Policies To Promote Economic Growth And Development Flashcards
Throughout the 1960s and 1970s what did people traditionally believe was the best way of promoting development
Government/state control control and economic planning, high levels of public investment and protections from the volatility of the world market (protectionism)
What was the 1980-1990 approach about development and growth
Market-friendly and open-border policies including reduced tariffs and increased migration of people and capital
Joseph Stiglitz on the potential of the developmental state
Finding the right balance between the role of the state and the role of the market
Broad policies to increase development
- improve education
- protectionism
- external debt relief
- fairytale schemes for farmers
- anti-corruption policies
What is the free market
The market allocates the resources and is driven by profit. Private sector dominates
What is a mixed economy
Mix of state and private ownership - government intervention in markets
What is a command economy
Planning allocated resources, most resources are state owned and little role for market prices
What are market-oriented policies
Policies giving s larger role to private sector enterprises with liberalisation of markets and structural economic reforms
Examples of free-market/private sector policies
- fiscal discipline
- reallocating state spending
- tax reforms
- liberalising interest rates
- XRs
- trade liberalisation
- liberalisation of FDI
- privatisation
- deregulation
- property rights
Free-market / private sector policies: fiscal discipline
Control of government budget deficits and national debt so taxes can remain low and drive investment / competitiveness
Free-market / private sector policies: reallocating state spending
Away from subsidies towards healthcare, education and infrastructure etc.
Free-market / private sector policies: tax reforms
Widening the base of taxation and encouraging lower tax rates to raise enterprise and work incentives as a means of creating wealth
Free-market / private sector policies: XRs
Free-market economists support a choice of a fixed or free floating XR
