4.3 - Strategies influencing growth and development

What is capital flight?

• The rapid, large-scale exit of financial capital due to a reduction in confidence, reducing the supply of loanable funds and increasing interest rates.

• The inflow of foreign direct investment into a country.

• The process of increasing government subsidies.

• The development of human capital.

Which of the following is NOT a market-orientated strategy for influencing growth and development?

• Trade liberalisation

• Promotion of foreign direct investment

• Development of human capital

• Privatisation

Fill in the blank: The exit of financial capital reduces the supply of ________ which then reduces access to credit of firms and governments.

Which of the following is an example of an interventionist strategy?

• Microfinance schemes

• Infrastructure development

• Floating exchange rate systems

• Privatisation

Which international institution is mentioned as important for development policies?

• World Bank

• United Nations

• European Union

• World Trade Organization

Capital flight can lead to a fall in investment causing a contraction in aggregate demand (AD).

• True

• False

Which country is shown as having followed a free market approach in the image?

• Chile

• Estonia

• India

• China

Which country has adopted a free market development agenda according to the image?

• Estonia

• Chile

• India

• China

Which of the following is an example of a market-led policy?

• Fiscal discipline

• Increasing government subsidies

• Reducing transparency for government

• Fixing exchange rates

Which policy involves moving state enterprises from the government into the private sector?

• Tax reforms

• Privatisation

• Trade liberalisation

• Floating exchange rates