ECON 4053 Development Economics, Semester 1, 2024-2025
Note: NOT a group assignment. Please submit your own answers on iSpace before/on October 25.
Q1: (20 marks)
a) What are the three core values of development? (6 marks)
b) What are the three indicators of development? (6 marks)
c) How are the three indicators related to Amartya Sen’s “capabilities” approach of development? Briefly explain your answers. (8 marks)
Q2: (20 marks)
a) Summarize the different assumptions on return to capital in the AK model and the Solow
Neoclassical growth model. Discuss the different implications of a higher saving rate in these two models. (10 marks)
b) Why do many economists believe that the Lewis model can explain the Chinese economy over the period 1990-2010? Explain. (10 marks)
Q3: (40 marks) The citizens in Happy Island are evenly divided into 10 groups according to their income levels. The following table shows the average annual real incomes of these groups in the years 2010 and 2020, respectively.
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Group #
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2010
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2020
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1
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1,000
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1,200
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2
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1,500
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1,600
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3
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1,800
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2,100
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4
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2,400
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2,600
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5
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4,000
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3,500
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6
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5,000
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4,500
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7
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6,000
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5,000
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8
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8,000
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8,000
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9
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20,000
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40,000
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10
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100,000
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200,000
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a) (4 marks) Calculate the Kuznets ratio in 2010 and 2020, respectively.
b) (6 marks) Carefully graph the Lorenz curves for the years 2010 and 2020 in one diagram. Label the axes clearly. (You are encouraged to use Excel, STATA, etc. to draw the diagram.)
c) (3 marks) How would you calculate the Gini coefficient of income for Happy Island? Explain.
d) (3 marks) Do you think the income inequality of Happy Island increased or decreased over 2010-2020? Explain.
Assume that the poverty line set by the United Nations is $2,500/year.
e) (14 marks) Complete the following form. for Happy Island.
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2010
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2020
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Headcount index
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Total poverty gap
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Average poverty gap
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Average income shortfall
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Normalized poverty gap
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Normalized income shortfall
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Foster-Greer-Thorbecke P2
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f) (4 marks) Did the extent of absolute poverty increase or decrease in Happy Island over the period 2010-2020? Explain.
g) (6 marks) How do you evaluate the development of Happy Island over the period 2010-2020?
Q4: (20 marks)
a) Describe the typical age structure of a least-developed country. Explain the reasons behind this typical age structure. (6 marks)
b) What is Malthusian population trap? What’s the main suggestion of modern-day neo-Malthusians to population policy? (6 marks)
c) What are your opinions on the relation between population growth and economic development? Briefly discuss the reasons. (8 marks)