Kindly, solve these questions. This is an international econ. class. Discuss the
ID: 1197251 • Letter: K
Question
Kindly, solve these questions. This is an international econ. class.
Discuss the pros and cons of the single currency in EU. (one pros and one cons) Describe the typical circumstances of economic populism. What types of economic policies do populist governments implement and what are the consequences? Discuss the Import Substitution Industrial policy (ISI) in Latin America? Explain die reasoning behind it its goals and methods. Contrast the characteristics of economic growth in the East Asia with those characteristics of Latin .America. What are the common characteristics of BRICs economies?Explanation / Answer
(1) One pros of the single currency of European Union(EU) is that the single currency helps to deal with exchange rate uncertainty. A single curency helps all the member countries of EU to eliminate volatility and improves business confidence enhancing increased exports thereby promoting growth.
One con of the single currency of EU is that in such a union not every member country will ne equally strong or weak.So, the level of cooperation needed in such an union has to be very high to tackle the macroeconomic factors. An example might be that of the recent incident in Greece.
(2) The typical circumstances of economic populism are moderate growth, stagnation or depression and dissatisfying economic performance of the economy.
The economic policies undertaken are:
Consequences of undertaking such a policy are reactivation, redistribution of income and better parity among the diverse classes of the economy.
(3) Import Substitution Industrial (ISI) policy is an inward looking policy where imports from other countries are substituted by domestic production in the home country. This is done to boost the production of the country thereby increasing the GDP of the country and henct the growth. In the context of Latin American development, the term "Latin American structuralism" refers to the era of import substitution industrialization in many Latin American countries from the 1950s until the 1980s. ISI was most successful in countries with large populations and income levels which allowed for the consumption of locally produced products. Latin American countries such as Argentina, Brazil, Mexico, and (to a lesser extent) Chile, Uruguay and Venezuela, had the most success with ISI.
The principal concept underlying ISI that can explain its goals and methods can be described as an attempt to reduce foreign dependency of a country's economy through local production of industrialized products, whether through national or foreign investment, for domestic or foreign consumption. Import substitution did not mean import elimination: as a country industrializes, it begins to import new materials that become necessary for its industries, such as petroleum, chemicals, and other raw materials it may have formerly lacked.
(4) Comparing the characteristics of economic growth in the East Asia with those of Latin America it has been found that compared to East Asia, Latin America's performance was disappointing.
For Latin America as a whole, average per capita GDP growth was 1.3% from 1960 to 2000, compared to 4.6 % in East Asia over the same period. While per capita income in East Asia increased sevenfold, in Latin America it did not even double.
The average GDP per capita in Latin America was more than twice the average in Asian countries in 1960, but low growth over the next 40 years reverted this situation bringing the Asian average per capita GDP to twice that of Latin America.
(5) The common characteristics of BRICs economies are :
(i) High volatility in exchange rate which implies greater risk in trading
(ii) All the members are primarily in an investment category
(iii) These countries are both fastest growing and largest growing economies
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