Frameworks and actions designed to promote economic growth, social development, and environmental sustainability
Stakeholders implementing economic development
Government
International organizations
Other stakeholders
Development Policies
Policies designed to sustainably reduce poverty by addressing its multi-dimensional aspects and promoting inclusive economic growth
Development Policies
Attracting, creating, and retaining businesses that provide jobs to residents
Development Strategies
Investment in Infrastructure
Investment in Education
Tourism Development
Investment in Human Capital
Policy Formulation
1. Identify the Problem
2. Define the Objectives
3. Analyze Options
4. Writing the Policy
5. Implementation
6. Monitoring and Evaluation
Effective Development Policy
Clear Goals
Inclusivity
Transparency
Sustainability
Flexibility
Import Substitution (IS)
Replacing consumer goods imported from abroad, thereby catering to local demand through locally produced goods<|>Substituting imports of raw materials or inputs used for industrial production
Export-Led Growth (ELG)
Strengthening local manufacturing to compete in global markets
Import Substitution
Frequently involves implementing protectionist policies like tariffs and quotas
Export-Oriented Approach
Often requires a more liberalized trade policy to gain access to international markets
Advantages of Export-Led Growth (ELG)
Increased revenue
Transfer of skills and technology
Economic diversification
Job creation
Potential currency appreciation
Disadvantages of Export-Led Growth (ELG)
Over-reliance on international market
Potential social and environmental consequences
Potential for declining market shares
Exchange rate risks
Possible resource depletion
Advantages of Import Substitution (IS)
Promotes domestic production and reduces dependence on imports
Encourages the development of local industries and technology
Creates employment opportunities in the domestic market
Protects infant industries from foreign competition
Disadvantages of Import Substitution (IS)
Can lead to inefficiencies and low productivity due to lack of competition
Can lead to a limited choice of goods and services for consumers
Can result in high inflation due to protectionist measures
Can lead to a lack of foreign exchange and balance of payment problems
Initially, developing countries adopted import substitution strategies. In the 1960s, countries like South Korea and Taiwan shifted to ELG. By the 1980s, countries like China and India effectively adopted the strategy.
Both strategies have their own set of challenges and criticisms. However, it is important to consider the specific needs and circumstances of each country when deciding which approach to take.
Mercantilism
An economic theory that emphasizes the importance of stockpiling precious metals, such as gold and silver, to increase national wealth and power
Nationalism
Prioritizes the interests of the national economy over global considerations, involving implementing protectionist measures such as tariffs and quotas to shield domestic industries from foreign competition
Linear-stages of growth theory
A theory that outlines five stages of economic development: Traditional Society, Preconditions for Take-Off, Take-Off, Drive to Maturity, and Age of High Mass Consumption
Harrod-Domar Growth Model
A functional economic relationship in which the growth rate of gross domestic product depends directly on the national net savings rate and inversely on the national capital-output ratio
Structural change theory
Examines how less developed economies transition their economic structures away from traditional subsistence agriculture towards a more diversified, urbanized, and modern industrial and service-oriented economy
Governmentality
The concept developed by Michel Foucault that examines how power and knowledge are exercised through the "conduct of conduct" in economic systems