Development Economics Quiz
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Questions and Answers

Which of the following statements accurately describes the informal sector?

  • Businesses in the informal sector are officially registered and regulated.
  • The informal sector often comprises small or micro enterprises. (correct)
  • Individuals in the informal sector can access bank financing easily.
  • It includes large corporations with extensive government regulation.

    • What does the Obsolescing Bargaining Model suggest about the relationship between states and multinational corporations?

  • States and MNCs maintain equal power throughout the investment period.
  • MNCs always maintain a stronger position than states in negotiations.
  • The bargaining power of the state increases over time as it becomes more powerful. (correct)
  • The initial contract remains static and unchanging over time.

    • What characterizes Dunantist organizations in humanitarian scenarios?

  • They focus solely on economic solutions to humanitarian issues.
  • They maintain neutrality and respond only to humanitarian needs. (correct)
  • They seek to influence the outcome of conflicts actively.
  • They operate with bias towards one side in a conflict.

    • What is meant by resilience in the context of crises and hazards?

    <p>The ability to adapt to and recover from crises and hazards.</p> Signup and view all the answers

    What defines Triangular Development Cooperation?

    <p>Projects involving a traditional donor, an emerging donor from the south, and a beneficiary country in the south.</p> Signup and view all the answers

    What was a primary focus of the basic needs approach implemented in the 1970s?

    <p>To ensure access to food, shelter, water, and primary education</p> Signup and view all the answers

    Who was instrumental in popularizing the basic needs approach during the 1970s?

    <p>Robert McNamara</p> Signup and view all the answers

    What does empowerment in the context of development primarily refer to?

    <p>Self-development and participation in decision-making</p> Signup and view all the answers

    What are Poverty Reduction Strategy Papers primarily associated with?

    <p>Structural adjustment programmes of the IMF and WB</p> Signup and view all the answers

    Which field of economics examines the impact of institutions on economic outcomes?

    <p>New Institutional Economics</p> Signup and view all the answers

    What does humanitarian assistance primarily focus on?

    <p>Immediate life-saving support</p> Signup and view all the answers

    Which of the following best describes liberal humanitarianism?

    <p>An approach emphasizing NGO provision of services</p> Signup and view all the answers

    What is a key characteristic of Wilsonian organisations?

    <p>Alignment with specific political stakeholders</p> Signup and view all the answers

    What does the Belt and Road Initiative aim to achieve?

    <p>Integration of diverse regions into economic collaboration</p> Signup and view all the answers

    Which principle is NOT part of China's White Paper on Foreign Aid?

    <p>Imposing political conditions</p> Signup and view all the answers

    What is the purpose of UNCTAD?

    <p>To help countries integrate into the international trading system</p> Signup and view all the answers

    Which factors are included in the Human Development Index (HDI)?

    <p>Knowledge, a healthy life, and standard of living</p> Signup and view all the answers

    What characterized the Millennium Development Goals?

    <p>Shift towards establishing development as poverty eradication</p> Signup and view all the answers

    What does the Washington Consensus primarily emphasize?

    <p>Economic liberalization and macroeconomic prudence</p> Signup and view all the answers

    Which best describes corporate social responsibility (CSR)?

    <p>A moral obligation towards broader stakeholders</p> Signup and view all the answers

    What is a significant concern related to enclaves?

    <p>Limited interaction with local communities</p> Signup and view all the answers

    What does South-South cooperation involve?

    <p>Cooperative activities among Global South countries</p> Signup and view all the answers

    Which aspect is NOT emphasized in the Sustainable Development Goals?

    <p>Isolationist national policies</p> Signup and view all the answers

    What distinguishes the Bretton Woods Institutions?

    <p>Founding in 1944 to stabilize global economies</p> Signup and view all the answers

    What is the primary purpose of bilateral aid?

    <p>To support the government of one country directly with funds from another</p> Signup and view all the answers

    What does the concept of good governance emphasize?

    <p>Accountability and transparency in political systems</p> Signup and view all the answers

    Which term describes aid that requires the recipient to purchase goods from the donor country?

    <p>Tied Aid</p> Signup and view all the answers

    What is the role of non-governmental organizations (NGOs) as perceived by the World Bank?

    <p>To support the war on poverty and promote good governance</p> Signup and view all the answers

    What does Foreign Direct Investment (FDI) imply?

    <p>Investment made across borders with a degree of control over its use</p> Signup and view all the answers

    How is Official Development Assistance (ODA) defined?

    <p>Aid aimed at promoting economic development with a grant element of at least 25%</p> Signup and view all the answers

    What best describes the 'International Division of Labour' (IDL)?

    <p>A structure where countries serve different roles in the global economy</p> Signup and view all the answers

    Which factor is NOT part of the OLI Paradigm in explaining multinational corporations?

    <p>International operational scale</p> Signup and view all the answers

    What characterizes entrepreneurship as theorized by Joseph Schumpeter?

    <p>The ability to innovate for economic growth</p> Signup and view all the answers

    What is a key characteristic of multinational corporations (MNCs)?

    <p>They establish operations in multiple countries</p> Signup and view all the answers

    What is bilateral investment treated as?

    <p>It details treatments for foreign investors from host governments</p> Signup and view all the answers

    Which of the following best captures the essence of free trade?

    <p>It supports the removal of trade barriers for mutual gain</p> Signup and view all the answers

    Which aspect distinguishes multilateral agreements from bilateral agreements?

    <p>They encompass three or more participating countries</p> Signup and view all the answers

    What does informality in the economy refer to?

    <p>Existing conditions in the informal economy with limited protections</p> Signup and view all the answers

    What is the main purpose of alliances formed by businesses, government, and civil society organizations?

    <p>To creatively address development problems.</p> Signup and view all the answers

    Which term describes the legal framework that defines recognized property and allows access to capital?

    <p>Property Rights Regime</p> Signup and view all the answers

    How do public-private partnerships (PPPs) typically operate?

    <p>Through collaboration with private companies to enhance service delivery.</p> Signup and view all the answers

    What is the 'CNN Effect' in the context of humanitarian assistance?

    <p>The ability of media coverage to garner public interest in humanitarian emergencies.</p> Signup and view all the answers

    What is considered a negative consequence of the aid economy?

    <p>It can distort national economies and prolong crises.</p> Signup and view all the answers

    What role do social movements play in civil society?

    <p>They seek social change through collective action.</p> Signup and view all the answers

    What is one of the primary beliefs behind the shared value concept?

    <p>Businesses can be competitive by addressing societal needs.</p> Signup and view all the answers

    Which aspect of internationalism do transaction costs primarily relate to?

    <p>Economic costs associated with market transactions.</p> Signup and view all the answers

    What is the focus of the concept of social capital?

    <p>Building networks of relationships that provide support.</p> Signup and view all the answers

    How does the property rights regime impact entrepreneurs?

    <p>It allows them to access loans using legally recognized property.</p> Signup and view all the answers

    What defines downward accountability within the aid framework?

    <p>Aid recipients having a voice in the assessment of aid effectiveness.</p> Signup and view all the answers

    What does neoliberal globalization advocate in relation to the state?

    <p>Deregulation and minimal state intervention in the economy.</p> Signup and view all the answers

    Which factor does NOT contribute to the challenges faced by multinationals in foreign markets?

    <p>Effective local regulations.</p> Signup and view all the answers

    Why is diaspora support significant during humanitarian crises?

    <p>They can mobilize quickly to provide aid and support.</p> Signup and view all the answers

    Study Notes

    Basic Needs Approach (Chapter 10)

    • Popularized in the 1970s, this approach prioritizes policies, budgets, and actions ensuring basic well-being for disadvantaged people.
    • Basic needs include food, shelter, water, and primary education.
    • Supported by World Bank President McNamara (1968-1981) who funded direct anti-poverty efforts.

    Empowerment (Chapter 10)

    • Refers to individuals' capacity for self-development and participation in decisions affecting their well-being.
    • Focuses on enhanced participation and personal change rather than altering systemic structures.
    • In the context of gender, it promotes changing power dynamics and challenging traditional roles.

    Foreign Portfolio Investment (Chapter 10)

    • Includes investments like foreign debt, loans, and stock market purchases.
    • Prioritized by the IMF in the 1990s.
    • Promotes capital account liberalization and attracts capital to developing countries.

    New Institutional Economics (Chapter 10)

    • Studies how institutions impact economic outcomes.
    • Associated with economists Ronald Coase and Douglass North, emphasizing institutional contexts in development.

    Poverty Reduction Strategy Papers (Chapter 10)

    • Replaced structural adjustment programs in the late 1990s.
    • Designed to encompass comprehensive social, economic, and political reforms, emphasizing good governance and country ownership.
    • Became the primary means of financing for low-income countries.
    • Implemented by a clear division of labor between the IMF and World Bank, likened to breathing in and out.

    National Development Agencies and Bilateral Aid (Chapter 9)

    • Author: Stephen Brown

    Bilateral Aid (Chapter 9)

    • Foreign aid provided directly by one government to another.
    • Accounts for ~70% of donor aid.

    Bilateral (Chapter 9)

    • Relations or agreements involving only two governments.

    Donors (Chapter 9)

    • Governments or international agencies providing foreign aid.

    Good Governance (Chapter 9)

    • Political systems must be accountable, transparent, responsive, efficient, and inclusive for market-oriented development strategies to be effective.

    Multilateral (Chapter 10)

    • Arrangements among three or more states for peaceful purposes and long-term objectives.

    Non-Governmental Organizations (NGOs) (Chapter 10)

    • Emerged in the 1960s.
    • Serve a range of purposes (charitable, political).
    • Often supported by governments and can be instrumental in promoting or maintaining the existing order.
    • Supported by the World Bank for their roles in poverty reduction and good governance.

    Official Development Assistance (ODA) (Chapter 9)

    • Defined by Western donors in 1969, aimed at promoting developing countries' welfare.
    • Contains at least 25% grant element.
    • Often referred to as foreign aid.

    Recipients (Chapter 9)

    • Governments receiving foreign aid.

    Tied Aid (Chapter 9)

    • Aid used to purchase goods/services from the donor country.
    • Donor economy benefits from aid.

    Bilateral Investment Treaties (Chapter 12)

    • Agreements outlining foreign investor treatment standards.
    • Allow MNCs to sue host governments for treaty breach via international arbitration.
    • Negotiated between developed and developing countries.

    Emerging Multinationals (Chapter 12)

    • MNCs based in developing countries (e.g., Brazil, China, India, South Africa).
    • Increasingly transnationalized. Often Chinese-dominated.

    Entrepreneurship (Chapter 12)

    • Individuals with innovative abilities combining resources for economic growth.
    • Theorised by Joseph Schumpeter

    Foreign Direct Investment (Chapter 12)

    • Investment across borders with physical presence and control, distinguishing it from indirect portfolio investment.

    Free Trade (Chapter 12)

    • 19th-century concept promoting trade liberalization and limited state intervention for social gains.
    • Revived in the 1970s, supporting market efficiency and unregulated markets as superior to state intervention.

    Informality (Chapter 12)

    • The informal economy condition involving weak property rights, poor financing, and limited growth potential.

    International Division of Labour (IDL) (Chapter 12)

    • Recognizes different global economic roles.
    • Developing countries export commodities, while developed countries export manufactured goods.
    • Paul Baran discusses MNCs maintaining and deepening periphery underdevelopment via the IDL.

    Multinational Corporations (MNCs) (Chapter 12)

    • Invest and operate across national borders.
    • Synonyms: Transnational corporations, multinational enterprises.
    • Contentious role in development.

    Multinational Enterprises (MNEs) (Chapter 12)

    • Invest and operate across national borders.
    • Synonyms: Transnational corporations, multinational corporations.

    OLI Paradigm (Chapter 12)

    • Developed by John H. Dunning. Explains internationalization through intertwined ownership (O), location-specific (L), and internalization (I) advantages.
    • Analyses the multinational firm as an institution and actor.

    Partnerships (Chapter 12)

    • Alliances among businesses, governments, and civil society organizations to address global issues.
    • Private actors as development agents.

    Policy Space (Chapter 12)

    • Limits on governmental policy-making due to international agreements and MNC influence.
    • The Uruguay Round restricted developing countries' policy choices.

    Property Rights Regime (Chapter 12)

    • Legal framework defining property assets.
    • Crucial for accessing loans – thus necessary for business development.
    • Hernando de Soto connected poor entrepreneurs' lack of capital to a deficient property rights regime.

    Public-Private Partnerships (PPPs) (Chapter 12)

    • Public services provided by private companies under government contract.
    • Supposedly cheaper, more cost-effective; better customer service, greater expertise.

    Shared Value (Chapter 12)

    • Business model enhancing competitiveness through social programs with governments and NGOs.
    • Porter and Kramer advocate combining competitiveness with solving societal issues.

    Transaction Costs (Chapter 12)

    • Costs of market transactions (e.g., information asymmetry, transportation).
    • Multinationals invest in foreign production to address market imperfections.

    Transfer Prices (Chapter 12)

    • Internally set prices for multinational products across borders, not determined by supply and demand.
    • Multinationals may utilize transfer pricing to reduce overall tax burden.

    Civil Society and Development (Chapter 13)

    • Author:* Henry Veltmeyer

    Civil Society (Chapter 13)

    • Collective of non-state, non-business organizations (e.g., church groups, environmental lobbies).
    • Presence and participation are seen as crucial for democracy, good governance, and participatory development.
    • Correlation with democratisation in Latin America and Eastern Europe.

    Neoliberal Globalization (Chapter 13)

    • Economic doctrine rejecting state control in favor of market-driven global integration.
    • Promotes free-market capitalism.

    Social Capital (Chapter 13)

    • Networks of interpersonal relationships supporting individuals and communities in various needs (financial, health, emotional), and securing jobs.
    • Robert Chambers and Robert Putnam

    Social Movements (Chapter 13)

    • Groups advocating for social change through collective action (e.g., workers' movements, civil rights movements).

    Sustainable Livelihoods (Chapter 13)

    • Holistic approach considering rural livelihood strategies (e.g., farming, other means).

    Humanitarian Assistance and Intervention (Chapter 29)

    • Author:* Laura Hammond

    Aid Economy (Chapter 29)

    • System of employment, incentives, goods, and services generated through humanitarian assistance.
    • Can distort national economies and potentially incentivize conflict actors to prolong crises for personal gain.

    CNN Effect (Chapter 29)

    • Global television broadcasts of humanitarian crises stimulating public interest.
    • First observed globally in 1984, during BBC coverage of the Ethiopian famine.

    Diaspora (Chapter 29)

    • Transnational community outside the country of origin.
    • Frequently support their country of origin in times of crisis, with quickly mobilized resources.

    Downward Accountability (Chapter 29)

    • Aid recipients' ability to assess aid effectiveness through complaints systems.

    Humanitarian Assistance (Chapter 29)

    • Short-term crisis-related life-saving support.
    • Addresses immediate suffering without necessarily addressing underlying systemic issues.

    Humanitarian Intervention (Chapter 29)

    • Military intervention partially or fully motivated by humanitarian concerns.

    Liberal Humanitarianism (Chapter 29)

    • Post-Cold War (1989-present) approach using services like healthcare and social nets to address human suffering, and viewed by some as states' responsibility.

    Wilsonian Organizations (Chapter 29)

    • NGOs aligned with political stakeholders.
    • Utilizing humanitarian assistance to achieve political objectives.

    China and the Emerging Economies (Chapter 14)

    • Author:* Jing Gu

    Belt and Road Initiative (BRI) (Chapter 14)

    • China's flagship initiative integrating Asia, Middle East, Europe, and Africa.

    One Belt, One Road (Chapter 14)

    • China's initiative integrating regions through infrastructure, cultural exchange, and trade.
    • 143 countries signed by 2020

    People-to-People (Chapter 14)

    • Chinese diplomacy strategy promoting academic, cultural, tourism, and information-sharing.
    • Promotes economic growth and competitiveness.

    South-South Cooperation (Chapter 14)

    • Cooperative social, cultural, and economic activities between Global South nations.

    White Paper on Foreign Aid (Chapter 14)

    • Chinese government documents detailing perspectives on international development.
    • Differs ideologically from Western approaches (e.g., partnership rather than donor/recipient structures), adhering to non-interference.
    • 5 principles: Self-reliance; no political conditions; equality, mutual benefit; realistic, forward-thinking; reform & innovation.

    UNCTAD (Chapter 14)

    • United Nations Conference on Trade and Development.
    • Promotes trade, economic diversification, reducing debt and financial volatility.

    HDI (Human Development Index) (Chapter 14)

    • Measures knowledge, healthy life, and standard of living.
    • Categorizes development levels (very highly developed, low development).
    • Amartya Sen - Capabilities approach

    Millennium Development Goals (Chapter 14)

    • Increased focus on development as poverty eradication.

    Sustainable Development Goals (Chapter 14)

    • Promotes economic, social, and environmental development, emphasizing global partnership.

    International Financial Institutions (Chapter 10)

    • Author: Marcus Taylor

    Bretton Woods Institutions (Chapter 10)

    • World Bank and International Monetary Fund.

    Bretton Woods System (Chapter 10)

    • Post-WWII system of fixed exchange rates, pegged to the US dollar (backed by gold initially), promoting financial stability and trade

    Structural Adjustment (Chapter 10)

    • Economic reforms promoted by IMF and World Bank after the 1982 debt crisis to minimize state involvement in economies.

    Washington Consensus (Chapter 10)

    • Agreement between IMF, World Bank, and US on developing country development policies.
    • Promoted macroeconomic prudence, export-led growth, and economic liberalization.

    Private Enterprise and Development (Chapter 12)

    • Author:* Paul A. Haslam

    Corporate Social Responsibility (Chapter 12)

    • Corporations' voluntary commitment to improve relations with stakeholders (employees, community).
    • Acknowledges responsibilities beyond shareholders.

    Enclaves (Chapter 12)

    • Company operations with limited beneficial links to the wider economy, often associated with extractive industries and MNCs, especially resource seeking ones

    Informal Sector (Chapter 12)

    • Part of the economy involving unregistered/unregulated individuals and enterprises. Often small/micro businesses.

    Obsolescing Bargaining Model (Chapter 12)

    • Explains state-firm relations, where multinationals initially hold power but eventually loses it over time as states regulate investment terms.

    Dunanist (Chapter 29)

    • NGOs adopting a neutral, impartial position regarding conflict, responding to humanitarian need without influencing outcome.

    Resilience (Chapter 29)

    • Ability to recover from and adapt to hazards and crises.

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    Test your knowledge on key concepts in development economics, including the informal sector, resilience, and the basic needs approach. This quiz will challenge your understanding of institutional impacts and significant models in humanitarian scenarios. Perfect for students and enthusiasts of economic development.

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