Explain in terms of what you have learned in this chapter how you think the foll

Question

Explain in terms of what you have learned in this chapter how you think the following policies will boost growth and living standards in a poor country over the long run? Which of them do you think is the most effective?

a. Offer tax incentives for investment by local firms

b. Offer tax incentives for investment by foreign firms

c. Give cash payments for good school attendance

d. Crack down on government corruption

e. Restrict imports to protect domestic industries

f. Allow free trade

g. Give away condoms

Explanation / Answer

A. This will encourage the local firms to invest in their domestic area, leading to better economic co operation amongst the domestic firms and better output as they know their country and its resources well.

B. This will encourage the foreign firms to invest more in the domestic area of country which would help the producers in terms of money and technology, thus would also increase the producer's knowledge as well as the output. This would also enrich the forex reserve.

C. This would encourage the students to attend school and increase their capabilities, eventually leading to production in highly efficient citizens having overall and sincere knowledge.

D. This would lead to better public expenditure as well as better public service. Corruption eats up the economy. Getting rid of curroption will help the economy to grow.

E. This will help to flourish the domestic economy and would increase their productivity.

F. This would allow countries to trade freely without any restrictions leading to exchange of cheap goods and services, technology and innovation indirectly.

G. This will help in population control because resources are limited and it is easy to take care of health of limited population within limited resources.

I think allowing free trade is the beat amongst all as it also increases the feeling of international co-operation.

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