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 (a)   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