• Inward oriented strategy
• Developing country wherever possible produce goods domestically rather than import them
• Industries will grow and be able to compete on world markets
• Opposite of export-led growth

• Government needs to adopt a policy of organizing the selection of goods to produce domestically (Labour-intensive, low skill manufactured goods)
• Subsidies are made available to encourage domestic industries
• Government needs to implement a protectionist system with tariff barriers to keep out foreign imports.

• ISI protects jobs in the domestic market, since foreign firms are prevented from competing, which means that domestic firms can dominate the market.
• ISI protects the local culture and social habits by practically isolating the economy from foreign influence.
• ISI protects the economy from the power, and possibly bad influence, of multinational corporations

• ISI may only protect jobs in the short-run. In the long-run, economic growth may be lower in the economy and the lack of growth may lead to a lack of job creation
• ISI means that the country doesn't enjoy benefits gained from comparative advantage and specialization (Inefficient)
• Inefficiency in domestic industries, no competition
  High rates of inflation due to domestic aggregate supply constraints
• Cause other countries to take retaliatory protectionist measures.

• Export-led growth, an outward-oriented growth strategy (openness and increased international trade)
• Increase exports ad exports revenue as factor in AD (increased GDP thus higher incomes and growth in domestic and export market)

To achieve export-led growth, it's assumed that a country will adopt these policies

• Liberalized trade: Open up domestic market
• Liberalized capital flows: Reduce restriction on FDI
• Floating exchange rate
• Deregulation and minimal government intervention

We should consider the differences involved in using the export of primary or manufactured products

• Developing country depends on export of primary products. Overall trend in primary product (except for oil and some metal) has been downward due to increasing supply and insignificant increases in demand. Export-led growth based on export of primary product is highly unlikely
• Usually on manufactured product export (Japan, South Korea, Hongkong, Singapore known as "Asian Tigers"). Export product with comparative advantage, low cost labour. Become major exporter, tend to change from product with labour-intensive, low skill to more sophisticated product, capital-intensive and more highly skilled workers

• Success of "Asian tigers", since around 1965 and emergence of China (exporting powerhouse) led to increased protectionism. Trade unions in developed countries could not compete against imports from low-wage developing countries. Government lobbied to put tariffs and quotas on lower-priced goods. Price increases, comparative advantage removed from exporting countries. Tariff escalation reduced abilities for developing countries to export forcing many to export primary products

Certain assumptions were made; however, successful countries don't necessarily meet them. Economists argue it's vital and minimizing government intervention is not the way forward. Governments played an important role (provide infrastructure, subsidizing output through low credit terms via central banks, and promoting savings and improvement in technology) in "Asian tigers". Governments also protected domestic industries that can't compete with foreign firms yet and promoted industries that were ready. "Infant industry" argument for protection. It's controversial about the government intervention.

Attracting MNC to kick-start the export-led growth might cause the MNCs become too powerful

Argued by some economists that free market-export-led growth may increase income inequality thus economic growth achieved at the expense of economic development

Advantages/opportunities associate with economic integration

• Larger export markets, economies of scale
• Encourage diversification, reduce dependence on narrow range of commodities
• Encourage regional cooperation (infrastructure transport etc)
• Regional integration offer vital links to infrastructure networks in neighboring countries for landlocked countries
• Stimuli for inward FDI
• Workers to work in other member countries sending remittance if there's free movement of labour
• Companies can invest in other member countries if there's free movement of capital.
  -Greater political stability and cooperation
• Greater efficiency, competitiveness
• Part of trading bloc, increase their bargaining power in multilateral trade negotiation.

Disadvantages/challenges associated with economic integration

• Role of WTO is undermined, allows member countries look inwards
• Complication in trading because of agreement of trading bloc
• Unemployment may arise, less efficient companies can't compete with lower priced imports from other member countries.
• Trade creation will benefit producers who can import inputs without tariffs.
• Trade viersion

Barriers:

• Practice of tariff escalation (Rate of import tariffs on goods rises the more the goods are processed). Importing country protects its processing and manufacturing industries (Lower tariffs on imports of raw materials and higher tariffs on processed and finished products. Little incentive to diversify away as higher price by tariffs will make processed goods uncompetitive
• Need for more highly qualified workforce. Developing countries lack it because of low educational standard thu the country is in poverty trap. Low education > production of low profit commodities and components > low incomes for governments > low ability to fund education

1. Trade liberalization

• Removal/reduction of trade barriers that block the free trade of goods and services between countries. (Tariffs barriers, quotas, export subsidies and administrative legislation)
• Can increase world trade, enable developing countries focus on G&S of comparative advantage.
  However, the countries lack infrastructure and institutions to gain the full benefits
• Protectionist policies employed by developed countries reduced the effectiveness of trade liberalization.
• Subsidies given by developed countries government can damage the ability of producers from developing country to compete

2. Privatization

• Sale of public government-owned firms (Nationalized firms) to the private sector
• Privately-owned, profit-maximizing firms more efficient.
• Nationalized firms have different goal, maintenance of employment, provision of a service to an isolated market.
• The process requires careful design and sequencing, creation of a regulatory infrastructure, assessment of possible poverty and social impacts, and transparent public communication.
• Some G&S necessary provided by nationalized firms so it's accessible, affordable, if not, certain operations are closed because they aren't profit-marking, price of product become unaffordable.
• E.g: Provision of water and sanitation. It's a human right and essential. Huge expense of providing, governments in developing countries turned to private sector. Some were required to privatize such sectors to receive support from international agencies. However, left purely to market forces, lack of competition and regulation means development goal of accessible and affordable prices won't happened. Necessary for government in establishing and enforcing regulation.

3. Deregulation

• Many regulations will increase the COP thus reduce potential output (environmental laws, health and safety regulations, work hours, leave and holidays)
• Deregulation help increase AS, economic growth
• Reducing 'red tape' will increase investment domestic and foreign.
• Ease of Doing Business Index
• Drawback: Can damage the safety and right of workers, banking system leads to debt-driven growth, any growth will be at the cost of sustainable development

MNCs build new plants or expand existing facilities in foreign countries (known as greenfield investment)

MNCs merge with or acquire (buy) existing firms in foreign countries

• Rich in natural resources (oil and minerals). MNCs have technology & expertise to extract
• Represent huge growing markets. Located directly, have better access to large number of potential customers. MNCs can satisfy the demand
• Cost of labor is lower, lower COP, can sell at lower price.
• Government regulation is less severe. Easy to set up, reduce COP, tax concession by government.

• Increased savings and developing countries suffered from savings gap,FDI fills that gap.
• MNC provide employment, education and training
• Greater access to R&D, technology and marketing expertise
• Stimulating growth by multiplier effect
• Host government gain tax revenue
• MNC bought existing companies, injecting foreign capital and increase AD
• Infrastructure of economy physical and financial
• Lower price for consumer, essential goods that aren't available domestically
  

• Bring their own teams, inexpensive low-skilled workers for basic production
• Too much power, tax advantage/subsidies, exert too much influence
• Transfer pricing
• Legislation on pollution not effective, create more external cost. Environmentally damaging
• Extract particular resources
• Capital-intensive production methods
• MNCs repatriate their profits, transfer the profits out of the country back to origin

• Contribute to economic, environmental and social progress
• Respect internationally recognized human rights
• Encourage local capacity building
• Encourage human capital formation through providing employment and training
• Provide full financial and operating information

Some argue, giving away the products is better. The director argues, "We have taken a market-based approach because we believe that only by helping to create a viable market, which serves the needs of customers, will any intervention be sustainable. Giving away products runs the risk of destroying a market which responds to the needs of people. How can an entrepreneur in Kenya, for example, make a living out of selling solar lights if a nearby NGO is busy giving them away for free?"

• Developing countries, weak financial systems.
• Limit the ability to save, affects the ability of people to buy and sell G&S, limit the ability of entrepreneur and firms to gain credit to start and expand business

Microfinance

• Geared specifically to the poor. Provision of financial services (small loans, saving accounts, insurance and cheque books)
• Small loans = micro-credit.
• Micro-credit loans enable poor people to start up very small-scale businesses (micro-enterprises).
• Give regular income, build wealth and escape poverty
• Women main recipient, better credit risk

Mobile phone banking

• A person send money via text to the receiver's phone number.
• Mobile phone companies taking over baking services in less developed countries.

Empowerment is the process which women gain power and control over their lives and acquire the ability to make strategic choices.

• Increasing support for the education of females
• increase the access to healthcare for women
• Create a safe environment in the home, workplace and society
• Establishing the right for women to own property and other assets
• Increase female involvement in decision making, both within the home and outside

• Invest in high levels of transparency and independent external scrutiny. Allows audit agencies and the public at large to provide effective oversight)
• Reform institutions. Design reforms to tackle corruption from all angles. E.g: Reform to tax administration have greater payoff if tax laws are simpler and reduce officials' scope for discretion
• Build a professional civil service. Transparent, merit-based hiring and merit-based pay.
• Keep pace with new challenges as technology and opportunities for wrongdoing evolve. (Higher risk such as procurement, revenue administration and management of natural resources)
• More cooperation to fight corruption. Countries joined efforts, harder to cross borders.

• Collect, analyze and disseminate gender desegregated data. Sufficient, accurate, up-to-date information
• Recognize and address specific gendered forms of corruption such as sextortion
• Include women in anti-corruption decision making. Fairer access to political rights, part of formulation, implementation, monitoring and evaluation of said policies.
• Empower women. Unaware of their rights and entitlements, easier target for corruption. Campaign and distribution of information.
• Gender sensitive reporting mechanism. Safe, accountable, accessible gender sensitive to report corruption

1. Secure land rights are an important pillar for agriculture. Secure land titles, incentive to invest in their land and borrow money
2. Secure land rights are essential for urban development. Failure to clarify land rights, and formation of large informal slums in cities.
3. Secure property rights help protect the environment. Incentive to look after their land, ensure sustainability.
4. Secure property rights and access to land are crucial for private sector development and job creating. Gives collateral to companies to help finance operations.
5. Secure property rights are important for empowering women.
6. Secure property rights help secure indigenous peoples' right. Can happen take over, or use without consent.
7. Secure property rights are vital for keeping peace. War and conflict caused millions of people leaving their properties behind. Without property right, won't be able to go back to their home

Challenge

1. Large size of the informal economy, economic activity is not taxed
2. Heavy reliance on indirect tax, but lower revenues. Indirect taxes are regressive.
3. Extensive tax exemptions and loopholes in the tax structure
4. High tax rates on high levels of income may give incentives to evade paying taxes

Strategy

1. Mobilize informal workers and enterprises into the formal sector
2. Impose higher taxes on goods such as alcohol, cigarettes, gambling and luxury goods which are consumed more by high-income
3. Improve the tax structure to remove loopholes and ensure that the tax exemptions are meaningful
4. Lower rates of tax at high incomes to encourage people to pay. The lower rate could be offset if more people pay their share.

CCT money enabled girls to extend their education up to two years, which had significant economic and social impacts.

"Protect workers against unduly low pay and ensure an equitable share in the fruits of progress to all and a minimum living wage to all who are employed and in need of such protection"

Minimum wage's effectiveness is limited by the sheer size of the informal sector, and the extent of non-compliance that may prevent workers from being paid the legal minimum wage

• Merit goods are underprovided. (Health services and education)
• Merit goods provide tremendous private and external benefits.
• Has potential to raise the human capital of a country's population.
• Challenges: identify the needs, choose appropriate services, finance the programmes and ensure all people have access.
• To support economic development, extensive investments must be made in all types of infrastructure (clean energy, transport, telecommunications, clean water and sanitation)
• Can be provided through many means, such as domestic government investment, FDI, microfinance, social enterprise or international cooperation.

Reasons foreign aid is provided:

• Help people after natural disaster or war
• Help developing countries to achieve economic development
• Fill the savings gap that exist in developing countries
  -Improve the quality of human resources in a developing countries
• Strengthen institutions
• Improve level of technology
• Fund specific development projects
• Enable country to increase their capacity to benefit from international trade opportunities (Aid-for-trade)
• Meet the SDG

Given to save lives and alleviate suffering in response to emergencies such as natural disaster or human-made crises, medical crisis such as COVID-19

Given by governments, multilateral organizations and NGO to alleviate systemic poverty and promote the economic, social, environmental or political development. Long-term assistance in response to systematic problems

• Govt. doesn't have welfare of population at heart, it goes to a small sector of the population
• Aid is given for political reasons. Developed countries give aid to those countries that are of political or economic interest.
• One form of bilateral aid is 'tied aid'. Country gives money for a particular aid project on the condition that the recipient country uses the money to buy goods and services from the donor country. Donor country ends up paying more, reduce possible trade between developing countries
• Long-term provision of food may force down domestic prices and becomes worse for domestic farmers.
• Can createe a culture of dependency. Too dependant on aid
• Aid is often focused on the modern industrail sector and may cause a greater income gap.
• Only available if the country agrees to adopt certain economic policies.
• Repayment of the loans itself may lead to massive problems of indebtedness

Operational activities
Plan and implement specifically targeted projects in developing countries

Advocacy activities
Influence public policy in areas such as poverty reduction, workers' right, human rights and the environment.

• NGOs rely on funding to carry out their work. NGO can or can't do depends on where their funding came, limit the effectiveness of what they were meant to do.
• NGOs operating in developing countries, resulting in uncoordinated and wasteful activities.
• NGOs have political or religious bias
• NGOs, are unaccountable; they aren't elected by the people that they are representing
• Can be accused of spending more money on advertising and promoting their activities.

Made up two closely linked organizations, International Bank for Reconstruction and Development (IBRD) and International Development Agency.

Provides financial support and technical assistance to developing countries to reduce poverty and supporting development

International Development Agency (IDA) works with the world's poorest countries. The poorer the country, the more favorable the loan conditions.

Responsibilities of the IMF are set out in Articles of Agreement:

• Promoting international monetary cooperation
• Facilitating the expansion and balanced growth of international trade
• Promoting exchange stability
• Assisting in the establishment of a multilateral system of payments
• Making its resources available to members experiencing balance of payments difficulties.

• Both established in US. They have been accused of promoting free market, business-friendly policies which mainly help companies in developed countries and high-income people in developing countries.
• The head of the World Bank is appointed by the American president.
• Negative impression of the IMF with conditions that it may set.
  
  

Washington Consensus
-Trade liberalization

• Encouraging the export of primary commodities
• Devaluing the currency
• Liberalized capital flows
• Encouraging FDI
• Privatization of nationalized industries
• Elimination of subsidies and price controls
• Austerity measures to reduce government spending, including spending in areas such as education and health.

Importance of debt relief:

• Frees up resources for social spending. Additional money can be spent on programs that benefit the poor.
• Boosting social spending
• Reducing debt service.
• Improving public debt management. Improved the debt position of post-completion point countries.

Two main categories: Interventionist strategies and market-oriented strategies. Economic growth can come at the cost of economic development and at the cost of sustainability. Therefore, it must be concluded that for any country in the world, regardless of its national income, a complementary package of policies should be adopted when approaching any economic issue, in order to achieve inclusive, sustainable economic development