Tshwane University of Technology

ECON ALE30BT

Chapter 2

1)Explain how low levels of living can turn into a vicious cycle in developing countries.

2. Explain some of the similar problems faced by otherwise diverse countries in Africa, Asia, and Latin America.
3. What are some of the main ways in which the economies of developing countries differ from one another?
4. Explain why purchasing power parity measures of income levels tend to show a smaller difference between poor and rich countries.

5. What are the three main indicators that make up the Human Development Index?
6. If countries are first ranked by level of real GDP per capita, and then by the value of the Human Development Index, would you expect the ranking of countries to be similar or different. Explain
7. Comment on the following statement: The level and growth rate of real GDP per capita can be a misleading indicator of development. At the same time, countries that experience sustained increases in real GDP per capita over time will tend to be more developed.
8. What are the three major components of economic growth?

9. Explain the lingering effects of colonialism and how it is still playing a role in hindering economic development in the developing world.

10. The 2006 Human Development Report reported that the HDI of South Africa was 0.653 (and its rank was 121) and that of the Peru was 0.767 (and its rank was

82). South Africa’s per capita income (in PPP dollars) was 11,192 and that of Peru was 5,678. Comment and explain.

11. Are living standards in developed and developing countries converging? Give evidence to support your answer.
12. How is poverty measured? What is the extent of poverty in the developing world?

13. What are the major differences between the new HDI and the original HDI?