FACULTY OF COMMERCE

http://www.uow.edu.au/commerce/

SCHOOL OF ECONOMICS
http://uow.edu.au/economics/seis

ECON303 ECONOMICS DEVELOPMENT ISSUES 6 CP

Prerequisites: Both ECON101 and ECON111 or any 72 credit points of

subjects.

AUTUMN SESSION 2006 WOLLONGONG CAMPUS

Lecturer and Subject Coordinator

DR JULIE SUTHERLAND School of Economics

Room: 40.108 Ph: 42214017 email: julie_sutherland@uow.edu.au

Consultation: Tuesday Time: 11:30 am – 3:30pm

 SECTION A: GENERAL INFORMATION

LECTURE TIMES
Lectures will be held on Friday at 8:30 am to Room 131, Building 40
10:30 am

LECTURE PROGRAM
Date Topics Covered Readings

1 24/02/06 Emergency Evacuation Procedures Todaro, Chs 1 and 2

Economic Development and Developing Ray, Chs 1 and 2
Nations

2 03/03/06 Theories and Models of Development Todaro, Chs 3-4

Ray, Chs 3 and 4

3 10/03/06 Poverty and Income Distribution Todaro, Ch 5

Ray, Chs 6 and 8

4 17/03/06 Population Growth Todaro, Chs 6

Ray, Chs 9 and 13

5 24/03/06 Human Capital Todaro, Ch 8

Ray, Ch 13

6 31/03/06 Agricultural Transformation Todaro, Ch 9

Ray, Chs 11 and 12

7 07/04/06 International Trade Theory and Policy Todaro, Chs 12 and 13

Ray, Chs 16-18

8 14/04/06 GOOD FRIDAY

9 26/04/06 MID-SEMESTER EXAMINATION

10 05/05/06 Balance of Payments and Debt Issues Todaro, Ch 14

11 12/05/06 Finance, Investment, and Aid

Todaro, Ch 15

Todaro, Ch 16
12 19/05/06 Financial Reform and Fiscal Policy
Ray, Ch 14

Todaro, Ch 17
13 26/05/06 Further Issues and Conclusion

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 2/19

TUTORIAL TIMES
Tutorials will be held on TBA

TUTORIAL/ LABORATORY PROGRAM

Date Topics Covered Readings

1 24/02/06 NO TUTORIAL

2 03/03/06 Economic Development and Todaro, Chs 1 and 2

Developing Nations
Ray, Chs 1 and 2

3 10/03/06 Theories and Models of Development Todaro, Chs 3 and 4

Ray, Chs 3 and 4

4 17/03/06 Poverty and Income Distribution Todaro, Ch 5

Ray, Chs 6 and 8

5 24/03/06 Population Growth Todaro, Ch 6

Ray, Chs 9 and 13

6 31/03/06 Human Capital Todaro, Ch 8

Ray, Ch 13

7 07/04/06 Agricultural Transformation Todaro, Ch 9

Ray, Chs 11 and 12

8 14/04/06 GOOD FRIDAY

9 26/04/06 MID-SEMESTER EXAMINATION

10 05/05/06 International Trade Theory and Policy Todaro, Chs 12 and 13

Ray, Chs 16-18

11 12/05/06 Balance of Payments and Debt Issues Todaro, Ch 14

12 19/05/06 Finance, Investment, and Aid

Todaro, Ch 15

Todaro, Ch 16
13 26/05/06 Financial Reform and Fiscal Policy
Ray, Ch 14

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 3/19

BRIEF OUTLINE
Commencing with general ideas and concepts for the study of economic development, the subject
foundation is established with an explanation of key theories and models of development (stage,
structural, dependence, neoclassical, and new growth). A review of historical experience
establishes the long run parallels for current debate and discussion. We then focus on key
influences upon the development process including population, education, agricultural systems,
international trade and investment, and fiscal policy. The subject draws upon a wide range of
empirical country-based material to illustrate these issues and to promote their closer
understanding.

STUDENT LEARNING OUTCOMES

The objective of this course is to guide students in applying economic analysis to questions
relating to developing countries. On successful completion of this subject, the student should be
able to:
• Explain and analyse the main issues and debates in the field of development economics
• Critically evaluate different policy approaches to economic development
• Distinguish key variables affecting development
• Focus upon the experience of individual nations and regions in the development process

ATTENDANCE REQUIREMENTS
In order to maximise learning outcomes, it is strongly recommended that students attend all
lectures.

PARTICIPATION/CONTRIBUTION TO TUTORIALS
Attendance and participation in tutorials is expected.
Each student must attend the allocated tutorial in order to complete Assessment 1 (Tutorial
Presentation and Submission).

PERFORMANCE LEVEL
To be eligible to pass this subject, students must achieve an overall mark of at least 45%, and at
least 40% on the final examination.
To be eligible to pass this subject all assessment components must be completed.

REQUIRED TEXT
• Todaro, M (2006), Economic Development, 9th edition, Pearson Education: Essex.
(Cat no. 330.91724/32)

This textbook is available online from the University Bookshop at

http://unishop.uow.edu.au/textbooks/

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 4/19

ADDITIONAL READINGS
Week 1: Economic Development and Developing Nations
• Sen A (1988). “The Concept of Development”, in H Chenery and TN Srinivasan (eds.),
Handbook of Development Economics.

Week 2: Theories and Models of Development

• Solow, R (1956). “A contribution to the theory of economic growth”, Quarterly Journal of
Economics, 65, pp. 65-94.

Week 3: Poverty and Income Distribution

• Kakwani, N (1980). Income inequality and Poverty: Methods of Estimation and Policy
Applications, New York, Oxford University Press, chapters 4, 5, and 15.

Week 6: Agricultural Transformation

• Johnson D ( 1998). "China's Rural and Agricultural Reforms in Perspective"
http://www.worldbank.org/research/pdffiles/johnson.pdf

Week 7: International Trade Theory and Policy

• Frankel J and D Romer (1999). “Does Trade Cause Growth?, American Economic Review,
89 (3), June, pp. 379-399.
• Baldwin R (2003). “Openness and Growth: What’s the Empirical Relationship?”, NBER
Working Paper 9578, March.
• Dollar D and A Kraay (2001). “Trade, Growth, and Poverty”, World Bank Working Paper,
June.

Week 10: Balance of Payments and Debt Issues

• Meltzer A (1998). "Asian Problems and the IMF".
http://www.cato.org/pubs/journal/cj17n3-10.html

Week 11: Finance, Investment and Aid

• World Bank Policy Report (1998), Assessing Aid, Oxford University Press.

Week 12: Financial Reform and Fiscal Policy

• Prasad E, K Rogoff, S Wei, and M Kose (2003). “Effects of Financial Globalisation on
Developing Countries: Some Empirical Evidence”, IMF Occasional Paper 220.

Week 13: Further Issues

• Artadi E and X Sala-I-Martin (2003). “The Economic Tragedy of the XXth Century: Growth
in Africa”, NBER Working Paper 9865, July.

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 5/19

RECOMMENDED BACKGROUND AND FURTHER READING
• Ray D. (1998), Development Economics (Cat no. 338.9/409)
• Gillis M, Perkins D, Roemer M and D Snodgrass (2001). Economics of Development, WW
Norton & Company: New York. (Cat no. 338.9/289)
• Handbook of Development Economics (Cat no. 338.9/224)
• Meier G (2000). Leading Issues in Economic Development, Oxford University Press: New
York. (Cat no. 330.91724/15)
• Ogawa, N., Jones, G. W. and J G Williamson, Human Resources in Development Along
the Asia-Pacific Rim (Cat no. 331.1109164/1)
• Todaro, M (2000 7th edition). Economic Development (Cat no. 330.91724/32)
• United Nations Development Programme (various years). Human Development Report,
Oxford University Press: New York. (Cat no. 338.9/273)
• R. Wade, Governing the Market. Economic Theory and the Role of Government in East
Asian Industrialization. (Cat no. 338.95/11)
• Wilber, C K and K P Jameson, The Political Economy of Development and Under-
Development. (Cat no. 330.91724/25)
• World Bank (various years). World Development Report, Oxford University Press: New
York. (Cat no. 330.91724/42)
This is not an exhaustive list of references. Students should also use the library catalogue and
databases to locate additional resources.

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 6/19

 SECTION B: ASSESSMENT

WRITTEN ASSESSMENT

Assessment 1: Tutorial Presentation and Submission

Topic Selected topic (see page 14)

Marking criteria (2/3) for written assessment, (1/3) for oral assessment

Length: 1,000 words (written assessment) and 10 minutes (oral assessment)

Weighting: 10 per cent (10 marks)

Due date Selected tutorial class

Style and format: Oral assessment: Students must present a summarized solution of the
tutorial question assigned during the tutorial class. Students must be
prepared to answer questions regarding the presented material by the
lecturer and fellow students. Marks will be allocated for the presentation
style, content, and response to questions.
Written assessment: The solution to the tutorial question selected must
be submitted to Dr Julie Sutherland in the tutorial class in which the
presentation is made. (The solution should be type-written and double
spaced.)

Assessment 2: Case Study

Topic Selected topic (see page 18)

Marking criteria See page 18

Length: 2,500 words

Weighting: 20 per cent (20 marks)

Due date Thursday 18 May, 5:00pm

Style and format: The case must be submitted into the ECON303 submission box located
on Level 2 of Building 40. (The solution should be type-written and double
spaced.)

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 7/19

EXAMINATIONS
MID-SEMESTER EXAMINATION

Weighting 35 %

Date Friday 26 April 2006

Time allowed 2 hours (8:30 am – 10:30 am)

Structure of paper Long answer/ short answer/ multiple choice/ other

FINAL EXAMINATION

Weighting 35 %

Date Examination period 5 June – 17 June. The final examination date will be
confirmed during the course of the subject and published on SOLS
approximately 3 weeks before the examination period.

Time allowed 2 hours

Structure of paper Long answer/ short answer/ multiple choice/ other

COLLECTION OF WRITTEN ASSESSMENT

Assessment tasks which are relevant to the final examination for the subject will be marked and
available for collection prior to the final examination.

A Faculty of Commerce assignment cover sheet should be attached to each piece of written
assessment.
This cover sheet can be obtained from the website:
http://www.uow.edu.au/commerce/pdf/assignmentcoversheet.pdf

PENALTIES FOR LATE SUBMISSION OF ASSESSMENT

Assessed work must be handed in by the date and time given. Assessed work handed in late can
be penalised by the deduction (from the mark given to the assessed work) of 5 percentage points
per 24 hours of the weekday or part thereof. The operation of this rule will not result in a negative
mark being carried forward.

PLAGIARISM
Plagiarism means using the ideas of someone else without giving them proper credit. For example,
that someone else may be an author, critic, journalist, artist, composer, lecturer, tutor or another
student. Unintentional plagiarism can result if you don’t understand and use the acceptable scholarly
methods of acknowledgement. Whether plagiarism is deliberate or unintentional, the University may
impose penalties, which can be very severe. When it is desirable, or necessary, to use other people's

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 8/19

material, take care to include appropriate references and attribution. Plagiarism will not be tolerated
and has led to expulsion from the University.
Students should visit the following University website and become familiar with the University’s policy
on Plagiarism.
http://www.uow.edu.au/handbook/courserules/plagiarism.html

SECTION C: RULES, CODES OF PRACTICE & POLICIES

C1 UNIVERSITY POLICIES
Information on the following University Policies can be found at the websites below:

Code of Practice – Teaching http://www.uow.edu.au/handbook/codesofprac/teaching_code.html

& Assessment

Code of Practice (Honours) http://www.uow.edu.au/handbook/honourscode.html

Code of Practice – Students http://www.uow.edu.au/handbook/codesofprac/cop_students.html

Acknowledgement Practice http://www.uow.edu.au/handbook/courserules/plagiarism.html

(Plagiarism)

Special Consideration Policy* http://www.uow.edu.au/handbook/courserules/specialconsideration.ht

ml

Ethical Issues http://www.uow.edu.au/research/current/ethics.html

Ethical objection by students http://www.uow.edu.au/about/policy/ethicalobjectionanimals.html

to the use of animal and
animal products in
coursework subjects

Non Discriminatory Language http://staff.uow.edu.au/eeo/nondiscrimlanguage.html

– practice and presentation*

Occupational Health and http://staff.uow.edu.au/ohs/commitment/index.html

Safety

Intellectual Property http://www.uow.edu.au/handbook/courserules/ownershipofwork.html

Human Research Ethics http://www.uow.edu.au/research/staff/ethics.html

Guidelines

Student Academic Grievance http://www.uow.edu.au/handbook/courserules/studacgrievpol.html

Policy*

Animal Research Guidelines http://www.uow.edu.au/research/staff/animal.html

* see brief explanation of policy below.

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 9/19

C1.1 Non-discriminatory Language
The Faculty of Commerce supports the University’s policy on the use of non-discriminatory language.
It is the responsibility of students to ensure that they understand and abide by this policy. The policy
is available at:
http://staff.uow.edu.au/eeo/nondiscrimlanguage.html

C1.2 Special Consideration Policy

The Faculty of Commerce recognises that it has a responsibility to ensure equity and consistency
across its subjects for all students. Sometimes, in exceptional circumstances, students need to
apply for special consideration in order to complete all assessable work.
The University applies strict criteria to the granting of special consideration. Before applying for
special consideration students should carefully read the University’s policy. The policy can be
found at:
http://www.uow.edu.au/handbook/courserules/specialconsideration.html
Add any School specific procedures or information here {or delete statement}.

C1.3 Student Academic Grievance Policy

The Faculty of Commerce aims to provide a fair, equitable and productive learning environment for all
its students. The Student Academic Grievance Policy seeks to support the achievement of this goal
by providing a transparent and consistent process for resolving student academic grievances.
Any student who has a grievance over a result should, in the first instance, attempt to informally
resolve this grievance with his/her lecturer. If the grievance cannot be resolved, the student can
complete an academic grievance form and lodge the grievance with the Faculty.
Once the Faculty has made a decision on the grievance, if the student still feels the situation has not
been fully resolved s/he may consult the Dean of Students. However, the Dean of Students can have
no input into the academic judgement of the lecturer and can only review the grievance to ensure
proper procedure has been followed.
For more information, please consult the policy in full at
http://www.uow.edu.au/handbook/courserules/studacgrievpol.html

C2 FACULTY AND SCHOOL POLICIES

REFERENCING
WHY DO YOU NEED TO REFERENCE?
At University it is necessary to acknowledge the sources of information and ideas that you have
incorporated in your assignments. Failure to do this thoroughly may result in accusations of
plagiarism: this is the academic equivalent of stealing (because by not acknowledging someone
else's work, you are presenting it as your own). Plagiarism is taken very seriously by the University
and may result in expulsion from the University.
Referencing is not only about acknowledging other people's work: accurate referencing and lists of
references are beneficial when researching a topic as they allow the reader to follow up
information and read further into the area. In a sense, references provide readers with clues to
help them explore different avenues of a topic. This aspect of referencing will become more
valuable to you as you progress in your studies.

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 10/19

There is a correct procedure that must be followed when referencing and using footnotes. Not
complying with these set techniques and format will most likely result in loss of marks.
When writing an essay it is easiest to reference as you go, making sure you are writing down all
relevant information. This will save hours trying to find the source again in the library.
THE HARVARD SYSTEM OF REFERENCING
The Faculty of Commerce uses the Harvard system of referencing. This system makes use of
short references within the body of the text. It is supplemented by a detailed list of references at
the end of the text, which provides all the information necessary to find the source material. In-
text references include the author and year of publication, and where necessary the page
number(s).
It is the responsibility of students to ensure that they are familiar with the Harvard system of
referencing and that they use it accurately in all written work submitted.
Students should consult the following University Library website for a detailed explanation and
examples of the Harvard system of referencing.
http://www.library.uow.edu.au/helptraining/guides/citing.html

CITATION OF ELECTRONIC SOURCES

It is necessary for students to reference all sources used in their written work, including file transfer
protocol sites, worldwide web sites, telnet sites, synchronous communications (MOOs, MUDs,
IRC, etc.) GOPHER sites, and email, Listserv and Newsgroup citations.
It is the responsibility of students to ensure that they are familiar with the accepted Faculty of
Commerce practice for referencing electronic material and that they use it accurately in all written
work submitted.
Students should consult the following University Library website for a detailed explanation and
examples of how to reference electronic material..
http://www.library.uow.edu.au/helptraining/guides/citeelec.html

OCCUPATIONAL HEALTH AND SAFETY WHERE RELEVANT,

INCLUDING SAFETY IN LABORATORIES AND ON FIELD TRIPS

C3 SUPPORT SERVICES AND FACILITIES

LEARNING RESOURCE CENTRE
Learning Development offers a range of free services to all enrolled students who wish to improve
their academic or English language skills. There are a range of workshops available including;
essay writing and editing; reading for assignments; grammar; presentation skills; pronunciation and
exam preparation.
For information on language and academic skills workshops, or to make appointments for
consultations, please visit the Learning Resource Centre (LRC), Building 19, Ground Floor, Room
G102, or Phone 02 4221 3977. For further information visit the website:
http://www.uow.edu.au/student/services/ld/index.html

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 11/19

FACULTY LIBRARIANS
Each faculty has a Faculty Librarian who is available to help with research related enquiries.
Research Help Desk staff are also available in the Library to assist with research needs.

The Faculty Librarians for Commerce can be contacted as follows:

email: lib_commerce@uow.edu.au

telephone: 42 213078

DISABILITY LIAISON OFFICER

The Disability Liaison Officer (DLO) can provide advice on how particular disabilities affect
university study and information on resources available at the University for assisting students with
disabilities. Students commencing courses are advised to contact the Disability Liaison Officer
prior to the beginning of their first session of study.

For further information on services offered, consult the Disability Services website or contact the
office.

web address: http://www.uow.edu.au/student/services/ds/

telephone: 42 213445

fax: 42 215667

FACULTY DISABILITY ADVISERS

Faculty Disability Advisers are academic staff who provide assistance and support to students with
disabilities within their Faculty and act as an intermediary between the student and the Faculty's
academic and general staff. They provide support, educational advice and referral to appropriate
staff on issues related to teaching and learning within the Faculty and the University. Students are
advised to communicate specific information about the ways in which their disability affects
learning to the Faculty Disability Adviser as soon as possible after enrolment.

The Faculty of Commerce Disability Adviser is Mr. Ron Perrin. Mr Perrin can be contacted as
follows:

Office location: Building 40, room 311

email address: ron_perrin@uow.edu.au

telephone: 42 214118

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 12/19

ABORIGINAL EDUCATION CENTRE
The Aboriginal Education Centre (AEC) provides academic and personal support for Aboriginal &
Torres Strait Islander and other indigenous students. The Centre also runs an Indigenous Specific
Orientation Program for students who gain entry to the University through the alternative
admissions program.

For further information on services offered, consult the Aboriginal Education Centre website or
contact the office.

Centre location: Building 30

web address: http://www.uow.edu.au/aec/

telephone: 42 213563

fax: 42 214244

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 13/19

 ASSESSMENT 1
TUTORIAL QUESTIONS
Students must select ONE (1) tutorial question from the range of tutorial topics and questions listed
below. Allocation of the questions is to be conducted in Lecture 1.
An oral presentation of the answer to the question is to be given in the appropriate tutorial class.
A written submission of the answer to the question is to be submitted to the lecturer in the same
tutorial class.

TUTORIAL 1 (WEEK 2)
Economic Development and Developing Nations
1. Briefly describe the various definitions of the term development. What are the strengths
and weaknesses of each approach?
2. Why is a strictly economic definition of development inadequate? What do you
understand economic development to mean? Give examples of situations in which a
country may be developing economically but still underdeveloped?
3. Explain the distinction between low levels of living and low per capita income. Can low
levels of living co-exist with high levels of per capita income in a country? Explain and
give examples.
4. What is meant by the statement that many developing nations can be subject to
“dominance, dependence and vulnerability” in their relations with rich nations? Give
examples.

TUTORIAL 2 (WEEK 3)
Theories and Models of Development
1. Explain the concept of dualism and dual societies. Do your think that the concept of
dualism adequately portrays the development picture in most developing countries?
Explain.
2. Is the neoclassical, free-market theory necessarily incompatible with dependency
theory? How might these two approaches work together?
3. How does the endogenous (new) growth approach differ from the traditional (neo-
classical or Solow) approach? What are the implications for public policy in each case?

TUTORIAL 3 (WEEK 4)
Poverty and Income Distribution
1. Most development economists now seem to agree that the level and rate of growth of
GNI and per capita income do not provide sufficient or even accurate measures of a
country’s development. What is the essence of their argument? Give examples.
2. What is meant by absolute poverty? What is the poverty gap? How do these measures
differ from the UNDP’s Human Poverty Index (HPI)? Why should we be concerned with
the measurement of poverty in developing nations?
3. What is the relationship between a Lorenz curve and a Gini coefficient? Give some
examples of how Lorenz curves and Gini coefficients can be used as summary
measures of equality and inequality in a nation’s distribution of income.
4. Outline the range of major policy options available to LDC governments to alter and
modify the size distribution of their national income. Which policy or policies do you
believe are absolutely essential, and which are not critical? Explain.
ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 14/19
TUTORIAL 4 (WEEK 5)
Population Growth
1. How does the microeconomic theory of fertility relate to the theory of consumer choice?
Do you think that economic incentives and disincentives influence family size
decisions? Explain your answer, giving some specific examples of such incentives and
disincentives.
2. Outline and comment on some of the arguments against the idea that population growth
is a serious problem in developing nations.
3. Outline and comment on the various policy options available to LDC governments in
their attempt to modify or limit the rate of population growth.

TUTORIAL 5 (WEEK 6)
Human Capital
1. Distinguish between private and social benefits and cost of education. What economic
factors give rise to the wide divergence between private and social benefit-to-cost
valuations in most developing countries? Should governments attempt through their
educational and economic policies to narrow the gap between private and social
valuations? Explain.
2. What are the relationships between health and education, on the one hand, to
productivity and incomes, on the other?
4. Governments can influence the character, quality and content of their educational
systems by manipulating important economic and non-economic factors or variables
both inside and outside of and within educational systems. What are some of these
external and internal factors, and how can government policies make education more
relevant to the real meaning of development?

TUTORIAL 6 (WEEK 7)
Agricultural Transformation
1. What were the principal reasons for the relative stagnation of developing-country
agriculture during the so-called development decades of the 1960s and 1970s? How
can this disappointing performance be improved on in the future? Explain.
2. It is sometimes asserted that small peasant farmers are backward and ignorant
because they seem to resist agricultural innovations that could raise farm yields
substantially. Does this resistance stem from an inherent irrationality on their part, or
might it be attributable to some other factors overlooked by Western economists?
Explain.
3. What are the principal characteristics of each of the three stages in the transition from
subsistence to specialized agriculture?
4. There appears to be widespread agreement that in regions where the distribution of
land ownership is highly unequal (mainly Latin America but also parts of Asia), land
reform is a necessary but not sufficient condition for promoting and improving small-
scale agriculture. What is meant by this statement and by the concept of land reform?
Give some examples of supportive policy measures that might accompany land reform.

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 15/19

TUTORIAL 7 (WEEK 10)
International Trade Theory and Policy
1. Compare and contrast the classical labour cost theory of comparative advantage with
the neoclassical factor endowment theory of international trade. Include an analysis of
both assumptions and conclusions.
2. Critics of international trade from developing countries sometimes claim that present
trading relationships between developed and underdeveloped countries can be a
source of “antidevelopment” for the latter and merely serve to perpetuate their weak
and dependent status. Explain their argument. Do you tend to agree or disagree?
Explain.
3. Most less developed countries in Latin America, Africa and Asia have pursued policies
of import substitution as major components of their development strategies. Explain the
theoretical and practical arguments in support of import substitution policies. What have
been some of the weaknesses of these policies in practice, and why have the results
often not lived up to expectations?
4. What factors do you think are most important in implementing a successful, outward-
looking industrialization strategy?

TUTORIAL 8 (WEEK 11)

Balance of Payments and Debt Issues
1. Trace the evolution of the LDC debt problem during the 1970s and 1980s. What were
the key ingredients? Explain.
2. Who should bear most of the burden of responsibility for (a) causing and (b) lleviating
the debt crisis, LDCs or MDCs? And which agents within the LDCs and MDCs bear the
blame for the crisis?
3. Describe the typical IMF stabilization package for SICs. What are the objectives of
these policies, and why are international banks so eager for IMF negotiations to
precede their discussions with SICs?
4. What are the economic and social costs of IMF stabilization packages for LDCs? Give
examples.

TUTORIAL 9 (WEEK 12)

Finance, Investment and Aid
1. Summarise the arguments for and against the role and impact of private foreign
investment in less developed countries. What strategies might LDCs adopt to make
private foreign investment fit their development aspirations better without destroying all
incentives for foreign investors?
2. To what extent do private portfolio investments in LDCs benefit the recipient countries?
What are the potential costs and risks to both investors and recipients? Explain.
3. Under what conditions and terms do you think LDCs should seek and accept foreign aid
in the future? If aid cannot be obtained on such terms, do you think LDCs should accept
whatever they can get? Explain.

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 16/19

TUTORIAL 10 (WEEK 13)
Financial Reform and Fiscal Policy
1. What is meant by financial repression, financial liberalisation, currency substitution, and
unorganized money markets, and how do they relate to financial policy in developing
countries? Give specific examples.
2. In what ways do you think LDC taxation and expenditure systems could be improved?
3. What are the pros and cons of encouraging the development of stock markets in LDCs?

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 17/19

 ASSESSMENT 2
CASE STUDY

Choose ONE (1) question only.

Case Study 1: The Industrial and Trade Policies of South Korea

Data
Visit the World Bank dxDatabase available in the Computer Labs in Building 40. Select the
appropriate variables for Korea, Rep., as listed below, for 1906 and 2003 (or earliest and latest
available years, consistent across all variables).

Part A (10 marks)

Answer the following questions: (5 marks)
• What were Korea's GDP growth rates in 1960 and 2003?
• What were Korea's inflation rates in 1960 and 2003?
• What were Korea's gross capital formation rates in 1960 and 2003?
• What were Korea's GDP share of exports of goods and services in 1960 and 2003?
• What were Korea's GDP share of imports of goods and services in 1960 and 2003?
• What were Korea's shares of manufacturing high-technology exports in 1960 and 2003?

Inferring from these data, describe the improvements you observe in South Korea's economy and
trade pattern between 1960 and 2003? (5 marks)

Part B (10 marks)

Inferring from the data and solutions in Part A, and your independent research of the economic
growth and development of South Korea since 1960, discuss the impacts of Korea's industrial and
trade policies on its industrialization and growth.

OR

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 18/19

Case Study 2: Economic Growth and Development in Botswana
Data
Visit the World Bank dxDatabase available in the Computer Labs in Building 40. Select the
appropriate variables for Botswana, as listed below, for 1906 and 2003 (or earliest and latest
available years, consistent across all variables).

Part A (10 marks)

Answer the following questions: (5 marks)
• What were Botswana's GDP (current US$) in 1960 and 2003?
• What were Botswana's inflation rates (GDP implicit deflator, annual % growth) in 1960 and
2003?
• What were Botswana's GDP growth rates (annual, %) in 1960 and 2003?
• What were Botswana's gross capital formation rates (% of GDP) in 1960 and 2003?
• What were Botswana's foreign direct investment (current US$)) in 1960 and 2003?
• What were Botswana's aid per capita (current US$) in 1960 and 2003?

Review Botswana's data on:

• life expectancy (years)
• infant mortality rate (per 1,000 live births)
• prevalence of HIV (% of population aged 14-59)
• net secondary school enrolment (% relevant age group)
• access to improved sanitation (% of urban population).

Inferring from these data, describe the improvements you observe in Botswana's economy and
social condition between 1960 and 2003? (5 marks)

Part B (10 marks)

Inferring from the data and solutions in Part A, and your independent research of the economic
growth and development of Botswana since 1960, describe the development challenges Botswana
is facing in spite of its economic and social improvements.

ECON303: ECONOMIC DEVELOPMENT ISSUES Session 1, 2006 Pg. 19/19