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Three types of strategies
-market orientated
-interventionist
-other
6 market orientated strategies
-trade liberalisation
-promotion of FDI
-removal of gov subsidies
-floating exchange rate
-micro finance schemes
-privatisation
Market orientated strategies
Using the free market to achieve growth and development
Trade liberalisation, what is it and pros and cons
Removal of trade barriers, utilises comparative advantage and increased efficiency, however infant industries aren’t protected
3 Benefits and problems of FDI
-increased employment
-transfer of skills
-more trade
•corruption?
•soft power
•managers and important employees come from abroad
How removing subsidies improves development
-frees up money to be spent elsewhere, improves firms efficiency
2 advantages and 4 disadvantages of floating exchange rates
~currency may depreciate and make exports cheaper
~weaker currency encourages FDI
-higher import prices-higher cost of essentials and higher cost of parts of production
-volatility creates instability
-weaker currency may fail to boost exports if demand is price inelastic
Microfinanve schemes, definition, 3 positives and 2 negatives
Providing poor families with small loans to help grow businesses or expand farms etc
-far lower interest rates than banks
-money can be reinvested again and again
-loans can empower women
~Only reaches a small proportion of society
~doesn’t stimulate infrastructure
3 benefits and 3 negatives of privatisation for development
-increased competition, increased efficiency, decrease prices
-incentive to make higher quality goods
-more innovation and shift LRAS
~corruption, gov sell to friends
~privatisation can lead to monopoly
~essential services are privatised which makes them hard for those in poverty to access
6 interventionist strategies
-development of human capital
-protectionism
-managed exchange rates
-infrastructure development
-promotion of joint ventures
-buffer stock schemes
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