Economic development

Question 1

What are the 4 policies to improve economic development?

Answer 1

• accessing development aid
• trade liberalisation
• borrowing from bond markets
• stamping down on corruption

Question 2

how does borrowing from bond markets improve economic development?

Answer 2

direct injection = increased AD
invest in the supply side = increased LRAS

Question 3

how does development aid help with economic development?

Answer 3

improve infrastructure and education by investing in the supply side

Question 4

how does stamping down on corruption improve economic development?

Answer 4

better institutions such as the police and court system will make sure resources are allocated efficiently

Question 5

how can trade liberalisation improve economic development?

Answer 5

• access to foreign markets
• attractive to FDI
• comparative advantage opporunities

Question 6

issues with development aid

Answer 6

• reliant on the donor
• takes time to be effective
• depends how it is spent

Question 7

what is the problem with borrowing from bond markets?

Answer 7

• servicing the debt carries an opportunity cost
• intergenerational theft

Question 8

what is the problem with trade liberalisation?

Answer 8

• exploitation of workers and resources

Question 9

what is the problem with stamping down on corruption?

Answer 9

a lot of the time, the institutions meant to correct corruption are actually the ones that are corrupt

Question 10

what is the Harrod Domar model?

Answer 10

the concept that growth in a country is determined by savings
- this is because savings in a bank can be turned into loans that are lent out to consumers and firms, which can be used for investment
- many poorer countries have very low savings

Question 11

what is the lewis model?

Answer 11

• the idea that the move from the primary sector to the secondary and tertiary sector is what creates growth and drives productivity