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Chapter 18: Q.16 (page 414)

What does this tell us about a comparison of the average rate of growth of real GDP since 2000 in emerging and developing nations compared with advanced nations?

Short Answer

Expert verified

a comparison of the average rate of growth of real GDP since 2000 in emerging and developing nations compared with advanced nations is shown.

Step by step solution

01

Given Information

GDP is the standard proportion of the worth added made through the development of labour and products in a country during a specific period. Accordingly, it additionally gauges the pay acquired from that creation or the aggregate sum spent on definite labour and products.

02

Explanation Part (1)

A comparison of the average rate of growth of real GDP since2000 in emerging and developing nations compared with advanced nations is shown.

03

Explanation Part (2)

Central African Republic, Congo Democratic Republic, Haiti, Liberia, Madagascar and Togo should be visible to have a populace development rate higher than the typical yearly per capita GDP development rate. This finishes into a typical yearly development pace of the genuine pay which is a lot slower than the development figures in the high-level nations

This is because of its aggressive and very much arranged development procedure. A coercive populace development strategy system combined with high development rates made it an exemption. The other non-industrial nations running against the norm neglected to accomplish the arrangement's purpose notwithstanding the population.

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Most popular questions from this chapter

Identify which of the following situations currently faced by international investors are examples of adverse selection and which are examples of moral hazard.

aAmong the governments of several developing countries that are attempting to issue new bonds this year, it is certain that a few will fail to collect taxes to repay the bonds when they mature. It is difficult, however, for investors considering buying government bonds to predict which governments will experience this problem.

bForeign investors are contemplating purchasing stock in a company that, unknown to them, may have failed to properly establish legal ownership over a crucial capital resource.

c. Companies in a less developed nation have already issued bonds to finance the purchase of new capital goods. After receiving the funds from the bond issue, however, the company's managers pay themselves large bonuses instead.

dWhen the government of a developing nation received a bank loan three years ago, it ultimately repaid the loan but had to reschedule its payments after officials misused the funds for unworthy projects. Now the government, which still has many of the same officials, is trying to raise funds by issuing bonds to foreign investors, who must decide whether or not to purchase them.

Suppose that a foreign resident is contemplating buying 5 per cent of the shares of a company based in a developing nation but is experiencing difficulty determining whether the firm is riskier than others in that country. What type of investment is this foreign resident considering, and what type of asymmetric information problem is he or she experiencing?

A country's real GDP is growing at an annual rate of 3.1percent, and the current rate of growth of per capital real GDP is0.3 percent per year. What is the population growth rate in this nation?

Discuss the sources of international investment funds for developing nations.

Answer the following questions concerning proposals to reform long-term development lending programs currently offered by the IMF and World Bank.

a. Why might the World Bank face moral hazard problems if it were to offer to provide funds to governments that promise to allocate the funds to major institutional reforms aimed at enhancing economic growth?

b. How does the IMF face an adverse selection problem if it is considering making loans to governments in which the ruling parties have already shown predispositions to try to "buy" votes by creating expensive public programs in advance of elections? How might following an announced rule in which the IMF cuts off future loans to governments that engage in such activities reduce this problem and promote increased economic growth in nations that do receive IMF loans?
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