Economic growth and economic development strategies

Which of the following is not part of an import substitution development strategy?

• Tax incentives to encourage FDI

• Tariffs on imported manufactured goods

• Subsidies to domestic manufacturing businesses

• Low-interest loans to domestic industries

Answer explanation

FDI is not part of import substitution. Import substitution relies on domestic producers.

Which of the following is least likely to be part of a market-based supply-side approach to economic development?

• Increasing tariffs

• Encouraging FDI

• Reducing corporation tax rates

• Reducing environmental regulations

Answer explanation

Trade barriers are not part of an export promotion strategy.

Which of the following is most likely to be an advantage of interventionist supply-side policies to increase economic development?

• Additional regulations on businesses

• Political influence of government

• Cost of spending on improving education

• Development is more likely to be sustainable

Answer explanation

Interventionist policies are more likely to protect the environment and increase equality.

Which of the following is least likely to be a benefit of FDI in Country X?

• Producers in Country X replicating the production techniques of an MNC

• Increased employment

• Repatriation of profits

• Increased exports

Answer explanation

If MNC's locate in an ELDC they may send profits back to their home country.

Which of the following is a type of aid that involves extension on a loan, reduced rates of interest or an agreement not to repay some of the loan?

• Bilateral aid

• Soft Aid

• Debt relief

• Tied aid