International Economics, 6e (Gerber)
Chapter 16 Export-Oriented Growth in East Asia
16.1 Introduction: The High-Performance Asian Economies
1) Which of the following groupings correctly represents the Four Tigers (or Four Dragons)?
A) Thailand, China, Japan, and Malaysia
B) Hong Kong, Singapore, South Korea, and Taiwan
C) Japan, Hong Kong, Thailand, and Malaysia
D) South Korea, China, the Philippines, and Japan
E) Singapore, Malaysia, Indonesia, and India
2) The economies of the Four Tigers are all classified as middle income by the World Bank.
16.2 Population, Income, and Economic Growth
1) One of the main differences between the recent economic history of the high-performance
Asian economies and most of the rest of the world is that growth in the Asian economies
A) increased in the 1960s.
B) continued in the 1980s.
C) slowed down in the 1960s.
D) slowed down in the 1980s.
E) slowed down in the 1970s.
2) If a country’s income grows at the rate of 5 percent a year, it doubles in about
A) eight years.
B) six and one-half years.
C) ten years.
D) fourteen and one-half years.
E) twenty years.
3) All eight countries known as the High Performance Asian Economies are outwardly oriented
for trade and investment, and all have experienced rapid growth by world standards.
4) All of the Newly Industrializing Economies are in East Asia.
5) Name the eight HPAEs.
16.3 General Characteristics of Growth in the HPAE
1) The experience of the HPAEs has brought attention to predictions about income inequality
made by Kuznets. He predicted that at first income inequality would ________ as economies
began to develop. In the HPAEs experience it ________.
A) rise; rose
B) decrease; decreased
C) rise; fell
D) fall; rose
E) There was no pattern.
2) Movement of the fast-growing Asian nations through the demographic transition may have
had an impact on growth rates because it
A) reduced expenditures on health care.
B) reduced expenditures on pensions.
C) increased savings.
D) increased consumption relative to GDP.
E) increased the number of retired people.
3) Investment in education in the HPAE was ________ in ________.
A) low; primary schools
B) high; primary schools
C) low; primary and secondary schools
D) high; primary and secondary schools
E) high; university education
4) Which of the following is a false statement about education in the HPAE?
A) An emphasis on state funding of advanced degree programs, such as engineering and
computer science, increased manufacturing production significantly.
B) Literacy rates rose dramatically in the HPAE and laid a foundation for a skilled labor force.
C) As the average educational level rose, workers could take on more technological,
sophisticated production, pushing new investment into product lines.
D) Spending was focused on the primary and secondary level, where it has the greatest social
impact.
5) All of the following are true of the HPAE EXCEPT
A) macroeconomic stability has been a high priority of their economic policies.
B) strong, credible commitments to sharing economic growth across all layers of society exist.
C) exports have been promoted while at the same time being more open to imports than other
developing countries.
D) restrictions on imports of capital goods have helped to favor the development of domestic
technology.
6) Which of the following has not been promoted by HPAE?
A) Large job creation in the government sector
B) Land reform
C) Free basic health care
D) Significant investments in rural infrastructure
7) Which of the following is NOT a mechanism the HPAE used to share wealth across all layers
of society?
A) significant investments in rural infrastructure
B) free public education
C) tax policies that strongly redistributed income from rich to poor
D) land reform
8) Each of the HPAE promoted manufactured exports.
9) Macroeconomic stability has been a high priority for the economic policies of the HPAE.
10) Falling inequality has been a feature of the HPAE due to land reform, free public education,
free basic health care, and significant investments in infrastructure for communication,
sanitation, and transportation.
11) Contrast the economic experience of the HPAE with the experience in Latin America,
especially with regard to the 1980s and in terms of weathering financial crises.
12) What did the HPAE do to share wealth across all levels of society?
13) Identify at least three key factors in the HPAE’s economic success?
16.4 The Institutional Environment
1) In general, the relationship between democracy and economic growth as demonstrated by the
HPAEs is that
A) democratic nations grow faster than undemocratic nations.
B) democratic nations grow slower than undemocratic nations.
C) there does not seem to be a relationship between democracy and economic growth.
D) democracies are much more variable in their rates of growth than undemocratic nations.
E) democracies are much less variable in their rates of growth than undemocratic nations.
2) One of the functions of deliberation councils is to
A) coordinate foreign investment from different countries.
B) set educational policy for universities and colleges.
C) coordinate government policy and private investment.
D) broaden the economies base of exports.
E) ensure stability in the country’s fiscal and monetary policies.
3) Which of the following is NOT a contributing factor into why the HPAE were able to rapidly
accumulate physical and human capital?
A) A stable macroeconomic environment meant low inflation
B) Loans from multilateral institutions such as the IMF, the World Bank, and regional
development banks
C) The demographic transition meant that the proportion of their population working was higher.
D) A rapid rise in income made greater amounts of savings possible.
4) The Latin American region has more economic equality than the HPAE because nations are
more democratic.
5) The voices of business and industry are less likely to influence government policy than the
voices of consumers in the HPAE.
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6) Deliberation councils have no private sector input.
7) In the HPAE, inflation is kept under control and budget deficits and foreign debt levels are
kept within the ability of the governments and the economies to handle them, which is quite
different from the past experience of the Latin American region.
8) The HPAE have been more open to imports than most developing countries.
9) Similarly to the Latin American region, the HPAE experienced a Lost Decade in the 1980s.
10) The HPAE focused their education spending on the university level to better develop high
technology workers.
11) Rent-seeking activities have been a major problem in the HPAE and contributed greatly to
the Asian financial crisis.
12) Property rights are relatively secure and free from the threat of nationalization in the HPAE.
13) Describe several components of the institutional environment in the HPAEs that are critical
to their success.
16.5 The Role of Industrial Policies
1) A technique for implementing industrial policies that probably worsened the effects of the
1997 crisis was
A) directed credit.
B) protection from imports.
C) export subsidies.
D) research subsidies.
E) quotas.
2) Which of the following was NOT part of Korean industrial policies?
A) An aggressive promotion of exports along with high levels of protection
B) Directed credit and tax breaks given to targeted industries
C) Subsidies given to some targeted firms
D) Bailing out bankrupt firms without any attempt to dispose distressed firms
E) Allowing exporting firms to borrow funds at below-market interest rates
3) The World Bank’s view of the effectiveness of industrial policies in East Asia is that, in
general, they
A) hindered growth.
B) had little or no effect on growth.
C) encouraged growth.
D) are the main factor in the success of the East Asian economies.
E) worked in Japan and Korea, but not in the other countries.
4) Critics of the World Bank’s analysis of East Asian industrial policies argue that
A) even though growth was faster in the non-targeted industries than it was in the targeted ones,
the policies were essential to overall economic growth.
B) growth was faster in nearly every targeted industries than it was in the non-targeted ones.
C) even though growth was the same in the targeted industries as it was in the non-targeted ones,
they would have grown slower without the policies.
D) growth was slower in the targeted industries; hence the policies did not work.
E) measurements of economic growth are invalid and cannot be used to make comparisons
between industries.
5) What appears to have been one of the major causes of the Asian financial crisis?
6) What types of government intervention did the World Bank determine was common in the
HPAEs?
16.6 The Role of Manufactured Exports
1) All of the following would be potential problems if developing nations around the world
emphasized export promotion EXCEPT
A) industrial nations may be unable to absorb the exports of many newly industrializing nations.
B) it would be much harder to emphasize exports under the WTO framework if the emphasis in
exports requires some kind of subsidies.
C) export growth may not add to GDP if it crowds out growth in output of goods for domestic
consumption.
D) export promotion by many countries may lead to economic conflicts.
E) current research has clearly established that there is no causal connection between exports and
faster economic growth.
2) Which of the following economic conditions cause export growth to be a basis for faster
overall economic growth?
A) Diseconomies of scale in production for the domestic market
B) A larger-than- average service sector
C) A larger-than-average manufacturing sector
D) High and constant levels of productivity in export production
E) Economies of scale in production for the world market
3) One economic advantage of a large share of exports in GDP is that countries
A) can reduce their budget deficits.
B) can purchase the imports they need.
C) can maintain lower rates of unemployment.
D) will have greater equality in their incomes.
E) develop more labor-intensive industry.
4) One obstacle to the adoption of the export promotion model by countries in other regions is
that
A) the Uruguay Round of the GATT forbids many types of export promotion policies.
B) the Washington Consensus opposes the spread of this model.
C) research and development for new exports is too expensive.
D) only noncommercial R&D is permitted under the rules of the GATT.
E) industrial monopolies in the high-income countries will block further exports by developing
countries.
5) Export promotion is widely regarding by economists as a positive role for government policy
makers to play because it is very effective at promoting economic growth.
16.7 Is There an Asian Model of Economic Growth?
1) Total factor productivity is
A) the quantity of output per worker.
B) the quantity of output per unit of capital.
C) the ratio of inputs divided by outputs.
D) the quantity of output per unit of input.
E) a measurement of the contribution of education to productivity.
2) Measurements of TFP indicate that the East Asian success story is based on
A) a significantly different economic model from the one followed in the West.
B) unusually large amounts of innovation.
C) rapid increases in the education of the work force.
D) high amounts of savings and investment.
E) large current account surpluses.
3) The main contributor to growth in the HPAE according to empirical research was government
industrial policies.
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4) Studies of the HPAE confirm the importance of savings and investment in increasing
economic growth.
5) Which factors account for most of the growth in the HPAEs?