ECONOMICS OF NAMIBIA & SADC COUNTRIES [ECN411S]

Transcription

1 FEEDBACK TUTORIAL LETTER ASSIGNMENT 2 SECOND SEMESTER 2017 ECONOMICS OF NAMIBIA & SADC COUNTRIES [ECN411S] 1

2 ECONOMICS OF NAMIBIA AND SADC COUNTRIES ECN411S FEEDBACK ASSIGNMENT 2 It is not possible to give each one of you full, individual feedback. The comments below therefore include all the comments that I would have made to all of you. In your answer I highlighted the words or sentences that were either wrong, or not clear, or a statement made without an explanation, or in some or other way lacking. That means that you will have to read the comments below to find the comment that applies to you. NB It is very disappointing that honours students still don t know how make use of the APA referencing style or for that matter fail to acknowledge the original author. Plagiarism is a big offence. 1.1 USEFUL INFORMATION FOR WRITING ASSIGNMENTS Below are valuable information for improving upon the quality of your assignments and other assessments i.e. exam: Communicate in a simple and flowing language. Be logical in your reasoning Avoid the use of I. Rather make use of We. Avoid plagiarising the work of others. Carefully paragraph your presentation. Always check for spellings and grammatical errors. Do extensive reading before writing your assignment. The beauty of economics lies in the use of diagrams and appropriate mathematical models. Make use of these tools, whenever the need arise. Avoid duplicating your friend s work. You are however encouraged to discuss your assignment in groups. Address specifically the question raised. Make use of Time Management principles in approaching your assignment questions. Do not introduce irrelevant materials into your discussion. Always be sure that the demands of a question are clear to you before proceeding with your discussion. 1

3 General Remarks Broadly speaking a reasonable number of the students did attempt interpret all the questions correctly. However, in some cases the points mentioned were not explained. Other specific issues that were observed during the assessment process are highlighted below: Too much time spent in the introductory section. Lack of sentence coherence Failure to adhere to the APA referencing style and poor in text referencing Mentioning of points without elaborating upon them. Spellings and grammatical errors The use of irrelevant examples Contradictions in the presentations Failure to observe paragraphing The use of abbreviations without providing explanations SOLUTION FRAMEWORK QUESTION 1 Established in 1992, the SADC s goal initially was to form a common market. Subsequently, the SADC included monetary integration as part of its objective. Despite its achievement over the past years, there is still a long path ahead. Analyse the various factors behind this long path. (25) The discussion is expected to centre on the following: Disillusionment with import substitution programmes Failure to attract substantial FDI Colonial and historical factors Declining Terms of Trade Conflicts: Wars Lack of political will Declining Agricultural and Industrial sectors Natural factors High population growth rate Poverty HIV-AIDS Absence of basic infrastructures Multiple membership of economic blocs Heavy dependence on primary products Heavy external debt Inflation and unemployment etc Award a maximum of 3 marks each for the discussion of any 7 relevant points. 2

4 QUESTION 2 Most of the countries in the Sub-Saharan African region are among the poorest in the world. The debt of this region has been growing rapidly over the years. Critically analyse the root causes of the debt crisis in the context of SACU countries. African governments' unwillingness to increase domestic savings and cut domestic consumption ( ) Prolonged and devastating drought between High, positive real interest rates throughout the 1980s US dollar Depreciation between Repeated official and private rescheduling, Poor and impractical advice by IFls and official creditors Building up of egregious arrears Protectionism in the world's markets for agricultural products and low technology manufactures, QUESTION 3 Most African governments regard Export Processing Zone s (EPZ s) as a suitable strategy to find a niche in the global economy. In light of this statement, discuss the various benefits of EPZ s to the host country that are known to you. (25) The economic benefits of Export Processing Zones (EPZs) are: Employment Private investment Foreign exchange earnings Economic diversification Backward linkages Technology transfer Award a maximum of 5 marks each for the explanation of any 5 relevant points. 3

5 QUESTION 4 The Namibian government plans to borrow 90% of its spending needs from the domestic market. Comment upon the importance of the Government borrowing from the domestic market. (25) At the macroeconomic policy level, if the is not financing the borrowing, this can reduce the need for direct and potentially damaging monetary financing of government deficits and avoid a build-up of foreign currency denominated debt. This also strengthens the transmission and implementation of monetary policy, including the achievement of monetary targets or inflation objectives, and can enable the use of market-based indirect monetary policy instruments. Helps governments reduce their exposure to interest rate, currency, and other financial risks. A shift toward market-oriented funding of government budget deficits will reduce debt-service costs over the medium to long term through development of a deep and liquid market for government securities. At the microeconomic level, development of a domestic securities market can increase overall financial stability and improve financial intermediation through greater competition and development of related financial infrastructure, products, and services Can help change the financial system from a primarily bank-oriented to a multilayered system, where capital markets can complement bank financing. The absence of exchange risk in cases of the currency devaluing. the ability to use tax measures to attract local investors (alternatively, to use legal means to force them to invest in government securities), building up the national money and capital markets To develop the financial sector. to include more activities in domestic debt, e.g. to establish primary dealers networks To upgrade existing debt management system to enable the markets to provide reports with the same degree of sophistication as for external debt. To promote the development of the domestic capital markets, To boost investors' confidence in the government's debt instruments (bonds) Retaining domestic savings in the country. The End! Good luck with the exam. 4