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Economics > Global Economics - Economic growth and economic development strategies > Flashcards

Global Economics - Economic growth and economic development strategies Flashcards

1
Q

Define trade liberalisation

A

Trade liberalisation is when countries remove barriers to trade such as subsidies, tariffs, quotas and administrative barriers.

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2
Q

What are the benefits of increased imports?

A
  • Lower prices for consumers
  • Increased competition improves the quantity and quality of products
  • Increased competition pressures local firms therefore improving productive efficiency
  • Greater consumer choice
  • Access to natural resources and technologies that are locally unavailable
  • Improved international cooperation
  • More efficient global resource allocation
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3
Q

What are the benefits of increased exports?

A
  • Access to larger markets (higher revenues and profits for firms)
  • Income in international currencies can be used to buy resources on global markets
  • Economies of scale
  • Aggregate demand and national income increase, increasing employment
  • Domestic firms may be able to sell goods and services for higher prices abroad than they do in domestic markets, increasing revenues
  • Improved international cooperation
  • More efficient global resource allocation
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4
Q

What percentage of the WTO members are developing countries?

A

Over 75%

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5
Q

What are the disadvantages of trade liberalisation for developing countries?

A
  • national security issues
  • infant (sunrise) industries / diversification
  • health, safety, environment
  • unfair competition
  • cannot use trade barriers to adjust balance of payments
  • decreased government revenues
  • job protection
  • dependence
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6
Q

Define import substitution

A

Import substitution refers to protectionist measures that are implemented to help a country become independent from imports from abroad using protectionism to limit foreign competition.

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7
Q

Define export promotion

A

Export promotion, or export-led growth strategy, is any policy that supports domestic industries so that they become exporting industries. Like import substitution, trade protectionism is used to achieve this.

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8
Q

What are the benefits of diversification?

A
  • Economic resilience
  • Helps the economy shift from primary sector to higher value-added sectors
  • Smooths fluctuations in foreign exchange earnings
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9
Q

What are the methods to diversify exports?

A
  • Trade liberalisation

- Export promotion

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10
Q

Define social enterprises

A

Social enterprises are businesses whose primary objective is to improve social or environmental conditions. They can be non-for-profit and for-profit.

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11
Q

What are the market-based policies to encourage economic development and growth?

A
  • Trade liberalisation
  • Privatisation
  • Deregulation
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12
Q

Define Regulation

A

Regulations are rules and restrictions that the government creates to ensure that firms behave in a way that is best for social welfare.

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13
Q

What are the strengths of market-based policies (privatisation/deregulation)?

A
  • Economic growth
  • Development – multiple dimensions?
  • Productive efficiency
  • Allocative efficiency
  • Reduced pressure on government budget
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14
Q

What are the limitations of market-based policies (privatisation/deregulation)?

A
  • May reduce equity
  • May result in market failure
  • May increase unemployment
  • Ineffective if institutions and complex systems are dysfunctional
  • Ineffective if informal economy is large
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15
Q

Define redistribution policies

A

Redistribution policies are measures taken by governments to reallocate income and wealth more equitably in society.

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16
Q

What are the redistribution policies?

A
  • Tax structure
  • Transfer payments
  • Minimum wage
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17
Q

Define merit goods

A

Merit goods are goods or services that are beneficial for those who consume them and have positive externalities for society. In a free market they are under-provided and under-consumed, so the government will usually provide them to some extent.

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18
Q

What are the the merit goods a government can provide?

A
  • Education
  • Health (Universal healthcare, vaccines, maternal and newborn care)
  • Infrastructure (energy, telecommunications, transportation, clean water and sanitation)
19
Q

What are the strengths of interventionist policies?

A
  • Development

- Economic growth

20
Q

What are the limitations of interventionist policies?

A
  • Government budget implications

- Governance, including bureaucracy, corruption and short-term thinking

21
Q

Define forward direct investment

A

Foreign direct investment (FDI) is long-term investment in a foreign country by multinational corporations. This involves either setting up factories and expanding their operations in the new country or the purchase of at least a 10% share of a foreign company.

22
Q

Define inward forward direct investment

A

When we use the term inward foreign direct investment (IFDI), this refers to FDI coming into a country.

23
Q

What are the benefits of IFDI?

A
  • Economic growth and employment
  • Increased efficiency and productivity due to increased competition
  • Diversification
  • Improved infrastructure
  • Skills and knowledge transfer
  • Source of tax revenue
24
Q

What are the limitations of IFDI?

A
  • Loss of control of capital assets, innovation, human capital and intellectual property
  • Environmental damage
  • Limitations on tax revenue gains (due to possible tax exemptions to attract FDI)
  • Limitations on labour gains (possible worker mistreatment)
  • MNC dominance and lower resilience
25
Q

Define foreign aid

A

Foreign aid is any assistance given to a country that would not have been provided through normal market forces.

26
Q

What are the types of foreign aid?

A
  • Humanitarian aid (food aid, medical aid, emergency relief aid)
  • Development aid (with the aim of achieving development in the longer term)
  • Debt relief
27
Q

What are the types of development aid?

A
  • Grants (no need to be paid back)
  • Concession loans (loans with generous terms and conditions)
  • Project aid (funding for small, short-term projects)
  • Programme aid (long-term aid that supports improvements in an entire industry or sector)
  • Official Development Assistance (when development aid is given by governments)
  • NGOs
28
Q

What is one benefit of development aid?

A

A major benefit of development aid is that it can be targeted directly where it is needed.

29
Q

What are some limitations of development aid?

A
  • May require certain actions from beneficiaries
  • Major donors may undermine democracy, by deciding how the money donated is used
  • Can be inefficient
30
Q

Define debt relief

A

This is where part or all of a country’s debt is cancelled, rather than paid back.

31
Q

What are some benefits of debt relief?

A
  • Debt relief allows highly-indebted countries to direct their money to endeavours that really improve people’s lives, such as improving education, health care and infrastructure.
  • Can improve intergenerational equity.
32
Q

What are 2 limitations of debt relief?

A
  • Is a moral hazard

- If money is not repaid to creditors there is less money available to lend to others who may need it.

33
Q

Define multilateral development assistance

A

Multilateral development assistance is the support provided by organisations that many countries contribute to.

34
Q

What are the largest multilateral development assistance organisations?

A

The World Bank and the International Monetary Fund (IMF).

35
Q

What is the aim of the World Bank?

A

The World Bank loans money for large-scale, long-term development projects. The aim of the World Bank is to reduce poverty.

36
Q

What is the aim of the IMF?

A

The aim of the IMF is to maintain global economic stability.

37
Q

What are the divisions of the World Bank?

A

The International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

38
Q

How does the IMF pursue its objectives

A
  • Economic surveillance
  • Lending
  • Capacity development
39
Q

How can access to banking be improved?

A
  • Improving access to transaction accounts
  • Mobile banking
  • Micro-credit
40
Q

How can countries improve access to transaction accounts?

A
  • increase the number of bank access points, especially in rural areas
  • reduce service fees for bank accounts
  • help people get biometric identification to prove identity
  • increase the use of digital technologies
41
Q

What are the issues associated with micro-credits?

A
  • Poor people are not natural entrepreneurs

- They often have inconvenient payment schedules

42
Q

What are the 7 drivers of women’s empowerment?

A
  1. Tackling adverse norms and promoting positive role models
  2. Ensuring legal protection and reforming discriminatory laws and regulations
  3. Recognising, reducing and redistributing unpaid work and care
  4. Building assets – Digital, financial and property
  5. Changing business culture and practice
  6. Improving public sector practices in employment and procurement
  7. Strengthening visibility, collective voice and representation
43
Q

What are the components of institutional change?

A
  • Banking and Microcredit
  • Women’s empowerment
  • Corruption
  • Property and land rights
44
Q

What are all the economic growth and/or economic development strategies?

A
  • Trade policies
  • Social enterprises
  • Market-based policies
  • Interventionist policies (redistribution + merit goods)
  • Inward FDI
  • Foreign aid
  • Multilateral development assistance
  • Institutional change (Banking and Microcredit, Women’s empowerment, Corruption, Property and land rights)

Economics (7 decks)

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