Solutions To Development

Question 1

What are the categories that solutions to development an be split into?

Answer 1

Internal - I.e. what governments can do themselves to help their country developed in the future

External - what the rest of the world can do to help the poor countries develop e.g. foreign aid

Question 2

What are the two main internal approaches a government can use to help the country develop in the future?

Answer 2

1 - The free market approach

2 - The interventionalist approach

Question 3

What is the free market internal solution?

Answer 3

The free market approach - this is where the government relies on the private sector to achieve development.

Question 4

How does the government limit their involvement in the free market approach? (4)

Answer 4

• keeping government spending and taxes low
• Increasing privatised firms with in the economy
• limiting rules + regulations on firms
• keeping both tariffs and protection low (external)

Question 5

What are the advantages of the free market approach? (5)

Answer 5

• Low taxes to help encourage business to grow/ expand
• Encourages multinationals into those countries, providing more jobs and trade helping to improve development
• Encourages specialisation in goods and services those countries have a comparative advantage in, thus increasing their efficiency
• Increased competition, benefiting the consumers with lower prices; thus, raising their disposable income
• Might help reduce the problem of corruption within the government due to their lesser involvement

Question 6

What are the disadvantages of the free market approach? (3)

Answer 6

• The government may have to increase spending on infrastructure and public services (i.e. education and health care) to help encourage multinationals and make trading / transport more accessible
• Little to no protection prevents infant industries from developing and competing with multinationals
• Businesses may benefit at the expense of workers and/ or take advantage of the environment ; due to little protection. E.g. little wages, polluting etc… causing poverty to increase therefore preventing development

Question 7

What is the interventionist internal solution?

Answer 7

More interventionist approach- when the government accepts more responsibility for the development of the economy

Question 8

What aspects are involved in the more interventionist approach? (3)

Answer 8

• Nationalisation of industries will be far greater so the government can control more parts of the economy
• Likely to be an increase in government spending therefore taxes will become higher
• Import substitution approach: Tariffs and protection will be higher, hoping that it will help their own (infant) industries develop more therefore increasing demand for local goods

Question 9

What are the advantages of the more interventionist approach? (3)

Answer 9

• The approach is more realistic in development terms for their infant industries
• Government can set their own priorities E.g. spending more money on infrastructure and public services
• Government would be able to protect their people more, therefore more people can benefit from the development e.g. increasing / setting a minimum wage; prevent environmental harm

Question 10

What are the disadvantages of the more interventionist approach?

Answer 10

• if the government owns more of the economy and makes more use of tariffs it can reduce the pressure firms are under to become more efficient
• The higher taxes may put of multinationals reducing investment and development
• Higher tariffs will lower disposable income
• The increase in gov involvement may increase the problem of corruption