Practise interventionist development strategies by linking human capital, infrastructure, trade controls, joint ventures and buffer stocks to outcomes.
In Libya the HDI was 0.80 in 2010 and it was 0.72 in 2019.
Evaluate interventionist strategies that a government in a developing country of your choice might use to increase economic development.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the general marking guidance. The indicative content below exemplifies some of the points that candidates may make but this does not imply that any of these must be included. Other relevant points must also be credited.
QS9: Interpret, apply and analyse information in written, graphical, tabular and numerical forms.
Knowledge, Application, Analysis ( 12 marks) - indicative content
- Understanding of economic development/HDI
- Development of human capital - government investment in healthcare and education can increase human capital and productivity;
increases HDI as it increasing life expectancy and mean years of schooling
- Protectionism - by imposing restrictions on free trade, the government helps domestic (infant and geriatric) industries therefore maintaining employment;
increases HDI as per capita incomes increase
- Managed exchange rates - countries with an overvalued exchange rate can import raw materials and capital goods at a relatively lower price promoting advances in technology;
e.g. increases proportion of people with access to mobile phones and the internet
- Infrastructure development - investment in physical capital, e.g. power and water supplies, transport links and telecommunication networks will increase efficiency and reduce unit costs;
e.g. increases the proportion of people with access to energy and clean water
- Promoting joint ventures with TNCs - allows sharing of costs with the TNCs thereby gaining internal economies of scale that reduces export prices;
local businesses could access resources including technology/human capital
- Buffer stock schemes - by setting a floor and a ceiling price, governments reduce uncertainty caused by price volatility;
this would therefore stabilise incomes and increase HDI
N.B. Award maximum of Level 3 (9 marks) if a candidate does not refer to a developing country in their answer
N.B. Award maximum of Level 3 (9 marks) if a candidate does not refer to economic development in their answer
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Displays isolated, superficial or imprecise knowledge and understanding of economic terms, principles, concepts, theories and models.
Use of generic material or irrelevant information or inappropriate examples.
Descriptive approach which has no chains of reasoning.
Level 2
4-6
Displays elements of knowledge and understanding of economic terms, principles, concepts, theories and models.
Limited application of knowledge and understanding to economic problems in context.
A narrow response or superficial, only two-stage chains of reasoning in terms of cause and/or consequence.
Level 3
7-9
Demonstrates accurate knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the question. Some evidence and contextual references are evident in the answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause and/or consequence are evident but they may not be developed fully or some stages are omitted.
Level 4
10-12
Demonstrates accurate and precise knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using appropriate examples which are fully integrated to address the broad elements of the question.
Analysis is clear, coherent, relevant and focused. The answer demonstrates logical and multi-stage chains of reasoning in terms of cause and/or consequence.
Evaluation (8 marks) - indicative content
- Increase in government spending could worsen fiscal position;
if government spending is financed through borrowing it could increase external debt and subsequently lead to crowding out: resource and financial
- Impact of the policies employed might depend on the state of the economy
- A combination of policies may have to be implemented by the government to experience a large increase in economic development and HDI
- Depends on the quality of education and healthcare programmes, e.g. if the government is investing in science/technology/maths based subjects, it may have a larger impact on economic development
- Protectionism could lead to a distortion of comparative advantage and hence resources will be allocated inefficiently;
the lack of competition for domestic industries could result in higher x-inefficiency
- Overvalued exchange rate would make exports relatively more expensive therefore reducing demand for domestic goods and causing unemployment
- Depends on the quality of the infrastructure developments
- A joint venture is only a temporary arrangement with TNCs: once this ends, investment may fall and economic development may not be sustained;
may not raise investment if firms have conflicting objectives and reaches a point of diseconomies of scale, causing export price to rise
- Government failure: information gaps for the government, unintended consequences, moral hazard, excessive administrative costs e.g. due to high costs of storage and security associated with buffer stock schemes
- Some of these policies will only have an impact after a significant time lag e.g. infrastructure developments
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2
4-6
Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3
7-8
Evaluation recognises different viewpoints and/or is critical of the evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.