Development Economics

Bonus Assignment
Name: Mahmood Iqbal
ERP: 0517
Instructor: Sir Adil Nakhuda
Question no.1
a)
b)
c)
d)
e)
f)
g)
h)
i)

GNI, PPP (current international $) 561.378 billion

GNI per capita, PPP (current international $) 3660
GNI, Atlas method (current US$) 112.907 billion
Life expectancy 63.9 years
Prevalence of undernourishment (% of population) 24.7 %
Mortality rate, under-5 (per 1,000 live births) 101
Crude birth rate ( per 1000 people) 30
Male adult literacy rate (% of females ages 15 and above) N/A
Female adult literacy rate(% of females ages 15 and above)35.4%

Question no.2
a)S=18% ,c=3
GDP growth rate=s/c ,
18%/3=6%
b)S=18% , c=2
GDP growth rate= 18%/2=9%
c)S=15% , c=3
GDP growth rate=15%/3=5%
Question no.3
If a country is willing to transform it dependence from traditional agricultural sector
to modern industrial sector then Lewis development model can be applied by
keeping few factors in consideration. The migration of surplus labor from rural to
urban sector is only possible if the wages in industrial sector are higher than wages
in agricultural sector. The government should make sure that in the process of labor
migration, output is not loss in the agricultural sector. In order for industrial sector
to grow and accommodate more surplus labor, profits should be reinvested in the
manufacturing sector to improve capital formation (for example buying more

efficient equipment or generating more capacity to accommodate more labor). The

profits generated each year or each quarter should be reinvested till all the surplus
labor is accommodated in industrial sector. However, there are few issues with the
application of Lewis development model. The rate of labor transfer and rate of
employment creation might not be in direct proportion with rate of capital
accumulation in industrial sector. Profits might be invested in labor saving
equipment. The assumption of surplus labor in agricultural sector and full
employment n urban industrial sector is not valid. Secondly, the assumption of zero
marginal productivity in agricultural sector is not correct. Institutional factors can
create hindrance in transformation of economic structure from agricultural sector to
industrial sector. For example MNCs, labor union might create hindrance to cease
migration to challenge capital investment policies. Firms will tend to invest more in
labor saving equipment to reduce cost. While applying Lewis development model,
few modifications are required to effectively utilize Lewis development model.
Question no.4
LOW-INCOME ECONOMIES (Based on GNI per capita of $1,025 or less)
1. Afghanistan
2. Zimbabwe
LOWER-MIDDLE-INCOME ECONOMIES (Based on GNI per capita between $1,026 and
$4,0350)
1. Bangladesh
2. Ukraine
UPPER-MIDDLE-INCOME ECONOMIES upper middle-income (Based on GNI per capita
between $4,036 and $12,475)
1. Panama
2. Turkey
HIGH-INCOME ECONOMIES ((Based on GNI per capita of $12,476 or more)
1. Sweden
2. Denmark
Three richest OECD member countries in terms of GNI per capita (current US $)
1. Norway (US $ 93820)
2. Switzerland (US $ 84180)
3. Luxembourg (US $ 77000)
Three richest OECD member countries in terms of GNI (current US $)
1. USA 18,138,314 (US$ 18.138 trillion)
2. Japan 4,934,417 (US$ 4.934 trillion)

3. Germany 3,929,324 (US$ 3.929 trillion)