Econ 2220 Study Guide Franko Chp2 Historical Legacies
True/False questions
1. T In the tropical regions of LAC, where resources were abundant, health conditions were
disadvantageous and geography posed many challenges, European settlers imposed extractive
institutions, whereas in more temperate regions, with abundant labor (settlers brought their own
families), they established institutions that protected private property and fostered the creation of
more competitive markets. (p.39 based on the labor feasibility)
2. T Due to the conquest and the introduction of new diseases, the indigenous population of
LAC fell sharply. This created a shortage of labor that led to the importation of Africans as slaves.
3. F An enclave economy (a model of production) is one where the production of the
dominant commodity integrates other sectors of the economy through backward and forward
linkages.
4. F Most commodities are price inelastic. Therefore, a price drop leads to a large increase in
demand, which implies faster economic growth.
5. F In the war years, foreign investors withdrew from LAC. Fortunately, this did not limit the
availability of capital significantly, as most of the capital came from domestic sources.
Essay Questions
1. According to Franko, mention three relevant factors shaping the patterns of growth for any
country.
(1) Natural resources
Commented [ZZ1]: Backward linkage: 带动所需
material的production
Forward linkage: 带动后续市场的production和sales
Commented [ZZ2]: When the price of a commodity drop
significantly in a single-commodity economy, the economy
crashes
Commented [ZZ3]: Most capital came from foreign
sources, thus in war times, LAC had to turn to inward
substitution industrialization in order to foster the economy
