Emerging And Developing Economics Flashcards
1
Q
Trade liberalisation as a market orientated strategy
A
Free trade is the act of trading between nations without protectionism.
World GDP can be increased when countries specialise, therefore living standards might increase and there could be growth.
2
Q
Promotion of FDI as a market orientated strategy
A
- FDI is the flow of capital from one country to another.
- it can help create employment, encourage innovation of technology and help promote long term sustainable growth.
- it provides less economically developed countries with the funds to invest and develop.
3
Q
Removal of government subsidies as a market orientated strategy?
A
- they distort price signals by distorting the free market mechanism, leading to inefficient allocation of resources because the market mechanism is not able to act freely.
4
Q
Floating exchange rate systems as a market orientated strategy?
A
The value of the exchange rate in a floating system is determined by forces of demand and supply.
5
Q
Micro finance schemes as a market orientated strategy?
A
- micro finance is borrowing small amounts of money from lenders to finance enterprises, increase income of borrowers and reduce dependency on primary products.
- it is small loans for usually unbankable people, it detaches the poor from high interest and exploitive loan sharks.
- money can be used to fuel investment, start business helping raise employment.
- 95% of microfinance cohorts are women.
6
Q
Privatisation as a market orientated strategy?
A
- privatisation is when the government sell a firm so they no longer own it, and it is owned by private individuals and the free market.
- Private sector gives incentive to operate efficiently, increasing economic welfare, this is due to the profit incentive.
- in the free market they also have to produce what consumers want so leads to allocative efficiency.
- Government also raise tax revenue.
7
Q
Development of human capital as a interventionist strategy?
A
- skills base would increase, improving productivity and allow more advanced technology.
- developing human capital can mean countries can produce goods that will earn them more.
8
Q
Protectionism as an interventionist strategy?
A
- Reduce trade deficit, importing less due to tariffs and quotas on imports.
- it can protect infant industries that are relatively new and need support. Usually short term until the industry develops.
- Protectionism can distort the market signals and lead to a loss of allocative efficiency. It prevents competition and means consumers have higher prices.
- tariffs are regressive and more damaging to those on lower incomes.
9
Q
Managed exchange rates as interventionist strategy?
A
The currency fluctuates, but does not float fully on a free market. The central bank would buy and sell some of the currency to try and influence the rate.
10
Q
Infrastructure as an interventionist strategy?
A
- infrastructure includes transport, energy, water and telecommunications.
- China have heavily invested in their infrastructure.
11
Q
Promoting joint ventures with global companies as interventionist?
A
- Partnership is formed between two firms based in multiple countries.
- the firm can participate in international trade without the responsibilities involved.
- Joint ventures open up new opportunities for small firms so they can distribute their product. It saves time, funds and spreads the risk. It helps penetrate a foreign market.
12
Q
Buffer stock schemes as an interventionist strategy?
A
- In agriculture may intervene to avoid volatile prices. Government buy harvests when supply is high and hold onto them until supply is low.
- Aids the producers income to remain stable, fluctuations in the market are reduced and it increase consumer welfare.
- However, the government may not have the funds to buy the stock.
13
Q
Development of tourism
A
- Creates thousands of jobs, shift a developing country away from depending on primary products.
- Diversify the economy, more attractive to FDI and develop infrastructure.
- Tourism is 6% of world trade.
- LDC it is a way of earning foreign currency, the low level of work and technology suits them. However little profits remain in the countries, trade, agents usually reap the profits..
- Income from tourism is unstable. It can be risky and expensive and cause damage to environmental factors.
14
Q
Fair trade schemes
A
- Ensure farmers receive a fair price for their goods. Supermarkets buy a set amount above equilibrium price which guarantees income for the farmers.
- It can help develop community development, promotes sustainable production, promotes environmental protection and stops child labour.
- Negatives: make those not involved worse off, psychological thing for consumers, make farmers reliant on the sale of produce.
15
Q
Aid
A
- Africa received 45% of China’s aid in 2009.
- Consumers in LEDCs tend to have limited incomes , aid can help fill the savings gap.
- It provides temporary assistance to a country, and could be used to reduce human capital inadequate, improve infrastructure making a country more productive.
- Benefits limited by corrupt leaders.
16
Q
Debt relief
A
- it is the partial or total forgiveness of debt.
- in LEDCs debt is considered the main cause of poverty. It takes funding away from infrastructure, education and healthcare.
- Debt forgiveness can increase standard of living, however it can lead to risky borrowing in the future leading to corruption.
17
Q
Role of international institutions and non-government organisations.
A
- World bank and IMF aim to provide structure and stability in the economic and financial systems.
- World bank: focuses on development. They loan funds to member countries and aims to promote economic and social progress by raising productivity and reducing poverty.
- International Monetary Fund: aims to promote monetary cooperation between nations and monetary issues can be consulted. It aims to help free trade globally, jobs are supported. It promotes exchange rate stability and avoids competitive depreciations.
- NGOs : voluntary groups which aim to raise the voices of individuals.
