Market oriented strategies Influencing Growth And Development Flashcards
What are market oriented strategies?
Market oriented strategies to focus of removing government intervention to enable a free market to function more efficiently
What factors can influence growth and development? (5)
- Free trade
- Free market supply side policies
- Removal of government subsidies
- Micro finance
- Floating exchange rate
How does free trade enable growth and development
How does it prevent this
Enables countries to specialise in good where they have lower opportunity costs leading to lower prices
However free trade may mean developing countries only focus on primary products which limits development long term
How do free market supply side policies enable growth and development
How do they prevent it
Policies such as privatisation or deregulation improves efficiency
However deregulation may increase inequality and privatisation may lead to creating monopolies.
How does removal of government subsidies improve growth and development
How does it not
Government subsidies for firms encourage inefficiency
However depends on firm, if a firm create positive externalities then a subsidy can help
How does micro finance improve growth and development
How does it not
Helping people on very low incomes to gain access to credit
However depends on how Wel it is managed and directed
How does a floating exchange rate improve growth and development
How does it not
May cause temporary depreciation and cost push inflation. But it will increase competitiveness of export sector
However there is no guarantee it will solve e countries underlying problems
