3.3 Strategies influencing growth & development Flashcards
(18 cards)
Types of strategies?
1) Market-orientated
2) Interventionist
What are some market-orientated strategies?
1) Trade Liberalisation
2) Promoting FDI
3) Microfinance
4) Lower taxes
What are some interventionist strategies?
1) Developing human capital
2) Protectionism
3) Monetary policy tools
4) Infrastructure development
5) Buffer Stock Schemes
What is trade liberalisation?
Lowering trade barriers such as tariffs to open up an economy to trade
Micro effects of trade liberalisation?
1) Lower prices
2) Increased competition
3) Improved efficiency
Macro effects of trade liberalisation?
1) Multiplier effects
2) Lower inflation
3) Structural unemployment
Main gains from FDI?
- Improved infrastructure
- Better training
- More competition
- Shift to higher value, productive industries
Main risks from FDI?
- MNCs could exploit power
- Poor working conditions
- Profits from MNCs usually repatriated
Policies to attract FDI?
1) Lower corporation tax
2) Special Economic Zones
3) Skilled workers
4) Low unit labour costs
5) Trade Agreements
What is microfinance?
Refers to different financial products such as micro-credit (small loans) and micro-savings (voluntary local savings clubs)
Advantages of microfinance?
1) Help overcome savings gap
2) Targeted at women
3) High rates of loan repayment
Disadvantages of microfinance?
1) High interest rates
2) Low success for entrepreneurship
3) May be relatively inefficient
Ways to improve human capital?
1) Investment into education
2) Incentive to attract skilled workers
3) Invest into training
Arguments for protectionism?
1) Infant industries
2) Protect employment
3) Raise tax revenue
Arguments against protectionism?
1) Trade War
2) Negative effects of tariffs
3) X-inefficiency
Advantages of monetary policy?
1) Depreciation
2) Imrpoved BoP
3) Lower inflation
Advantages of infrastructure development?
1) Lower transport costs
2) Improve productivity
3) Attract FDI
What is a buffer stock scheme?
- For agricultural products
- Buys up supplies when supply high
- Sells off supplies when harvest poor
