4.3.3 - Strategies influencing growth and development

• Market-orientated strategies:

  • trade liberalisation
  • promotion of FDI
  • removal of government subsidies
  • floating exchange rate systems
  • microfinance schemes
  • privatisation
• Trade liberalization refers to the reduction or removal of barriers to international trade, such as tariffs, quotas, and trade restrictions.

  • Benefits:
  • Encourages competition, leading to efficiency and lower prices for consumers.
  • Increases access to foreign markets, promoting economic growth.
• FDI involves foreign entities investing in a country's economy, typically by establishing businesses or acquiring assets.

  • Benefits:
  • Brings in capital, technology, and expertise.
  • Creates jobs and stimulates economic growth.
• Removing or reducing government subsidies can lead to a more efficient allocation of resources in the economy.

  • Benefits:
  • Reduces market distortions and encourages innovation.
  • Can help improve fiscal sustainability
• A floating exchange rate system allows a currency's value to fluctuate based on market forces.

  • Benefits:
  • Provides a natural mechanism for trade balance adjustments.
  • Reduces the need for government intervention in currency markets.
• Microfinance involves providing small loans and financial services to low-income individuals and businesses.

  • Benefits:
  • Empowers individuals and promotes entrepreneurship.
  • Alleviates poverty and fosters economic development.
• Privatization involves transferring state-owned enterprises to private ownership and management.

  • Benefits:
  • Increases efficiency and competitiveness.
  • Generates revenue for the government.
• Interventionist strategies:

  • development of human capital
  • protectionism
  • managed exchange rates
  • infrastructure development
  • promoting joint ventures with global companies
  • buffer stock schemes
• Investment in education, training, and healthcare to enhance the skills and well-being of the workforce.

  • Benefits:
  • Improves productivity and innovation.
  • Reduces poverty and inequality.
• Protectionist policies include tariffs, quotas, and trade barriers designed to protect domestic industries.

  • Benefits:
  • Shields domestic industries from foreign competition.
  • Preserves jobs but can lead to inefficiencies
• Governments intervene in currency markets to influence the exchange rate.

  • Benefits:
  • Provides stability for international trade.
  • Helps prevent currency crises.
• Investment in transportation, communication, and public facilities.

  • Benefits:
  • Enhances economic productivity.
  • Attracts private investment.
• Promoting Joint Ventures with Global Companies - Encouraging partnerships between local and foreign firms to leverage technology and expertise.

  • Benefits:
  • Access to global markets and technology.
  • Transfer of knowledge and skills.
• Buffer Stock Schemes - Governments maintain stockpiles of certain commodities to stabilize prices.

  • Benefits:
  • Prevents price fluctuations and ensures food security.
  • Protects farmers and consumers.
• international institutions and non-government organisations (NGOs):

  • World Bank
  • International Monetary Fund (IMF)
  • NGOs
•  World Bank

  • Role: Provides financial and technical assistance for development projects in developing countries.
  • Focus: Poverty reduction, infrastructure, and sustainable development.
• International Monetary Fund (IMF)

  • Role: Offers financial assistance, policy advice, and macroeconomic stability to member countries.
  • Focus: Exchange rate stability, fiscal policies, and economic reforms.
• NGOs (Non-Government Organizations)

  • Role: NGOs operate independently of governments and work on various development projects and humanitarian efforts.
  • Focus: Diverse areas such as healthcare, education, human rights, and environmental conservation.