Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

Spring Semester 2022

Development Economics II

Midterm Test

Question 1 (50 points)

Regarding the effects of trade liberalization over economic convergence, some experts sustain that global trade liberalization generated economic divergence among countries. The main    reason for this effect is that developing countries remain as commodities producers and they are unable to move their economic complexity toward more sophisticated goods production.

On the other hand, another group of economists contend that trade liberalization impulses    the GDP of developing countries but they failed to solve internal structural problems such as

poverty, informality, income inequality, and low quality education. Which of the postures do you agree with? Why?

Question 2 (50 points):

Recently most research papers have been using mathematically complex economic growth      models. One of the critics of those models, mostly endogenous growth models, is that they    overuse mathematics, making the intuition more complicated and, in some cases, lost. In       some cases, even the equilibrium is impossible to find, and we need to use numerical methods to understand the behavior of these models.

On the other hand, supporters of these methodologies sustain this complexity because the model is more complete since it incorporates more aspects of the economy.

Do you agree that more complex models allow us to incorporate more aspects of the economy, even when some interpretation power may be lost? Or do you agree the simpler is better       because simple models allow us to have a straightforward understanding of the economic        phenomena?

Question 3 (50 points):

Considering the paper  “Is India’s Economic Growth Leaving the Poor Behind?” Journal of Economic Perspectives — Volume 16, Number 3 —Summer 2002 —Pages 89– 108 from Gaurav Datt and Martin Ravallion.

• What are the main conclusions respect to the relationship between poverty and economic growth?

• What are the main reasons why economic growth may not reduce poverty?