4.3.3 stragies influencing growth

Question 1

What is a market-oriented strategy?

Answer 1

Private sector organisations that use market forces to supply goods. (no/ little gov intervention)

Question 2

What is trade liberalisation

Answer 2

Removing/ reducing barriers to trade among countries like getting rid of tariffs or quotas (market-oriented strategy)

Question 3

What is foreign direct investment (FDI)

Answer 3

Investment located in a foreign country

Question 4

What is microfinance

Answer 4

Supply of finance services to poor people. E.g. credit, savings

Question 5

What is privatization

Answer 5

Public firms turns into private gain profit

Question 6

5 market-orientated strategies

Answer 6

1. Trade liberalisation
2. Promotion of FDI into the country
3. Remove gov subsidies
   4.Microfinance schemes
4. Privatisation

Question 7

What is an interventionist strategy

Answer 7

Government intervene in domestic market

Question 8

Benefits of Market orientated strategies

Answer 8

Developing countries benefit as wages will be lower which leads to lower costs and an increase in exports

Question 9

Drawbacks of Market orientated strategies

Answer 9

Reduction in barriers increase competition from other countries so less money is spent on domestic firms

Question 10

Advantages of interventionist strategies

Answer 10

Creates employment in domestic markets

Question 11

Disadvantages of interventionist strategies

Answer 11

1. Increases gov spending
2. Productively inefficient firms ( rely on gov money)
3. Corruption?

Question 12

What is protectionism

Answer 12

Increasing barriers of entry to promote domestic firms like increasing tariffs and quotas or subsiding domestic firms

Question 13

What is a managed exchange rate

Answer 13

Allowing exchange rates to fluctuate between 2 figures in response to foreign exchange mechanisms. They do this but altering interest rate

Question 14

What is a joint venture

Answer 14

2 or more firms agree to set up a new business together using all they’re current resources

Question 15

What is buffer stock scheme

Answer 15

Where government have saved stock to put into a market if supply slows down in order to keep demand for the product steady. For example if floods happen the supply of farm food will stop as crops are damaged so gov put in stock of farm foods to keep demand.

Question 16

6 interventionist strategies

Answer 16

1. Development of human capital
2. Protectionism
3. Managed exchange rates
4. infrastructure development
   5.Buffer stock scheme
5. promotion of joint ventures

Question 17

What is Simon Kuznets model

Answer 17

1. Lower developed countries have a high number of people in rural sectors like agriculture so it has a marginal productivity of labour of around 0
2. So they should get people working in urban sectors like industrial
3. This will generate more profit whichc an be reinvested to grow

Question 18

What is a fair trade scheme?

Answer 18

They sell ethical products at a fairer price so producers in low income countries like farmers get a fair proportion on the sale. The only issues is that the price is very high for consumers

Question 19

What is AID

Answer 19

Money from higher income countries given to low income countries to help them grow maybe after a naturual disastor.

Question 20

What is debt relief

Answer 20

Where a country writes of debt so they can spend theyre money elsewhere. This will make them untrustworthy with money and reduce trade

Question 21

What is the world bank

Answer 21

Funding for low developing countries to help them invest at a low intrest rate

Question 22

What is the International Monetary Fund(IMF)

Answer 22

189 members that control international trading like exchange rates and international payments in order to keep the economy stable.