South Asia and the World Economy Practice Test
- Which of the following is an alternative theory of trade in South Asia that emphasizes state intervention over market forces?
A) Classical trade theory
B) Mercantilism
C) Comparative advantage theory
D) New trade theory
Answer: B) Mercantilism
- In the context of South Asian development, which theory emphasizes the role of institutions in driving economic growth?
A) Neoclassical growth theory
B) Dependency theory
C) Endogenous growth theory
D) World-systems theory
Answer: C) Endogenous growth theory
- According to the dependency theory, why did South Asian countries remain economically underdeveloped?
A) Lack of natural resources
B) Exploitation by developed countries
C) Poor governance
D) Geopolitical instability
Answer: B) Exploitation by developed countries
- Which development theory suggests that South Asian economies can achieve growth by adopting the same policies as developed countries?
A) Dependency theory
B) Structuralist theory
C) Modernization theory
D) World-systems theory
Answer: C) Modernization theory
- What does the New Trade Theory argue regarding trade between South Asian nations and the rest of the world?
A) Trade should be based on comparative advantage.
B) Developing nations should rely on self-sufficiency.
C) Market imperfections can lead to benefits from economies of scale.
D) Trade barriers should be eliminated for all nations.
Answer: C) Market imperfections can lead to benefits from economies of scale.
- According to the South Asian perspective on globalization, which of the following is the most likely challenge for the region?
A) Economic growth through foreign investment
B) Increased income inequality
C) The rise of global institutions
D) Declining agricultural productivity
Answer: B) Increased income inequality
- In the context of growth, which of the following is a key characteristic of the ‘Asian Tigers’ model, which has been influential in South Asia?
A) The emphasis on agricultural reform
B) Rapid industrialization and export-led growth
C) Self-sufficiency and isolationist policies
D) A focus on natural resource exploitation
Answer: B) Rapid industrialization and export-led growth
- The concept of “economic dualism” in South Asia refers to:
A) The coexistence of traditional agriculture and modern industry
B) The rapid growth of both the public and private sectors
C) The stark contrast between rural and urban economies
D) The division between wealthy and poor regions
Answer: A) The coexistence of traditional agriculture and modern industry
- Which of the following theories highlights the importance of external factors, such as foreign aid and trade, in the development of South Asia?
A) Structuralist theory
B) Dependency theory
C) Neoliberal theory
D) World-systems theory
Answer: B) Dependency theory
- Which development theory stresses that South Asian economies should follow a strategy of import substitution industrialization (ISI) to achieve growth?
A) Modernization theory
B) Structuralist theory
C) Neoclassical growth theory
D) Endogenous growth theory
Answer: B) Structuralist theory
- Which theory argues that developing countries, including those in South Asia, should focus on export-led growth to drive development?
A) Dependency theory
B) Neoclassical theory
C) Modernization theory
D) Structuralist theory
Answer: C) Modernization theory
- In the South Asian context, which of the following is the primary role of the state according to the Structuralist theory of development?
A) Minimizing regulation and market interference
B) Encouraging foreign investments exclusively
C) Promoting industrialization through state intervention
D) Focusing solely on rural development
Answer: C) Promoting industrialization through state intervention
- The “Big Push” theory of development suggests that:
A) Small-scale projects will suffice for development in South Asia
B) Large investments in key sectors are necessary for economic growth
C) External trade barriers must be removed for success
D) Aid dependency should be minimized
Answer: B) Large investments in key sectors are necessary for economic growth
- According to the World Systems theory, which of the following would South Asia be classified as?
A) Core nations
B) Semi-peripheral nations
C) Peripheral nations
D) Transnational nations
Answer: C) Peripheral nations
- Which development model emphasizes the importance of technology transfer and innovation for South Asian growth?
A) Neoclassical growth model
B) Endogenous growth theory
C) Dependency theory
D) Structuralist theory
Answer: B) Endogenous growth theory
- In the South Asian context, the practice of import substitution industrialization (ISI) aimed to:
A) Encourage export markets by reducing tariffs
B) Build a domestic industry by replacing imports with local production
C) Rely on foreign investment to drive growth
D) Reduce reliance on government interventions
Answer: B) Build a domestic industry by replacing imports with local production
- The “Flying Geese” model, which is often associated with South Asia’s development, highlights the importance of:
A) Expanding local agricultural production
B) Technology and knowledge transfer from more developed to less developed nations
C) Building infrastructure through foreign loans
D) Creating free trade zones
Answer: B) Technology and knowledge transfer from more developed to less developed nations
- Which economic theory suggests that South Asian economies should primarily focus on the export of raw materials and commodities to stimulate growth?
A) Mercantilism
B) Dependency theory
C) Classical trade theory
D) Structuralism
Answer: A) Mercantilism
- Which of the following is a key feature of the Neoclassical growth theory that can be applied to South Asian economies?
A) Strong emphasis on state-driven industrialization
B) Reliance on capital accumulation and technological advancement
C) Focus on reducing foreign direct investment (FDI)
D) Promoting self-sufficiency through agricultural growth
Answer: B) Reliance on capital accumulation and technological advancement
- According to the Dependency theory, South Asian countries are dependent on:
A) The global flow of capital and foreign aid
B) Self-sustaining internal growth
C) Strict government regulation of the economy
D) Market liberalization
Answer: A) The global flow of capital and foreign aid
- Which of the following was a primary policy focus of South Asia during the era of import substitution industrialization (ISI)?
A) Deregulating industries to encourage foreign investment
B) Promoting export industries and opening up to global trade
C) Restricting foreign imports to foster domestic industries
D) Reducing tariffs on imports from developed countries
Answer: C) Restricting foreign imports to foster domestic industries
- Which of the following was a result of South Asian adoption of export-oriented growth strategies?
A) Increased agricultural output and rural development
B) Decreased dependency on foreign loans
C) Stronger integration into the global market
D) Increased economic isolation from the world economy
Answer: C) Stronger integration into the global market
- The “dual economy” model in South Asia suggests the existence of:
A) Both highly advanced and underdeveloped industrial sectors
B) A mix of traditional agricultural economies and modern industrial sectors
C) An over-reliance on state-owned enterprises
D) A single, unified economic structure
Answer: B) A mix of traditional agricultural economies and modern industrial sectors
- According to the Heckscher-Ohlin theory, South Asia’s comparative advantage lies in:
A) Capital-intensive goods
B) Labor-intensive goods
C) Technology-intensive products
D) Services
Answer: B) Labor-intensive goods
- According to the New International Division of Labor (NIDL), South Asia is primarily involved in:
A) High-tech manufacturing
B) Low-wage manufacturing and assembly tasks
C) Research and development sectors
D) Global finance and investment
Answer: B) Low-wage manufacturing and assembly tasks
- The “trickle-down” theory in the context of South Asian development suggests that:
A) Government interventions should be minimized to allow the market to function
B) Growth in wealth at the top will eventually benefit all sectors of society
C) Agricultural growth should take priority over industrialization
D) Economic progress can only occur with strict regulation and control
Answer: B) Growth in wealth at the top will eventually benefit all sectors of society
- In the context of South Asia, which of the following is a major drawback of neoliberal economic reforms?
A) Increased government spending on social services
B) The rise of income inequality and poverty
C) Reduction in foreign direct investment
D) Slower economic growth
Answer: B) The rise of income inequality and poverty
- Which of the following best describes the “Washington Consensus” as it relates to South Asia?
A) A focus on state-led development strategies
B) A series of neoliberal economic reforms recommended by international institutions
C) An emphasis on import substitution industrialization
D) A plan for regional trade cooperation within South Asia
Answer: B) A series of neoliberal economic reforms recommended by international institutions
- According to the growth pole theory, South Asia’s development should focus on:
A) Encouraging rural growth through agriculture
B) Fostering the development of specific regions or sectors to stimulate broader economic growth
C) Maintaining a strong focus on primary industry exports
D) Relying on foreign aid for economic development
Answer: B) Fostering the development of specific regions or sectors to stimulate broader economic growth
- Which of the following theories would most likely recommend that South Asia focus on developing its human capital for sustained growth?
A) Neoclassical growth theory
B) Endogenous growth theory
C) Mercantilism
D) Dependency theory
Answer: B) Endogenous growth theory
- According to the export-led growth theory, South Asia can achieve sustained development by:
A) Decreasing its reliance on foreign direct investment
B) Limiting trade with developed countries
C) Expanding its exports and integrating into global markets
D) Focusing exclusively on agricultural productivity
Answer: C) Expanding its exports and integrating into global markets
- Which of the following is a primary criticism of the Dependency theory in the context of South Asia?
A) It overestimates the role of government intervention
B) It underestimates the potential benefits of foreign aid
C) It focuses too much on domestic factors and ignores global influences
D) It neglects the possibility of self-sustained growth
Answer: D) It neglects the possibility of self-sustained growth
- According to the Dependency theory, South Asia’s economic underdevelopment is caused by:
A) Technological barriers
B) Poor governance within the region
C) The global capitalist system exploiting developing countries
D) The lack of investment in human capital
Answer: C) The global capitalist system exploiting developing countries
- The concept of “latent comparative advantage” in South Asia refers to:
A) The inherent ability of a country to produce a good more efficiently than others
B) The unrecognized potential of countries to export certain goods after development
C) The imbalance in trade between South Asia and developed nations
D) The theoretical benefit of foreign aid over trade
Answer: B) The unrecognized potential of countries to export certain goods after development
- Which theory of economic development suggests that South Asian countries can benefit from initial protectionism followed by gradual liberalization?
A) Neoclassical growth theory
B) Modernization theory
C) Structuralist theory
D) Endogenous growth theory
Answer: C) Structuralist theory
- The concept of “sustainable development” in the South Asian context emphasizes:
A) Growth based solely on export industries
B) Economic growth without considering environmental impacts
C) Equitable growth that accounts for social, economic, and environmental factors
D) A focus on raw material exports for short-term development
Answer: C) Equitable growth that accounts for social, economic, and environmental factors
- According to the Modernization theory, South Asia’s development would be best supported by:
A) High tariffs on imports and promoting self-sufficiency
B) Extensive government control over industrial and agricultural sectors
C) Modernizing the agricultural sector while increasing industrial output
D) Rejecting global trade in favor of local economies
Answer: C) Modernizing the agricultural sector while increasing industrial output
- Which of the following strategies is commonly advocated by proponents of export-led growth for South Asia?
A) Focus on self-sufficiency in energy production
B) Build and expand export industries to increase global market share
C) Restrict foreign investments and capital inflows
D) Maintain high trade barriers to protect domestic industries
Answer: B) Build and expand export industries to increase global market share
- The term “post-colonial development” in South Asia refers to:
A) The economic policies implemented during the colonial era
B) The development strategies that emerged after the end of colonial rule
C) The continuation of colonial trade practices in the modern era
D) The development of South Asia as a major colonial power
Answer: B) The development strategies that emerged after the end of colonial rule
- Which of the following is a characteristic of the “Asian Tigers” model of development, often cited in comparison with South Asian growth strategies?
A) A focus on agriculture and rural development
B) A strong emphasis on export-led industrialization and high-tech industries
C) A reliance on external aid and loans
D) Protectionist policies to support local industries
Answer: B) A strong emphasis on export-led industrialization and high-tech industries
- The “New International Economic Order” (NIEO) advocated for by some South Asian leaders during the 1970s was aimed at:
A) Reducing reliance on foreign capital
B) Implementing free-market capitalism worldwide
C) Securing greater control over global trade and development policies for developing countries
D) Expanding global financial institutions’ influence
Answer: C) Securing greater control over global trade and development policies for developing countries
- According to the classical theory of trade, South Asia’s trade advantage would primarily stem from:
A) Its capital-intensive industries
B) Its large labor force and low-cost manufacturing
C) Technological innovation
D) Its high-skilled workforce in services
Answer: B) Its large labor force and low-cost manufacturing
- Which of the following does the endogenous growth theory emphasize as a key factor in South Asia’s economic development?
A) Government-imposed tariffs on imports
B) Technological advancement and innovation
C) Low levels of foreign direct investment
D) Dependence on agricultural productivity
Answer: B) Technological advancement and innovation
- According to the Mercantilist theory, South Asia should:
A) Restrict imports and focus on increasing exports to achieve trade surpluses
B) Rely heavily on foreign aid and international institutions
C) Open its markets to all countries and reduce tariffs
D) Focus on domestic consumption rather than trade
Answer: A) Restrict imports and focus on increasing exports to achieve trade surpluses
- According to the World-systems theory, the South Asian economy can be considered as part of:
A) The core of the global economy
B) The semi-periphery of the global economy
C) The periphery of the global economy
D) The center of global technological innovation
Answer: C) The periphery of the global economy
- Which of the following is an example of a “growth pole” in the South Asian economy?
A) A rural area with no access to global markets
B) A city that leads industrial development and attracts investment
C) A region focused on agricultural production with minimal industrial activity
D) A community focused solely on exporting raw materials
Answer: B) A city that leads industrial development and attracts investment
- The concept of “late development” in South Asia suggests that the region can:
A) Skip earlier stages of development and move directly to advanced industrialization
B) Continue with a reliance on agriculture for growth
C) Focus on self-sufficiency and limit foreign influence
D) Adopt external market-based models for rapid development
Answer: A) Skip earlier stages of development and move directly to advanced industrialization
- The term “neo-imperialism” in the context of South Asia refers to:
A) The dominance of foreign powers in South Asia’s economic development through trade and investment
B) The process of decolonization and the withdrawal of European powers
C) South Asia’s independence from global economic systems
D) The movement toward regional self-sufficiency in the global market
Answer: A) The dominance of foreign powers in South Asia’s economic development through trade and investment
- According to the neoclassical growth theory, which factor is most important for South Asia to improve its economic growth rate?
A) Reducing government spending
B) Increasing foreign aid
C) Improving capital accumulation and technological advancement
D) Restricting foreign direct investment
Answer: C) Improving capital accumulation and technological advancement
- Which of the following best describes the primary focus of “human development” in the context of South Asia’s economic growth?
A) Increasing output and industrial capacity at all costs
B) Focusing on enhancing human welfare, including education and health
C) Restricting population growth through strict government policies
D) Reducing the role of the state in all economic activities
Answer: B) Focusing on enhancing human welfare, including education and health
- Which of the following is a major criticism of the “Big Push” theory of development in South Asia?
A) It relies too heavily on foreign aid
B) It disregards the role of local entrepreneurship
C) It assumes that large investments in infrastructure will automatically lead to growth
D) It advocates for extreme protectionist policies
Answer: C) It assumes that large investments in infrastructure will automatically lead to growth
- The “Washington Consensus” approach to economic development focuses primarily on:
A) Expanding state-owned enterprises and reducing privatization
B) Emphasizing import substitution as a growth strategy
C) Encouraging free-market reforms, deregulation, and fiscal austerity
D) Increasing reliance on foreign aid for growth
Answer: C) Encouraging free-market reforms, deregulation, and fiscal austerity
- According to the “dual economy” model, South Asia’s development is often hindered by:
A) A lack of capital and technology
B) The coexistence of modern and traditional sectors, creating unequal development
C) The over-reliance on foreign investment
D) The failure to integrate rural areas into global trade
Answer: B) The coexistence of modern and traditional sectors, creating unequal development
- In the context of South Asia’s economic growth, the “Prebisch-Singer Hypothesis” suggests that:
A) Developed countries tend to export low-value goods while importing high-value goods
B) The terms of trade will improve over time for developing nations like those in South Asia
C) Raw material exports will allow South Asia to achieve self-sustained growth
D) South Asia should focus on regional rather than global trade networks
Answer: A) Developed countries tend to export low-value goods while importing high-value goods
- According to the “stages of growth” theory by Walt Rostow, South Asia should focus on:
A) Exporting labor-intensive products to developed countries
B) Moving through the five stages of growth, including the traditional society and take-off stages
C) Maintaining a closed economy and limiting foreign exchange dependency
D) Focusing primarily on agricultural exports for the long-term growth
Answer: B) Moving through the five stages of growth, including the traditional society and take-off stages
- The “capabilities approach” to development, popularized by Amartya Sen, emphasizes:
A) Maximizing economic output through industrialization
B) Reducing the role of the state in social services
C) Improving individuals’ capabilities to lead the kind of life they value, including education, health, and freedom
D) Maximizing foreign trade at the expense of local industries
Answer: C) Improving individuals’ capabilities to lead the kind of life they value, including education, health, and freedom
- In the context of trade theory, which of the following strategies would be most consistent with “import substitution industrialization” (ISI) in South Asia?
A) Reducing tariffs on imported goods to encourage competition
B) Promoting local industries by limiting imports and focusing on domestic production
C) Encouraging foreign companies to invest in South Asia’s economy
D) Prioritizing exports as the main source of economic growth
Answer: B) Promoting local industries by limiting imports and focusing on domestic production
- Which of the following would be a key policy recommendation from the “institutional approach” to economic development in South Asia?
A) Strengthening property rights and enforcing contracts to foster entrepreneurship
B) Promoting free trade with developed nations as a path to growth
C) Limiting the role of state intervention in the economy
D) Focusing on agricultural development while restricting industrialization
Answer: A) Strengthening property rights and enforcing contracts to foster entrepreneurship
- The “new trade theory,” which has been applied in South Asia, emphasizes the importance of:
A) Government subsidies to encourage domestic industries
B) The role of economies of scale and network effects in creating trade advantages
C) Reducing trade barriers between developing nations to foster regional growth
D) The benefits of complete economic self-sufficiency for growth
Answer: B) The role of economies of scale and network effects in creating trade advantages
- The “East Asian model” of development, which contrasts with South Asia’s experience, emphasizes:
A) Heavy reliance on foreign aid and loans
B) A focus on industrialization through state-directed credit and investment
C) Prioritizing agricultural exports to stimulate industrial growth
D) Minimal state intervention in economic planning
Answer: B) A focus on industrialization through state-directed credit and investment
- According to the “human capital theory,” South Asia can promote economic growth by:
A) Focusing on the development of physical capital alone
B) Investing in the education and skills of its workforce
C) Limiting foreign investment and focusing on internal resources
D) Encouraging an increase in labor-intensive industries
Answer: B) Investing in the education and skills of its workforce
- The “Capital Accumulation Theory” of growth suggests that economic growth in South Asia can be achieved primarily by:
A) Expanding the agricultural sector to increase exports
B) Increasing the stock of physical capital, such as infrastructure and machinery
C) Focusing on reducing income inequality across the region
D) Limiting foreign capital inflows and focusing on domestic savings
Answer: B) Increasing the stock of physical capital, such as infrastructure and machinery
- The “Globalization theory” suggests that for South Asia to grow economically, it must:
A) Avoid foreign investments and remain self-sufficient
B) Engage more deeply in global trade networks and integrate with the global economy
C) Focus on maximizing exports to neighboring countries
D) Isolate itself from the global financial markets to reduce risks
Answer: B) Engage more deeply in global trade networks and integrate with the global economy
- The “Trickle-down theory” suggests that economic growth in South Asia will ultimately benefit:
A) Only the wealthiest members of society
B) Large urban centers and multinational corporations
C) The broader population as wealth generated at the top eventually reaches the lower income groups
D) Rural areas and agricultural workers
Answer: C) The broader population as wealth generated at the top eventually reaches the lower income groups
- A key criticism of the “structural adjustment programs” implemented by the IMF and World Bank in South Asia is that they often lead to:
A) Excessive state intervention in markets
B) Environmental degradation due to unregulated industrialization
C) Widening income inequality and social unrest
D) A reduction in the role of international trade
Answer: C) Widening income inequality and social unrest
- According to the “growth diagnostics” approach, South Asia should first address which of the following before pursuing industrialization?
A) Environmental sustainability
B) Identifying and eliminating key constraints to economic growth
C) Increasing social welfare programs
D) Maximizing capital outflows to increase international investment
Answer: B) Identifying and eliminating key constraints to economic growth
- Which of the following is a feature of “inclusive growth” in South Asia?
A) Prioritizing the growth of urban areas at the expense of rural development
B) Ensuring that the benefits of economic growth are widely distributed across all segments of society
C) Focusing on maintaining the status quo and avoiding economic reforms
D) Increasing dependence on foreign direct investment over domestic industries
Answer: B) Ensuring that the benefits of economic growth are widely distributed across all segments of society
- In terms of economic growth, the “traditional view” of South Asia’s development emphasizes:
A) The need for significant external intervention to stimulate growth
B) Relying primarily on labor-intensive manufacturing to drive growth
C) Focusing on human development as the key to economic success
D) Government-led industrialization and heavy investment in public infrastructure
Answer: B) Relying primarily on labor-intensive manufacturing to drive growth
- The “Sustainable Development Goals” (SDGs) for South Asia focus on which of the following areas?
A) Fostering unregulated free markets
B) Encouraging the mass migration of workers to developed countries
C) Promoting balanced economic growth while protecting social and environmental resources
D) Reducing the role of the government in social services
Answer: C) Promoting balanced economic growth while protecting social and environmental resources
- In the context of the “World Systems Theory,” South Asia is primarily positioned as:
A) A core region that drives global trade and development
B) A peripheral region dependent on the core for technological innovations and capital
C) A semi-peripheral region with equal trade relationships
D) An independent zone free from the global capitalist system
Answer: B) A peripheral region dependent on the core for technological innovations and capital
- Which theory posits that trade can improve the welfare of developing countries, such as those in South Asia, by allowing them to specialize in industries where they have a comparative advantage?
A) Dependency theory
B) Heckscher-Ohlin theory
C) Theory of Comparative Advantage
D) Structuralism
Answer: C) Theory of Comparative Advantage
- The “Dependency Theory” argues that economic development in South Asia is hindered because:
A) It is not integrated into the global economy
B) Developed countries exploit the region’s resources and labor, keeping it in a state of underdevelopment
C) It relies too heavily on exports of raw materials
D) It does not focus on rural areas and agricultural development
Answer: B) Developed countries exploit the region’s resources and labor, keeping it in a state of underdevelopment
- Which of the following is a key feature of the “Export-led Growth” model used in South Asia’s development strategies?
A) A focus on heavy industry and resource extraction
B) Liberalization of trade to encourage the export of goods and services
C) Protectionist policies to limit foreign competition
D) Focus on increasing domestic demand without external trade
Answer: B) Liberalization of trade to encourage the export of goods and services
- In the context of South Asian economies, “inclusive growth” aims to:
A) Focus on economic growth without concern for income distribution
B) Promote growth that benefits only urban populations
C) Ensure that the economic growth benefits all sections of society, including the poor and marginalized
D) Limit the role of the government in economic planning
Answer: C) Ensure that the economic growth benefits all sections of society, including the poor and marginalized
- According to “neoliberal economic policies,” which of the following is a key recommendation for South Asian countries?
A) Increased government intervention and subsidies in key industries
B) Promoting privatization and reducing state control over the economy
C) Protectionism to shield domestic industries from global competition
D) Focusing on domestic markets and limiting foreign trade
Answer: B) Promoting privatization and reducing state control over the economy
- Which of the following is a characteristic of the “neo-classical” economic approach to development in South Asia?
A) A strong emphasis on state-led industrialization
B) The belief that markets are self-regulating and should not be interfered with
C) Focus on import substitution industrialization
D) Protectionist policies to foster local industries
Answer: B) The belief that markets are self-regulating and should not be interfered with
- The “Structuralist” approach to development, often applied to South Asia, argues that the region should focus on:
A) Relying on market forces to dictate economic growth
B) A gradual reduction in state involvement in the economy
C) Reducing dependence on foreign capital and promoting local industries through state intervention
D) Open trade and full integration with the global economy
Answer: C) Reducing dependence on foreign capital and promoting local industries through state intervention
- The “Gandhian economic approach” in South Asia advocates for:
A) Full integration into the global capitalist system
B) Industrialization through large factories
C) A focus on self-reliance, rural development, and minimal dependence on foreign trade
D) Extensive government subsidies for large multinational companies
Answer: C) A focus on self-reliance, rural development, and minimal dependence on foreign trade
- According to “Endogenous Growth Theory,” South Asia’s economic development can be driven by:
A) Foreign capital and technologies alone
B) Investment in human capital and innovation within the region
C) Heavy reliance on natural resources and exports
D) Importing technologies from developed countries without local adaptation
Answer: B) Investment in human capital and innovation within the region
- In South Asia, the “Role of State” approach to development suggests that:
A) The state should have minimal involvement in the economy
B) Governments must actively intervene to address market failures and ensure equitable development
C) A focus on reducing the role of the public sector is crucial for growth
D) Economic development should solely rely on foreign investments and external trade
Answer: B) Governments must actively intervene to address market failures and ensure equitable development
- According to “theories of modernization,” South Asia’s development depends on:
A) Rejecting foreign investment and focusing solely on internal resources
B) Moving through linear stages of economic development, similar to Western nations
C) Focusing entirely on agricultural reform and rural growth
D) Dependence on foreign aid and investment to stimulate growth
Answer: B) Moving through linear stages of economic development, similar to Western nations
- Which of the following is a key criticism of the “Export-oriented Industrialization” model in South Asia?
A) It leads to higher tariffs and protectionist policies
B) It focuses too much on local industries and does not promote international trade
C) It can result in excessive dependence on external markets and foreign demand
D) It ignores the environmental impact of rapid industrialization
Answer: C) It can result in excessive dependence on external markets and foreign demand
- The “Human Development Index” (HDI) introduced by the United Nations is used to measure development based on:
A) Only GDP per capita
B) A composite of life expectancy, education, and income
C) Total exports and trade volumes
D) Environmental sustainability and carbon emissions
Answer: B) A composite of life expectancy, education, and income
- The “Asian Tigers” (Hong Kong, Singapore, South Korea, and Taiwan) are often used as models for South Asia because they:
A) Relied on resource-based industries
B) Focused on export-led growth and industrialization
C) Adopted protectionist trade policies to nurture local businesses
D) Emphasized self-sufficiency in all economic sectors
Answer: B) Focused on export-led growth and industrialization
- The “Multiplier effect” in economic development, particularly in South Asia, refers to:
A) The decrease in output due to decreased investment
B) The way initial investments in the economy lead to a chain of subsequent economic activities and growth
C) The reduction of government spending on welfare programs
D) The impact of tariffs and trade barriers on local businesses
Answer: B) The way initial investments in the economy lead to a chain of subsequent economic activities and growth
- According to the “International Dependency Theory,” South Asia’s development has been hindered by:
A) Over-reliance on labor-intensive industries
B) Dependency on foreign countries for trade, finance, and technology
C) Excessive reliance on self-sufficiency in production
D) Over-exploitation of natural resources without reinvestment
Answer: B) Dependency on foreign countries for trade, finance, and technology
- The “Resource Curse” theory suggests that South Asia’s reliance on natural resources for economic growth can often:
A) Lead to widespread poverty and underdevelopment
B) Result in rapid economic diversification and modernization
C) Provide consistent and long-term development gains
D) Increase social equality and reduce income disparities
Answer: A) Lead to widespread poverty and underdevelopment
- Which of the following is a policy suggestion of the “Global Value Chains” theory for South Asia?
A) Focus on manufacturing finished products only
B) Focus on integrating into global supply chains and specializing in certain stages of production
C) Implement protectionist policies to shield local industries
D) Limit engagement with foreign firms and companies
Answer: B) Focus on integrating into global supply chains and specializing in certain stages of production
- In the “Sustainability and Green Growth” approach to development in South Asia, the focus is on:
A) Maximizing industrial output at the expense of environmental considerations
B) Encouraging economic growth without regard for natural resources
C) Achieving economic growth that is both environmentally sustainable and socially inclusive
D) Focusing only on the short-term economic needs of the region
Answer: C) Achieving economic growth that is both environmentally sustainable and socially inclusive
- The “Capital Flow Model” emphasizes the importance of:
A) Balancing the flow of capital between developed and developing countries
B) Relying on foreign loans and investments as the primary source of economic growth
C) Reducing the amount of foreign capital entering South Asia to promote local businesses
D) Prioritizing local savings over foreign investment for economic growth
Answer: A) Balancing the flow of capital between developed and developing countries
- The “new trade theory” emphasizes the role of:
A) Natural resources in driving trade
B) Economies of scale and network effects in international trade
C) Agricultural exports in enhancing economic growth
D) Government-imposed tariffs to protect domestic industries
Answer: B) Economies of scale and network effects in international trade
- The “Washington Consensus” refers to a set of policy recommendations for developing countries, including those in South Asia, that emphasizes:
A) State-led industrialization and protectionism
B) Free-market reforms, including privatization and deregulation
C) Heavy reliance on foreign aid and investment
D) A focus on rural development and subsistence farming
Answer: B) Free-market reforms, including privatization and deregulation
- According to “Balanced Growth Theory,” for South Asia to develop successfully, it must:
A) Focus exclusively on export industries
B) Prioritize development in the agriculture sector only
C) Promote simultaneous growth across various sectors, such as agriculture, industry, and services
D) Limit the role of government intervention in the economy
Answer: C) Promote simultaneous growth across various sectors, such as agriculture, industry, and services
- “Trade liberalization” in the context of South Asia typically refers to:
A) Restricting imports to protect domestic industries
B) Opening up markets by reducing tariffs and trade barriers
C) Focusing only on local markets and limiting international trade
D) Increasing state control over foreign investment
Answer: B) Opening up markets by reducing tariffs and trade barriers
- The “Flying Geese Model” of development suggests that economic development in South Asia is best achieved by:
A) Relying on natural resource exports
B) Emulating the successful economic strategies of East Asian countries
C) Encouraging large-scale immigration to developed countries
D) Focusing solely on self-sufficiency in agriculture
Answer: B) Emulating the successful economic strategies of East Asian countries
- The concept of “trickle-down economics” in development theory suggests that:
A) Growth in wealthy sectors will eventually benefit all segments of society
B) Redistribution of wealth is the primary driver of economic growth
C) Government control of the economy is essential for equitable growth
D) Wealth creation should focus only on rural areas
Answer: A) Growth in wealthy sectors will eventually benefit all segments of society
- “Asian Development Model” is primarily based on:
A) Heavy reliance on international aid and foreign loans
B) State-led economic planning, investment in human capital, and industrialization
C) Protectionist policies to shield local industries from global competition
D) Agricultural self-sufficiency as the foundation for all economic growth
Answer: B) State-led economic planning, investment in human capital, and industrialization
- In the context of South Asia, “inclusive growth” typically includes which of the following?
A) Economic growth focused only on urban areas
B) The reduction of poverty and improvement in access to basic services for marginalized groups
C) Limiting the role of the government in economic development
D) Focusing on increasing exports without regard to local populations
Answer: B) The reduction of poverty and improvement in access to basic services for marginalized groups
- The “Cultural Approach” to development in South Asia emphasizes:
A) The role of cultural traditions in shaping economic policy
B) The need to avoid foreign cultural influences to preserve national identity
C) The importance of technological advancement and industrialization
D) The reduction of governmental influence on cultural norms and values
Answer: A) The role of cultural traditions in shaping economic policy
- The “Kuznets Curve” suggests that economic growth in developing countries, such as South Asia, initially leads to:
A) A significant decline in income inequality
B) A rise in income inequality before it eventually decreases as development progresses
C) A direct increase in income equality across all sectors
D) Stable income distribution with no major changes in inequality
Answer: B) A rise in income inequality before it eventually decreases as development progresses
- In the context of South Asia’s economic development, the “Regional Integration Theory” suggests that:
A) Countries should remain isolated from one another to maintain their sovereignty
B) Cooperation between neighboring countries can create economic synergies and foster mutual development
C) Economic growth can only occur through dependence on external markets
D) Economic integration should be limited to the agricultural sector
Answer: B) Cooperation between neighboring countries can create economic synergies and foster mutual development
- “Foreign Direct Investment” (FDI) in South Asia is often seen as crucial because it:
A) Limits the role of multinational corporations in the region
B) Promotes economic growth by providing capital, technology, and managerial expertise
C) Hinders the development of local industries
D) Leads to a permanent loss of local resources
Answer: B) Promotes economic growth by providing capital, technology, and managerial expertise
- The “Human Capital Theory” argues that development in South Asia can be achieved by:
A) Expanding investment in physical capital only
B) Focusing on education, health, and skills development of the workforce
C) Restricting access to education to maintain social stability
D) Relying on technological imports to drive growth
Answer: B) Focusing on education, health, and skills development of the workforce
- “Microfinance” as a development tool in South Asia focuses on:
A) Providing large-scale loans to multinational companies
B) Supporting small loans to individuals and small businesses to encourage entrepreneurship and reduce poverty
C) Encouraging foreign banks to control the local economy
D) Restricting access to financial services to prevent exploitation
Answer: B) Supporting small loans to individuals and small businesses to encourage entrepreneurship and reduce poverty
- The “Socialist Model” in South Asia advocates for:
A) A free-market economy with minimal government intervention
B) State ownership and control of key sectors of the economy to promote equitable growth
C) Heavy reliance on foreign multinational corporations
D) Focusing on agricultural self-sufficiency and rural development
Answer: B) State ownership and control of key sectors of the economy to promote equitable growth
- The “Globalization Theory” in the context of South Asia suggests that:
A) Economic isolation is the best strategy for development
B) Open markets and integration into the global economy can enhance growth and development
C) Protectionism is essential for the region’s economic prosperity
D) The global economy harms developing countries by exploiting them
Answer: B) Open markets and integration into the global economy can enhance growth and development
- “Institutional Economics” suggests that development in South Asia requires:
A) A focus on technological advancements alone
B) Strong institutions that enforce property rights, rule of law, and political stability
C) Abandoning foreign trade and focusing solely on domestic growth
D) Heavy government control of all economic activities
Answer: B) Strong institutions that enforce property rights, rule of law, and political stability
- The “Sustainable Development Goals” (SDGs) set by the United Nations emphasize for South Asia that:
A) Growth should be pursued at the expense of environmental and social concerns
B) Development should be achieved without consideration for environmental sustainability
C) Development should balance economic growth with social inclusion and environmental sustainability
D) All countries in South Asia should focus solely on economic growth
Answer: C) Development should balance economic growth with social inclusion and environmental sustainability
- The “Ricardian Model of Trade” emphasizes the importance of:
A) Absolute advantage in trade between nations
B) The importance of specialization and comparative advantage
C) Restricting trade to protect domestic industries
D) Government intervention in trade agreements
Answer: B) The importance of specialization and comparative advantage
- The concept of “Agrarian Transformation” in South Asia emphasizes:
A) The rapid urbanization of rural areas
B) The shift from agriculture to a service-oriented economy
C) The modernization and commercialization of the agricultural sector to boost productivity
D) Limiting agricultural production to increase dependence on industrial sectors
Answer: C) The modernization and commercialization of the agricultural sector to boost productivity
- The “dependency theory” in the context of South Asia suggests that:
A) Developing countries should isolate themselves from global markets
B) Economic development is hindered by dependence on developed countries for capital, technology, and trade
C) Developing countries should follow the free-market model to grow
D) Growth is best achieved through complete economic integration with developed countries
Answer: B) Economic development is hindered by dependence on developed countries for capital, technology, and trade
- The “East Asian Development Model” that South Asia could follow emphasizes:
A) Protectionism and isolation from global markets
B) Export-led growth, state intervention, and industrialization
C) Agricultural reforms and rural development
D) Social welfare programs over industrialization
Answer: B) Export-led growth, state intervention, and industrialization
- In the context of South Asia, the “developmental state” model argues that:
A) The government should stay out of economic activities
B) The state should actively guide economic development by promoting industrialization and controlling capital flows
C) Multinational corporations should take a lead in developing the economy
D) The market should be fully deregulated to ensure rapid growth
Answer: B) The state should actively guide economic development by promoting industrialization and controlling capital flows
- According to the “Human Development Theory,” South Asian countries should focus on:
A) Maximizing economic output without concern for social impacts
B) Expanding human capabilities such as education, healthcare, and access to clean water
C) Relying on foreign loans to finance development projects
D) Emphasizing growth in the manufacturing sector at the expense of agriculture
Answer: B) Expanding human capabilities such as education, healthcare, and access to clean water
- The “new institutional economics” stresses the importance of:
A) A large role for the state in regulating every sector of the economy
B) Strong institutions that enforce contracts, property rights, and reduce transaction costs
C) Dependence on foreign investments and loans to build infrastructure
D) Trade restrictions to protect domestic markets from foreign competition
Answer: B) Strong institutions that enforce contracts, property rights, and reduce transaction costs
- The “Trickle-up” model of development in South Asia suggests that:
A) The benefits of economic growth should first reach the wealthy before benefiting the poor
B) Growth should focus primarily on the richest sectors of society to generate wealth
C) Economic prosperity should begin with marginalized and poorer groups, gradually lifting all segments of society
D) The state should eliminate all social welfare programs to encourage self-reliance
Answer: C) Economic prosperity should begin with marginalized and poorer groups, gradually lifting all segments of society
- “Global value chains” in the context of South Asia emphasize:
A) The concentration of economic activity within one country
B) Countries focusing on self-sufficiency without engaging in global trade
C) The interconnection of production and services across multiple countries, with each country specializing in specific tasks
D) Limiting foreign investment to protect local industries
Answer: C) The interconnection of production and services across multiple countries, with each country specializing in specific tasks
- “Market-driven growth” in South Asia refers to:
A) The government’s control over the economy and industrial sectors
B) Economic growth primarily driven by government spending and investments
C) Growth stimulated by market forces, entrepreneurship, and competition
D) A strong reliance on foreign assistance to stimulate development
Answer: C) Growth stimulated by market forces, entrepreneurship, and competition
- According to “Unbalanced Growth Theory,” economic development in South Asia requires:
A) Equal focus on all sectors of the economy to ensure balanced progress
B) Growth in one key sector (such as industry) that will trigger growth in other areas
C) Decreasing the role of industrialization and focusing on rural development
D) Complete isolation from international markets to prevent foreign competition
Answer: B) Growth in one key sector (such as industry) that will trigger growth in other areas
- The “Comparative Advantage Theory” suggests that South Asia should:
A) Develop all industries equally without specializing
B) Specialize in producing goods in which it has a lower opportunity cost, thereby increasing trade
C) Focus on self-sufficiency in all sectors to reduce dependency on foreign markets
D) Limit trade to protect domestic industries from foreign competition
Answer: B) Specialize in producing goods in which it has a lower opportunity cost, thereby increasing trade
- The “International Dependency Model” argues that the underdevelopment of South Asia is caused by:
A) A lack of technological advancements in the region
B) Economic exploitation and dependency on foreign capital, markets, and expertise
C) Internal conflicts and political instability
D) A preference for local markets over global integration
Answer: B) Economic exploitation and dependency on foreign capital, markets, and expertise
- According to “Structural Change Theory,” economic growth in South Asia is driven by:
A) The rapid liberalization of markets and trade
B) A shift from agriculture to industrialization and urbanization
C) A complete reliance on the service sector for growth
D) Continued dependence on foreign aid and loans for infrastructure development
Answer: B) A shift from agriculture to industrialization and urbanization
- The “Inclusive Capitalism” model in South Asia focuses on:
A) Accumulating wealth for a few select corporations
B) Fostering inclusive growth that benefits both the rich and poor in society
C) Creating a large disparity between urban and rural areas for long-term growth
D) Limiting foreign investments in favor of state-run industries
Answer: B) Fostering inclusive growth that benefits both the rich and poor in society
- The “Export-led Growth” theory suggests that South Asian economies should:
A) Focus only on developing the agricultural sector for self-sufficiency
B) Stimulate growth by expanding exports and increasing foreign exchange earnings
C) Isolate themselves from the global economy to build local industries
D) Prioritize internal market growth while avoiding international trade
Answer: B) Stimulate growth by expanding exports and increasing foreign exchange earnings
- “Foreign Aid” in South Asia has been criticized for:
A) Contributing to long-term economic development
B) Encouraging dependence and hindering the development of self-sustaining economies
C) Promoting technological advancement and innovation
D) Helping to reduce poverty without strings attached
Answer: B) Encouraging dependence and hindering the development of self-sustaining economies
- The “Modernization Theory” in South Asia suggests that:
A) Economic development is the result of returning to traditional agricultural practices
B) Societies progress through linear stages from traditional to modern economies
C) The focus should be on reducing urbanization to preserve rural cultures
D) Economic progress should occur through state-controlled development programs
Answer: B) Societies progress through linear stages from traditional to modern economies
- The “Human Capital Model” stresses that development in South Asia depends on:
A) Increasing investment in education, health, and skills development
B) Building large-scale infrastructure projects with foreign loans
C) Focusing on capital-intensive industries without regard to education
D) Restricting human capital flows across borders to prevent brain drain
Answer: A) Increasing investment in education, health, and skills development
- “Social Capital” in South Asia’s development refers to:
A) The financial assets available to the state
B) The social networks, trust, and institutions that facilitate economic cooperation
C) The government’s investment in industrialization
D) The international loans provided to developing countries
Answer: B) The social networks, trust, and institutions that facilitate economic cooperation
- The “Growth Pole Theory” suggests that:
A) Development should be spread equally across all regions of a country
B) Economic growth is best achieved by concentrating investments in certain regions or sectors
C) Large-scale foreign investments should be the primary driver of development
D) The focus should be on decentralized rural development
Answer: B) Economic growth is best achieved by concentrating investments in certain regions or sectors
- “Diversification” in the context of South Asia’s economic growth refers to:
A) The increase in the production of a single commodity
B) A strategy of expanding into a wide range of industries to reduce dependence on one sector
C) Focusing exclusively on the service sector
D) Reducing the role of government in regulating industries
Answer: B) A strategy of expanding into a wide range of industries to reduce dependence on one sector