Economics

Take-home final exam

Answer all questions. Altogether, your exam should be between 4-6 pages, typed, double-spaced, 12 point font, Times New Roman. Please submit only PDFs.

1. THIS QUESTION IS REQUIRED: Read the following articles on trade liberalization (all on Moodle) and answer the questions a-c that follow. Answer each part separately. (25 points)

IMF (2001), Global Trade Liberalization and the Developing Countries

Stiglitz and Charlton (2006), Free trade, fair trade in World Ark, March/April 2006

Fair trade and farm subsidies: How big a deal? Two Views in Real World Globalization p.213-219

Chang, H. J. (2003), Kicking away the ladder: the real history of free trade, Foreign Policy In Focus

a. What are the main arguments in favor of trade liberalization in developing countries?

(5 points)

b. What are the main arguments against trade liberalization in developing countries?

(10 points)

c. Briefly summarize the main arguments in Ha-Joon Chang’s article titled ‘Kicking away the ladder: the real history of free trade’. Do you agree with Chang’s assessment? (10 points)

2. Foreign resource flows: answer each part separately. (25 points)

a. It is often argued that inward flows of foreign direct investment by multinational or transnational corporations are essential to development. Explain three ways in which developing countries are expected to benefit from inflows of investment by these corporations. (9 points)

b. Clearly explain three potential negative effects that foreign direct investment can bring to a host country. (9 points)

c. Identify one other source of foreign resource inflows into a country, and discuss the limitations of relying on this particular source as a strategy for development. (7 points)

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