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Chapter 22: Q7RQ (page 456)

Question. True or False. Economists are unanimous that foreign aid greatly helps DVCs

Short Answer

Expert verified

The above-given statement is false.

Step by step solution

01

Foreign aid

Foreign aid refers to the financial assistance that Industrially Advanced Countries (IACs) provide to the developing countries in several forms. This financial assistance helps these countries to strengthen their economy by developing their infrastructure and thus increasing their capital flow.

02

Explanation for the statement being false.

Economists argue that the financial aid provided by the IACs doesn鈥檛 help much in the development of DVCs.

  • Most of the assistance is given with a motive to have an influential power over the economic decisions of the DVCs.
  • The majority of the aid is not utilized for development purposes. Corruption diverts the funds to personal political gains and to clear the debt.
  • The most affluent DVCs receive a major share of the aid, and those who are less affluent receive only less aid. So the financial aid is only helping some of the DVCs, and some are still not receiving the actual help they need.

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Most popular questions from this chapter

Do you think that IACs such as United States should open their doors wider to the immigration of low skilled DVC workers as a way to help DVC develop? Do you think it is appropriate for students from DVC nations to stay in IAC nations to work and build careers?

Suppose a country鈥檚 total output is growing 10 percent per year, but its population is growing 11 percent per year. What will happen to living standards?

  1. Remain the same
  2. Fall
  3. Rise

Do you favor debt forgiveness to all DVCs typically, just the process ones, or none at all? What incentives problem might debt relief create? Would you be willing to pay \(20 a year more in personal income taxes for debt forgiveness? How about \)200? How about $2000?

As it relates to the vicious circle of poverty, what is meant by the saying, 鈥淪ome DVCs stay poor because they are poor鈥�? Change the box labels as necessary in Figure 22.3 to explain rapid economic growth in countries such as South Korea and Chile. What factors other than those contained in the figure might contribute to that growth?

Question. True or False. The term developing country (DVC) is applied to rich nations like the United States and Germany because their economies are always growing quickly by developing new technologies.
See all solutions

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