Economic Development Stages & China's Impact

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Questions and Answers

What is a key element of the economic strategies discussed?

Encouragement of monopolies

High taxes on small businesses

Low tariffs and few trade restrictions (correct)

Strict government control of production

Which strategy focuses on improving efficiency and competitiveness while keeping trade barriers low?

Import substitution

Conservative trade policy

Economic isolation

Outward orientation (correct)

What growth rate did China's real GDP average through 2018?

9.5% (correct)

7.0%

5.5%

12.0%

What major change occurred in China's economy after 1979?

Introduction of market-oriented reforms (B) Signup and view all the answers

Which group has highlighted China's economic growth as significant?

World Bank (C) Signup and view all the answers

What has been one major result of China's economic growth since 2008?

Doubling of GDP every eight years (B) Signup and view all the answers

Which position does China hold regarding U.S. merchandise trade?

Largest merchandise trading partner (B) Signup and view all the answers

How many people has China's economic growth helped raise out of poverty?

800 million (B) Signup and view all the answers

What is the primary characteristic of a developing country?

Low real per capita income relative to advanced countries (C) Signup and view all the answers

What did the World Bank decide regarding the term 'developing countries' in 2016?

To eliminate it from formal classification (D) Signup and view all the answers

Which of the following statements is generally deemed untrue regarding developing countries?

Agricultural and mining exports cannot contribute to economic development. (B), Population growth always leads to food scarcity. (C), They are condemned to stagnation and poverty. (D) Signup and view all the answers

What stereotype about agricultural and mining exports is often considered outdated?

They cannot lead to economic prosperity. (B) Signup and view all the answers

Which viewpoint about developing countries does NOT align with common misconceptions?

They can evolve from their developing status. (C) Signup and view all the answers

What is a common but flawed assertion about the relationship between developing countries and advanced economies?

Dependence leads to a net outflow of capital. (B) Signup and view all the answers

How do common misconceptions about developing countries often portray their agricultural sector?

As incapable of contributing positively to the economy. (A) Signup and view all the answers

Which of the following assertions is true regarding the economic progress of developing countries?

Many have transitioned to advanced economies. (C) Signup and view all the answers

What are some advantages of a large country size?

Diverse resource endowments (A) Signup and view all the answers

How does historical colonial background affect developing countries?

It leads to similar problems faced by many countries. (C) Signup and view all the answers

Which region is noted for having larger private sectors in developing countries?

Latin America (C) Signup and view all the answers

What is the role of physical and human resources in a country's economic growth?

They are crucial for potential economic growth. (D) Signup and view all the answers

What characterizes economies dominated by the public sector?

Focus on direct government investment projects (C) Signup and view all the answers

Which of the following countries is cited as having minimal endowments of physical resources?

Bangladesh (B) Signup and view all the answers

Which economic policy is more likely in private-oriented economies?

Special tax allowances for businesses (B) Signup and view all the answers

What outcome can result from regional imbalances in large countries?

Increased internal migration to urban areas (A) Signup and view all the answers

Which statement accurately reflects the relationship between population growth and economic development?

A low population density can also obstruct economic growth. (C) Signup and view all the answers

What was the trend regarding the flow of resources between colonies and their colonizers during the first half of the twentieth century?

There was a net outflow of resources from colonies to colonizers. (B) Signup and view all the answers

Which factor is NOT a criterion for examining developing countries?

Level of technological advancement (B) Signup and view all the answers

Which developing country has the highest yearly population change as reported?

Nigeria (A) Signup and view all the answers

What does the term 'net inflows of capital' imply for developing countries in the second half of the twentieth century?

They received more financial resources than they sent out. (D) Signup and view all the answers

Which of the following countries has the lowest population density according to the data provided?

Russia (B) Signup and view all the answers

Which demographic trend is indicated for both China and India?

Both have a significant urban population percentage. (B) Signup and view all the answers

Which of the following is likely a reason for rapid population growth in developing countries?

High birth rates and declining mortality rates. (B) Signup and view all the answers

What demographic attribute does Pakistan have in relation to its population growth?

A yearly population growth rate of 1.93%. (C) Signup and view all the answers

What significant economic change occurred in China in 1979?

Implementation of price and ownership incentives for farmers (C) Signup and view all the answers

What was the primary purpose of the special economic zones established in China?

To encourage foreign investment and technology import (A) Signup and view all the answers

Which element was mainly controlled by the state in China's economy during the 1950s?

Production goals and pricing (D) Signup and view all the answers

What was one of the key investments made by the Chinese government in the 1960s and 1970s?

Investments in physical and human capital (A) Signup and view all the answers

What was the outcome of the collectivization of household farms in the 1950s?

Formation of large communes (C) Signup and view all the answers

By 1978, what percentage of industrial production was attributed to state-owned enterprises in China?

75% (B) Signup and view all the answers

Which area in China was NOT one of the original four special economic zones established in 1980?

Shanghai (A) Signup and view all the answers

What was a consequence of the economic reforms initiated in the late 1970s?

Decentralization in economic policymaking (A) Signup and view all the answers

What is the primary challenge in developing countries that hinders economic progress?

Too little saving (D) Signup and view all the answers

Which factor is critical for the thriving of innovation and entrepreneurship?

Clear and complete property rights (C) Signup and view all the answers

How did Japan successfully develop its industrial economy?

By adopting productive foreign technologies (A) Signup and view all the answers

In the context of economic development, industrialization has which of the following effects?

Higher urban incomes compared to rural incomes (B) Signup and view all the answers

What role can government play in fostering entrepreneurship?

Establishing management schools and extension services (D) Signup and view all the answers

What is a potential consequence of high levels of urbanization due to industrialization?

Overcrowding in cities and high unemployment (A) Signup and view all the answers

What is the significance of establishing market-oriented policies in economic development?

They ensure predictable profits and reduce corruption (C) Signup and view all the answers

What challenge do urgent current consumption and investment create in developing nations?

They lead to insufficient investment in productive capital (B) Signup and view all the answers

Study Notes

Stages of Economic Development - The Economic Cycle in Developing Economies

Developing countries are categorized by low per-capita income relative to developed nations.
Characteristics of developing economies include: low levels of living, low levels of productivity, high population growth and dependency burdens, high and rising levels of unemployment, significant dependence on primary product exports, and dominance, dependence, and vulnerability in international relations.
Case study China: The largest contributor to world growth since the 2008 financial crisis.
China boasts among the fastest-growing economies.
China has experienced average annual GDP growth of 9.5%.
China's GDP has doubled every 8 years on average.
China has lifted an estimated 800 million people out of poverty.
China has become the world's largest economy based on purchasing power parity, manufacturer, merchandise trader, and significant holder of foreign exchange reserves.
Prior to 1979, China operated under a centrally planned economy.
Significant investments in capital and human assets were implemented during the 1960s and 1970s.
The majority of industrial production was produced by state-owned enterprises.

Structure of the Lecture

Developing countries - definition
Structure of developing countries
Common characteristics of developing nations
Case study: Recent trend of developing countries

Criteria for Examination

Size of the country (geographic area, population, and income)
Historical and colonial background
Endowments of physical and human resources
Relative importance of public and private sectors
Nature of industrial structure
Degree of dependence on external economic and political forces
Distribution of power and the institutional and political structure within the nation

The Structure of Developing Countries

Size of the Country: Large countries often possess diverse resources and large markets, but management can be challenging.
Historical and Colonial Background: Past colonial ties often influence current economic and political structures. Examples include shared institutions and similar problems faced by former colonies.
Physical and Human Resources: A nation's resources (land, minerals, and the workforce) influence economic growth potential. There are examples where resource endowments have influenced development in extreme ways.
Relative Importance of the Public and Private Sectors: Most developing countries have a combination of public and private sectors.
Industrial Structure: Many developing countries are highly agrarian. Industrial sectors in these economies may be comparatively small relative to their total national economy.
Degree of Dependence on External Forces: Many developing nations depend on foreign trade and investment from developed nations.
Distribution of Power and Political Structure: Political power distribution and the national governing institutions frequently play a strong role in shaping development.

Common Characteristics of Developing Nations

Low living standards with low incomes, significant inequality, poor health, and inadequate education.
Low levels of productivity.
High rates of population growth and high dependency burdens.
High and rising levels of unemployment.
Significant dependence on primary product exports.
Dominance, dependence, and vulnerability to international relations.

The Four Elements in Development

Human Resources Population Explosion: The Legacy of Malthus
Natural Resources
Capital
Technological Change and Innovations

Strategies of Economic Development

Industrialization vs. Agriculture:
State vs. Market:
Growth and Outward Orientation

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Description

Explore the stages of economic development in developing economies, focusing on characteristics like income levels, productivity, and population growth. This quiz also highlights China's remarkable economic growth and its transformative role in the global economy post-2008. Test your understanding of these essential concepts and the case study of China's progress.