6. Political environment in less-developed countries 6. Political environment in

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6. Political environment in less-developed countries

6. Political environment in less-developed countries

Determine whether the following policies and programs support a political environment that promotes economic growth and development in less-developed countries (LDCs). For those that help promote economic growth and development in LDCs, classify each policy or program into one of the following categories: law and order, infrastructure, or international trade.

6. Political environment in less-developed countries Determine whether the following policies and programs support a political environment that promotes economic growth and developme in less- developed countries (LDCs). For those that help promote economic growth and development in LDCs, classify each policy or program into one of the following categories: law and order, infrastructure, or international trade. Support economic growth Policies and Programs Artificially high exchange rates Efficient transportation systems Openness to international trade Competitive markets Public goods supplied by the market Law and Order Infrastructure International Trade Inhibit economic growth Grade It Now Save & Continue Continue without saving

Explanation / Answer

Artificially high exchange rate: (International Trade)

Exchange rate is considered an important factor in an economy as it affects all other prices. Exchange rate affects deeply on economic activity of less developed countries. It also determines the relation of a countries economy with the rest of world. When a less developed country has a weak currency the local producers find it easy to produce qualty products at low cost which in turn decreases the cost of their products in international market. This gives them an edge over other competitors.

Efficient transportation system (Infrastructure):

In a countries economic development infrastructure plays a vital role as all other sectors like employment, health, education, public services depend on it. An efficient transport system in a less developed country will fuel the economic growth by providing easy accessibility to jobs, healthcare, education & public services.

Openness to international trade (International trade):

This means removing policy barriers for international organizations to do business in a country. When a country opens up its economy for international organizations it unleashes a wealth of foreign investment. It also helps in private sector job creation, faster movement of technology & talent.

Competitive Markets (Inhibit economic growth):

Competitive markets have large number of firms producing same type of products. This results in better quality of products & services at lower cost. This also boosts innovation in market as every firm tries to retain its customers. Overall it inhibits economic growth by creating quality & innovation.

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