IB Economics 4.10 Growth and development strategies

Study the extract and data below and answer the questions that follow.
Nigeria

(1) In August 2016 Nigeria, the largest economy in Africa, went into recession. This was accompanied by rising inflation and growing unemployment.

(2) 80 % to 90 % of Nigeria's export revenue is earned from oil exports. The recent fall in the world price of oil has had a significant impact on export revenues. Therefore, government revenue has fallen by about 30 %. This has prompted economists to argue that Nigeria should not be so dependent on oil and needs to diversify.

(3) Until the end of the 1960s, Nigeria was food self-sufficient and a net exporter of agricultural products. This changed in the early 1970s when the dependence on oil started. Researchers have suggested that Nigeria should start to focus on the production of agricultural goods for export. It has also been suggested that Nigeria should try to promote tourism. Government officials have said that agriculture is the most viable option for Nigeria to create employment for the large number of unemployed young people.

(4) Farmers have asked the government for more protection against foreign agricultural products. The government has already banned several agricultural imports. It also imposed strict currency controls that limit how much foreign currency Nigerians can spend online and how much businesses and individuals can exchange on a daily basis, limiting imports further. The evidence is clear that the government is adopting an import-substitution strategy.

(5) In the state of Osun, the first step towards diversification has been made. The cocoa processing industry has been revived to produce globally competitive chocolates and other cocoa products. The state governor said that it is slowly leading to more employment and higher revenues for firms. However, many firms remain small and are unable to achieve the economies of scale that would make them more competitive.

(6) The government is planning to create jobs in other areas such as the textile industry. 6000 young people will be trained and provided with facilities like sewing machines, fabrics and other equipment to make school uniforms for the growing young population. The president said that youth employment is needed to help eradicate poverty.

(7) One of Nigeria's challenges is the existence of powerful monopolies in some sectors, including the electricity sector. These monopolies refuse to lower prices for businesses and households, creating a welfare loss.

(8) To help the process of diversification, the country urgently needs better private sector regulation to increase healthy competition, reduce monopoly power, remove illegal cartels, lower corruption and encourage technological innovation.
[Sources: adapted from www.vanguardngr.com, accessed 17 August 2016 and www.sciedupress.com, accessed 18 August]

[Sources: adapted from www.tradingeconomics.com, accessed 14 August 2016; http://hdr.undp.org, accessed 14 August 2016; www.cia.gov, accessed 14 August 2016; http://data.worldbank.org, accessed 14 August 2016; http://allafrica.com, accessed 13 August 2016; www.theguardian.com, accessed 13 August 2016; www.theguardian.com, accessed 13 August 2016 and www.proshareng.com, accessed 2 October 2016]

Using information from the text/data and your knowledge of economics, evaluate import-substitution and diversification as a means of achieving economic development in Nigeria.

Study the following extract and answer the questions that follow.
New policies for Brazil

(1) From 2010 to 2014, Brazil experienced an economic boom with annual gross domestic product (GDP) growth of 8 %. During this time, the government spent heavily on social programmes (including cash transfers and pensions) that helped millions to get out of the poverty cycle. The poverty rate decreased from 22 % to 9 % and the Gini coefficient dropped from 0.581 to 0.515 . However, the spending on social programmes resulted in fiscal deficits and a large public debt, which is currently 80 % of GDP.

(2) In 2015, Brazil entered a recession that lasted until 2017. During the recession GDP declined by an average of 3 % per year. By 2017, the number of Brazilians living in absolute poverty climbed by 13 %, inequality worsened, and unemployment was 12 %. From late 2017 to 2019, Brazil struggled to recover, with only approximately 1 % annual economic growth.

(3) Some economists blamed the slow recovery on the lack of investment in education and technology during the economic boom. According to those economists, investment in human and physical capital was necessary to improve productivity and decrease the reliance on the production of primary commodities. Historically, spending on education has not been effective in reaching the very poor.

(4) In 2018, a newly elected government, aiming to stimulate economic growth, introduced market-oriented policies. Since Brazil has a large economy, the new government believed that Brazil should take advantage of world trade and foreign investment to boost economic growth and achieve economic development.

(5) The new government aimed to increase the number of multinational corporations (MNCs) investing in Brazil through deregulation and trade liberalization. Furthermore, in 2020 several state-owned enterprises were privatized.

(6) Additionally, new labour market and tax reforms were introduced to create jobs, increase labour force participation and make it easier for firms to hire and fire workers. The reforms included increasing the retirement age and reducing transfer payments. However, trade unions claim that the reforms are unfair and will lead to the exploitation of workers.

(7) There is concern that deregulation, privatization and market liberalization will put pressure on Brazil's environment, threaten sustainable development, and benefit only urban areas. In 2017, the government introduced "green GDP" as an official measure and committed to environmental protection goals. This is necessary because, for example, over 40 % of the population live in areas without access to a sewage system and manufacturing companies are dumping untreated wastewater in rivers, contributing to water pollution.

Explain how education programmes and health programmes can promote economic development.