4.3.3 - Strategies influencing growth and development (Market Oriented)

Question 1

Name Market - Oriented Strategies

Answer 1

. Trade Liberalisation

. Promotion of FDI

. Removal of government subsidies

. Floating Exchange Rate systems

. Microfinance schemes

. Privatisation

Question 2

Explain Microfinance schemes

Answer 2

. Banking service to low income individuals who have no access to financial services

. Allows people to take on business loans with low interest rates.

. Gives a source for capital. Entrepreneurs can create business, which creates job and trade leading to G and D

. Used in developing nations such as Uganda and Indonesia

Question 3

Explain Foreign Direct Investment

Answer 3

. FDI is transfer of funds to purchase physical capital, such as factories and machine

. E.g. Nissan, a Japanese firm building car factory in UK

Benefits:

. Avoid tariff barriers when trading

. Take advantage of proximity to raw materials rather than transporting

. Lower labour costs in countries (e.g. India)

. Reduced transport costs E.g. Nissan has lower transport costs by selling to UK market

. Leads to increased employment and higher wages. Workers can increase in their human capital through training and education.

Question 4

Removal of Subsidies