strategies

what does it mean by market based strategies

they use the price mechanism to influence the behaviour

what does it mean by interventionist strategies

this is when the government is directly involved

what are the 6 market based strategies

• trade liberalisation (trading without protectionist barriers)

• promoting FDI (help create employment/technology)

• removal of gov subsidy (leads to more efficiency / fixes price mechanism)

• floating E/R

• microfinance

• privatisation

what are the 6 interventionist strategies

• development of human capital (education)

• protectionism (more trade)

• managed E/R (both fixed and floating)

• infrastructure development

• promoting joint ventures (when 2 companies from diff countries work together on projects) → increase FDI/ AS

• buffer stocks

what are other methods

• lewis model (more from agriculture to manufacturing)

• tourism

• development of primary industries (theory of CA)

• fairtrade schemes

• aid

• debt relief

what are the economic factors that influence growth and development

• primary sector dependency

• volatility of commodity prices

• Harrod domar model (saving)

• foreign currency gaps ( outflows > inflows)

• capital flight (people move their capital/assets from one country to another)

Others → demographic factors/ debt/ access to credit/banking/ infastructure/ education

what’s the world bank

organisation that provides long term development projects e.g infastructure

what’s the IMF

provides short term emergency loans to countries