Dr. Don J. DeVoretz April 12, 1997

Dept. of Economics

Simon Fraser University Name__________________

ID # __________________

Part A: Short answer: Answer any four. Each question worth 12.5 points. Use information from your country when appropriate.

1. Calculate the required amount of net savings for your country's income per capita to grow at 2.5 per cent per annum. Repeat the above exercise assuming that your country did not change except that it had Canada's population growth rate of approximately 1/2 of per cent.

2. Your country requires both imports and foreign investment to grow. With the aid of the Balance of Payments schedule explain the mechanisms to finance the required imports and the necessary foreign investment.

3. Provide through graphical analysis the argument for the gains from trade available to all poor countries that make their economies more export oriented. Next, with the aid of a diagram explain why these gains are reduced or increased as the terms of trade change in your country. With facts about the terms of trade explain if your country has gained over time from trading.

4. The demographic transition theory argues that as development proceeds a country will pass from stage one or two through to stage four.

a. Outline the four stages of the model and explain what demographic factor drives each stage.

b. Place your country in its current stage and add the correct numbers to the diagram

c. What prevents your country from moving to the next stage ?

d. If your country moved from its current stage in the demographic transition theory to stage IV how fast would your country now grow?

5. Explain the strengths and weakness of the Human Development Index. Why does your country get a relatively low rating while Canada gets a high ranking ?

Part B. Each question is worth 25 points:

1. Evaluate both the effectiveness and harmful features of the following international organizations on your country's development prospects.

a. IMF

b. World Bank

c. CIDA-Canada's Aid agency

d. International Commodity Agreements

e. GATT or now called World Trade Organization

2. Explain the ethical issue(s) that enter into the development process under the following topics:

a. Trade and Child Labour

b. Trade versus Aid

c. Trade, growth and the environment

d. Growth and income distribution

e. Brain Drain, education and the international flow of human capital

Once you have outlined the issues state a Canadian policy that would reduce the impact of these negative side effects whilst not slowing down your country's development.