Global Economic Development Practice Test

Between the 1970s and 1990s, several East Asian economies expanded export-oriented industrialization, attracting foreign direct investment, building port facilities, and emphasizing education and manufacturing for global markets. At the same time, many Latin American and African states faced debt crises, currency devaluations, and pressure to cut state spending. Both sets of regions participated in a more integrated world economy, but outcomes diverged sharply. Which explanation best accounts for the East Asian “developmental state” advantage?

In the late nineteenth century, European investors financed railways, mines, and ports in Latin America and parts of Africa. Governments often granted foreign firms long concessions, low export taxes, and control over customs revenues to guarantee debt repayment. Local elites benefited from export booms in commodities such as rubber, copper, and coffee, while many rural workers faced coercive labor practices and land loss. Which development best explains why this pattern deepened global economic inequality by 1914?