Essays

Question 1

Policies governments could use to develop certain industries

Answer 1

• import tariffs and protectionist measures
• subsidise factories/manufacturers
• invest in infrastructure e.g. roads & ports to make exporting easier
• investing in renewable electricity to help factories reduce costs
• deregulation and reduce corporation tax
• interventionist supply side policies (education and training)

Question 2

Evaluation of policies used to develop certain industries

Answer 2

• opportunity costs of spending
• country should focus on industries for which they have a comparative advantage in
• time lag for policies to have an impact
• risk of corruption
• risk of educated workforce emigrating to MEDCs

Question 3

Points for the role of the financial sector in the growth and development of developing countries

Answer 3

• facilitating saving so banks have more funds for lending, facilitating investment and therefore growth
• promoting lending to enable more investment in the economy
• exchanging currencies - enabling firms to import parts and materials (often more cheaply) and also enables them to export helping to increase the size of their market
• providing a market for equities
• harrod-domar model
• microfinance

Question 4

Evaluation of points for the role of the financial sector in the growth and development in developing countries

Answer 4

• clear rule of law required for financial sector to develop
• risk of corruption
• risk of market failure in financial market
• lack of financial literacy in developing countries may limit potential

Question 5

Benefits of a country joining the WTO

Answer 5

• current account surplus (macro-objective) due to increased trade
• employment may rise
• increased FDI leads to higher living standards

Question 6

Evaluate the benefits of joining the WTO

Answer 6

• time lags
• rise in exports not guaranteed as other countries may produce a better quality product and during an economic boom, consumers may choose those products
• FDI may lead to the repatriation of profits to shareholders

Question 7

Impacts of tariffs on domestic consumers and producers

Answer 7

• retaliation from foreign nations -> loss of jobs
• fall in economic growth due to distortion of comparative advantage -> lower real incomes for consumers (due to less job creation)
• fall in producer profits

Question 8

Evaluation of negatives of tariffs on domestic consumers and producers

Answer 8

• significance of PED and PES
• short run/long run
• government revenue gained -> subsidies and investment -> econ growth
• infant industries can grow as less competition
• improve CA position
• potential domestic job creation