DATE: FRIDAY, 4TH DECEMBER 2009 TIME: 9.00 A.M. – 12.00 P.M.
INSTRUCTIONS: Answer four questions only. All questions carry equal marks.
1. (a) “Poverty is both a cause and consequence of underdevelopment.”
Discuss. (5 marks)
(b) More than 50 years after independence in most of the African countries,
colonialists are still blamed for their under development. Discuss. (4 marks)
(c) Apart from poverty, explain other factors that have played role in the
underdevelopment of developing countries. (8 2
1 marks)
2. (a) “If less developed countries have to develop, the surplus labor in rural
areas should be moved to urban centers.” Discuss this statement by
highlighting the main arguments of Lewis model. (10 marks)
(b) Critically examine the doctrine of balanced growth as put forward by
Rosenstein-Rodan and Nurkse. (7 2
1 marks)
3. (a) Given that
Y = F(K, L) and ?K = sY – dK , derive and explain the two basic equations
of Solow model. (4 marks)
(b) Using diagrams explain the steady state in the Solow model and what
happens to this state when savings rate and population growth changes. (9 marks)
(c) Giving examples, explain the difference between capital deepening and
capital widening and how they relate to economic growth and development.
1 marks)

4. (a) “Women are more likely to be poor in less developed countries.” Explain
(5 marks)
(b) Explain various ways in which poverty in the society can be measured.
1 marks)
(c) Explain whether the Kuznet curve is applicable in your country. (5 marks)
5. Using diagram(s) and basing your argument on the Harris Todaro model,
(i) Show and explain the importance of informal sector in ensuring
equilibrium in the economy. (5 marks)
(ii) Explain the paradox of urban job creation. (6 marks)
(iii) Explain the main policy that can be adopted to remove or reduce the
informal sector. (62
1 marks)
6. “International Trade can lead to growth and development.” Discuss this
statement in the context of developing countries. (17 2
1 marks)