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Economics > Strategies Influencing Growth and Development > Flashcards

Strategies Influencing Growth and Development Flashcards

1
Q

Trade Liberation

A

Removal of trade barriers to allow free movement of goods and services

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2
Q

TradLib Benefits

A

Job Creation
Tech progress which opens economies up
Promotes entrepreneurship
Higher growth rates and lower poverty (eg Asia)

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3
Q

TradLib Costs

A

If industry is weak, job will be lost
Industries/firms may not be able to compete globally
Higher inequality etc

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4
Q

FDI Benefits

A

Growth (investment is an injection)
Increase in trade
Technological and managerial transfers (techniques passed through countries)
Increased CapEx
Greater competition

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5
Q

FDI Costs

A

Could be seen as exploitative
Domestic market isn’t mature enough to compete against international firms
Worker’s rights laws may be underdeveloped.

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6
Q

Removal of Govt Subsidies Benefits

A

Improves efficiency and productivity
Greater technological advancement
Increased international competitiveness

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7
Q

Removal of Govt Subsidies Costs

A

In the SR, firms may shut down as they cannot afford the removal of subsidies.

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8
Q

Floating Exchange Rate System

A

When value of a currency is determined by market forces

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9
Q

Floating Exchange Rate System Benefits

A

Automatic Adjustment of exchange rate (allows you to have slightly better export prices)
Independence of monetary policy to respond to shocks

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10
Q

Floating Exchange Rate System Costs

A

Economic volatility could lead to lack of consumer confidence
Central banks may not be able to support falls of value

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11
Q

Microfinance Schemes

A

Bottom up schemes to provide credit to low income households

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12
Q

Microfinance Benefits

A

Loans can set up businesses
High repayment rates
Safety net of savings are provided
Encourages female participants, develops human capital

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13
Q

Microfinance Costs

A

Loans can be used for consumption and not repayment
High interest rates could prove expensive
The poorest of the poor still don’t have access to microfinance
Markets become saturated as repeat businesses crop up

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14
Q

Privatisation Benefits

A

Monopolies break down, less barriers to market means more supply so more competition
Efficiency is maximised
Government generates revenue
More innovation + investment

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15
Q

Privatisation Costs

A

Only works with high competition and robust ownership

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16
Q

Human Capital

A

Higher quality human capital means higher skilled jobs, higher productivity and more output

17
Q

Interventionist Strategies

A

Protectionism
Human Capital Development
Managed Exchange Rates
Infrastructure Development
Joint ventures with private firms
Buffer Stock Schemes

18
Q

Market Led Strategies

A

Privatisation
Microfinance
FLoating Exchange Rate
Removal of subsidies
TradLib
FDI promotion

19
Q

Protectionism Costs

A

Net welfare loss
Not a sustainable long run solution

20
Q

Protectionism Benefits

A

Revenue source for government
Industries can grow till international competitiveness
Protects jobs

21
Q

Managed Exchange Rates Benefits

A

Exchange rate stability provides confidence for firms and promotes FDI
Countries can control Ex.Rate to suit needs - eg make currency weaker to maximise exports
Financial Repression can take place, can pay off debts quicker

22
Q

Managed Exchange Rates Costs

A

Contradiction of any domestic economic policies
Regular intervention will be limited by currency reserves of foreign country

23
Q

Infrastructure Development

A

Greater mobility of labour
Low utility costs promotes business growth
BUT financing could build huge debt and poor people may not have access to the use
ROI may not be high enough to be profitable

24
Q

Joint Ventures with Global Companies

A

All Economies of Scale utilised
BUT de merger could happen due to culture differences

25
Q

Buffer Stock Schemes

A

Min and Max Price shows conditions for government intervention. Gov buys excess stock at max price, and releases at min price.

26
Q

Industrialisation (Lewis Model)

A

The transition from primary to secondary sectors

27
Q

Lewis Model

A

Excess labour in agriculture sector moves to manufacturing, HD model dismisses agriculture workers, HD model keeps stealing workers.
EG China

28
Q

Lewis Model Eval

A

Lewis Model Turning Point:
As labour is absorbed, wages increase, manufacturing sector loses competitiveness

29
Q

Tourism Development Benefits

A

Creates employment and consumption
Multiplier Effect
Improves Current Account

30
Q

Tourism Development Costs

A

Seasonal unemployment
Foreign companies will reinvest profits into other economies
Negative Externalites

31
Q

Primary Industry Development

A

Greater Research and investment leads to lower prices due to greater productvity
More employment
Maximises competitive advantage

32
Q

Fairtrade Benefits

A

Increased Farmer income
FDI and investment is more confidence, as guaranteed revenue and sales
Multiplier Effect in local community

33
Q

Fairtrade Costs

A

Increased revenue may not be passed down workers
High membership fees make it inaccessible
Encourages lower skilled workers and low profits

34
Q

Aid Benefits

A

Fills the savings gap (allows HD to take place)
Basic provisions are met
Multiplier Effect on local community

35
Q

Aid Costs

A

Corruption may be fueled, no effect on economy
Aid may come with conditions of neoliberalism, contradicting country’s beliefs
Dependence on aid may reduce incentives to develop economy and discourage FDI
Only effective when bottom-up schemes used

36
Q

Debt Relief Definition

A

The restructuring of debt to make it more sustainable

37
Q

Debt Relief Eval

A

Could encourage reckless spending
Only IMF and World Bank participate, private creditors don’t
Claiming debt relief may hinder future borrowing

38
Q

Role of World Bank

A

12,000 projects funded via loans, grants and interest-free credit
Focused on developing countries to fight poverty

39
Q

Role of IMF

A

Controls international monetary system
Bails out financial crisis loasn eg greece

Economics (22 decks)

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