Exercise 1. A) Please decide whether the following statements are correct or not.

A) Please decide whether the following statements are correct or not.

Q1: Eradicating poverty is one of the most difficult tasks facing the world economy C

Q2: Fortunately, there is a widely shared consensus among economists, public officials, and other scholars over the best methods to achieve the final goal, a world without poverty. (p. 305) I

Q3: Throughout much of the postwar era, a sharp contradiction existed between the proponents of market forces and the proponents of state interventionism. (p. 305) C

Q4: According to the theory of the developmental state, it is the state that should play the central role in economic development. (p. 306) C

Q5: According to the proponents of neoliberalism, the success of newly industrialising countries was due to their reliance on state interventionism. (p. 306) I

Q6: Development economics was the first systematic effort to deal with the challenges that developed nations faced during the postwar era. (p. 306) I

Q7: Development theory as a whole was a collection of general ideas rather than a single coherent theory. (p. 307) C

Q8: According to the proponents of the developmental state, developing countries were locked in a vicious circle. (p. 307) C

Q9: According to the proponents of the developmental state, developing countries could only escape from the above-mentioned vicious circle if the state withdrew substantially from the economy. (p. 307) I

Q10: According to the concept of Myrdal, poor countries had low savings rates, which caused a low investment ratio, which in turn resulted in low productivity. As a consequence, these countries became poor… (and the whole circle repeats itself all over again) (p. 308) C

Q11: Keynes pointed out that there were situations characterised by market failures (such as the Great Depression in the USA). (p. 310) C

Q12: According to the neoliberals, there are two different types of economics: one for the advanced countries and the other one for developing nations. (p. 311) I

Q13: For neoliberals, if LDCs wanted to catch up with industrialised nations, they should maintain market openness, fiscal discipline and noninterventionism. (p. 312) C

Q14: By the early 1950s, neoclassical orthodoxy had triumphed in the economic profession. (p. 312) I

Q15: Neoclassical economists had accepted the idea that the LDCs were trapped in a vicious circle. (p. 312) I

Q1: What do we mean by LDCs? (c) Least Developed Countries

Q2: According to the textbook, what was the primary aim of establishing the IMF, the World Bank and the international regime? (p. 305) (b) They were established to serve the interests of less powerful entities.

Q3: In which period after the World War II was development economics the prevailing approach in the academic literature? (p. 305) (c) 1945 to 1970

Q4: Which of the following concepts characterised the seventies and the eighties? (p. 306) (b) neoliberalism, structural adjustment, free market

Q5: Which theory challenged neoliberalism in the late 1980s? (p. 306) (b) the theory of developmental state

Q6: What does the term “NIEs” refer to? (p. 306) (c) Newly Industrialising Countries

Q7: On which continent would you look for the NIEs? (p. 306) (c) Asia

Q8: Who or what were blamed for the 1997-98 East Asian crisis according to the proponents of the theory of the developmental state? (p. 306) (a) International economic and political pressures

Q9: What did development economics assume in relation with the LDCs? (p. 307) (d) The LDCs were fundamentally different in kind from advanced industrialised countries.

Q10: According to the proponents of the theory of developmental state, what kind of market failure prevailed in LDCs? (a) very low savings rate, poor educational system

Q11. The idea of the “Big Push”… (p. 308) (c) was supposed to enable LDCs to get rid of the state of underdevelopment.

Q12: According to development economists, what should have the rich countries done in order to help LDCs in their catching up? (p. 309) (c) Rich nations should have provided massive foreign aid for instance.

Q13: Among other things, neoliberals stated that … (p. 311) (a) LDCs’ problems were caused by government failures.

Q14: According to Keynesianism, … (p. 311) (a) the state should play a central role in development.

Q15: What is meant by “getting the prices right”? (p. 312) (a) To allow market forces (that is the change in demand and supply) to work effectively.

topic 11.

Changing role of the state in development

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