Development Review - Long Essay (Please circle one) Number __18___
Copy the Question here:
Question:
18, a) under what circumstances might a country achieve economic growth without economic development?
b) Evaluate the effectiveness of outward-orientated strategies in achieving growth and development.
What are the 2-3 key words in the question to pay attention to? You should underline these in a real test situation.
2005
List Verb(s) and Nouns (concepts):
Economic growth and economic development
Outward-orientated strategies
What are the concepts to provide definitions for?
Define them precisely here:
Economic Growth (the growth of the real output of an economy over time)
Economic Development (economic development not only include economic growth , also include reduction of inequality, elimination of poverty and improving living standard)
Outward-orientated strategies is Export Promotion – need to be more specific! Outline the policies, e.g. reducing import barriers, open to international trade, encourage foreign investment and multinationals, encourage mobility of capital and labor.
Structure of your answer What graph should you draw for this point?
What example can you provide to illustrate your point?
(Use numbered lists or bullet points: develop and explain your argument so that others can understand – no need to write them out here as this is only for your review. Please insert more rows as necessary).
Remember to EVALUATE for Part B of Long Essays: a)

Real GDP increase by less percentage of increase in population.

Gov’t borrow money and increase gov’t expenditure, AD shift AD SRAS and LRAS

to right, actual GDP increase, economic growth, but inflation.
Or Gov’t expenditure increase for providing demerit goods.
 Gov’t borrow money –international debt make economic growth, but Debt service might getting worse.

Benefit from trade, economic growth. If exploit goods have negative externality, MSC>MPC. market failure.

Economic growth but the more income inequality especially in developing countries
 economic growth cause Environment problems: land over-use, exploitation of non-renewable resources, deforestation, pollutions. Environment damage might undermine development.
 Industrialization, economic growth but cause Rural-Urban migration, more slums in city, crimes, social insecurity.

Foreign direct invest (MNCs), economic growth. But might drive out local industry, monopoly power, inefficient. b) outward-orientated strategies----Export promotion
 encourage free trade in goods
 free movement of capital and labor.

Encourage multinationals, their tech and products

Encourage manufactures in practice
Evaluation
Advantage: Increase output and growth arising from comparative advantage
Economies of scale
Increased competition and efficiency
Spread of technology
Protectionist policies result in higher prices and lower output
Disadvantage: limited growth of world demand for primary exports curve.
MSC and MPC graph
PPF cure with x-axis is necessaries and y-axis is luxuries OR Lorenze curve
Monopoly graph
Canada over-logging
China Agriculture sector, use more fertilizer improve the output of agriculture productions, in the mean time, environment pollution.
Asian tigers
NICs like Brazil, Malaysia
LDCs like China, Vietnam

Worsening TOT for primary producing nations
Protectionism of DCs : Labor-intensive suffer the most from
LDC competition and hurt the relatively poor in DCs. The more LDCs adopt EP, the more likely protectionism in DCs. But LDC growth offers market potential to DC export and intra-LDC trade can also grow as income rise.
Inward oriented—Import substitution – This can be offered as an alternative, but it has many disadvantages as well. The practical experience of many countries show that this less likely to be successful than the export oriented strategies.
In this contect, you can discuss the following – but not at great length:
Inward oriented strategies involve:
Encourage self-reliance in the manufactures
Erect tariff barriers against imports
Restrict movement of labor and capital
Restrict MNCs with inappropriate tech and products
Evaluation
Problems with trade policy
Problem s with EP policies
Infant industry argument
Low growth
Infants never grow up
Rich benefit more, income inequality
Inappropriate tech
Summary Conclusion (one sentence)
Both outward-oriented and inward-oriented strategies have advantages and disadvantages.
Argentina, India, Peru,
Ghana

(The question did not ask about inward-oriented strategies, so stay focused on outward oriented strategies. The inward strategy can be referred to as an alternative, but only in relation to the outward strategies. Thus the conclusion should not be both of these strategies have pros and cons, the conclusion should be focused on the outward strategies’ pros and cons).