famine, weather extremes, species loss, acute and chronic medical illnesses, war and human rights abuses, and an increasingly unstable global situation that portends Malthusian chaos and disasters. However the poor South suffers more because they are not benefiting from the damages made by the rich North as a result of the technological advancement they are exposed to.

17. Free market and economic privatization are part of the answer to development problem because free market contributes to economic growth and transparency; it ensures competitive markets; consumers’ voices are heard in that, their decisions determine what products or services are in demand; Supply and demand creates competition, which helps ensure that the best goods or services are provided to consumers at a lower price. While that of privatization; is a means of improving overall economic efficiency; official decision-makers believe that it reduces the fiscal burden and the external national debt; they also expect that this process will stimulate both technical efficiency and investments to increase the pace of economic growth; the government also benefit from the private industries. In other words, privatization helps the government save money and increase efficiency thereby resulting to economic development. This point is backed up with the neo-classical view which believes that government should not interfere in the economic activities of the economy. I believe that this school of thought is better for developing countries because once the economic activities are privatized there’s room for competition and this leads to the production of unique and great items.
Nonetheless, I suggest governments in developing countries still have major roles to play in their economies which includes: provision of incentives like electricity, quality transport system, and other basic utilities for entrepreneurship to take hold; financial inducements and subsidies; establishment of capital and money markets in which lenders could have confidence without financial intermediaries acting as brokers between lenders and business borrowers, it is difficult envisage economic growth taking place on a sustained and rapid basis.

18. Since it is the role of the leaders to take decision on the choice of policies to be implemented; Ignorance on the part of the leaders, lack of managerial skills, poor intellectual capacity on the leaders, lack of innovative and creative skills on the aspect of the leaders are to be considered, adoption of foreign and previous policies used without looking at the domestic peculiarities and changes. As a result of all these, the selection of development policies will be poor precisely in developing countries like Nigeria.
The following can be done to improve these choices: the right leaders should be placed in their rightful position so as to ensure the right choice of policies to be implemented; every leaders in position should be well enlighten about the structure of the system so as to ensure adequate decision making; policies makers shouldn’t be biased in their decision to ensure adequacy and transparency; the ability to formulate policies should be placed in the hands of the rightful authorities without restrictions.

19. Of a truth poor nations desire wealth, increments, productivity. As a result of these desires, she will be ready to engage in any productive activities that would lead to development. However, a poor nation will definitely desire international trade and expand it in such a way that it leads to rapid development.
International trade has positive impact on the economy ensuring that both the governments and the citizens, the rich and the poor, the country exporting and importing benefits from international trade. Although, it is expected that every wise nation export more than she import so it does not lead to deficit (loss).
The advantages of international trade include; increase in revenue, benefiting from currency exchange, become diversified, a nice way to dispose surplus goods, enhance reputation which gives room for popularity, opportunity to specialize in a line of trade and be so good and known for it. All these advantages listed above can be distributed among nations ensuring that nations get developed as a result of international trade.

20. When a developing country’s import is becoming more than her export; measures has to be taken to prevent such, also when the freedom to export is given freely and easily goods that worth great use to her can be given out cheaply and then she ends up lacking greatly and vice versa that is, when nonessential goods are allowed to be imported freely it can become problematic to the nation thereby, preventing domestic trades. Nevertheless, policies made on foreign exchange control, raise in tariff, quotas on importation of nonessential goods can help to allow countries to better stabilize their economies by limiting in-flows and out-flows of currency, which can create exchange rate volatility; also disapproval of importation of nonessential and destructive goods. All these, will help promote the nation’s industrialization and avoid chronic balance of payments problems.
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 are boosting of social spending; reducing debt service; improving public debt management among others.

21. According to World Health Organization, globalization can be defined as” the increased interconnectedness and interdependence of peoples and countries. It is generally understood to include two inter-related elements; the opening of international borders to increasingly fast flows of goods, services, finance, people and ideas; and the changes in institutions and policies at national and international levels that facilitate or promote such flows.” The Committee for Development Policy (a subsidiary body of the United Nations), from an economic point of view, define globalization as the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, the flow of international capital and the wide and rapid spread of technologies. It reflects the continuing expansion and mutual integration of market frontiers and the rapid growing significance of information in all types of productive activities and mercerization are the two major driving forces for economic globalization.” For me, globalization is a form of growth that enables you become interconnected around the world.
Globalization has both positive and negative impact on developing countries. However, the positivity is more so it is advisable for every developing country to go global. The following are the positive effect of globalization on developing countries; it helps developing countries to deal with the rest of the world in other to promote their economic growth, solving the poverty problems in their country; globalization can contribute greatly to the development of health and educational systems in the developing countries; globalization has also made cultures of many developing countries known. In conclusion, globalization can affect developing countries positively depending on how well they use the opportunity.

22. Exports of primary products such as agricultural commodities should be promoted. In addition, developing countries should engage in industrialization thereby, developing her own manufacturing industries as rapidly as possible, that way economic development can be achieved. Such industrialization will lead to productivity, affordable goods for the citizens, improved standard of living, and great room for employment opportunity, among others.

23. Developing countries are facing serious foreign-debt problems due to the following reasons: when loans are taken from world bank; such money are not properly used to maintain the affairs of the economy due to bad leadership system hence, the effect of the borrowed money won’t be able to reflect in the economy therefore, no income will be generated for refund. Another reason is when such loans have been received they are mostly used for consumption goods rather than productive investments which is as a result of poor debt management. Also, investment should be made available on critical sectors in the economy that could help promote and sustain growth in the economy.
Furthermore, the implications of debt problems on economic development include: public debt may have non-linear effects on growth, either through capital accumulation or productivity growth, in the future government debt will be larger than the country’s repayment ability, and expected debt service costs will discourage further domestic and foreign investment. Potential investors would be discouraged on the assumption that the more there is production, the more they will be taxed by governments to service the public debt and thus they will be less willing to incur investment costs today for the sake of increasing future output (Gordon & Cosimo, 2018).
Financial crises can affect development because it leads to devastating social and economic effects. Financial crises usually result to poverty; also reduce the progress of achieving desired developmental goals, not only that it makes economies lose time of economic enrichment and productivity thereby slowing the rate of development to be obtained in the economy.

24. Foreign aid is a post-war phenomenon which was introduced to help the Third World countries to escape from the underdevelopment and poverty. Clearly, foreign economic aid from rich countries has negative implication on economic development like; exploitation and dependence on the aids of the rich countries. Although, still has it positive benefit which includes; support economically, socially and politically. Developing countries despite the negative implications can consider seeking such aids wisely in other to avoid more complex issues to their economy; especially when the economy is faced with great loss and lack, probably as a result of some limitations in their health sector knowing that urgent needs arise just like the case of the pandemic; another instance is when there is war and pestilence and no means to avert such challenges then it’s wise to seek aids from rich countries that are willing to assist without taking advantage of the situation in the economy. On the other hand, developed countries are free to offer such aids but not at their own detriments. Only when the needs required are at their own disposal; meaning they do not have to borrow just for the purpose of assisting developing countries economically, socially or politically as the case maybe.

25. A multinational corporation (MNC) has facilities and other assets in at least one country other than its home country. A multinational company generally has offices and/or factories in different countries and a centralized head office where they coordinate global management. Some of these companies, also known as international, stateless, or transnational corporate organizations, may have budgets that exceed those of some small countries. 
Multinational corporations are very much free and are encouraged to invest in poor nations because they’d also benefit from it as well. The benefits involved are two sided thing and should not be overlooked. Of a truth, such investment would require more capital and capacity however, just as how the higher your risks the higher your profit so diving into such investment will greatly generate profit to the investor by creating business expansion thereby promoting great growth and to the poor country involved by increasing new infrastructure and technological advancement and many other positive changes brought by the multinational corporations. This can be done under the condition that it wouldn’t hinder producers from engaging in domestic activities and also if it doesn’t affect the security of the county negatively.
The emergence of global factory and globalization of trade and finance has influenced international economic relations positively because Globalization 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. The roles of financial and fiscal policy in promoting development are making policies that favor domestic producers like importation ban on particular goods to eliminate foreign competition, decrease exportation duties to enable local producers export more of their local product in which leads to increase in foreign reserve, regulation of inflation through their policies like increase in tax to enable withdrawal of money in circulation.
Large military expenditure promotes economic growth because for every business to strive there must be secured environments. However, it’s the duty of the military to maintain peace and order as well as protection of lives and properties; these attract foreign investors into the country because the nation has enabling business environment. All these can be achieved through expenses made in the military force like purchases of arm and ammunitions, the cost made in training military personnel, among others.

27. According to Investopedia, 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. The potentials of micro finance are it helps low-income households to stabilize their income flows and save for future needs. In good times, microfinance helps families and small businesses to prosper, and at times of crisis it can help them cope and rebuild. The limitations of microfinance includes low volume of money to be loaned, limited amount of people benefit from microfinance services, high interest rate involved . All these have a way of reducing poverty and spurring grassroots development.

Name: Ogbu Emmanuel Chimaobim
Reg no.: 2018/246272
Department: Combined social sciences, (ECONOMICS/POLITICAL SCIENCE)

14.Education in every sense is one of the fundamental factors of development. 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.

15.Rural institution are also need in order to help encourage effectiveness of agricultural progress that will help to improve the economy development of a country.

16.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.
What Is Environmental Sustainability?
According to the United Nations (UN) World Commission on Environment and Development, environmental sustainability is about acting in a way that ensures future generations have the natural resources available to live an equal, if not better, way of life as current generations.While it may not be universally accepted, the UN’s definition is pretty standard and has been expanded over the years to include perspectives on human needs and well-being, including non-economic variables, such as education and health, clean air and water, and the protection of natural beauty Yes there are serious economic cost of pursuing sustainable development as opossed to simple output growth , therefore, the total impact on the environment can be expected to increase as a function of the GDP.

NAME: OYIBE EBERE IZUINYA

REG. NUMBER: 2018/245131

DEPARTMENT: ECONOMICS

COURSE: ECO 361(DEVELOPMENT ECONOMICS)

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?

Education is not a means enable certain select groups or classes of people to maintain position of wealth, power and influence. This is because of the numerous benefits which also enhance economic development:
Education in every sense is one of the fundamental factors of of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and the world. It improves the quality of their lives and leads to broad social benefits of individuals and society. Education raises people’s productivity and creativity. It also promote entrepreneurship and technological advances. It also plays a very crucial role in securing economic and social progress and improving income redistribution.

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

1. 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.

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

No. Higher agricultural prices is not sufficient to stimulate food production rather food production can be stimulated through institutional changes in areas such as:
Land distribution, storage facilities, construction of good roads, provisions of credit facilities, education, building more market, etc. When this is achieved, it will enable the producers in the rural areas to be able to transport their products to the cities at ease their thereby making agricultural products readily available at all times

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?
Sustainability is a broad term that describes managing resources without depleting them for future generations. This concept goes beyond environmental sustainability, which concerns earth’s natural resources, to include economic and social sustainability, which relate to meeting people’s current economic and social needs without compromising future generations.

Sustainable development describes the processes for improving long-term economic well-being and quality of life without compromising future generations’ ability to meet their needs.

Yes there are serious cost of pursuing sustainable development.
The south bears the major responsibility of global environmental damage because the rich North now take advantage of the poor South by using their (south) environment as a dumping ground for their products.

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?
No. Free market and be economic privatization does not respond positively to development problems rather it adds to it. In developing countries, without the participation of the government in economic activities, there will be in equitable distribution of wealth and also to minimize exploitation of the poor masses by the few rich.

18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
Many developing countries select such poor development policies because the leaders are always after their own selfish interest. Also policy makers in developing countries do not consider the disparity between their own country and those other countries where those policies they are adopting has worked well. Most of the leaders in developing countries lack well defined goals.

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 from the point of view of the development of poor nations because no developing country is self sufficient therefore the need for expanded international trade arises.
When we talk about absolute advantage theory, we’ll refer to Adam Smith who is a developer
of this theory. Smith’s thought on international trade theory has related with division of labor
(SCHUMACHER, 2012). This division leads to production improvements which increase
output, technological development, skill workers and productivity. Then countries will
experience economic growth and increase wealth of their nation. In this respect international
trade has to be considered (SCHUMACHER, 2012). According to Smith, international trade
is advantageous for nation even poor or rich countries. Moreover, international trade will
enhance division of labor or specialization of each countries which can lead to increase of
exchange goods generating profits for countries, as show in figure 4.1 (SCHUMACHER,
2012). In addition, international trade can also help poor nations to enhance production
technique and productivity through transfer knowledge and technology that enable their
market expansion (Smith, 2005). This can help the poor countries to experience economic
growth and development. For example, Cambodia can get new knowledge and technology
through its trade liberalization by connecting with developed nations like Japan, South Korea,
etc. Overall, Smith has optimistic on international trade that it benefit the countries involved.

20. When and under what conditions, if any, should governments in developing countries adopt
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?
Developing countries should not adopt international monetary fund stabilization programs and world bank structural adjustment lending because those policies are anti growth and development strategies. This is because instead of the economies of those developing countries improve, they keep going backwards as a result of the heavy debt.

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.

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).
How it is affecting developing countries.
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.

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

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?
The debt of developing countries usually refers to the external debt incurred by governments of developing countries.

There have been several historical episodes of governments of developing countries borrowing in quantities beyond their ability to repay. “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, thus preventing it from ever being repaid. The debt can result from many causes.

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. At the same time, OPEC funds deposited and “recycled” through western banks provided a ready source of funds for loans. While a portion of borrowed funds went towards infrastructure and economic development financed by central governments, a portion was lost to corruption and about one-fifth was spent on arms.

Implications of debt problems for development
Nigeria is currently ranked among Sub-Saharan Africa heavily indebted countries with a stunted GDP growth rate, retarded export growth rate, a fast dwindling income per capita and an increasing poverty level.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?

Effects of financial crisis on development.
PHigh growth rate disappears and a shrinking economic production sets in.
Leads to inflation
Decline in foreign direct investment
Decline in export
Decline in remittance from abroad

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: 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. 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.
Countries also offer foreign aid in order to improve their own security. Economic aid may also be used to discourage friendly countries from coming under the control of unfriendly governments or paying for the right to set up or use military bases on foreign soil.

Foreign aid can be used to accomplish the political aims of a government, allowing it to obtain diplomatic recognition, to gain respect for its role in international institutions, or to improve the accessibility of its diplomats to foreign countries.

Foreign aid also seeks to promote the exports of 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. It helps to promote sustainable prosperity, create or reinforce political institutions, and address a range of worldwide concerns, including cancer, terrorism, and other violations, and environmental degradation.
Advantages: The economic reasons for giving foreign aid:
i. For humanitarian reasons
ii. To improve the country’s international image  Continue to build positive working relationships with other governments
iii. To promote the conditions for peace and stability. Because many governments genuinely believe we’ll be safer and happier when everyone else is safe and happy.
Disadvantage: The economic arguments for not giving foreign aid:
i. 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.
ii. If the aid given is concerned with unproductive fields or old technology, it will have the effect of increasing inflation in the country.
iii. The most prominent objection is that donor countries interfere with the economic and political activities of the recipient country.

Conditions and terms under which developing countries seek and accept foreign aid are as follows –

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.
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

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 corporation should be encouraged to invest in the economies of poor nations because it’s foreign direct investment which also leads to economic development.
The conditions are:
i. They should be multi taxed,
ii. Government of the country should set strong environmental legislation to prevent multinational corporations from outsourcing part of the production of their economy.
iii. Trade union should set minimum wage to avoid exploitation of their employees because most of them are underpaid
It has helped in improving production, communication, technological advancement, etc thereby strengthening economic relations as countries depends on the other do some products which they don’t have comparative advantage on.

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

The overarching goal of both monetary and fiscal policy is normally the creation of an economic environment where growth is stable and positive and inflation is stable and low. Crucially, the aim is therefore to steer the underlying economy so that it does not experience economic booms that may be followed by extended periods of low or negative growth and high levels of unemployment. In such a stable economic environment, householders can feel secure in their consumption and saving decisions, while corporations can concentrate on their investment decisions, on making their regular coupon payments to their bond holders and on making profits for their shareholders.
26b. According to the classical school of thought, an upsurge in defense spending is likely to impede economic growth. This argument is based on the principle that greater defense expenditure indicates a lower level of private investment, savings, and consumption due to small aggregate demand. In other words, increased military spending contributes to a rise in the interest rate, which subsequently overwhelms private investment.

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.
Microfinance allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices.
It’s potentials
The World Bank estimates that more than 500 million people have benefited from microfinance-related operations.
Globally, researchers have paid attention to microfinance as significant contributors to poverty
reduction. For instance, Bakhtiari (2006) concluded that and microfinance has received
extensive recognition as a strategy for poverty reduction, particularly among rural poor. Mawa
(2008) also conducted a research study on microfinance and poverty reduction and concluded
that microfinance is an innovative step towards alleviating poverty. The author argued that
microfinance facilities helped people to use and develop their skills as well as enable them earn

money through micro enterprises.

NAME: ABONYI AMAKA MARY
REG NO: 2018/241874
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 is a very important factor 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. It plays a very crucial role in securing economic and social progress and improving income distribution.
Education is not a mechanism to enable certain group or classes of people to maintain positions of wealth, power and influence. Corruption in education threatens the well-being of society because it erodes social trust and worsens inequality. It sabotages development by undermining the formation of educated, competent, and ethical individuals for future leadership and the labour force.
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 best be promoted by the following ways;
• Increase in 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..
In rural areas where the agricultural sector is dominated by small farmers, some of whom are able to smooth their consumption by moving into or expanding commercial crop production or by finding other means to supplement agricultural income, Higher food prices lead poor people to limit their food consumption and adjust to an increasingly unbalanced diet, which has a harmful effect on health in the short term (hunger) and long term (food insecurity). Restructuring of the institution, that is land distribution, good roads, access to credits etc can foster agriculture and rural 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 is the practice of interacting with the planet responsibly. We do it to avoid depleting natural resources and compromising the future generation’s ability to meet their daily needs. Environmental sustainability aims to improve the quality of human life without putting unnecessary strain on the earth’s supporting ecosystems. Environmental sustainability is important because of how much energy, food and human-made resources we use every day.
If man’s activities are not properly checked, it may lead to serious economic costs which include greenhouse gas emissions, unsustainable energy use, and deforestation. Developed countries engage more in production and industrial activities which lead to the emission of C02 and these activities are mostly responsible for the causes of environmental damages. Unfortunately, the poor south suffers mostly from these damages due to lack of facilities and inability to manage the wastes.
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?
While a free economy has many advantages, such as fostering innovation, it also has disadvantages, such as a tendency for an inequitable distribution of wealth, poorer work conditions, and environmental degradation. In a free market economy, every economic agent pursues his own narrow interest, no economic agent is concerned about the common goal and this leads to neglect of public goods which is best for social and economic wellbeing thus lead to underdevelopment. In order to checkmate these disadvantages, government perform the following functions;
Maintenance of law and order through effective legal, judicial and police services.
Protection of the territorial integrity of the nation against external aggression
Provision of socio economic facilities
Production of goods and services and regulation and subsidization of private producers
Purchase of goods and services
Income distribution with efficiency and equity in view.

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 should adopt a policy of foreign exchange control when they can produce those nonessential goods they import so as to promote the local industries.
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:

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.
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 can be defined as the expansion of economic activities across the political boundaries of the nation. It is a process of economic integration and economic interdependence among nations in the world economy.
Globalization has both positive and negative impacts on developing countries. The following are effects both positive and negative of globalization on developing countries.
Economic and Trade Processes Field: With globalization, the World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans. This has solved the poverty problems in these countries. Developed nations invest in less developed nations which lead to creation of jobs for poor people in the less developed countries; this is a positive outcome of globalization. However, globalization has had its negative effects on these less developed nations. Globalization has increased inequality in developing nations between the rich and the poor. Globalization is making the rich richer and the poor poorer.
Education and Health Systems: The health and education system in developing countries has benefited in a positive way due to the contribution of globalization. Education has increased in the recent years because globalization has created jobs that require a higher education.. Globalization has helped improve developing countries rates of illiteracy living standards and life expectancy. 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”. An Increase trade and travel can lead to spread of diseases for example HIV/ADIS. Another drawback to globalization is the loss of highly educated and qualified professionals in developing countries due to migration to developed countries for a better life.
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.. 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. In addition, today we can see clearly a heavily effect that caused by globalization to the young people in the different poor nations, 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 countries have been affected by globalization and whether negatively or positively, the economies of these countries have improved under the influence of globalization also globalization has brought many drawbacks to these countries as well. Many customs and cultures are disappeared such as traditions clothes and some language and expressions have changed. I believe that globalization has brought the developing countries many more benefits than the detriments.

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 especially in primary agricultural commodities should be encouraged. Sales of agricultural products to other countries can be increased through the following activities:
Identification of products and markets
Location of new investment opportunities
Provision of trade information
Provision of support services like export procedures, product quality, export financing, transportation etc
Organising trade fairs and trade missions
Engaging in export promotion in agricultural activities can lead to the following benefits:
Provision of employment opportunities and means of livelihood to workers in the production, processing, transportation and export industries
Provision of foreign exchange for the exporter and the country
It increase farmers income
It encourages bilateral and multilateral trade relationship among nations of the world.
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 foreign debt problems due to the following causes;
Over lending : While the action of debtor governments was essential, many creditors continued to make loans for their own benefits. For example, western governments and international institutions such as the World Banks and IMF secretly lent $ 8.5 billion to Mobutu during the 1980s despite their own investigation that the loans were corruptly brought into Swiss banks.
Global Recession in 1981-1982: At the beginning of the 1980s, almost all the industrialized countries were deeply influenced by the oil crises and were suffering from the rising energy costs. In order to pay for petroleum, developed countries had to cut down their budget and reduce consumption spending. Hence, the global demand for exports from developing countries declined dramatically. In the meantime, developed countries set up high tariffs and quotas for the imported products to protect their domestic industries from foreign competition and gain extra revenue to reduce payment deficits. The global recession and trade protection of the western countries made developing nations more difficult to gain from the export products and generate income for their investment with borrowed loans, or even provide adequate infrastructure for their citizens.
Oil crisis in 1973 -1974 and 1979-1980: During the period of 1973-1974 and 1979-1980, the member of the Organisation of Petroleum Exporting Countries (OPEC: e.g. Saudi Arabia, Kuwait) with the oligopoly position interrupted the supply of oil and raised the prices. Thus those countries amassed great wealth and caused the global oil crisis. After the two oil crises, large amount of extra “petrodollars” was deposited in international and commercial banks. Those banks were left a huge excess of capital and were anxious to put it in productive use. Governments of many developing countries including some less developed OPEC countries such as Columbia, Ecuador, Mexico, Nigeria and Venezuela were keen to borrow funds, since it was generally assumed that countries wouldn’t default on their repayments. Consequently, loans were flowing into the developing countries at an unprecedented level.
Another cause of high foreign debt is poor debt management policies.
A debt crisis can lead to steep losses for banks, both domestic and international, perhaps undermining the stability of financial systems in both the crisis-hit country and others. This can hit economic growth as well as create turmoil in global financial markets. If a country’s debt crisis is severe enough, it could result in a sharp economic slowdown at home that drags on growth elsewhere.
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 economic aid to developing countries has been an important source of finance to enhance economic growth. It has helped to;
(i) Increase investment
(ii) Increase the capacity to 35 import capital goods or technology
(iii) Increase the capital productivity and promotes endogenous technical changes
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.
The government should divert a larger portion of aid to investment in the desired sector of an economy. The decisions should be taken by the recipient country to ensure the priority. For instance, in an agro-based economy where the economy of recipient country absolutely depends on agriculture, the investment in agriculture sector should get the top priority. Aid donors may provide a framework for the implementation aid funds. Well- targeted aid may increase the ability of the poorer country to maximise the benefits of trade liberalisation, improve the environment for investment and ensure that the poor have the ability to contribute in achieving growth.
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 are believed to be highly beneficial for developing countries in terms of bringing employment opportunities and new technologies that spill over to domestic firms. Furthermore, multinational corporations often benefit from government subsidies, which could in future be linked to investment in local firms. Through their involvement in investing in local businesses, multinational corporations can play an important role in building an entrepreneurial ecosystem in developing countries and, if done correctly, might solve the typical coordination failure that most governments struggle or are unable to cure.
26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
(i) To increase the rate of investment and capital formation, so as to accelerate the rate of economic growth.
(ii) To increase the rate of savings and discourage actual and potential consumption.
(iii) To diversify the flow of investments and spending from unproductive uses to socially most desirable channels.
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. 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.
There are two ways by which higher military expenditure may negatively affect long-run economic growth. First, increase in military spending may diminish the total accumulation of existing resources available for other domestic usages such as investment in prolific capital, education, and market-oriented technological enhancement. Second, high military expenditure can intensify misrepresentations that condense the efficiency of resource distribution, thereby diminishing the total yield factor. Military expenditure tends to reduce productivity because more funds diversion to military expenditure causes the government to either increase taxes or get loans from the foreign capital market to balance its budget.
27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?
Microfinance institutions are organizations that are charged with the responsibility of providing financial access to low income earners who lack access to banking and other related services. They aim to bridge the gap, bringing financial services to people who otherwise wouldn’t have them.
Microfinance institution seeks to reduce poverty through giving micro loans to the poor. The aim of this is to aid them start their own enterprise in order to come out of poverty. The new business enterprise would provide jobs, raise incomes of the people and the overall wellbeing. They perform the following functions;
Microfinance institutions encourage gender equality
They encourage entrepreneurship and self sufficiency
They are risk managers
They provide access to fund
The following the limitation of micro finance 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

Name: Uche Constance Chidera
Reg.no.:2018/250689
Dept.: Economics (major)
Course code: Eco 361
Quiz 4
1. Truly speaking,education has greater impact in every society, they include;
a. It has come to present to us more knowledge on how to tackle economic problems such inflation, income distribution, poor policies, etc.
b. Companies with such great intellectuals such as Dr.mrs Ngozi iweala, Dr.miss Constance Uche and the likes of them will be at the verge of business boom whose business plan will not only be profit yielding but forward progressive business atmosphere.
c. The technological advancement used to boost production in the system are all benefits of education.
2a. Provision and supervision of agricultural aids such as grants and loans will help in encouraging farmers to make food production sufficient.
b. Provision of improved infrastructural amenities will promote easy free movement goods and services to the various part of the country.
c. Establishment of financial institutions in the rural areas to encourage savings and proper utilization of resources.
d. Provision of basic amenities such as electricity,water,seedlings,etc.
e. Diversification of the rural economy by encouraging business people and investor to establish their industries in rural areas.
2ii. Based on the facts made above,both have its own contributions in the development. An increased agricultural prices will inject more money into the national account which will be used to stimulate food production while on the other hand, it can drive investors from purchasing goods. Institutional changes make them easily accessible to the consumers.
3. Environmental sustainability is responsibly interacting with the planet to maintain natural resources and not jeopardize the ability for future generations to meet their needs.
3b.State-of-the-art sustainability practices can transform traditional economic development and poverty alleviation strategies. Creating resource efficiencies in areas such as water, transportation, energy, and material use makes communities more equitable and resilient while lowering the cost of living.
a. Targeting the benefits of location and resource efficiency initiatives can help cities create jobs and help put people on track to a lower-poverty, higher-wage future.
b. Making these efficiency upgrades creates jobs, both temporary and ongoing.
c. When people can participate in the economy on more than a subsistence level, they are able to fully contribute their talents to the workforce and community.
d. 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. Reduced dependence on individual auto travel will make streets less congested, saving drivers time and money, and enhancing overall livability.
4. The two first core factors are partially the solution and partially the cause. In essence,both factors have impacted positively and negatively:
a. The creation of extensive employment opportunities.
b. Higher rate of investment.
c. Absence of centralization of economic power on a single entity.
d. Rapid increase in the national income.
e. Higher foreign exchange.
In some cases,the aforementioned benefit can be the opposite for the following reasons:
a. Marginalization of nation’s resources.
b. Corruption.
c. Unpayable debt by companies.
d. Poor manufacturing and social facilities.
The other core factor (government) plays major roles in the economy:
a. The government establish policies that maintains competition by limiting companies from charging exorbitant prices and producing poor quality goods.
b. They participate in reducing unemployment and inflation to enhance economic growth.
c. The actions of government have help to reduce negative externalities such as pollution,and at the same time have encourage goods and services that have positive externalities.
d. When they impose higher tax rate on higher income earners to provy the lacking basic amenities to low income earners,will also be a way of redistributing income.
c. They ensure that higher prices are minimized and also government subsidy.
5. Reasons are as follows:
a. Ethinc differences.when people’s traditional and religious beliefs clash with one another.
b. Ignorance of the human being.
c. Inaccurate and inadequate economic planning.
d. Yearly seminar and traing of policymakers,business analysis
e. Insufficient funding.
4. Based on the worldview theory, international trade is desirable and on the practical worldview,it is partially desirable.the fact still remains that the rich countries exploit the poor countries and on this case,we have the predator and the prey. Although there are benefits attached to international trade on both countries engaged in which the poor countries through this trade attracts foreign investors but somehow a nation will be worse-off in the process.
The benefits of international trade on both countries include:
a. Trade encourages a country to specialise in producing only those goods and services which it can produce more effectively and efficiently, and at the lowest opportunity cost.
b. Producing a narrow range of goods and services for the domestic and export market means that a country can produce in at higher volumes, which provides further cost benefits in terms of economies of scale.
c. Trade increases competition and lowers world prices, which provides benefits to consumers by raising the purchasing power of their own income, and leads a rise in consumer surplus.
d. Trade also breaks down domestic monopolies, which face competition from more efficient foreign firms.
e. The quality of goods and services is likely to increases as competition encourages innovation, design and the application of new technologies. Trade will also encourage the transfer of technology between countries.
f. Trade is also likely to increase employment, given that employment is closely related to production. Trade means that more will be employed in the export sector and, through the multiplier process, more jobs will be created across the whole economy.
The disadvantages of includes:
a. Exploitation or amassing a countries wealth and resources.
b. Makes the prey countries more poorer.
5. Firstly,one of the keywords “non-essential goods” entails goods that can have alternatives and not necessary to be imported but can be produced in one’s own country. Therefore,the condition under which the government adopts the policy of foreign exchange control,raise tarrif or set quotas on the importations of non-essential goods are as follows:
a. Disequilibrium of balance of payment.this is when import exceeds import.
b. Harmful or toxic goods such as alcohol, cigarettes nd so on,should be avoided.
c. When a country is heavily indebted,heavy debt with no sufficient means to repayment.
d. Increase in poverty and unemployment.
e. Protection of the infant industries.
5ii.
7. Agreeing on both points raised in the question with following reasons:
a. They country will be able to increase their foreign exchange and more foreign investors will be attracted.
b. It will be an avenue for such countries to easily access foreign financial aids.
c. It boosts the economy as more is pushed into the national account.
d. It creates a conducive and favourable environment for innovations and researches to take place.
e. It brings about infrastructural development such as good roads, Constant electricity,improved internet network,etc,and where tourism centers are established,can attract both investors and tourist.
On the other hand,manufacturing industries will impact greatly on the aforementioned benefits of export:
a. It will speed up production,that is faster and easier.
b. Time saving
c. Output stability.
d. Increased quantity of output.
8ia. 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.
8iia. 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.
9.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.
10a. 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
11. 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.
11bi. 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.
12. 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.
12b.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.

Name: Uche Constance Chidera
Reg.no.:2018/250689
Dept.: Economics (major)
Course code: Eco 361
Quiz 4
1. Truly speaking,education has greater impact in every society, they include;
a. It has come to present to us more knowledge on how to tackle economic problems such inflation, income distribution, poor policies, etc.
b. Companies with such great intellectuals such as Dr.mrs Ngozi iweala, Dr.miss Constance Uche and the likes of them will be at the verge of business boom whose business plan will not only be profit yielding but forward progressive business atmosphere.
c. The technological advancement used to boost production in the system are all benefits of education.
2a. Provision and supervision of agricultural aids such as grants and loans will help in encouraging farmers to make food production sufficient.
b. Provision of improved infrastructural amenities will promote easy free movement goods and services to the various part of the country.
c. Establishment of financial institutions in the rural areas to encourage savings and proper utilization of resources.
d. Provision of basic amenities such as electricity,water,seedlings,etc.
e. Diversification of the rural economy by encouraging business people and investor to establish their industries in rural areas.
2ii. Based on the facts made above,both have its own contributions in the development. An increased agricultural prices will inject more money into the national account which will be used to stimulate food production while on the other hand, it can drive investors from purchasing goods. Institutional changes make them easily accessible to the consumers.
3. Environmental sustainability is responsibly interacting with the planet to maintain natural resources and not jeopardize the ability for future generations to meet their needs.
3b.State-of-the-art sustainability practices can transform traditional economic development and poverty alleviation strategies. Creating resource efficiencies in areas such as water, transportation, energy, and material use makes communities more equitable and resilient while lowering the cost of living.
a. Targeting the benefits of location and resource efficiency initiatives can help cities create jobs and help put people on track to a lower-poverty, higher-wage future.
b. Making these efficiency upgrades creates jobs, both temporary and ongoing.
c. When people can participate in the economy on more than a subsistence level, they are able to fully contribute their talents to the workforce and community.
d. 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. Reduced dependence on individual auto travel will make streets less congested, saving drivers time and money, and enhancing overall livability.
4. The two first core factors are partially the solution and partially the cause. In essence,both factors have impacted positively and negatively:
a. The creation of extensive employment opportunities.
b. Higher rate of investment.
c. Absence of centralization of economic power on a single entity.
d. Rapid increase in the national income.
e. Higher foreign exchange.
In some cases,the aforementioned benefit can be the opposite for the following reasons:
a. Marginalization of nation’s resources.
b. Corruption.
c. Unpayable debt by companies.
d. Poor manufacturing and social facilities.
The other core factor (government) plays major roles in the economy:
a. The government establish policies that maintains competition by limiting companies from charging exorbitant prices and producing poor quality goods.
b. They participate in reducing unemployment and inflation to enhance economic growth.
c. The actions of government have help to reduce negative externalities such as pollution,and at the same time have encourage goods and services that have positive externalities.
d. When they impose higher tax rate on higher income earners to provy the lacking basic amenities to low income earners,will also be a way of redistributing income.
c. They ensure that higher prices are minimized and also government subsidy.
5. Reasons are as follows:
a. Ethinc differences.when people’s traditional and religious beliefs clash with one another.
b. Ignorance of the human being.
c. Inaccurate and inadequate economic planning.
d. Yearly seminar and traing of policymakers,business analysis
e. Insufficient funding.
4. Based on the worldview theory, international trade is desirable and on the practical worldview,it is partially desirable.the fact still remains that the rich countries exploit the poor countries and on this case,we have the predator and the prey. Although there are benefits attached to international trade on both countries engaged in which the poor countries through this trade attracts foreign investors but somehow a nation will be worse-off in the process.
The benefits of international trade on both countries include:
a. Trade encourages a country to specialise in producing only those goods and services which it can produce more effectively and efficiently, and at the lowest opportunity cost.
b. Producing a narrow range of goods and services for the domestic and export market means that a country can produce in at higher volumes, which provides further cost benefits in terms of economies of scale.
c. Trade increases competition and lowers world prices, which provides benefits to consumers by raising the purchasing power of their own income, and leads a rise in consumer surplus.
d. Trade also breaks down domestic monopolies, which face competition from more efficient foreign firms.
e. The quality of goods and services is likely to increases as competition encourages innovation, design and the application of new technologies. Trade will also encourage the transfer of technology between countries.
f. Trade is also likely to increase employment, given that employment is closely related to production. Trade means that more will be employed in the export sector and, through the multiplier process, more jobs will be created across the whole economy.
The disadvantages of includes:
a. Exploitation or amassing a countries wealth and resources.
b. Makes the prey countries more poorer.
5. Firstly,one of the keywords “non-essential goods” entails goods that can have alternatives and not necessary to be imported but can be produced in one’s own country. Therefore,the condition under which the government adopts the policy of foreign exchange control,raise tarrif or set quotas on the importations of non-essential goods are as follows:
a. Disequilibrium of balance of payment.this is when import exceeds import.
b. Harmful or toxic goods such as alcohol, cigarettes nd so on,should be avoided.
c. When a country is heavily indebted,heavy debt with no sufficient means to repayment.
d. Increase in poverty and unemployment.
e. Protection of the infant industries.
5ii.
7. Agreeing on both points raised in the question with following reasons:
a. They country will be able to increase their foreign exchange and more foreign investors will be attracted.
b. It will be an avenue for such countries to easily access foreign financial aids.
c. It boosts the economy as more is pushed into the national account.
d. It creates a conducive and favourable environment for innovations and researches to take place.
e. It brings about infrastructural development such as good roads, Constant electricity,improved internet network,etc,and where tourism centers are established,can attract both investors and tourist.
On the other hand,manufacturing industries will impact greatly on the aforementioned benefits of export:
a. It will speed up production,that is faster and easier.
b. Time saving
c. Output stability.
d. Increased quantity of output.
8ia. 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.
8iia. 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.
9.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.
10a. 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
11. 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.
11bi. 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.
12. 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.
12b.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.

Name: Uche Constance Chidera
Reg.no.:2018/250689
Dept.: Economics (major)
Course code: Eco 361
Quiz 4
1. Truly speaking,education has greater impact in every society, they include;
a. It has come to present to us more knowledge on how to tackle economic problems such inflation, income distribution, poor policies, etc.
b. Companies with such great intellectuals such as Dr.mrs Ngozi iweala, Dr.miss Constance Uche and the likes of them will be at the verge of business boom whose business plan will not only be profit yielding but forward progressive business atmosphere.
c. The technological advancement used to boost production in the system are all benefits of education.
2a. Provision and supervision of agricultural aids such as grants and loans will help in encouraging farmers to make food production sufficient.
b. Provision of improved infrastructural amenities will promote easy free movement goods and services to the various part of the country.
c. Establishment of financial institutions in the rural areas to encourage savings and proper utilization of resources.
d. Provision of basic amenities such as electricity,water,seedlings,etc.
e. Diversification of the rural economy by encouraging business people and investor to establish their industries in rural areas.
2ii. Based on the facts made above,both have its own contributions in the development. An increased agricultural prices will inject more money into the national account which will be used to stimulate food production while on the other hand, it can drive investors from purchasing goods. Institutional changes make them easily accessible to the consumers.
3. Environmental sustainability is responsibly interacting with the planet to maintain natural resources and not jeopardize the ability for future generations to meet their needs.
3b.State-of-the-art sustainability practices can transform traditional economic development and poverty alleviation strategies. Creating resource efficiencies in areas such as water, transportation, energy, and material use makes communities more equitable and resilient while lowering the cost of living.
a. Targeting the benefits of location and resource efficiency initiatives can help cities create jobs and help put people on track to a lower-poverty, higher-wage future.
b. Making these efficiency upgrades creates jobs, both temporary and ongoing.
c. When people can participate in the economy on more than a subsistence level, they are able to fully contribute their talents to the workforce and community.
d. 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. Reduced dependence on individual auto travel will make streets less congested, saving drivers time and money, and enhancing overall livability.
4. The two first core factors are partially the solution and partially the cause. In essence,both factors have impacted positively and negatively:
a. The creation of extensive employment opportunities.
b. Higher rate of investment.
c. Absence of centralization of economic power on a single entity.
d. Rapid increase in the national income.
e. Higher foreign exchange.
In some cases,the aforementioned benefit can be the opposite for the following reasons:
a. Marginalization of nation’s resources.
b. Corruption.
c. Unpayable debt by companies.
d. Poor manufacturing and social facilities.
The other core factor (government) plays major roles in the economy:
a. The government establish policies that maintains competition by limiting companies from charging exorbitant prices and producing poor quality goods.
b. They participate in reducing unemployment and inflation to enhance economic growth.
c. The actions of government have help to reduce negative externalities such as pollution,and at the same time have encourage goods and services that have positive externalities.
d. When they impose higher tax rate on higher income earners to provy the lacking basic amenities to low income earners,will also be a way of redistributing income.
c. They ensure that higher prices are minimized and also government subsidy.
5. Reasons are as follows:
a. Ethinc differences.when people’s traditional and religious beliefs clash with one another.
b. Ignorance of the human being.
c. Inaccurate and inadequate economic planning.
d. Yearly seminar and traing of policymakers,business analysis
e. Insufficient funding.
4. Based on the worldview theory, international trade is desirable and on the practical worldview,it is partially desirable.the fact still remains that the rich countries exploit the poor countries and on this case,we have the predator and the prey. Although there are benefits attached to international trade on both countries engaged in which the poor countries through this trade attracts foreign investors but somehow a nation will be worse-off in the process.
The benefits of international trade on both countries include:
a. Trade encourages a country to specialise in producing only those goods and services which it can produce more effectively and efficiently, and at the lowest opportunity cost.
b. Producing a narrow range of goods and services for the domestic and export market means that a country can produce in at higher volumes, which provides further cost benefits in terms of economies of scale.
c. Trade increases competition and lowers world prices, which provides benefits to consumers by raising the purchasing power of their own income, and leads a rise in consumer surplus.
d. Trade also breaks down domestic monopolies, which face competition from more efficient foreign firms.
e. The quality of goods and services is likely to increases as competition encourages innovation, design and the application of new technologies. Trade will also encourage the transfer of technology between countries.
f. Trade is also likely to increase employment, given that employment is closely related to production. Trade means that more will be employed in the export sector and, through the multiplier process, more jobs will be created across the whole economy.
The disadvantages of includes:
a. Exploitation or amassing a countries wealth and resources.
b. Makes the prey countries more poorer.
5. Firstly,one of the keywords “non-essential goods” entails goods that can have alternatives and not necessary to be imported but can be produced in one’s own country. Therefore,the condition under which the government adopts the policy of foreign exchange control,raise tarrif or set quotas on the importations of non-essential goods are as follows:
a. Disequilibrium of balance of payment.this is when import exceeds import.
b. Harmful or toxic goods such as alcohol, cigarettes nd so on,should be avoided.
c. When a country is heavily indebted,heavy debt with no sufficient means to repayment.
d. Increase in poverty and unemployment.
e. Protection of the infant industries.
5ii.
7. Agreeing on both points raised in the question with following reasons:
a. They country will be able to increase their foreign exchange and more foreign investors will be attracted.
b. It will be an avenue for such countries to easily access foreign financial aids.
c. It boosts the economy as more is pushed into the national account.
d. It creates a conducive and favourable environment for innovations and researches to take place.
e. It brings about infrastructural development such as good roads, Constant electricity,improved internet network,etc,and where tourism centers are established,can attract both investors and tourist.
On the other hand,manufacturing industries will impact greatly on the aforementioned benefits of export:
a. It will speed up production,that is faster and easier.
b. Time saving
c. Output stability.
d. Increased quantity of output.
8ia. 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.
8iia. 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.
9.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.
10a. 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
11. 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.
11bi. 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.
12. 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.
12b.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.

NAME:ONWE, IRENE EBERE
REG NO: 2018/242201
EMAIL: Irene.onwe.242201@unn.edu.ng
DEPT: EDUCATION AND ECONOMICS
COURSE: DEVELOPMENT ECONOMICS (ECO 361)
ASSIGNMENT:
QUES 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. 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. 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.

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 : A healthy and dynamic agricultural sector is an important foundation of rural development, generating strong linkages to other economic sectors. Rural livelihoods are enhanced 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, including through organizations such as local cooperatives and by applying the bottom-up approach. Close economic integration of rural areas with neighbouring urban areas and the creation of rural off-farm employment can narrow rural-urban disparities, expand opportunities and encourage the retention of skilled people, including youth, in rural areas. There is considerable potential for rural job creation not only in farming, agro processing and rural industry but also in building rural infrastructure, in the sustainable management of natural resources, waste and residues. Rural communities in developing countries are still faced with challenges related to access to basic services, economic opportunities and some degree of incoherence with regard to planning related to rural-urban divide. Investments in environmental protection, rural infrastructure and in rural health and education are critical to sustainable rural development and can enhance national well-being. Beyond meeting basic needs, investments must be linked to the potential to raise productivity and income. The vulnerabilities of the rural poor to the economic and financial crisis and to climate change and water shortage must be addressed.

i.) 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 do not really stimulate food production, rather rural institutionsal changes such as lands, redistribution, roads, transport, education, credit are needed to stimulate food production because if there’s availability of land, people especially women will be able to make good use of the lands by farming and planting and in that process, food is produced, if there are good roads different food that can not be easily planted in some locations can be transported easily and transportation should be made easy and smooth. Education is also needed to stimulate food production because with the right knowledge, people will know how to plant and produce effectively.

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 :
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.
There are serious economic costs in the pursuit of sustainable development because 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 and this will cost a lot to the government. 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.
The poor south bears the major responsibility for global environmental damage because islands and coastal areas close to sea level face the prospect of catastrophic inundation and storm damage from rising seas and the increasing strength of hurricanes and typhoons. These are communities geographically vulnerable through no fault of their own.

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 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).
This article therefore reviews the recent evidence on privatization, with an emphasis on developing countries. The first section presents some stylized facts. The next section examines the effects of privatization in terms of firms’ efficiency and performance. In the following section, we go on to examine the distributional impacts of privatization. Policy recommendations are developed in the final section.

18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
Not all the transactions of the developing countries with the more advanced countries have involved trade. Over most of the post-war period, indeed, the developing countries have run a trade and current account deficit with the rest of the world. This has been filled by a flow of resources through direct investment, private lending, government lending and government transfers of a unilateral nature.ÿ In varying degree, each of the flows has contributed to the development process, but each has had its particular weaknesses and, in the aggregate, the result has been disappointing not only in relation to the needs of the developing countries but also in relation to the targets adopted for such transfers by the international community. The inadequacy of the traditional forms of resource transfer–private direct and portfolio investment–reflects the change in the nature and dimensions of the task to be performed, as compared with the slow development of the territories opened up by immigrant settlers in the nineteenth century. The contribution of private direct investment in the postwar period has been confined very largely to the exploitation of mineral deposits with a ready export market and to manufacturing enterprises concentrated by and large in areas of relatively high demand or familiar to the investors as a result of earlier trading relations. Private lending has also been limited very largely to the most developed among the low-income countries, except in those cases–most notably in connexion with trade credits–in which donor Governments have organized an acceptable system of insurance ,or guarantee.
As it became clearer that the movement of private capital was not going to be sufficient to provide external resources either to the countries and sectors most in need of them or on the scale necessary to achieve the desired acceleration in growth rates, emphasis on official resource transfers rapidly increased. Early post-war efforts in the framework of colonial welfare and development budgets, refugee resettlement, war damage restitution and technical assistance under the Colombo Plan and the United States Point Four legislation were greatly augmented from a number of quite differently motivated sources. Quantitatively most important were the flows evoked by security considerations, useful for gaining domestic political acceptance for “foreign aid” and intended to win the allegiance of recipient countries or at least neutralize them in the ideological conflict that characterized much of the 1950’s. Of increasing importance after 1954 were the transfers of food-stuffs accumulating as the result of farm support measures in some of the developed market economies, most notably the United States. Also of increasing importance as the 1950’s progressed were the efforts to provide the means to finance exports in the light of intensifying competition: these resulted not only in the spread of official insurance mechanisms referred to above, but the lengthening of credit periods. And perhaps of greatest long-term significance, the completion of its reconstruction function released the resources of the International Bank for Reconstruction and Development (IBRD) for use in the developing countries.

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?
The most potent of the impulses emanating from abroad have been the side effect of events and policies in the more advanced countries rather the result of deliberate actions and measures designed to influence the course of development in the developing countries. This is not to underrate the significance of the evolution of the concept and practice of what has come to be known as “foreign aid”. It is merely to recognize the paramountcy of trade in its various aspects among the external forces shaping the course of economic events in the developing countries. The key aspect of trade in this context has been the response of imports to the rise in incomes and production in the more advanced countries. By historical standards, import demand in the advanced countries has provided a more or less continuous and vigorous stimulus to the developing countries in the post-war period. It was at its weakest in the second half of the 1950’s when the North American economy was lagging and developing country export earnings grew by only 2 per cent a year. It recovered notably in the quinquennium beginning in 1961, and the growth of developing country export earnings jumped to over 6 per cent a year. With the widespread slackening in demand in Europe and North America in 1967, developing country exports growth has again flagged. When viewed not in the aggregate but in terms of its components, the growth in the demand for imports from the developing countries has been far from uniformly dynamic, however, and for individual developing countries it is these differences that are significant not only in explaining past performance but also in pointing to future problems. Four main factors lie behind the differences in the rates of expansion in the various trade flows. The first of these–namely, production lags in the developing countries themselves–belongs to the category of development problems discussed earlier in this study.4 The others have their origin in the partner countries and hence lie largely if not entirely outside the sphere of influence of the developing countries. Two of these indeed-namely, the preference patterns of consumers and the technological innovations adopted by producers–are subject only to indirect government influence in the developed market economies in which they operate. It is only the fourth of these major determinants of developing country exports–namely, official production and trade policies-that is amenable to deliberate action and change. The most predictable and hence the factor most readily taken into account in the economic planning of the developing countries is the pattern of income growth in the more advanced countries with which they trade. At the relatively high level of personal income common in these countries, the proportion of any increment spent on conventional food-stuffs and personal and household effects tends to be rather low. This means that the demand for many of the traditional exports of the developing countries is slow-growing and relatively unresponsive to increases in income in the more affluent partner countries.

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?
Economists and policymakers in developing countries broadly agree that governments need to provide infrastructure, promote market efficiency, and foster a stable macroeconomic environment. Trade policy is a much more contentious issue. Trade policies can be characterized as outward oriented or inward oriented. An outward-oriented strategy provides incentives which are neutral between production for the domestic market and exports. Because international trade is not positively discouraged, this approach is often, although somewhat misleadingly, referred to as export promotion. In truth, the essence of an outwardoriented strategy is neither discrimination in favor of exports nor bias against import substitution. By contrast, in an inward-oriented strategy trade and industrial incentives are biased in favor of domestic production and against foreign trade. This approach is often referred to as an import substitution strategy. In some countries the bias against trade has been extreme. An inward-oriented strategy usually means overt protection. What is less obvious is that sheltering domestic industries puts exports at a great disadvantage because it raises the costs of the foreign inputs used in their production. Moreover, an increase in the relative costs of domestic inputs may also occur through inflationor because of an appreciation of the exchange rateas the import restrictions are introduced. In practice, trade policy contains elements of both approaches. Differences arise as much from the choice of instruments as from the absence or presence of intervention. Outward-oriented policies favor tariffs over quantitative restrictions. These tariffs are usually counterbalanced by other measures, including production subsidies and the provision of inputs at “free trade” prices. Governments aim to keep the exchange rate at a level that provides equal incentives to produce exports and import substitutes. Overall protection is lower under an outward-oriented strategy than under inward orientation; equally important, the spread between the highest and lowest rates of protection is narrower. Inward-oriented strategies typically prefer quantitative restrictions to tariffs, and they involve a higher overall level of protection, together with greater variation across activities. Exchange rates are generally overvalued because of high protection and the use of quantitative restrictions. Industrial incentives are administered by an elaborate and expensive bureaucracy.

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 implementation and outcomes of structural adjustment programmes (SAPs), promoted by the International Monetary Fund and the World Bank to help countries all around the world overcome their economic crises, have generated significant controversy.

21. What is meant by globalization, and how is it affecting the developing countries?
Glolization 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. It is the process of interaction and integration among people, companies, and governments worldwide.
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.

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?

For centuries countries have relied on trade in agricultural and food commodities to supplement and complement their domestic production. The uneven distribution of land resources and the influence of climatic zones on the ability to raise plants and animals have led to trade between and within continents. Historical patterns of settlement and colonization contributed to the definition of trade patterns and to the emergence of an infrastructure to support such trade. More recently, transnational firms with global production and distribution systems have taken over from post-colonial trade structures as a paradigm for the organization of world agricultural trade. Changes in consumer taste have encouraged the emergence of global markets and added to the significance of trade. Few countries could survive the elimination of agricultural trade without a considerable drop in national income, and none could do so without considerable reduction in consumer choice and well-being. The role of trade in meeting global food demand will further increase over the next 30 years. Developed countries will provide a growing share of developing countries’ food needs, and in return will continue to import larger quantities of other agricultural products, notably tropical beverages, rubber and fibres. However, the developing countries are not a homogenous trading bloc. While the group as a whole will increase its net exports of tropical products and import more and more temperate-zone commodities, within the group there will remain important net exporters of temperate-zone commodities.

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?
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.
The more the debt service payments, the more that deve­lopment is thwarted (hampered). 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.

The debt-service ratio measures the ratio of amortisation and interest payments to export earn­ings. A constantly rising ratio means a greater fixed claim on export receipts, and, therefore, there is a greater proneness to default if these receipts fluctuate and foreign exchange require­ments for other purposes cannot easily be cur­tailed.

In this sense, the world debt problem is essentially a foreign exchange problem. It repre­sents the inability of debtors to earn enough foreign exchange through exports to service foreign debts, and, at the same time to sustain the growth of output (which requires foreign exchange to pay for imports). Either debt service payments have to be suspended or growth curtailed, or a combination of both.

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. As part of the deal debtor nations were required to adopt austerity and to cut inflation, prevent wage increases and curtail domestic programmes, so as to be able to achieve economic growth on a more sustainable basis.
Governments of developed countries and interna­tional institutions such as the IMF and World Bank became involved in the management of the debt crisis through various structural adjustment programmes.

Resolution of the debt problem imposed burdens on the borrowers, in the form of austerity and unemployment, on bank sharehold­ers and on taxpayers in the developed world who ultimately paid for their governments rescue operations through the international financial institutions.

Most international banks reported losses to their shareholders. Others started the process of restoring the quality of balance sheets

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 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) aid increases investment, in physical and human capital; (b) aid increases the capacity to import capital goods or technology; (c) aid does not have indirect effects that reduce investment or savings rates; and aid is associated with technology transfer that increases the productivity of capital and promotes endogenous technical change. According to McGillivray, et al. (2006), four main alternative views on the effectiveness of aid have been suggested, namely, (a) aid has decreasing returns, (b) aid effectiveness is influenced by external and climatic conditions, (c) aid effectiveness is influenced by political conditions, and (d) aid effectiveness depends on institutional quality. It is interesting to note that in recent years there has been a significant increase in aid flows to developing countries although other types of flows such as foreign direct investment and other private flows are declining. For example, according to the Organization for Economic Corporation and Development (OECD, 2009b), foreign direct investment and other private flows are on the decline, and remittances are expected to drop significantly in 2009. Budgets of many developing countries were hit hard by the rises in food and oil prices in the last two years. Many countries are not in a strong fiscal position to address the current financial crisis. 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.

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?
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 multinational companies. Moreover, lower tax rates or tax exemptions are also given to multinational companies for a period in the developing countries. On the other hand, these developing countries can also gain from theinvestment made by these multinational companies. Multinational companies 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’s standard of living. Overall, it might seem that the developing countries gain frominvestments of MNCs. Is that really true? Although multinational companies have become omnipresent inthe developing world, there has always been an uncertainty about them, in both positiveand negative ways. Most of the multinational companies 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 the multinational companies. Thus, the theoretical dispute over the effects of multinational companies 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 developed arguments that emphasize the positive results of foreign direct investment (FDI) by multinational companies. 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.
Developing countries are becoming a hub of MNCs because of the reason that these countries are most eager and are underway to develop and want to be on par with the developed countries. Thus these countries ease up their norms and regulations and try to attract these foreign companies to open up their business units in these developing nations. Thus, the profit and ease of doing business in these countries makes them a preferred location for MNCs. They 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 Harod Domar model of growth suggests that this level of investment is important for determining the level of economic growth.The inflows of capital help to finance a current account deficit. (foreign investment enables developing countries to buy imports).Multinational corporations provide employment. Although wages seem very low to us, 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.

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. Globalisation is essentially a process driven by economic forces.

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

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. 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 (Benoit, 1978; Khalid and Noor, 2018; Raju and Ahmed, 2019). 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.

The focus of academicians, researchers, and developmental economists for peace economics are useable as military spending is one of the main concerns of countries, regardless of their development status. According to conventional logic, the military formulation is an economic encumbrance. While comparatively more resources are devoted to military formulations, and lesser proportion is left for investment in the education and technology sectors, which play a vital role in the economic growth process and provide a broader base for socio-economic development. Generally, it is believed that in the insecure region, each country deliberately allocates an uneven share of its meager economic resources to “unproductive” military expenditure. In the absenteeism of international collaboration to minimize political pressure, military expenditures can be driven more and more across a region as each country goes beyond its neighbors to safeguard its security, raise the level of regional military expenditure and bring little rise or even a decline in the security of all. However, there are two direct and interconnected ways by which higher military expenditure may unfavorably affect long-run economic growth. First, military spending upsurge may diminish the total accumulation of existing resources available for other domestic usages such as investment in prolific capital, education, and market-oriented technological enhancement. Second, high military expenditure can intensify misrepresentations that condense the efficiency of resource distribution, thereby diminishing the total yield factor2.

Military expenditure tends to attenuate productivity because more funds diversion to military expenditure causes the government to either increase taxes or get loans from the foreign capital market to balance its budget. The second alternative is therefore primarily harmful to economic prosperity, since it escalates the rate of interest, decreases investment and consumer demand, and drives economic growth sluggish (Russett, 1969; Borch and Wallace, 2010). In a similar vein, some other studies including Lim (1983) noted that military expenses are harmful to the growth of any economy. Even, a study by Dunne (2000) focusing on the Keynesian framework reveals that military spending has no influence on growth at best, but most probably has an inverse effect; obviously, there is no indication of a positive influence of military burden on economic growth. This implies that disarmament certainly offers a prospect for augmented economic performance.

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. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services. 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.
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. 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.9 This does not mean that they do not want to better themselves (e.g., as suggested by the so-called backward bending labour supply curve). Aneel Karnani (2007: 37) summarizes this point as follows: “Most people do not have the skills, vision, creativity, and persistence to be entrepreneurial. Even in developed countries with high levels of education and access to financial services, about 90 percent of the labor force is employees, not entrepreneurs.” According to Vijay Mahajan (2005), a social entrepreneur and chairman of BASIX, “Microcredit is a necessary but not a sufficient condition for micro-enterprise promotion. Other inputs are required, such as identification of livelihood opportunities, selection and motivation of the micro-entrepreneurs, business and technical training, establishing of market linkages for inputs and outputs, common infrastructure and some times regulatory approvals. In the absence of these, micro-credit by itself, works only for a limited familiar set of activities – small farming, livestock rearing and petty trading, and even those where market linkages are in place.” Robert Pollin (2007: 2) has a similar view, and puts it in the following words: “micro enterprises run by poor people cannot be broadly successful simply because they have increased opportunities to borrow money.
Microfinance is not the solution to global poverty, but neither is health, or education, or economic growth. T here is no one single solution to global poverty. The solution must include a broad array of empowering interventions and microfinance, when targeted to the very poor and effectively run, is one powerful tool.” (2007: 1). In the words of Professor Yunus (2003: 171; emphasis added), “Micro-credit is not a miracle cure that can eliminate poverty in one fell swoop. But it can end poverty for many and reduce its severity for others. Combined with other innovative programs that unleash people’s potential, micro-credit is an essential tool. Thus, there is broad agreement about the need for complementary factors for microfinance to have some positive impact on poverty reduction. The supply of microcredit does not necessarily ensure the avail-ability of complementary factors in adequate quantities and quality. Some microfinance institutions and non-government organizations (NGOs) seem to have understood the need for such factors and, therefore, also offer training to build management and entrepreneurial skills. There are also NGOs (such as BRAC in Bangladesh) which provide basic education in rural areas using innovative methods. These are all potentially positive developments for poverty reduction efforts.

Chime doris chinenye

2018/250191

Economics major

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. 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.
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.
Countries with a greater portion of their population attending and graduating from schools see faster economic growth than countries with less-educated workers. As a result, many countries provide funding for primary and secondary education to improve economic performance. In this sense, education is an investment in human capital, similar to an investment in better equipment.

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

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.

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

Changes in staple food prices involve changes in the opportunity cost of food consumption and production in terms of real income and substitution effects for consumers and cost, substitution and income effects for producers (Dorward, 2012). Monetary food prices should therefore be compared with other price series when looking at price changes: they should be deflated by consumer price indices and income comparators when examining food price changes for consumers, and deflated by other agricultural product prices and by input prices when examining food price changes for producers, a contrasts changes in nominal grain prices and prices deflated by the US CPI. The former demonstrates more about the effects of inflation on the value of money than about food prices faced by consumers, the latter is a more conventional indicator for showing real price changes. The common analysis of changes in real prices relative to US CPI, however, ignores differences between rich and poor consumers in the importance of food in their expenditures and in the composition of their non-food expenditures.

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

Sustainable development is a concept, which involves social, ecological and economic objectives, and requires to sustain the integrity of resources exploitation, the direction of investments, the orientation of technological development and institutional change. Although there is still much confusion and conflict about exact meaning of sustainable development, many agree that sustainable development is about satisfying social, environmental, and economic goals. While the concept is generally accepted and relatively easy to comprehend, the difficulty arises in trying to apply the principles of sustainable development in practice. One of the difficulties is need to measure the “level of sustainability”. The desirable characteristics for sustainability indicators have to include: simple to calculate, useful for decision making, and robust in indicating progress toward sustainability. The exergy analysis approach based on full life cycle assessment (LCA) of the materials and technologies is a useful metrics to evaluate mitigation of greenhouse gas (GHG) emissions associated with industrial eco materials and technologies. The metrics is used for reducing dimensionality on the input side by combining material and energy streams and output side reducing different characterisation factors to a single “unsustainability” indicator in a theoretically rigorous manner.

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

This reviews the recent empirical evidence on 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. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
Answer

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.

What can be done to improve this choices

Sustaining growth
Addressing risk and vulnerability
Addressing inequality

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
The growing volumes of international trade and lowering of tariff barriers have triggered continuing debate and analysis on the impact of international trade on poverty. On the one hand, there are scholars, policymakers and international organizations who argue that international trade provides opportunities to developing and least developed countries by expanding their markets, infusing new technologies and improving productivity, which leads to their overall growth. On the other hand, others have pointed out the complexities involved in the mechanism through which international trade may alleviate poverty.
It has been argued that international trade may not necessarily lead to growth, and even if it does, the trickledown effect from growth to poverty reduction is based on the assumption that economic growth is distribution-neutral, which may not be true in many cases. In the alternative, some argue that the more inequitable the distribution of incomes, the higher the growth will be.

B) Who gains from d trade

To show the static gains from trade, let us take an example –
Suppose two commodities, cloth and wheat, are produced in two countries, India and U.S.A., before they enter into trade. Their production possibility and indifference curves for cloth and wheat are shown in Figs. 36.1 and 36.2. It will be seen from Fig. 36.1 that before trade India would be in equilibrium at point F (i. e., producing and consuming at point F) where the price line pp’ is tangent to both production possibility curve AB and indifference curve IC1.The slope of the price line pp’ shows the price ratio (or cost ratio) of the two commodities in India. India can gain if international price ratio (i.e., terms of trade) is different from the domestic price ratio represented by pp’. Suppose the terms of trade settled are such that we get tt as the terms of trade line showing the price ratio at which goods can be exchanged between India and the U.S.A. Now, with tt’ as the given terms of trade line (i.e., new price ratio line), India would produce at point R at which the terms of trade line tt is tangent to her production possibility curve.

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?

Answer

Like Prebisch, other development economists believed that free trade was not the right course for developing countries, but they had surprisingly mixed views about import substitution. Myrdal was a critical supporter, Nurkse was skeptical, Lewis was implicitly supportive, and Hirschman was downright dismissive. In his book Economic Theory and Under-Developed Regions and elsewhere, Myrdal (1957, 94–95) attacked “the logically untenable and fallacious doctrine of free trade.” In his view, “the advice underdeveloped countries are now often gratuitously given to abstain from interfering with foreign trade, and from tampering with the foreign exchanges, is in most cases tantamount to advice not to bother about economic development.” He emphatically rejected using market prices as a way of judging how resources should be allocated. Although he rejected free trade as a guide to policy, Myrdal never denied the importance of exports. In An International Economy, Myrdal (1956, 229) argued that “an underdeveloped country has powerful reasons for maximizing the total value of its exports; for its ability to export will always be the main determinant of its capacity to import capital goods which it needs in order to build up, inter
alia, its manufacturing industries.” Therefore, “the proper approach to exports for an underdeveloped country would seem to be in the nature of a general and uncomplicated policy of export promotion,” particularly if such a policy would help diversify exports.

B) hat 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
Since the early 1980s, the World Bank has taken on new tasks in addition to its regular development finance function: preventing economic collapse in borrower countries, helping heavily indebted countries cope with their international payments difficulties, and encouraging basic economic policy reform and structural adjustment in developing countries. Many critics worry that, as the World Bank has taken on these new responsibilities, it has lessened its concern about poverty. The Bank and its friends argue that poverty alleviation remains a central element of the Bank’s agenda, but the world situation is different than it was during the 1970s and new kinds of action are needed today

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

how is it affecting the developing countries?
Answer
One of the major potential benefits of globalization is to provide opportunities for reducing macroeconomic volatility on output and consumption via diversification of risk. The overall evidence of the globalization effect on macroeconomic volatility of output indicates that although direct effects are ambiguous in theoretical models, financial integration helps in a nation’s production base diversification, and leads to an increase in specialization of production. However, the specialization of production, based on the concept of comparative advantage, can also lead to higher volatility in specific industries within an economy and society of a nation. As time passes, successful companies, independent of size, will be the ones that are part of the global economy.

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

There is plenty of ambition in Africa to industrialise, for good reasons. Manufacturing is probably the only proven development model so far that has helped to bring jobs, export revenues and rapid and sustained prosperity to a range of (mainly Asian) poorer countries.
But unless African countries get down to the messy and laborious task of actively promoting manufacturing through targeted infrastructure, skills development, financial policy, making quality connections with agriculture and services in partnership with the private sector, and preparing for a more digital future, significant industrial capacity may never take hold in Africa. The window of opportunity is closing.
Large scale manufacturing on the African continent is mostly absent (automobiles in South Africa being a notable exception). But there are many success stories and promising avenues.

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

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.

B) what are the implications of debt problems for economic development
Answer
i) Lower National Savings and Income
Large sustained federal deficits cause decreased investment and higher interest rates.
ii) Interest Payments Creating Pressure on Other Spending
As interest rates return to more typical levels from historically low levels and the debt grows, federal interest payments will increase rapidly.
iii) Greater Risk of a Fiscal Crisis
If the debt continues to climb, at some point investors will lose confidence in the government’s ability to pay back borrowed funds.

C) How do financial crises affect development?
Answer
Banking failures and reductions in domestic lending
Financial institutions in developing countries could be negatively affected depending on the extent to which they hold assets contaminated by subprime mortgages.

Reduction in export earnings
Even if most developing countries are spared significant damage to their own financial systems, the fact that the advanced economies are entering a recession is likely to hurt them.

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?

Answers
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.

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

Answer
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 reasons why providing foreign aid to LDCs is so important:

It can be used as humanitarian aid.
It can help LDCs fight against diseases such as HIV/AIDS.
It can help with market expansion.
It helps promote improvements in agriculture.
It can help with poverty relief.

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
For many, the first rule of policymaking is to avoid administering medicine that could be worse than the disease itself. When it comes to spurring entrepreneurship in developing countries, a key symptom of the “disease”—or market failure—that impedes the emergence of new firms is a lack of finance when excessive risk is involved. A dearth of entrepreneurs means there are few investors (because they cannot hedge their risk), and in the absence of investors there are few entrepreneurs. Thus, a natural course of treatment to remedy the problem is to have the government share risks with investors, or to assume the risks by investing in firms, generating a big enough mass of startups and investors. This, in turn, would allow for more complete risk capital markets.

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

Financial globalization has been a most dynamic component of the continued globalization experienced by the world in recent years. Capital flows to a large number of emerging economies expanded rapidly during the 1990s. Such capital surges were often followed by financial crisis affecting several emerging economies of Asia and Latin America in the 1990s. There is a broad recognition that financial instability is deeply rooted in the present operation of markets, which has brought consensus on the need to examine the issue in depth, in order to urgently find better solutions for crises prevention and crises management. The meetings of International Financial Institutions, G-7 and various groupings of developing economies have directed their attention to this issue.

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

Answer

1. Resource Mobilization:
Owing to acute poverty, the marginal propensity to consume is very high in developing economies.
2. Development of Private Sector:
In a developing economy private sector forms an important constitu­ent of the economy.
3. Optimization of Resources Allocation:
In developing economies, fiscal tools can be utilized to effect opti­mum allocation of resources. Very often resources in private sector are directed towards the production of goods which cater to the re­quirement of richer section of society.

B) Do large military expenditures stimulate or retard economic growth?
Answer

This study found a clear negative effect of military spending on economic growth. The pairwise Dumitrescu Hurlin panel causality test results exhibit bi-directional causality between military expenses and economic growth. Overall, these estimates provide strong support that military expenditure is not beneficial rather detrimental to economic growth. The empirical findings of this study suggest that policymakers need to redesign the military budget to stimulate economic growth and improve social welfare.

27. What is microfinance
Answer
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
B) and what are its potential and limitations for reducing poverty and spurring grassroots development?
Answer
The limitations in evidence of microfinance for poverty reduction result from poor study design and unreliable data, despite more than 30 years’ experience. Hopes remain that robust and well-designed research, including randomized controlled trials and systematic reviews, will provide clearer conclusions in coming years.
Microfinance initiatives will not be successful in a vacuum, according to Duvendack. They will need to operate as part of a broader poverty reduction strategy with appropriate large- and small-scale economic frameworks to support advancement for poor people.
Another forthcoming systematic review co-authored by Duvendack will also show no firm conclusions of microfinance as a tool to empower poor women, although it does increase recognition of poor people as consumers of financial services, and can result in the development of regulatory frameworks around consumer rights. These factors were argued as possible forms of empowerment and new regulatory frameworks for India were cited.

14. Yes, educational system can by a very large extent .e if the quality of education is high.
It enhances individuals’ productivity, directly increasing economic output . 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. The most substantial development is represented in tertiary and higher education. 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. Throughout each educational level (primary-, secondary-, and tertiary level), input quality is crucial.
15. Agricultural and rural development can be promoted through: Access to clean, reliable energy enables farmers and agribusinesses to increase food production and engage in value-added processing. It also allows farmers living in off-grid areas to replace expensive diesel generators with new and cleaner technologies, such as solar food dryers and solar water irrigation. The solar agricultural market is still in the early stages of development and barriers include the relatively high technology costs, limited awareness of the benefits, lack of appropriate policy incentives and limited access to finance for farmers and suppliers to make solar technologies more affordable.
Yes, they are: The technologies result in saved costs, increased yields and local value capture for farmers or local agro enterprises. My advice to businesses includes markets entry, product pricing, sales strategies, market assessments, payment solutions, route-to-market strategies and the agricultural value chain.
16. Environmentally 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. Sustainability goals, such as the current UN-level Sustainable Development Goals, address the global challenges, including poverty, inequality, climate change, environmental degradation, peace, and justice.
Implicit in these statements is the fact that future growth and overall quality of life are critically dependent on the quality of the environment. The natural resource base of a country and the quality of its air, water, and land represent a common heritage for all generations. To destroy that endowment indiscriminately in the pursuit of short-term economic goals penalizes both present and, especially, future generations. It is therefore important that development policymakers incorporate some form of environmental accounting into their decisions. For example, the preservation or loss of valuable environmental resources should be factored into estimates of economic growth and human well-being. Alternatively, policymakers may set a goal of no net loss of environmental assets. In other words, if an environmental resource is damaged or depleted in one area, a resource of equal or greater value should be regenerated elsewhere. Overall capital assets are meant to include not only manufactured capital (machines, factories, roads) but also human capital (knowledge, experience, skills) and environmental capital (forests, soil quality, rangeland). By this definition, sustainable development requires that these overall capital assets not be decreasing and that the correct measure of sustainable net national income (NN
17. Yes

18. Formulation of poor polices could be as a result of poor
Insufficient and Unreliable Data The economic value of a development plan depends to a great extent on the quality and reliability of the statistical data on which it is based. When these data are weak, unreliable, or nonexistent, as in many poor countries, the accuracy and internal consistency of economywide quantitative plans are greatly diminished. And when unreliable data are compounded by an inadequate supply of qualified economists, statisticians, and other planning personnel (as is also the situation in most poor nations), the attempt to formulate and carry out a comprehensive and detailed development plan is likely to be frustrated at all levels.
Unanticipated Economic Disturbances, External and Internal Because most developing countries have open economies dependent on the vicissitudes of international trade, aid, “hot” speculative capital inflows and private foreign investment, it becomes exceedingly difficult for them to engage in even short-term forecasting, let alone long-range planning. The oil price increases of the 1970s caused havoc in most development plans. But the energy crisis was only an extreme case of a general tendency for economic factors over which most governments in the developing world have little control to determine the success or failure of their development policies.

Institutional Weaknesses The institutional weaknesses of the planning processes of most developing countries include the separation of the planning agency from the day-to-day decision-making machinery of government; the failure of planners, administrators, and political leaders to engage in continuous dialogue and internal communication about goals and strategies; and the international transfer of institutional planning practices and organizational arrangements that may be inappropriate to local conditions. In addition, there has been much concern about incompetent and unqualified civil servants; cumbersome bureaucratic procedures; excessive caution and resistance to innovation and change; interministerial personal and departmental rivalries (e.g., finance ministries and planning agencies are often conflicting rather than cooperative forces in governments); lack of commitment to national goals as opposed to regional, departmental, or simply private objectives on the part of political leaders and government bureaucrats; and in accordance with this lack of national as opposed to personal interest, the political and bureaucratic corruption that is pervasive in many governments.20
Lack of Political Will Poor plan performance and the wide gap between plan formulation and plan implementation are also attributable to a lack of commitment and political will on the part of many developing-country leaders and high-level decision makers.21 Political will entails much more than high-minded purposes and noble rhetoric. It requires an unusual ability and a great deal of political courage to challenge powerful elites and vested-interest groups and to persuade them that development is in the long-run interests of all citizens even though some of them may suffer short-term losses. In the absence of their support, be it freely offered or coerced, a will to develop on the part of politicians is likely to meet with staunch resistance, frustration, and internal conflict.

19..
But unlike the oil producing states and successfully industrializing countries like South Korea, Taiwan, and now China, many developing countries must still depend on nonmineral primary-product exports for a relatively large fraction of their foreign-exchange earnings. This is a particularly serious problem in sub-Saharan Africa. Because the markets and prices for these exports are often unstable,
567CHAPTER 12 International Trade Theory and Development Strategy
Rent In macroeconomics, the share of national income going to the owners of the productive resource, land (i.e., landlords). In everyday usage, the price paid for the use of property (e.g., buildings, housing). In microeconomics, economic rent is the payment to a factor of production over and above its highest opportunity cost. In public choice theory, rent refers to those excess payments that are gained as a result of government laws, policies, or regulations.
Primary products Products derived from all extractive occupations—farming, lumbering, fishing, mining, and quarrying, foodstuffs, and raw materials.
primary-product export dependence carries with it a degree of risk and uncertainty that few nations desire. This is an important issue because despite strength since 2002 and some rebounding after the 2008 crisis, the long-term trend for prices of primary goods is downward, as well as very volatile (as we examine later in this section). Some African countries, including Mali, Niger, Burkina Faso, and Burundi, continue to receive 8% or less of their merchandise export earnings from manufactures (none of them received more than 3% of their export earnings from fossil fuels in 2005). Nigeria received 98% of its export earnings from fossil fuels in 2005. Indeed, some developing countries continue to receive at least two-fifths of their export earnings from one or two agricultural or nonfuel mineral products. In addition to their export dependence, many developing countries rely, generally to an even greater extent, on the importation of raw materials, machinery, capital goods, intermediate producer goods, and consumer products to fuel their industrial expansion and satisfy the rising consumption aspirations of their people. For a majority of developing nations, import demands exceeded their capacity to generate sufficient revenues from the sale of exports for much of the post–World War II period.

b. This led to chronic deficits on their balance of payments position vis-à-vis the rest of the world. Whereas such deficits on the current account (an excess of import payments over export receipts for goods and services) were compensated for on their balance of payments table by a surplus on the capital account (a receipt of foreign private and public lending and investment in excess of repayment of principal and interest on former loans and investments), the debt burden of repaying earlier international loans and investments often becomes acute. In a number of developing countries, severe deficits on current and capital accounts have led to a depletion of international monetary reserves, currency instability, and a slowdown in economic growth.
20.
Developing countries, especially like Nigeria should adopt foreign exchange control, tarrifs, embargoes on cases of nonessential goods example toothpick on a condition that if the developing countries in questions can domestically produce those goods efficiently and sufficiently without needing the aids from other countries of the world.

b.
I’ll like to answer this question by first defining what stabilization programs and structural adjustment mean. Stabilization programs according to me is the set of actions the government do to ensure that the economy is balanced. Meaning that in a case of increases in prices of goods, the government can decide to reduce taxes which in a very long way reduces the prices of these goods. While the structural adjustment, includes some actions like the privatization, deregulation, etc that is leaving the administration of the government to the hands of private individuals. This has not really reduced the indebted state of the country especially in Nigeria because of the corrupt state of the leaders.

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.

b.
Despite its benefits, the economic growth driven by globalization has not been done without awakening criticism. The consequences of globalization are far from homogeneous: income inequalities, disproportional wealth and trades that benefit parties differently. In the end, one of the criticisms is that some actors (countries, companies, individuals) benefit more from the phenomena of globalization, while others are sometimes perceived as the “losers” of globalization. As a matter of fact, a recent report from Oxfam says that 82% of the world’s generated wealth goes to 1% of the population. 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.
22.
25.
Because a majority of non-oil-exporting developing nations have historically incurred deficits on their current account balance, a continuous net inflow of foreign financial resources represents an important ingredient in their long-run development strategies.
Globally, MNCs employ about 80 million workers in countries outside their home base. Nonetheless, in most developing countries, MNCs employ a relatively small fraction of the workforce, but the jobs tend to be concentrated in the modern urban sector. Moreover, foreign direct investment also involves much more than the simple transfer of capital or the establishment of a local factory in a developing nation. Multinationals carry with them technologies of production, tastes and styles of living, managerial philosophies, and diverse business practices. But before analyzing some of the arguments concerning incentives for or restrictions against private foreign investment in general and multinational corporations in particular, let us examine the character of these enterprises. Two central characteristics of multinational corporations are their large size and the fact that their worldwide operations and activities tend to be centrally controlled by parent companies. They are the major force in the rapid globalization of world trade.
The 100 largest nonfinancial multinational corporations now account for over $8 trillion in sales. MNCs have become, in effect, global factories searching for opportunities anywhere in the world. Many MNCs have annual sales volumes in excess of the GDP of the developing nations in which they operate. The scale of these corporations is immense. Six of them accounted for more sales in 2008 than the GNI of all of South Asia and sub-Saharan Africa combined. Most poorer countries are dwarfed in size by the major MNCs. This large scale of operations, combined with limited competition, confers great bargaining power.

Name: Obiesie Mmesoma Rejoice
Reg. No: 2018/245427
Department: Economics/Education
E-mail: obiesiemmesoma@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?
Education is one of the fundamental factors of development. Education guarantees lifetime income; it promotes peace and reduces drop-out rates from schools and colleges and encourages healthy competition. 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 helps in making the right decisions at the time of conflicts. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world.
15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?
a. 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.
b. Agriculture also plays an important part in rural development, especially due to land use, in countries where the sector is of less economic significance.
c. 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.
d. 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.
e. 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.
f. 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.
g. 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.
h. 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.
i. 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.
j. 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.
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 are not sufficient to stimulate food production , rural institutional changes (land redistribution, roads, transport, education, credit, etc.) are also needed because they will improve the production capacity of farmers and their welfare and help stabilize their income.
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 Do We Mean By “Environmental Sustainable Development”?
Environmental sustainability is the responsibility to conserve natural resources and protect global ecosystems to support health and wellbeing, now and in the future. Because so many decisions that impact the environment are not felt immediately, a key element of environmental sustainability is its forward-looking nature. In fact, the U.S. Environmental Protection Agency defines it as “meeting today’s needs without compromising the ability of future generations to meet their needs.
Are There Serious Economic Costs Of Pursuing Sustainable Development As Opposed To Simple Output Growth
Potential Costs of Economic Growth Include
a. Inflation
If Aggregate Demand (AD) increases faster than Aggregate Supply (AS), then economic growth will lead to higher inflation as firms put up prices. Economic growth tends to cause inflation when the growth rate is above the long run trend rate of growth. It is when demand increases too quickly that we get a positive output gap and firms push up prices.
keynesian-increase-ad-lras
Graph showing economic growth caused by rising AD leads to inflation.
b. Boom and bust economic cycles
If economic growth is unsustainable then high inflationary growth may be followed by a recession. This occurred in the UK in the late 1980s and early 1990s.
In the 1980s there was an economic boom with growth of over 4% a year. However, this rate of economic growth caused inflation to rise to over 9%. To reduce this inflation, the government increased interest rates, and this rise in rates caused the economy to slow down and then enter into a recession.
However, if economic growth is at a sustainable rate, this will not occur. For example, between 1993 and 2007, both economic growth and inflation were at a sustainable rate.
long-run-economic-growth-LRAS-AD
In this diagram we have AD increasing at the same rate as LRAS. In this case, we get economic growth without inflation.
c. Current account deficit
growth-balance-payments
This shows that in the 1980s UK economic boom, there was an increasing deficit in the balance of goods and services. In the late 1980s, there was high growth in consumer spending leading to a rise in import spending. In the recession of 1991, there was an improvement in the current account. The UK is susceptible to a current account deficit during high growth because the UK has a high marginal propensity to import. Increased economic growth tends to cause an increase in spending on imports, therefore, causing a deterioration on the current account.
d. Environmental costs
Increased economic growth will lead to increased output and consumption. This causes an increase in pollution. Increased pollution from economic growth will cause health problems such as asthma and therefore will reduce the quality of life. Economic growth also means greater use of raw materials and can speed up depletion of non-renewable resources. Economic growth can also lead to problems of congestion as more people can afford to buy a car, but it is hard to increase the supply of roads to meet demand.
e. Potential of widening Inequality
Higher rates of economic growth have often resulted in increased inequality because growth can benefit a small section of society more than others. For example, those with assets and wealth will see a proportionally bigger rise in the market value of rents and their wealth. Those unskilled without wealth may benefit much less from growth.
However, it depends upon things such as tax rates and the nature of economic growth. Economic growth can also be a force for reducing absolute and relative poverty.
f. Diseases/problems of affluence
With rising living standards it can cause unintended consequences. For example, with rising incomes, there are more goods to steal. Also, high growth can make people more materialistic – which encourages crime. Crime rates have risen since the 1930s. Also, higher incomes enable people to afford more food – this is a factor behind rise in obesity and health related problems.
g. Costs of growth
The costs of economic growth will depend on the type of growth that we see.
h. Evaluation
It depends on the nature of economic growth. If growth is balanced and sustainable, then it can occur without inflation. Also, the environmental costs of economic growth can be minimised through the better use of technology.
Who Bears The Major Responsibility For Global Environmental Damage—The Rich North Or The Poor South?
Climate justice refers to the disproportional impact of climate change on poor and marginalized populations, while climate equity refers to who should bear the burden of responsibility for addressing climate change. These twin concerns have both intranational and international dimensions. Climate change will negatively and disproportionately impact poor and marginalized people within national borders as well as cause conflicts between nations, regions and cities that are more or less vulnerable to climate disruptions.
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?
A free market is one where voluntary exchange and the laws of supply and demand provide the sole basis for the economic system, without government intervention. The limited role of governments promotes increased efficiency and free and increased competition. With the existence of competition, a business tends to do whatever is necessary to lower its costs and achieve a higher number of sales to increase profits. Increased productivity is also associated with a market economy. In any economy, people need money to purchase goods and services. In a market economy, this need leads to increased motivation because workers want to earn more money to supply their needs and to live comfortably. When people are motivated to work, there is increased productivity and output for the economy. In a command economy, where wages, levels of production, prices, and investments are set by a central authority or government, there is less worker motivation because no matter how much harder you work, you will not see any additional monetary benefit.
18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
Developing countries should make and enforce sound plans gotten by looking around their own environment and not trying to copy the Western policies as the policies of the West do not make provision for cultural and societal differences. They should come together and lay complain to international organization that the current trade policies do not give them opportunity to set development policies they need to move their nation forward. International organization on their part should rewrite their policies to enable developing countries to attain development.
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 the exchange of products and services across borders. Export refers to sending products or services from your country to other countries, and the seller is referred to as an exporter. Import, on the other hand, refers to a good or service that is brought into your country from the outside and the entity bringing the trade in is called the importer.
Yes, development of international trade is desirable from point of view of poor nations in the following ways cause it enables companies to expand their business in unexplored markets and territories. Gives an opportunity to companies and countries to earn and bring in foreign reserves. It provides the power of choice to the customer and increases market competition leading to better quality and lesser prices for the consumers. It helps countries grow by focusing on producing goods and services for which they have resources (land, labor, capital or technology) locally available. International trade also throws open the doors for Foreign direct investments, which means that you could invest capital in a company based in another country. It creates more jobs locally if you are exporting goods or services. Being able to ship your products or services into different markets provides risk mitigation to your business.
Who gains from trade?
Everyone gains from trade. Both the developed and developing countries gains from trade. This is because no country in the world live in isolation. The developed nations need the raw materials from the developing nations and the developing nations needs the finished goods from the developed nations. So every nations benefit from trade. Each benefit from trading.
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 everywhere.
1.Trade makes possible the flow of new ideas and technology.
2. Increases in domestic production and consumption as a result of specialisation: A country that does not trade must itself produce all the goods and services consumed, and therefore cannot specialise. However, if it uses its resources to specialise in the production of those goods and services it can produce more efficiently (with lower costs of production). it can produce more of these, and trade some of them for other goods produced more efficiently in other countries. This way it is able to produce a greater quantity of output because it does not waste its scarce resources on producing goods and services at a relatively high cost. It can also increase its consumption of goods and services because by exporting part of its larger domestic output in exchange for other output produced more cheaply elsewhere, it can acquire a larger overall quantity of goods and services.
3. Greater choice for consumers.
4. Increased competition and greater efficiency in production
5. Greater choice for consumers: The goods and services each country can produce differ widely with respect to their variety and their quality. By trading with each other, countries can import a larger variety of goods and services, possibly of higher quality, than the ones they can produce themselves. This increases choice for consumers.
6. Acquiring needed resources.
7. Free trade and more efficient allocation of resources.
8. Lower prices for consumers.
9. Increases in domestic production and consumption as a result of specialisation.
10. Trade makes countries interdependent, reducing the possibility of hostilities and violence
11. Economies of scale in production.
12. Trade as an ‘engine for growth’.
13. Source of foreign exchange.
14. Economies of scale in production: In the absence of trade, the amount of output any firm can produce is limited by the size of the domestic market. The possibility of trade and exports to other countries involves an expansion in the size of the market, allowing firms to produce more output, achieve economies of scale and enjoy the benefits of lower costs, which include lower prices and therefore greater export competitiveness, or the ability to compete better in foreign markets.
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 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.
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 “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 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.
How it is affecting developing countries :
a. 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.
b. 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.
c. 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.
d. 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.
e. Globalization has increased inequality in developing nations between the rich and the poor. Education has increased in the recent years because globalization has created jobs that require a higher education.
f. 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.
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 exports of primary products such as agricultural commodities should be promoted because the federal government of Nigeria has prioritized agricultural development under its Economic Recovery and Growth Plan, which seeks to create new jobs in labour-intensive sectors including agriculture. 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. It has boost agriculture’s GDP contribution to more than 8% by 2020, up from current levels of between 3% and 4% annually, and make the country a net exporter of key crops including rice, cashew, groundnuts, vegetable oil and cassava (see overview). The government is moving to build on steady recent growth in both crop production and agricultural exports through a number of policies, including the development of staple crop processing zones (SCPZs) and reforms to the quality control process. Cassava and sugarcane have particularly high potential for export growth, as evidenced by major private investments, one of which we see a new biofuel plant established in Kogi State potentially linking to one of 14 planned SCPZs.
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?
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. An interest rate policy designed to reduce short-term capital flows and exchange rate volatility, and expansion of demand in surplus countries. As a result of weak policy coordination at the global level, developing countries paid a high price for adjustment, which set the stage for the debt crises of the 1980s.
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.
Implications of debt problems on development :
a. Lower National Savings and Income : Large sustained federal deficits cause decreased investment and higher interest rates. With the government borrowing more, a higher percentage of the savings available for investment would go towards government securities. This, in turn, would decrease the amount invested in private ventures such as factories and computers, making the workforce less productive. As the CBO notes, this would have a negative effect on wages.
b. Interest Payments Creating Pressure on Other Spending : As interest rates return to more typical levels from historically low levels and the debt grows, federal interest payments will increase rapidly. As interest takes up more of the budget, we will have less available to spend on programs. If the government wants to maintain the same level of benefits and services without running large deficits, more revenue will be required. If these cuts reduced federal investments, they would reduce future income further. If lawmakers continue running large deficits to provide benefits without raising taxes, CBO warns that larger deficit reduction will be needed in the future to avoid a large debt-to-GDP ratio.
c. Decreased Ability to Respond to Problems : Governments often borrow to address unexpected events, like wars, financial crises, and natural disasters. This is relatively easy to do when the federal debt is small. However, with a large and growing federal debt, government has fewer options available. For example, during the financial crisis several years ago, when the debt was just 40 percent of GDP, the government was able to respond by increasing spending and cutting taxes in order to stimulate the economy. However, as a result, the federal debt increased to almost double its share of GDP.
Given the potentially devastating effects of various types of crises, it is important to maintain our country’s ability to respond quickly. High and rising federal debt, however, decreases the ability to do so.
d. Greater Risk of a Fiscal Crisis : If the debt continues to climb, at some point investors will lose confidence in the government’s ability to pay back borrowed funds. Investors would demand higher interest rates on the debt, and at some point rates could rise sharply and suddenly, creating broader economic consequences. Though there is no sound mechanism for determining if and when a fiscal crisis will occur, according to the CBO, “All else being equal…the larger a government’s debt, the greater the risk of a fiscal crisis.”
e. Reduced foreign investment, trade and remittances had a significant impact on the economies of the world’s poorest countries. The crisis manifested itself in growing budget and trade deficits, currency devaluations, higher rates of inflation, increasing public debt and dwindling currency reserves.
In terms of the decrease in economic growth rate in the financial crisis, major developed countries and other developed countries were close to each other. Emerging European economies had the largest decrease. It is evident that the emerging European economies were seriously affected by the financial crisis.
How financial crises affect development :
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. Such conditions put the indebted country in a position to accept agreement which most times is unfavourable to it in order to write off it’s debt.
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?
Impact of foreign aid :
a. Save Lives : At the onset, foreign aid is there to save lives particularly during calamities and disasters, like in the case of natural disasters.
b. Rebuild Livelihoods : Foreign aid helps rebuild lives by providing livelihoods and housing right after a disaster so that victims can start over.
c. Provide Medicines : Medical missions are there to offer free medical and healthcare products and services where they are needed the most.
d. 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.
e. Encourage Development : Industrial development projects supported by foreign aid create more jobs, improve infrastructure and overall development of the local community.
f. 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.
g. 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.
Should developing countries continue to seek such aid, and if so, under what conditions
Yes, developing nations should continue to seek such aids, because foreign aid also seeks to promote the exports. They are crucial to many economies, as they provide goods and services of 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.
Conditions for foreign aid and the purpose
a. 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.
b. 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.
c. Rich nations should help to improve the economy of poor countries. This can be done by promoting free trade.
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 nations to provide employment and spur growth but they should not take advantage of them by paying low wages and polluting the environment as this will affect the social welfare of developing countries.
Under what conditions
a. When there is favourable government policies.
b. When multinational corporation have full control of investment without government interference.
c. Rapid response to the need and time frames of investors.
d. When there is security of lives and investment/ property.
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 of trade and finance has helped in building strong relationship among countries. It influenced international economic relations by ensuring easier movement of goods and services across countries. It helped in easier movement of labour thereby reducing unemployment. It also Foster the movement of capital between countries as multinational cooperation undertake economic activity across different border.
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. 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 as you can see. 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 following points affirms it:
a. 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.
b. 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.
c. 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.
Do large military expenditures stimulate or retard economic growth?
Large military expenditure retard economic growth because it diverts resources which should have been used for production of essential goods and services to production and acquisition of military tools thereby reducing employment level.
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. It is a banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. It 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.
Potential of Microfinance
a. They gives financial access such as loan
b. Microfinance banks operates on collateral free loans
c. There is always free use of loan i.e no Limited invitation on specific objective of obtaining a loan
d. In good times, microfinance helps families and small businesses to prosper, and at times of crisis.
e. Encourages self sufficiency and entrepreneurship by giving loans who wish to start up small business.
f. It helps low-income households to stabilize their income flows and save for future needs. it can help them cope and rebuild.
g. Encourages savings and reduces poverty.
Limitations Of Microfinance
a. Over_indebtedness
b. Higher Interest Rates in Comparison to Mainstream Banks
c. Inadequate Investment Validation
d. Lack of Enough Awareness of Financial Services in the Economy
e. Regulatory Issues
f. Choice of Appropriate Model

14.
In my own opinion using Nigeria as an example, the educational System does not promote development in that even if students learn in school, there are no good and sufficient facilities which may include laboratories and research centers which can create platform for experimentation and innovations. So it could be seen as a mechanism used by certain people to remain in power.
15.
Agriculture is the major reliance Or economic base of the rural people and therefore we can say and the rural area are interwoven and promoting development involves:
* Strengthing and reorganizing agricultural and forestry structures, including those for the marketing and processing of agricultural and forestry products, and to contribute towards offsetting the effects of natural handicaps on agriculture;
* Reconverting agricultural production and promote the diversification of the activities of farmers of both sexes;
* Developing the economic and social base of rural areas, in particular by diversifying jobs and turning to account natural and human resources and by measures to safeguard the environment and maintain the countryside.
B.
Higher agricultural prices are not sufficient in stimulating food production. Rural institutional changes are very necessary as this Strengthing and make easier the processes involved in food production because availability of good infrastructure as well as equivalent goes a long way in stimulating food production.

16.
Sustainability is a broad term that describes managing resources without depleting them for future generations.

While, Sustainable development describes the processes for improving long-term economic well-being and quality of life without compromising future generations’ ability to meet their needs.

Therefore, Environmental sustainability development is the responsibility to conserve natural resources and protect global ecosystems to support health and wellbeing, now and in the future.

B.
Yes, there are serious economic costs of pursuing sustainable development as opposed to simple output growth. Such economic costs
could include environmental costs caused by 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.

C.
It could be concluded that the Rich North bears the major responsibility for global environmental damage.

The proportional index ranked Singapore, Korea, Qatar, Kuwait, Japan, Thailand, Bahrain, Malaysia, Philippines and Netherlands as having the highest proportional environmental impact, whereas Brazil, USA, China, Indonesia, Japan, Mexico, India, Russia, Australia and Peru had the highest absolute impact.

17.
Free markets and economic privatization is not the answer to development problems, as the Governments in developing countries still have alot of (major) roles to play in the improvement of their economies.

Such roles includes but are not limited to- Providing the legal and social framework within which the economy operates, maintaining competition in the marketplace, providing public goods and services, redistributing income, corrects for externalities, and takes certain actions to stabilize the economy in order for the rich not to get richer and the poor get poorer.

18.
The Low- quality public sector institutions, is a major problem behind the selection of poor development policies in developing countries, as they fail to establish and enforce rules, collect revenue and provide effective public services.

B.
* Efforts should be made by bilateral aid agencies and multinational development banks on building and reforming the public sector institutions in developing countries.

* There should be improvements in institutional functions (i.e the ability of publics sector institutions to solve public problems).

* Anti-corruption commission should be created and empowered for identifying and recovering stolen public funds.

These and more are to be done inorder to improve on the choices of poor development policies, in developing countries.
19.
Yes, expanded international trade is desirable from the point of view of the development of poor nations as countries that are open to international trade tend 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 consumers more affordable goods and services.
International trade is desired from the point of view of developing countries also due to the numerous benefits which accures as a result of such actions which includes:
* Increasing profits
* Reducing risk and balancing growth.
* Lower unit costs.
* Economies of scale
* Minimising the effect of seasonal fluctuations in sales
* Overcoming low growth in the home market

It is not uncommon for a recession in the local market to act as a spur for companies to enter export markets that may offer greater opportunities for sales. While this may have the benefit of offering ongoing sales potential for the firm in question, the danger with this approach is that when the local market improves, these companies abandon their export markets to focus on the now buoyant local market. Overseas importers become disillusioned with this type of exporter and often see all firms from South African being the same and will want nothing more to do with South African exporters, even if they are serious.

* Extending the product life-cycle.

20.
In my own opinion, foreign exchange control or tariffs are to be imposed on unnecessary goods in cases where infant industries are to protected as well as in situations of dumping.

21.
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

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 (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).
. Economists have long noted several macroeconomic channels through which debt can adversely impact medium- and long-run economic growth. More recent observations suggest that large increases in the debt-to-GDP ratio could lead to much higher taxes, lower future incomes, and intergenerational inequity.

High public debt can negatively affect capital stock accumulation and economic growth via 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. Studies on the channels through which debt adversely impacts growth also find that when the debt-to-GDP ratio reaches elevated levels, the private sector seems to start dissaving. These findings contradict the Ricardian equivalence hypothesis, which holds that households are forward looking and increase their saving in response to increases in government borrowing

22.
Over the years, the exportation of primary products such as, agricultural commodities hasn’t proved to being the lasting solution to the development problems of developing economies using Nigeria as a case study, therefore I propose that attempts should be made to industrialize our economy by developing our manufacturing industries as rapidly as possible, as this could also facilitate improvements in the primary- agricultural sector, in cases of economic diversification.

23.
Developing nations get into serious foreign-debt problems by borrowing 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.

B.
The implications of debt problems for economic development-
It negatively affect capital stock accumulation and economic growth via 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.
C.
HOW DOES FINANCIAL CRISIS AFFECTS DEVELOPMENT?
There are three main channels through which the financial crisis can affect the economies of developing countries.

Banking failures and reductions in domestic lending

Financial institutions in developing countries could be negatively affected depending on the extent to which they hold assets contaminated by subprime mortgages. At the time of writing, this does not appear to be a significant concern although the ‘location’ of all of these ‘toxic’ securitized assets still seems to be causing concern. Many banks in developing countries only have weak links with international banks. In China, where the financial sector is largely government controlled, exposure to subprime mortgages of United States origin is limited.
There is, however, a more serious indirect threat through declines in stock market prices and housing prices. These reduce the capital of banks (and of other big firms), which in particular causes problems where they do not hold sufficient levels of their capital in cash. In such cases 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

Even if most developing countries are spared significant damage to their own financial systems, the fact that the advanced economies are entering a recession is likely to hurt them. The impact may be significant, given that most developing countries have been basing their economic growth in recent years on exports. The International Monetary Fund (IMF) expects growth in world trade to decline from 9.4 per cent in 2006 to 2.1 per cent in 2009. The expected declines will come through a combination of lower commodity prices, a reduction in demand for their goods from advanced economies and less tourism.
International trade depends on short-term credit. At the time of writing, the trade finance gap has been estimated at US$25 billion by the World Trade Organization (WTO). Although this seems relatively small, it has important knock-on effects. Consequently, there will be dual pressures on developing country trade: reduced demand for their exports and reduced trade credit.

Reduction in financial flows

Financial inflows from the rest of the world to developing countries include official development assistance (ODA), investment flows – both portfolio and foreign direct investment (FDI), trade credits and flows of remittances. All of these are likely to be affected negatively during the current crisis. Estimates put the decline in financial resources to developing countries from around US$300 – 400 billion.

24.
The impact of foreign economic aid from rich countries are of two sides/ effects, the positive and negative-
The positive impacts
Development aid has a positive effect on growth in the sense that it may actually promote long term economic growth and development through promoting investments in infrastructure and human capital.
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, e.t.c
On the other hand in the aspect of its negative Impacts-
A 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.

B.
In my own opinion seeking aid from foreign countries is quite necessary in the development of poor nations because basically there are certain project which actually requires their aid as well as the fact that it support security as well as the economic, social, and political development of the recipient countries and their people.
The aid on the other hand should be sought on the condition that in terms of financial aid, it should be used purposefully and efficiently for even development of developing countries. Foreign aid should also be in terms of outright grants or in terms of long term loans at low interest rates. Also, loans should accompany minimum conditionalities, if any.
The Purpose of such aid should be principally for humanitarian reasons as well as to improve the country’s international image and economic conditions and to continue building a positive working relationships with other countries.
Yes, developed countries should continue to offer such aids to developing nations under the conditions that these aids given are strictly used to fund Crucial economic and financial projects which may include facilitating judicial reforms, assisting the activities of human rights organizations and labour groups, e.t.c
The purpose should be for:
Seeking to promote the exports. They are crucial to many economies, as they provide goods and services of 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, e.t.c.

25.
multinational corporations Should be allowed to invest in the economy of developing nations considering the various advantages of multinational corporations in developing countries which includes that:
* 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.
Considering certain factors which can be said to be the disadvantages of their presence, it is necessary that they make investment under the conditions that environmental costs is reduced to a minimum level and the skilled labour adopted be selected from the local vicinity.
B.

26.
WHAT ARE THE ROLES OF FINANCIAL AND FISCAL POLICY IN DEVELOPMENT

It cab be stated that fiscal policies as well as financial policies plays very significant role for promoting economic development and stability of under developed countries.

It is illustrated by the following points:

1. To Mobilize Resources:

2. To Accelerate the Rate of Growth:

3. To Encourage Socially Optimal Investment:

4. Inducement to Investment and Capital Formation:

5. To Provide more Employment Opportunities:
B.
DO LARGE MILITARY EXPENDITURE STIMULATE OR RETARDS ECONOMIC GROWTH.
Theoretically, there is no clear-cut prediction of the direction of causation between these military expenditures and economic growth. Military spending can affect economic growth through a number of channels. On one hand, defense spending may retard growth through what is generally referred to as an investment “crowding-out” effect, which is a displacement of an equal amount of civilian resource use (in areas such as health, education and infrastructure). On the other hand, however, defense spending may stimulate growth through Keynesian-type, aggregate demand effects. An increase in demand generated by higher 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, generating short-run multiplier effects. In addition, growth may be stimulated through spin-off effects such as the creation of socioeconomic structures conducive to growth (Deger, 1986).

Although military expenditure may affect growth through these mechanisms, Joerding (1986) contends that economic growth may be causally prior to defense spending. For instance, a country with a high growth rates may wish to strengthen itself against foreign or domestic threats by increased defense spending. However, it is equally plausible that countries with high growth rates may divert resources from defense into other productive uses (Kollias (1997).

The foregoing discussion gives rise to four possible outcomes regarding the causal relationship between economic growth and military expenditures: a unidirectional causality from military expenditure to economic growth or vice versa; bi-directional causality between the two variables; and finally, a lack of any causal relationship. Moreover, there are both positive and negative net effects, so that there may be unidirectional causality from military expenditures to economic growth that is on balance either positive or negative.
27.
WHAT IS MICROFINANCE
Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services.
POTENTIALS OF MICROFINANCE.
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.
LIMITATIONS OF MICROFINANCE
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

NAME:UGWU CYNTHIA UGOCHUKWU
REG:2018/245470
DEPT:ECONOMICS
COURSE:ECO361
ASSIGNMENT
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?
Human wellbeing is closely linked to the health of the environment. Environmental sustainability is the responsibility to conserve natural resources and protect global ecosystems to support health and wellbeing, now and in the future. Because so many decisions that impact the environment are not felt immediately, a key element of environmental sustainability is its forward-looking nature. In fact, the U.S. Environmental Protection Agency defines it as “meeting today’s needs without compromising the ability of future generations to meet their needs.
Standards for environmental sustainability vary greatly, based on local economic, social and environmental conditions. Regulations are often set at the federal level. For example, the U.S. Environmental Protection Agency regulates everything from air pollutants to refrigerants to hazardous waste management. The EPA sets standards for quality of air, water, soil, wildlife habitats and carbon emissions, and enforces these standards with monetary penalties and legal action.
B. Although the richest, most developed countries in the world are overwhelmingly to blame for the catastrophe of global climate change, they are not the ones who will suffer the most from it.
The unfairness of that is self-evident, but so is the truth of it. For more than a century, the largest emitters of greenhouse gases, in total as well as per capita, have been the big developed nations, most notably the United States and the countries of Europe, which grew their economies by burning fossil fuels and spewing carbon from their factories, homes and cars. Today they still emit carbon and other greenhouse gasses disproportionately into the environment, although other big countries such as China and India have caught up.
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 and free market 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.
The government also has a role to play. The differences in rates of growth are often attributed to two factors: government and entrepreneurship. The two are not mutually exclusive. In the early stages of sustained growth, government has often provided the incentives for entrepreneurship to take hold. In some economies the development of transportation, power, and other utilities has been carried out by the government. In others the government has offered financial inducements and subsidies. The land given U.S. railroad developers in the second half of the 19th century is a notable example of the latter. Another important role governments have played in the early stages is to help establish the sort of capital and money markets in which lenders could have confidence. Without financial intermediaries acting as brokers between lenders and business borrowers, it is difficult to envisage economic growth taking place on a sustained and rapid basis.

18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices?
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.
Governments of today’s low-income countries spent more on average in 2018 than today’s advanced economies did in 1900 (in percent of GDP).
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.
B. What can be done?
1: 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.
2.Today’s developing economies need to focus on building fiscal and market institutions before rising spending needs—and not after they materialize.
Government spending in the Advanced 14 increased substantially since 1960 as they reevaluated the role of government amid rapid industrialization and globalization and new taxes became commonplace. The shift from agrarian to industrial to post-industrial economies required different worker skills.
3.Government spending by today’s developing economies is likely to increase, but there is a choice to make to the extent of redistribution and government services.
Government spending among the advanced economies has increased, but so has its variability. Before 1913, spending among the advanced economies ranged from less than 2 percent of GDP in Japan to 13 percent in Italy, or a span of 11 percentage points. Today, the span of spending among the advanced economies is 39 percentage points: from 17.3 percent in Hong Kong to 56.4 percent in France.
Development paradigms vary among today’s advanced and developing countries. Robust growth can happen with a smaller or a larger government, in general. Too large of a redistribution, however, may create substantial disincentives to work and invest, or lead to tensions between formal and informal workers, employees of large companies or state-owned enterprises and small private firms. This danger now is clearer than ever: The changing world of work is clashing with persistent informality in developing countries and social protection systems that cover only part of the population.
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 international trade 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.
How the advantages are distributed among countries.
International trade theory has related with division of labour. This division leads to production improvements which increase output, technological development, skill workers and productivity. Then countries will experience economic growth and increase wealth of their nation. In this respect international trade has to be considered. International trade is advantageous for nations even poor or rich countries. Moreover, international trade will enhance division of labor or specialization of each countries which can lead to increase of exchange goods generating profits for countries. In addition, international trade can also help poor nations to enhance production technique and productivity through transfer knowledge and technology that enable their market expansion. This can help the poor countries to experience economic growth and development. For example, Nigeria can get new knowledge and technology through its trade liberalization by connecting with developed nations like Japan, South Korea, etc. Overall, international trade benefit the countries involved.
However, everything has its limitation. In reality, developed countries always gain more advantageous for international trade because it has more developed technology and bigger market which can enhance more advance division of labor. International and domestic trade are determined by the same rule; it mean that international trade shall evolve in free condition like domestic . Countries will export goods on which they are specialized . It means countries that can produce goods in low cost by their specialization will export those goods to world market. So poor countries will export goods that they are specialized for boosting their economic 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?
The governments in developing countries use quantitative restrictions on imports to check the issue of balance of payments.
Domestic credit and import restrictions—interact in the determination of the balance of payments in developing countries. The government’s decision making on the supply of domestic credit and imports is described by a reaction function derived from minimization of a loss function. An important feature of the model is the symmetric treatment of the demand and supply functions in the imports market. The estimation technique makes it possible to estimate a model for data in which some of the observations for consumer imports are on the domestic authorities’ import supply function and some observations are on the private sector’s demand function for imports.
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?

A structural adjustment is a set of economic reforms that a country must adhere to in order to secure a loan from the International Monetary Fund 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. 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.
The IMF’s fundamental mission is to help ensure stability in the international system. It does so in three ways: keeping track of the global economy and the economies of member countries; lending to countries with balance of payments difficulties; and giving practical help to members.
However, structural adjustment programmes have a detrimental impact on child and maternal health. 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?
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.
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.
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?
Primary products which involves agriculture could be an engine of economic growth, the impact varies across countries. In some cases, we found strong evidence in support of the agriculture‐led growth hypothesis. The agricultural sector can assist to contribute significantly in generating capital income for a country in many ways. For example, when there is a surplus demand for the raw materials, it will, in turn, lead to the production of more goods supporting industrialization and increasing employment.
However, Industrialisation plays an important role in the promotion of trade. The advanced nations gain in trade than countries who are industrially backward. The underdeveloped countries export primary products and import industrial products. Agricultural products command lower prices and their demand is generally elastic.
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?
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. 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.
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.
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?
Historically, foreign economic aids have been known to positively impact the economies of developing nations significantly. These aids can lead to proliferation of economic activities in these countries which will result to economic growth and development in the long run.
Developing countries should not seek these aids because sometimes it has developed a culture of dependency which can make them vulnerable to exploitation by the developed countries.
Developed countries should provide these economic aids to the developing countries because they have the obligation and power to do so. Furthermore, these aids can help the developing countries in times of low growth and stagnation. Provision of these aids can serve the purpose of laying the foundation for economic development in these developing countries and expanding the range of resources and goods exchange between the two countries, which will boost the growth of the developing nation.
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 developing nations as long as they prove beneficial to the economic development of developing nations. By proving beneficial, we mean in terms of: foreign capital inflow, boost in employment rates, foreign technical know-how spillover into domestic economies etc. This will serve to spur economic activities in the country which will translate to economic growth and development.
26. What is the role of financial and fiscal policy in promoting development? Do large military expenditures stimulate or retard economic growth?
The role of fiscal and financial policies in developing countries deals mainly with the mobilisation of resources for the private and public sectors. There is generally low savings rate in these countries, in order to increase savings rate and boost capital formation, the government can enact policy measures that will stimulate the savings rate. This will increase the rate of investment in the economy and speed up economic growth and development.
b.
Large military expenditure can retard economic growth and development in developing economies. This is because, when the military is allotted a large portion of government expenditure, resources for other key sectors of the economy like education, healthcare, etc.,will diminish and this will further slow economic growth
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. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services.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.
B. Micro finance has the following limitations:
-Over-Indebtedness, Higher Interest Rates in Comparison to Mainstream Banks, Widespread Dependence on Banking System, inadequate Investment Validati, Lack of Enough Awareness of Financial Services in the Economy.

Name:Asogwa Martha Adaugo

Reg No: 2018/243642

Email: shantelmartha12@gmail.com

Unit:Economics/ Education
ANSWERS:::::

No.14

Education in every sense is one of the fundamental factors of development. … And in most developing countries 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.yes education enhances economic development in most countries at large .

No .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, per square kilometre, depending on the structure of society.While any economic activity in rural areas will have the potential to contribute to rural development, the particular roles may fall into these 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.

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.

No.16
Environmental sustainability is the responsibility to conserve natural resources and protect global ecosystems to support health and wellbeing, now and in the future. Because so many decisions that impact the environment are not felt immediately, a key element of environmental sustainability is its forward-looking nature. 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 e.t.c.There are several reasons for this. Sustainable materials cost more to grow and manufacture, reputable third-party certifications add further costs and using organic materials is more expensive than alternatives such as mass-produced chemicals. … While the demand for such products remains low, the price remains high.
***who bears the major responsibility for global environmental damage—the rich North or the poor South?
With respect to climate equity, a heated argument 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.
Some in the global south, including India’s Prime Minister Narenda Modi, argue that increasing developing countries’ use of fossil fuels is necessary to lift millions out of poverty.
Indeed, India’s latest negotiating position is to demand that the global north make steep carbon cuts so that India may continue to pollute for economic development. India would reduce the “carbon intensity” of its economic activity, but would not make cuts for decades as its total greenhouse gas pollution grows.
Such a position has led to a great deal of bickering, not only over who should shoulder the economic and social burden, but how sustainable development should move forward.
Moreover, the national commitments to reduce carbon emissions are essentially voluntary and self-policed. Taken together, they do not limit global warming to two degrees Celsius, a threshold we cannot exceed if we hope to maintain a planet of prosperous societies and flourishing biodiversity. Far preferable is to draw down greenhouse gas emissions for a safer 1.5C increase, a position that is not even being discussed.

No.17

Privatization involves the transfer of productive assets from the state to private hands. Such transfers are, by their very nature, politically sensitive and subject to potential corruption and abuse. we assume that the primary purpose of privatization is to enhance economic growth.

No.18

Some of the reasons why so many developing countries select such poor Development policies could be as a result of ignorance, embezzlement of funds which could have been used efficiently to run a good Development policies. Also absence of better understanding of how these other better policies works. When one is not informed, he becomes deformed, when one isn’t in conversant knowledge about the associated benefits of the richer Economic policies. Lastly corruption.
B. WHAT COULD BE DONE?
1. They should be properly educated and enlightened of the benefits of running better Economic policies that will Foster Development and growth.
2. There should be need for transparency at every point in time, to ensure that funds needed for better projects are not embezzled.
3. Government intervention.
4.enactment of strong guiding policy

No 19
International trade is desirable to poor countries because of the following reasons:
*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, *helping countries acquire new technologies.
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.
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.

No. 20
When a country’s import exceeds it’s export it’s said to be having balance of payment deficit. As we know excess import leads dependency from the exporting country,which discourages domestic production. In order to curtail this the country will adopt foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization.

b) 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? This programs create intellectual, financial, infrastructural support to local producers to encourage them produce goods and services. And this leads to economic development of the country.

No.21
Globalization is the spread of products, technology, information, jobs and cultures internationally. In economic terms, it describes an interdependence of nations around the globe fostered through free trade.

Effect of globalization

Globalization has positive and negative effects.
Starting with positive effects of globalization
Globalization provides businesses with a competitive advantage by allowing them to source raw materials where they are inexpensive.

Globalization also gives easy access to importation of technical know how

Negative effects of globalization
Economic Dependence

No. 22
Industrialization is often essential for economic growth, and for long-run poverty reduction. The pattern of industrialization, however, impacts remarkably on how the poor benefit from growth. Pro-poor economic and industrial policies focus on increasing the economic returns to the productive factors that the poor possess, e.g. raising returns to unskilled labour, whereas policies promoting higher returns to capital and land tend to increase inequality, unless they also include changes in existing patterns of concentration of physical and human capital and of land ownership. Use of capital-intensive methods instead of labour-intensive ones tends to increase income disparities, as does the employment of skill-biased technologies, especially where the level of education is low and human capital concentrated. Also, the location of industrial facilities has an impact on overall poverty reduction and inequality.

No.23
Reasons why Developing nations get into foreign debt problems can be result of 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.

No.24
Foreign aid has a significant positive impact on economic growth mainly in the long term in developing nations. So increased foreign aid in these nations is expected to increase economic activities which will translate to economic growth and development.
No, developing countries should consider not seeking such aids, because it has been found out by experts that the provision of foreign assistance has, at times, developed a culture of dependency in developing regions.
Hence, in order to fully attain a developed state, governments in developing regions need to to adopt and prioritize policies that will spur democracy,thereby, creating a conducive environment that will build growth and prosperity in their countries.
Developed countries are not bound by law to help poor nations, but they have the obligation – and the power – to do so. Developed countries should help less developed ones by continuing to offer or provide economic aids to them. These economic aids are mainly needed by developing countries in times of low growth and stagnation and also, some developing countries may need these economic aids in order to achieve industrialization.
Providing aid to a developing country can serve the following purposes:
Stimulating the economic growth and development of a developing economy
Expanding the range of goods and resources that can be shared between the two countries which can also serve to boost the developing nation’s growth.

No.25
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.

No.26
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.

No.27
Microfinance deals with providing access to credit for the poor or those with unstable credit. Microfinance institutions are those financial institutions who provide credit to low income entrepreneurs, who lacks access to banking and other related services.
Microfinance has the potential.to reduce poverty and spur grassroots development through the following ways:
By providing funds through loans to low income entrepreneurs and promoting self sufficiency; this is important because these entrepreneurs cannot get these loans from commercial banks due to their unstable credit and lack of collateral. Now they are able to get these loans albeit, with a higher interest but these loans can help them start up their business projects or steady a struggling business venture, in this way their self sufficiency can be guaranteed.
By alleviating poverty, Microfinance institutions can achieve this by giving loans to the poor or low income groups in the society. These funds can help them set up their businesses and earn income and thus, help them contribute to the economy. This can then serve to improve economic development.
Finally, Microfinance can empower women; they achieve this by providing access to credit to women especially those in the rural areas. This act has the benefits of making funds available for these women to start up their own business ventures and contribute significantly to the economy. It also, further acts to raise the status and roles of women in the society thereby, setting the economy on a sound growth and development path.