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Why do state approaches work into promoting development?
State planning and intervention is desirable due to the shortcomings of markets. The approaches range of state through planned economies by government setting outputs and prices.
Economic policy intends to protect domestic industry and encourage economic development through
• Heavy tariff barriers and a hostility to foreign direct investment to defend the home market for local firm’s for example
a. Limiting imports by quotas (limits onto the amount of imports permitted in a country)
b. High tariffs (taxes onto imports).
• High fixed swap over controls (high $/£) to create imports relatively inexpensive and exports relatively expensive
• State marketing boards purchase the output of tiny private sector farmers at well below world prices and utilize the foreign currency gain through profits to fund investment. There is low prices distort markets.
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Explain how getting right price affected the market for promoting development. Getting prices right implies: • Abolishing price controls as well as subsides on fundamentals.
Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2
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Difference between gross barter and net barter terms
discuss whether indian consumer goods industry is growing at the cost of future profitability
Illustrate some example of the development process affected on culture. Examples of the development process affected on culture: • Foreign Direct investment (FDI) and IMF st
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What are the internal constraints on government action less developed countries? Internal Constraints on Government Action LDCs: • Have restricted domestic resources to ac
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