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1 FEEDBACK TUTORIAL LETTER 2 nd SEMESTER 2017 ASSIGNMENT 1 DEVELOPMENT ECONOMICS DEC712S 1
2 COURSE: COURSE CODE: DEVELOPMENT ECONOMICS DEC712S TUTORIAL LETTER: 08/2017 DATE: AUGUST 2017 Dear Student Thank you for submitting your first assignment on time. We trust that you have worked hard this far and will continue to do so because success is the best motivator. If you did not start off well, remember you still have one assignment to try and make up for this. In this tutorial letter I would like to give feedback on Assignment 1 of Development Economics. If you did not answer any question correctly, it could be because you did not read the required units thoroughly or perform proper research before attempting to answer the questions. Always try to answer the questions as complete as possible providing all the facts and also all required statistical analysis. Use the opportunity to revise the questions with the memorandum in hand. Feel free to contact your tutor/marker if you need assistance with this assignment or with assignment 2.. I hope to see you at the vacation school as well as looking forward to your next assignment. Regards Mr. ADEYANJU ANTHONY TUTOR NAME TEL NO ADDRESS Mr. ADEYANJU ANTHONY. A tonyadeyanju@gmail.com
3 Question 1 [50 Marks] Students are expected to present answers by giving appropriate definition of GDP as well as a brief introduction to the Namibia`s economy before provision of impacts of debts to the economy. Thus; The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy. The Namibian economy has a modern market sector, which produces most of the country's wealth, and a traditional subsistence sector. Namibia's gross domestic product (GDP) per capita is relatively high among developing countries, but obscures one of the most unequal income distributions on the African continent. Although the majority of the population depends on subsistence agriculture and herding, Namibia has more than 200,000 skilled workers, as well as a small, well-trained professional and managerial class. The country's sophisticated formal economy is based on capital-intensive industry and farming. However, Namibia's economy is heavily dependent on the earnings generated from primary commodity exports in a few vital sectors, including minerals, livestock, and fish. Furthermore, the Namibian economy remains integrated with the economy of South Africa, as the bulk of Namibia's imports originate there. Since independence, the Namibian Government has pursued free-market economic principles designed to promote commercial development and job creation to bring disadvantaged Namibians into the economic mainstream. To facilitate this goal, the government has actively courted donor assistance and foreign investment. The liberal Foreign Investment Act of 1990 provides for freedom from nationalization, freedom to remit capital and profits, currency convertibility, and a process for settling disputes equitably. What is 'External Debt'? This is the portion of a country's debt that was borrowed from foreign lenders including commercial banks, governments or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made. Economic impacts as a result of high external debt would include High external debt would slow down economic growth, because instead of public funds to be invested in instruments that increases foreign direct investment it would be used to service debts High external debt could also lead to increase in tax rates as government tries to pay public debt Through creation of money, it could lead to inflation which is as a result of government`s attempt to finance its debt.
4 Question 2 [25 Marks] a. 20% poorest 7.5 % income 20% poor 11.8 % income 20% Middle 15.5 % income 20% Rich 21.1% income 20% Top rich 44.1% income b. Cumulative 60% bottom income = = 4.8% c. The Gini coefficient for Niger is roughly.6 (any estimate close to this point is correct) Question [25 Marks] a. The three co-values for development are: Sustenance: The ability to meet basic needs. All people have certain basic needs without which life would be impossible. These life-sustaining basic human needs include food, health, and protection. When any of these is absent or in critically short supply, a condition of absolute underdevelopment exists. Self-Esteem: A second universal component of the good life is self-esteem- a sense of worth and self-respect, of not being used as a tool by others for their own ends.
5 Freedom from Servitude (bondage): A third and final universal value that should constitute the meaning of development is the concept of human freedom. The concept of human freedom should also encompass various component of political freedom including, but not limited to, personal security, the rule of law, freedom of expression, political participation, and equity of opportunity. b. HDI for Gambia HDI = 1 (life expetancy index + education index + living standard index) General formula for an index = Actual value Minimum value Maximum value Minimum value Life expectency index = = = 0. Adult Literacy index = = = 0.55 Combined Gross Enrolment index = = = 0.62 Education index = 2 (Adult Literacy index) + 1 (Gross Enrolment Index) Education index = 2 (0.55) + 1 (0.62) = 0.57 Standard of Living index = log800 log100 log40000 log100 = = 0.5 HDI = 1 ( ) = 0.42 TOTAL MARKS 100
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