Commodity dependence in Karsana

Read the extracts and answer the questions that follow.

Text A — Copper and geography

1. Karsana is a landlocked country whose copper exports must travel through two neighbouring countries before reaching a seaport. Border delays and poor railways raise transport costs.

2. Copper accounts for 68% of merchandise export revenue and a large share of government tax receipts. This primary-sector production provides employment and foreign exchange, but falling world copper prices have reduced income and investment.

Text B — Market access and diversification

1. Karsana would like to export processed copper products. However, foreign tariffs on processed products are higher than tariffs on unprocessed copper. Electricity failures also prevent factories from operating reliably.

2. The government is considering a regional transport agreement and investment in electricity. Its high debt-service payments may limit both policies.

Table 1 — Copper export revenue

Karsana's copper export revenue by year.

Table 2 — Government expenditure

Government expenditure in Karsana, 2023.

Debt and capital outflows in Nembala

Read the extracts and answer the questions that follow.

Text A — Public debt

1. Nembala borrowed abroad to construct roads and power stations. Some projects increased productivity, but several remained unfinished. Indebtedness now requires substantial interest and principal repayments.

2. Much of the debt is denominated in foreign currency. Depreciation of the nemba has increased its domestic-currency repayment cost, causing the government to reduce health and education spending.

Text B — Investor confidence

1. Political instability and fear of higher taxes have caused capital flight. Wealth owners transfer funds abroad, while domestic banks have fewer deposits to lend to local businesses.

2. Falling confidence also weakens the nemba. The government is considering capital controls, but these may discourage future investment and be difficult to enforce.

Table 1 — External debt service

Nembala's annual government revenue and external debt-service payments.

Table 2 — Private capital flows

Private capital flows in Nembala, 2023.

Gender and political inequality in Orenda

Read the extracts and answer the questions that follow.

Text A — Unequal opportunities

1. Girls in rural Orenda are more likely than boys to leave school early. Women also face restrictions when opening bank accounts or registering land. This gender inequality wastes potential skills and entrepreneurship.

2. Lower female earnings reduce household income and spending on children's health and education, transmitting disadvantage across generations.

Text B — Influence and public spending

1. Large landowners possess unequal political power and have secured tax exemptions and subsidized credit. Remote communities receive few clinics, schools or roads.

2. Mining has raised national output, but ownership and income are concentrated. The government states that reform may be resisted by politically influential groups.

Table 1 — Labour-force participation

Labour-force participation rates in Orenda.

Table 2 — Rural school completion

Rural secondary-school completion rates in Orenda.

Institutions and land in Zandia

Read the extracts and answer the questions that follow.

Text A — Land and investment

1. Many farmers in Zandia cultivate land under customary arrangements, but official records are incomplete. Weak property rights make farmers uncertain that they will receive the future benefits of irrigation or soil improvement.

2. Banks often reject loan applications when land cannot be used as collateral. Some formalization programmes have also displaced households whose customary claims were not recorded.

Text B — Public administration

1. Businesses report paying bribes to accelerate court decisions and obtain construction permits. This corruption raises costs and causes contracts to be awarded according to political connections rather than efficiency.

2. The government plans to digitize land records and public procurement. However, courts remain slow and tax collection is weak.

Table 1 — Farm investment

Average annual farm investment by land-rights status in Zandia.

Table 2 — Public procurement

Annual public infrastructure procurement in Zandia.

Trade costs in Montara

Read the extracts and answer the questions that follow.

Text A — A landlocked exporter

1. Montara has no coastline and relies on a neighbouring country's roads and port. Its exporters face border inspections, transit fees and unpredictable delays. This geography reduces international competitiveness.

2. Coffee is Montara's main export. Limited storage and poor roads cause crops to spoil before reaching foreign buyers.

Text B — Access to markets

1. Foreign countries impose strict product standards and a quota on processed coffee. This lack of access to international markets discourages Montaran firms from investing in roasting and packaging.

2. The government proposes a regional transport corridor, but its weak institutional framework makes agreements and construction contracts difficult to enforce.

Table 1 — Export transport costs

Export transport cost per container

Table 2 — Coffee exports

Annual coffee production and exports in Montara.

Islands and technology in Pelago

Read the extracts and answer the questions that follow.

Text A — Dispersed geography

1. Pelago consists of many small islands separated by long distances. Providing electricity, schools and clinics to each island is costly, while shipping delays increase the prices of food, fuel and machinery.

2. Businesses import advanced equipment, but unreliable electricity and shortages of trained technicians mean it is often unused. The equipment is therefore not always appropriate technology.

Text B — Digital opportunities

1. Telecommunications could connect remote firms to international services markets. However, internet access is concentrated on the two largest islands and subscription charges are high.

2. Young skilled workers frequently emigrate. This loss of human capital further reduces the ability of firms to adopt new technology and provide specialized services.

Table 1 — Electricity access

Household electricity access in Pelago

Table 2 — Skilled-worker migration

Table 2: Skilled-worker migration within one year of qualification, 2023.

Inequality and informality in Sahari

Read the extracts and answer the questions that follow.

Text A — Unequal urban growth

1. Sahari's technology and finance sectors have expanded, but most new income has gone to highly educated urban workers. Many low-income households cannot afford secondary education, healthcare or secure housing.

2. High economic inequality also limits access to credit because poorer households possess little collateral. Their children often enter low-paid informal employment.

Text B — Taxation and political influence

1. Informal firms avoid complex taxes and regulations, while wealthy groups receive exemptions. The taxation structure therefore has a narrow base and raises insufficient revenue for public services.

2. Business groups oppose reforms that would remove exemptions. The government fears that higher taxes could cause capital flight.

Table 1 — Household income

Average monthly household income by income group in Sahari.

Table 2 — Tax revenue

Annual tax revenue and estimated revenue forgone in Sahari.

Commodity dependence in Country B

Country B depends heavily on exports of unprocessed cocoa. A fall in the world cocoa price has reduced export earnings and government revenue. Producers wishing to export processed cocoa also face a tariff in an important overseas market.

Table 1 presents data about Country B's cocoa exports.

Cocoa export data before and after the world-price fall, with processed-cocoa market access data. Raw-cocoa export quantities are annual; for the PED calculation, changes in raw-cocoa export volume are treated as changes in quantity demanded, ceteris paribus.

For calculations involving raw cocoa, assume that the raw-cocoa export quantities shown in Table 1 are annual quantities.

The government collects a royalty equal to 8% of the value of raw-cocoa exports. It is considering measures to reduce the country's dependence on primary-sector production.

Indebtedness and capital flight in Country C

Country C has borrowed extensively in foreign currency. Concerns about political instability, corruption and inflation have also encouraged residents to move financial assets abroad. The resulting depreciation of Country C's currency has raised the domestic-currency cost of servicing its external debt.

Table 1 presents relevant fiscal and financial data.

Table 1: Fiscal and financial data for Country C

Each community health clinic costs 12 million units of Country C's currency to construct.

Informality and weak institutions in Country E

A large proportion of workers and small businesses in Country E operate outside the formal economy. Many firms lack registered property rights, formal financial records and access to affordable bank credit. The government is considering reforms to simplify registration, strengthen property rights and broaden the tax base.

Table 1 presents selected data.

Table 1. Selected data for Country E

A new primary school costs 1.8 million US dollars to construct.

Copper revenue and governance in Cobreva

Read the extracts and answer the questions that follow.

Text A — Mineral dependence

1. Copper mining provides most of Cobreva's export earnings and government revenue. World prices are volatile, making budgets and private investment difficult to plan.

2. Mining raises GDP but employs relatively few people. Income is concentrated in mining regions, while farming communities lack roads and clean water. This has contributed to rising economic inequality.

Text B — Revenue management

1. During commodity booms, public funds have sometimes been spent on politically connected projects rather than maintenance, education or diversification. This reflects a lack of good governance.

2. The government proposes a transparent stabilization fund. Supporters argue it would save part of copper revenue for downturns; critics fear weak oversight will allow misuse.

Table 1 — Export concentration

Cobreva's annual export earnings by category.

Table 2 — Copper-related government revenue

Copper-related government revenue in Cobreva.

Interacting barriers in Viridia

Read the extracts and answer the questions that follow.

Text A — Rural production

1. Most people in Viridia work in low-productivity agriculture. Poor roads isolate farmers from markets, banks require collateral that many farmers cannot provide, and schools lack trained teachers.

2. Repeated floods destroy crops and roads. Low household income leaves little saving for irrigation or education, reinforcing a poverty trap.

Text B — Government capacity

1. A large informal economy and tax evasion produce unreliable public revenue. Officials have also diverted infrastructure funds. These problems indicate a weak institutional framework.

2. The government must choose between repairing roads, expanding rural schools and servicing foreign debt. Isolated programmes may have limited effects because roads, credit, health and skills are complementary.

Table 1 — Agricultural productivity

Annual agricultural output per worker by access to roads and banking.

Table 2 — Government budget commitments

Government budget commitments in Viridia

Gender inequality, endemic disease and governance in Country F

Women in Country F have lower school-completion and labour-force participation rates than men. An endemic disease also causes frequent worker absence. Although the government has allocated funds to healthcare, an audit found that part of the budget was lost through corruption.

Table 1 presents selected data.

Selected labour, education, health and governance data for Country F.

Each health clinic costs 5 million US dollars to construct.