Podcast
Questions and Answers
What was one outcome of the democratic revolutions of the late 1980s and early 1990s in transition economies?
What was one outcome of the democratic revolutions of the late 1980s and early 1990s in transition economies?
- Greater commitment to free market capitalism (correct)
- A decline in free market capitalism
- Totalitarian regimes gaining power
- Increased central planning in economies
What trend in governance has been observed in some nations since 2005?
What trend in governance has been observed in some nations since 2005?
- Expansion of civil liberties
- Increased authoritarianism (correct)
- Stronger democratic institutions
- Emergence of new political parties
Which factor contributed to the spread of democracy according to the content?
Which factor contributed to the spread of democracy according to the content?
- Stronger government control over media
- Increased military interventions
- Failure of totalitarian regimes to deliver economic progress (correct)
- Rise of authoritarian regimes
Freedom House classifies nations into how many broad categories?
Freedom House classifies nations into how many broad categories?
What role do new information and communication technologies play in the spread of democracy?
What role do new information and communication technologies play in the spread of democracy?
According to Francis Fukuyama, what characterizes the new world order?
According to Francis Fukuyama, what characterizes the new world order?
What prediction does Samuel Huntington make regarding modernizing societies?
What prediction does Samuel Huntington make regarding modernizing societies?
What significant threat to world peace is highlighted by Colin Powell?
What significant threat to world peace is highlighted by Colin Powell?
What is a key factor that makes market-based economies more attractive to international businesses?
What is a key factor that makes market-based economies more attractive to international businesses?
What does the process of deregulation entail?
What does the process of deregulation entail?
What is privatization primarily concerned with?
What is privatization primarily concerned with?
Which of the following is essential for a well-functioning market economy?
Which of the following is essential for a well-functioning market economy?
What factor is NOT associated with economic growth in market-based economies?
What factor is NOT associated with economic growth in market-based economies?
Why was the transition to market economies easier in mixed economies?
Why was the transition to market economies easier in mixed economies?
What is a major risk associated with investment in new market economies?
What is a major risk associated with investment in new market economies?
What must accompany privatization for it to effectively drive economic growth?
What must accompany privatization for it to effectively drive economic growth?
What is a key trend that fosters greater economic development?
What is a key trend that fosters greater economic development?
What measure reflects the total annual income received by residents of a nation?
What measure reflects the total annual income received by residents of a nation?
Which countries are noted for having a high GNI?
Which countries are noted for having a high GNI?
What does purchasing power parity (PPP) account for?
What does purchasing power parity (PPP) account for?
What concept did Amartya Sen contribute to assessing economic development?
What concept did Amartya Sen contribute to assessing economic development?
Which factors are included in the Human Development Index (HDI)?
Which factors are included in the Human Development Index (HDI)?
What is a common misconception about GNI and PPP data?
What is a common misconception about GNI and PPP data?
According to Amartya Sen, what requires the removal to achieve economic development?
According to Amartya Sen, what requires the removal to achieve economic development?
What is a potential benefit of a first-mover in a market?
What is a potential benefit of a first-mover in a market?
Which factor is NOT likely to predict a country's economic prospects?
Which factor is NOT likely to predict a country's economic prospects?
What is one of the legal risks associated with doing business internationally?
What is one of the legal risks associated with doing business internationally?
Which aspect is a cost that can affect business decisions in a country?
Which aspect is a cost that can affect business decisions in a country?
What is a common government policy to encourage outward foreign direct investment (FDI)?
What is a common government policy to encourage outward foreign direct investment (FDI)?
In what scenario might a country restrict inward foreign direct investment (FDI)?
In what scenario might a country restrict inward foreign direct investment (FDI)?
What overall factor affects the attractiveness of doing business in a country?
What overall factor affects the attractiveness of doing business in a country?
Which of the following is a drawback faced by late entrants in a market?
Which of the following is a drawback faced by late entrants in a market?
What is the primary role of entrepreneurs in an economy?
What is the primary role of entrepreneurs in an economy?
Which factor is essential for fostering innovation and entrepreneurship?
Which factor is essential for fostering innovation and entrepreneurship?
What is the relationship between economic freedom and economic growth?
What is the relationship between economic freedom and economic growth?
Which type of political system is likely more conducive to long-term economic growth?
Which type of political system is likely more conducive to long-term economic growth?
How can inadequate property protection in developing nations impact economic growth?
How can inadequate property protection in developing nations impact economic growth?
What demographic factor can enhance a country's economic growth potential?
What demographic factor can enhance a country's economic growth potential?
According to Jeffrey Sachs, what type of geography is conducive to higher economic development?
According to Jeffrey Sachs, what type of geography is conducive to higher economic development?
What is a likely outcome of economic growth in a country?
What is a likely outcome of economic growth in a country?
Study Notes
Economic Development
- Gross National Income (GNI) measures the total annual income received by a nation's residents.
- Japan, Sweden, Switzerland, and the U.S. have high GNI.
- China and India have low GNI.
- Purchasing Power Parity (PPP) adjusts GDP per capita to reflect cost of living differences.
- Amartya Sen argues that development should be assessed based on people's capabilities and opportunities.
- Development requires removing poverty, tyranny, and poor economic opportunities.
- Human Development Index (HDI) measures the quality of human life in different nations, considering:
- Life expectancy at birth
- Educational attainment
- Whether average incomes meet basic needs
Macropolitical and Macroeconomic Changes
- Innovation and Entrepreneurship are crucial for economic growth.
- Requires a market economy where individuals can reap the benefits of their efforts.
- Strong property rights are essential to protect innovations and profits.
- Democracy is often considered conducive to economic growth.
- However, some undemocratic countries like China, South Korea, Taiwan, Singapore, and Hong Kong have experienced economic growth.
- Economic progress can also lead to the establishment of democratic regimes.
Transition Economies
- Political Economy is characterized by:
- A shift towards free-market capitalism.
- A move away from centrally planned economies.
- A potential drift back towards authoritarianism in some nations.
- The Spread of Democracy:
- Many totalitarian regimes failed to deliver economic progress to their populations.
- New communication technologies reduced state control over information.
- Economic advances led to a prosperous middle class demanding democratic reforms.
Market-Based Systems
- Command and Mixed Economies failed to achieve sustained economic growth like market-based economies.
- Shift to Market-Based Economies involves:
- Deregulation (removing legal restrictions for businesses and markets).
- Privatization (transferring state property to private individuals).
- Establishing legal systems that safeguard property rights.
Benefits, Costs, and Risks of Doing Business Internationally
- Attractive Markets for international businesses are:
- Politically stable.
- Have free market systems.
- Offer protection for property rights.
- Provide economic growth, and a large market size, creating potential for profits.
- Costs of doing business internationally include:
- Corruption.
- Lack of infrastructure.
- Legal costs.
- Risks of doing business internationally include:
- Political risk (social unrest or anti-business trends).
- Economic risk (economic mismanagement).
- Legal risk (breaching contracts or expropriation of property rights).
Government Policies and Foreign Direct Investment (FDI)
- Home-Country Policies to encourage FDI:
- Government-backed insurance programs.
- Government loans
- Elimination of double taxation.
- Relaxing restrictions on foreign investment.
- Home-Country Policies to restrict FDI:
- Limiting capital outflows.
- Manipulating tax rules.
- Prohibiting investment for political reasons.
- Host-Country Policies to encourage FDI:
- Tax concessions.
- Low-interest loans.
- Grants or subsidies.
- Host-Country Policies to restrict FDI:
- Ownership restraints.
- Performance requirements.
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Description
Explore the key concepts of economic development, including Gross National Income (GNI), Purchasing Power Parity (PPP), and the Human Development Index (HDI). Understand the insights of Amartya Sen on capabilities and the role of innovation and entrepreneurship in economic growth. This quiz covers critical indicators and frameworks used to assess the development of nations.
