The balance between markets and intervention

Discuss the positive outcomes of market-oriented policies (such as liberalized trade and capital flows, privatization and deregulation), including a more efficient allocation of resources and economic growth.

Discuss the negative outcomes of market-oriented strategies, including market failure, the development of a dual economy and income inequalities.

Discuss the strengths of interventionist policies, including the provision of infrastructure, investment in human capital, the provision of a stable macroeconomic economy and the provision of a social safety net.

Discuss the limitations of interventionist policies, excessive bureaucracy, poor planning and corruption.

Explain the importance of good governance in the development process.

Discuss the view that economic development may best be achieved through a complementary approach, involving a balance of market oriented policies and government intervention.

Free market development policies - policies aimed at promoting economic growth / development through market mechanisms e.g. privatisation, deregulation of markets, low taxation, free trade, low government intervention in business, floating exchange rates and an absence of capital controls.

Interventionist development policies - policies aimed at promoting economic growth / development through government intervention e.g. investments in human and physical infrastructure, protectionist trade policies, exchange rate intervention and regulation of monopolies.