chapter 10 tmqt

The infant industry argument was an important theoretical basis for

• Neo-colonialist theory of international exploitation

• Import - substituting industrialization

• Historiography of the industrial revolution in Western Europe

• East-Asian miracle.

• None of the above.

Sophisticated theoretical arguments supporting import-substitution policies include

• Terms of trade effects

• Scale economy arguments.

• Learning curve considerations

• The problem of appropriability

• None of the above

General equilibrium considerations lead to the realization that import-substituting policies have an effect of

• Discouraging exports.

• Encouraging exports.

• Encouraging an efficient use of a country's resources.

• Generating large tariff revenues for the government

• None of the above.

Historically those few developing countries which have succeeded in significantly raising their per-capita income levels

• Did not accomplish this with import-substituting industrialization

• Did accomplish this with import-substituting industrialization

• Tended to provide heavy protection to domestic industrial sectors.

• Favored industrial to agricultural or service sectors.

• None of the above.

Statistical evidence suggests that

• Free trade policies promote economic growth more effectively than do import substitution policies.

• Import substituting policies tend to promote effective exploitation of scale economies

• Import substitution tends to lead to relatively low effective rates of protection

• Import substitution is to this day the preferred growth strategy promoted by the World Bank

• None of the above.

The wage differential theory which argued that shifting resources from agriculture to manufacturing entailed positive social benefits implied that

• Free trade policies would promote competitiveness

• Free trade policies would promote economic growth for both static and dynamic reasons.

• Protectionism was likely to lead to economic stagnation

• Protectionism and import substitution was likely to promote economic growth

• None of the above.

The Harris-Todaro model

• Lead to a rejection of the import substitution strategy for economic development.

• Supported the protectionist strategy for economic growth

• Implied that the free trade approach was not likely to promote economic growth

• Both b and c

• None of the above.

The growth successes of the high performance Asian economies

• Supports the belief that economic development requires import substitution policies

• Rejects the belief that export-oriented industrialization is likely to promote economic development.

• Rejects the belief that economic development requires import substitution policies

• Suggests that free trade policies are required for successful economic development

• None of the above.

The high correlation between rapid growth in exports and rapid economic growth observed in several East Asia countries in recent decades proves that

• Export promoting trade policy leads to relatively rapid economic growth.

• A free-trade orientation of trade policy results in rapid economic growth.

• Exports help growth, whereas imports impede growth

• Trade policy is perhaps the most important policy area for promotion of economic development.

• None of the above.

The relatively rapid economic growth experienced by Chile in the late 1980s

• Supported the conventional Latin American reliance on import substitution.

• Supported the conventional Latin American reliance on import substitution.

• Rejected the conventional Latin American reliance on import substitution

• Demonstrated the importance of market failure as a reason for import substitution

• None of the above