4.3.3 - Strategies influencing growth and development (Other Strategies)

Question 1

Name other strategies

Answer 1

. Industrialisation : the Lewis model
. development of tourism
. development of primary industries
. Fairtrade schemes
. aid
. debt relief

Question 2

Development of tourism

Answer 2

. Tourism creates more jobs and the majority of jobs don’t require much education or training so they are accessible to the poor, which can reduce income inequality decreasing the Gini Coefficient score

. Multiplier effect if local tourist industry can supply locally made products for tourists

BUT :

It can be have negative impact on the environment

It can cause demand pull inflation for the locals if there is excess demand

Question 3

Development of tourism

Answer 3

. Tourism creates more jobs (multiplier effect) and the majority of jobs don’t require much education or training so they are accessible to the poor, which can reduce income inequality decreasing the Gini Coefficient score

. Another multiplier effect is caused if local tourist industry can supply locally made products for tourists

BUT :

It can be have negative impact on the environment

It can cause demand pull inflation for the locals if there is excess demand from tourists.

Question 4

Fairtrade Schemes

Answer 4

. Fairtrade has multiple principles :

1.) Producers should receive a fair price about the market price and a guaranteed amount of produced bought

This gives producers some certainty about sales and price. This could convince them to invest and grow their business, which could lead to hiring more workers, reducing unemployment

2.) Community development, fair working conditions and sustainable environment. This involves abolishing child labour. This results in children having a higher chance of getting an education and training, which would improve their human capital, which would have many benefits.

HOWEVER :

. By advantaging some producers, it can leave other non - fairtrade producers worse off by reducing the level of demand for them. This would result in less revenue for these producers and they would invest less or possibly lay off workers causing unemployment

It increases the prices for consumers, which means more disposable income is required.

Question 5

Advantages and reasons for aid

Answer 5

. Citizens of developing nations were poor because they had a high propensity to consume and a low propensity to save. Hence, savings would be below the level of investment to generate high economic growth. Inflows of foreign capital supplied through aid would help this savings gap. This would encourage investment and innovation and would lead to new firms opening, reducing unemployment.

. Foreign exchange would be scarce. Export revenues would be limited and would be likely to be insufficient to cover imports of capital equipment and other essential. Foreign aid would help recover this trade gap

. Long term loans can be given intending to improve infrastructure, health and education standards. These loans are given for developing

Question 6

Types of aid

Answer 6

Grant - donor country gives a sum of money, resources or expertise to a developing nation. It has not interest and not paid back; it’s free.

Loan - Form of debt incurred by an individual or country. Might be at commercial rates of interest or a soft loan where there is a lower rate of interest than commercial rate of
interest

Tied aid - Foreign that must be spent on goods & services provided by companies that are from the country providing the aid

BUT this prevents recipient countries from receiving good value for money for good and services.

Bilateral aid - Given directly from one country to another

Multilateral aid - Donor country gives money to international agency e.g. UNICEF