Development opportunities practice questions.

Mobile money services allowed millions of people in several African countries to make payments and save without ever holding a bank account. Which concept does this illustrate?

• Leapfrogging, in which a country bypasses an earlier technological stage
• Import substitution, in which domestic production replaces imports
• Cumulative causation, in which growth concentrates in one region
• Trickle-down, in which growth at the top reaches the poorest last

Answer: Leapfrogging, in which a country bypasses an earlier technological stage

Where branch banking never reached most of the population, the mobile network became the payment system directly, skipping the branch-and-cheque stage entirely. Leapfrogging is possible precisely because the older infrastructure was absent rather than in place.

A country attracts outsourced business services because it has a large English-speaking graduate workforce and a time zone offset from its clients. What limits the development benefit of this specialisation?

• Contracts can move to another country if costs rise or skills appear elsewhere
• Business services employ no graduates, so skills are not developed
• The sector cannot earn foreign exchange for the host country
• Time zone differences prevent any service work being performed

Answer: Contracts can move to another country if costs rise or skills appear elsewhere

The advantages that attracted the work - cost and language - are replicable, so the sector remains mobile unless the country moves into higher-value functions that are harder to relocate. This is the same upgrading problem that manufacturing faces.

A student writes: "GNI per capita in the fictional state of Marovia rose by 40% over ten years, so development opportunities improved for Marovians in general." Which single flaw in that reasoning would an examiner identify first?

• GNI per capita cannot be compared over time because it is measured at purchasing power parity.
• GNI per capita counts only the income earned inside the country's borders.
• A ten-year period is too short for a change in income to be measured.
• A mean value says nothing about how the extra income was distributed.

Answer: A mean value says nothing about how the extra income was distributed.

A per capita figure is a mean, so the same rise is produced by a broad gain and by a narrow one; PPP exists precisely to make comparisons possible, and GNI (unlike GDP) does include income earned abroad by residents.

Voting power at the International Monetary Fund is weighted by member quotas rather than allocated one vote per member state. Which consequence for development decision-making follows most directly from that rule?

• The largest borrowers automatically hold the largest share of the votes.
• Every member state can veto a lending decision it disagrees with.
• Borrowing states have little say over the conditions attached to their own loans.
• Lending decisions pass to the regional development banks instead.

Answer: Borrowing states have little say over the conditions attached to their own loans.

Quotas reflect the size of a member's economy, not the size of its borrowing, so the states most affected by a programme are the ones with the fewest votes on it. The largest votes sit with the large economies that rarely borrow, so it is they who shape the conditions attached to loans.

The fictional state of Marovia has a gross national income of US$84 billion (PPP) and a population of 12 million. Calculate its GNI per capita, in US$ PPP, to the nearest US$100. Answer: ___

Answer: 7000

GNI per capita = 84 000 000 000 / 12 000 000 = US$7 000 PPP. Note that World Bank income groups are set from nominal GNI per capita using the Atlas method, not from PPP values, so this figure cannot be read as an income band; PPP adjusts for local price levels and is meant for comparisons of living standards.

The three dimension indices of the Human Development Index are combined using the ___ mean, so that a very high income score cannot fully compensate for a very low health score (one word).

Answer: geometric

A geometric mean multiplies the indices and takes the cube root, so poor performance in one dimension drags the whole value down; an arithmetic mean would let oil wealth hide a collapsed health system.