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nswer the following questions related to developing countries (a) Define convergence. Explain the theory behind convergence and why it is a decep- tively simple theory.
nswer the following questions related to developing countries (a) Define convergence. Explain the theory behind convergence and why it is a "decep- tively simple" theory. You should consider the flow of trade and knowledge. (b) Describe some of the features hindering developing countries from growing faster. It may help to consider the extensive economic role of governments of developing coun- tries. (c) What factors lie behind capital inflows to the developing world? You might want to consider the size of the country, its national savings, the maturity of its financial sector, and intertemporal trade-offs. (d) Define original sin. What are the reasons for original sin? (e) The 1980s are considered as the "lost decade" of Latin American growth. How did a global recession in the 1980s and a dollar appreciation spark a crisis in developing countries? Which country could not pay its debt first? What phenomenon caused panic to spread throughout Latin America? ECON476: Open-Economy Macro 5
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