interventionalist strategies essays

Essay chain: infrastructure development

Government spending on roads, rail, ports, energy and communications creates jobs and demand in the short run. In the long run, it lowers transport and production costs, raises productivity, attracts private investment and increases competitiveness, so LRAS rises and development improves.

Diagram for infrastructure development (Paper 2)

Use AD-AS. AD shifts right in the short run because government spending rises. SRAS and LRAS shift right in the long run because costs fall and productivity rises.

Diagram for infrastructure development (Paper 3 micro)

Use a cost-revenue diagram for a firm. Better infrastructure lowers transport and energy costs, so AC and MC fall and profit rises.

Evaluation for infrastructure development

It may involve high fiscal costs, long time lags and weak implementation. If projects are poorly chosen or corruption is high, the benefits may be limited.

Essay chain: development of human capital

Government spending on education, training and healthcare increases human capital. Workers become healthier and more skilled, productivity rises, unit costs fall, competitiveness improves, wages and profits rise, and the economy’s productive capacity expands, improving both growth and development.

Diagram for development of human capital (Paper 2)

Use AD-AS with LRAS shifting right as productivity and productive capacity increase. You can mention a small AD effect in the short run from higher government spending, but LRAS is the main story.

Diagram for development of human capital (Paper 3 micro)

Use a cost-revenue diagram for a firm. Higher labour productivity lowers unit costs, so AC falls and profit rises.

Evaluation for development of human capital

The gains take time, and better education or healthcare will not guarantee development unless the wider economy can create productive jobs for the improved workforce.