Tag: Edexcel IAL Economics Specification

Based on Edexcel International Advanced Levels Economics (2018) Official Specification Unit 1: Markets in action 1.3.1 Introductory concepts 1 The nature of economics Economics as a social science: inability to conduct scientific experiments. The development of models in economics based on assumptions. The use of the ceteris paribus assumption in building models and drawing conclusions based on them. 2 Positive and normative economics The distinction between positive statements and value judgements on economic issues. The role of value judgements in influencing economic decision making and policy. 3 Scarcity The problem of unlimited wants and finite resources. The distinction between renewable and non-renewable resources. The link between scarcity and opportunity cost. The distinction between free goods and economic goods. 4 Production possibility frontiers The use of production possibility frontiers to depict: the maximum productive potential of an economy efficient or inefficient allocation of resources possible and unobtainable production opportunity cost (using marginal analysis) economic growth and decline. The distinction between movements along, and shifts in, production possibility frontiers, and their possible causes. The distinction between capital goods and consumer goods. The significance of capital goods for productivity and economic growth. 5 Specialisation and the role of money and financial markets The advantages and disadvantages of specialisation and the division of labour in organising production; Adam Smith's views on the division of labour. The function of money as a medium of exchange, a measure and store of value, and a method of deferred payment; the significance of these functions for specialisation. The role of financial markets: to facilitate saving to make funds available to businesses and individuals to facilitate the exchange of goods and services to provide forward markets in commodities and currencies to provide a market for equities. 6 Free market, mixed and command economies The distinction between free market, mixed and command economies. The advantages and disadvantages of free market and command economies. The role of the state in a mixed economy. 1.3.2 Consumer behaviour and demand 1 Rational decision making The assumption of rationality in decision making: consumers aim to maximise utility by making rational choices; firms aim to maximise profits. Reasons why consumers may not aim to maximise utility: the influence of other people's behaviour (herding) habitual behaviour inertia poor computational skills the need to feel valued framing and bias. 2 The demand curve The concept of 'demand'. The distinction between movements along a demand curve and shifts of a demand curve. The concept of diminishing marginal utility and its significance for the shape of the individual demand curve. Factors that may cause a shift in the demand curve: changes in the price of substitutes or complementary goods changes in real income changes in tastes changes in size and age distribution of the population advertising. 3 Price, income and cross-elasticities of demand The concepts of 'price', 'income' and 'cross-elasticities of demand'. How to use formulae to calculate price, income and cross-elasticities of demand. Interpretation of numerical values of price elasticity of demand: perfectly price elastic demand price elastic demand unitary price elastic demand price inelastic demand perfectly price inelastic demand. The factors influencing price elasticity of demand: availability of substitutes branding percentage of total expenditure addictiveness of product durability of product. How to calculate total revenue. How price elasticity of demand varies along a straight line demand curve. The relationship between price elasticity of demand and total revenue. Interpretation of numerical values of income elasticity of demand: perfectly income elastic demand income elastic demand income inelastic demand perfectly income inelastic demand the distinction between normal goods and inferior goods. Interpretation of numerical values of cross elasticity of demand. Significance for the degree to which goods are: substitutes complements unrelated. The significance of price, income and cross-elasticities of demand for firms, consumers and the government. 1.3.3 Supply 1 The supply curve The concept of 'supply'. The distinction between movements along a supply curve and shifts of a supply curve. Factors that may cause a shift in the supply curve: changes in the costs of production the introduction of new technology indirect taxes (specific and ad valorem) government subsidies natural disasters. 2 Price elasticity of supply The concept of 'price elasticity of supply'. Calculation and interpretation of numerical values of price elasticity of supply: perfectly elastic supply elastic supply unitary elastic supply inelastic supply perfectly inelastic supply. Factors that influence price elasticity of supply: the time period availability of stock/perishability mobility of factors of production legal constraints capacity. The distinction between the short run and long run in economics and its significance for price elasticity of supply. 1.3.4 Price determination 1 Determination of market equilibrium Equilibrium price and quantity, and how they are determined. Causes of changes in the equilibrium price and quantity as a result of shifts in demand and supply curves. The operation of market forces to eliminate excess demand and excess supply. 2 Consumer and producer surplus The distinction between consumer and producer surplus. How changes in demand or supply might affect consumer and producer surplus. 3 Functions of the price mechanism The rationing, incentive and signalling functions of the price mechanism for allocating scarce resources. The price mechanism in the context of different types of markets, including local, national and global markets. 4 Indirect taxes and subsidies The impact of indirect taxes on consumers, producers and the government. The incidence of indirect taxes on consumers and producers. The impact of subsidies on consumers, producers and the government. The incidence of subsidies on consumers and producers. 1.3.5 Market failure 1 Sources of market failure Why market failure occurs: too much or too little of a good is produced and/or consumed compared to the socially optimal level of output. Sources of market failure: externalities the free-rider problem; non-provision of public goods imperfect market information moral hazard speculation and market bubbles. 2 Positive and negative externalities The distinction between private benefits, external benefits and social benefits. The distinction between private costs, external costs and social costs. The distinction between: external benefits of production external benefits of consumption external costs of production external costs of consumption. The use of diagrams, using marginal analysis, to illustrate: the external benefits from consumption the external costs from production the distinction between the market and social optimum positions; identification of the welfare loss or gain areas. The impact of externalities in various contexts: transport health education environment financial. 3 Non-provision of public goods The distinction between public and private goods: private goods: rival and excludable public goods: non-rival and non-excludable. Why public goods may not be provided by the private sector making reference to the free-rider problem. 4 Imperfect market information The distinction between symmetric and asymmetric information. The significance of information gaps. How imperfect market information may lead to a misallocation of resources in various contexts: healthcare education pensions insurance. 5 Moral hazard How moral hazard can occur. The impact of moral hazard on consumers, producers, workers and governments in: insurance banking. 6 Speculation and market bubbles How market bubbles may arise. The impact of market bubbles on consumers, producers, workers and governments in various contexts: housing stocks and shares. 1.3.6 Government intervention in markets 1 Purpose and methods of government intervention The purpose of government intervention, including reference to market failure. Methods of intervention: indirect taxation (ad valorem and specific) subsidies maximum and minimum (guaranteed) prices. tradeable pollution permits extension of property rights state provision regulation provision of information. Contexts in which governments may intervene: health housing education transport environment energy agriculture commodities. 2 Government failure 'Government failure' as intervention that results in a net welfare loss. Causes of government failure: information gaps lack of incentives unintended consequences excessive administrative costs moral hazard. Unit 2: Macroeconomic performance and policy 2.3.1 Measures of economic performance 1 Economic growth The rate of change of real Gross Domestic Product (GDP) as a measure of economic growth and living standards. Gross National Income (GNI) as an alternative measure of national income. The distinction between the following measures of GDP/GNI: real and nominal total and per capita value and volume. Comparison of GDP/GNI rates of growth between countries and over time. The concept of Purchasing Power Parities (PPPs) in making international comparisons of real GDP/GNI. The distinction between positive economic growth rates and negative economic growth rates. The concept of 'recession' as two consecutive quarters of negative economic growth. The limitations of using GDP/GNI to compare living standards between countries and over time. National happiness and wellbeing: indicators of national happiness and wellbeing the relationship between real incomes and subjective happiness. 2 Inflation The concepts of inflation, deflation and disinflation. Calculating inflation using a consumer price index (CPI), including role of weighted basket of goods and services. Limitations of the CPI as a measure of the rate of inflation. The producer (wholesale) price index as an indicator of future trends in the rate of inflation. Causes of inflation: demand-pull cost-push excessive growth of money supply. Causes of deflation: falling aggregate demand (AD) increase in aggregate supply (AS) fall in the money supply. Effects of inflation and deflation on: Consumers the government firms workers income distribution investment competitiveness the current account of the balance of payments. 3 Employment and unemployment How unemployment is measured, using the International Labour Organization (ILO) definition. The causes of unemployment: frictional seasonal structural demand deficiency real wage inflexibility. The effects of unemployment on: consumers firms workers public finances resource utilisation and production possibility frontier society. The distinction between unemployment and underemployment. The significance of changes in rates of employment, unemployment and economic inactivity. The significance of net migration for employment and unemployment. 4 Balance of payments Components of the balance of payments, with particular reference to the current account. The distinction between deficits and surpluses in the trade in goods and services balance. The distinction between balance of payments deficits and surpluses on the current account. 2.3.2 Aggregate demand (AD) 1 The characteristics of AD The concept of AD. Components of aggregate demand: C + I + G + (X - M) = the AD curve. The distinction between a movement along, and a shift of, the AD curve. 2 Consumption (C) Influences on consumption: disposable income interest rates consumer confidence level of welfare payments wealth effects availability of credit. The relationship between savings and consumption. The definition of the 'savings ratio'. Causes and effects of changes in the savings ratio. 3 Investment (I) The distinction between gross investment and net investment. Influences on investment: the rate of economic growth interest rates business confidence and expectations availability of credit tax on company profits. Government policy to promote investment: tax relief subsidies reductions on the rate of corporation tax. 4 Government expenditure (G) Influences on government expenditure: fiscal policy the level of economic activity correction of market failures political priorities. 5 Net trade balance (X−M) The impact on the net trade balance of changes in: real income the exchange rate the state of the global economy degree of protectionism non-price factors. 2.3.3 Aggregate supply (AS) 1 The characteristics of AS The concept of AS. The AS curve. The distinction between a movement along and a shift of the AS curve. 2 Short-run AS (SRAS) Factors influencing SRAS. Changes in: costs of raw materials and energy exchange rates tax rates. 3 Long-run AS (LRAS) Different shapes of AS curve: Keynesian classical. Factors influencing LRAS. Changes in: the state of technology productivity education and skills government regulations and tax demography and net migration competition policy. 2.3.4 National income 1 National income The circular flow of income. The distinction between income and wealth. 2 Injections and withdrawals The distinction between injections and withdrawals. Injections: investment government expenditure exports. Withdrawals: savings taxation imports. The impact of net injections into, and net withdrawals from, the circular flow of income. 3 Equilibrium level of real output The concept of equilibrium level of real national output. Causes of changes in equilibrium real national output, as a result of shifts in AD and/or AS curves. 4 The multiplier The multiplier and multiplier process. Marginal propensities and their effects on the multiplier: the marginal propensity to consume (MPC) the marginal propensity to save (MPS) the marginal propensity to tax (MPT) the marginal propensity to import (MPM). Calculations of the multiplier using the formula 1/(1-MPC) and 1/MPW, where MPW = MPS + MPT + MPM. The significance of the multiplier for shifts in AD and the level of economic activity. 2.3.5 Economic growth 1 Causes of growth The distinction between actual and potential growth. Actual growth caused by an increase in the components of AD. The importance of international trade for export-led growth. Causes of potential growth: domestic investment and foreign direct investment (FDI) innovation growth in size of labour force, including net migration the degree of competition. The importance of productivity for the rate of economic growth. 2 Benefits of growth Possible benefits of growth: higher living standards lower unemployment increased profits for firms higher levels of investment increased tax revenues improved public services. 3 Costs of growth Possible costs of growth: opportunity costs environmental costs balance of trade deficits increased inequality inflation. 4 Output gaps The difference between actual growth rate and long-term trends in growth. The distinction between positive and negative output gaps. Characteristics of positive and negative output gaps. Difficulties of measuring output gaps. 2.3.6 Macroeconomic objectives and policies 1 Macroeconomic objectives Economic growth. Low and stable rate of inflation. Low unemployment. Balance of payments equilibrium on current account. Balanced government budget. Greater income equality. 2 Possible conflicts between macroeconomic objectives Inflation and unemployment, including the short-run Phillips curve. Economic growth and protection of the environment. Inflation and equilibrium on the current account of the balance of payments. Economic growth and income equality. 3 Macroeconomic supply-side policies Supply-side policies designed to increase productivity, competition and incentives. Free market policies: deregulation of product and labour markets privatisation reduction in taxation changing the levels of welfare payments cutting the costs of bureaucracy for firms. Interventionist policies: investment in education, training and skills incentives to encourage investment: tax incentive or subsidies infrastructure investment finance for business start-ups regional policy. Strengths and weaknesses of different supply-side policies. 4 Macroeconomic demand-side policies Demand-side policies: the distinction between fiscal and monetary policy the distinction between reflationary and deflationary policies. Fiscal policy instruments: government spending and taxation. Monetary policy instruments: interest rates asset purchases to increase money supply (quantitative easing) changes in lending criteria reserve asset (liquidity) requirements. The role of central banks in the conduct of monetary policy: implementation of monetary policy achieving an inflation target as banker to the government as banker to the banks – lender of last resort. Strengths and weaknesses of different demand-side policies. Unit 3: Business behaviour 3.3.1 Types and sizes of businesses 1 Types of business Types of businesses: private sector organisations state-owned enterprises (public sector) for-profit and not-for-profit organisations co-operatives joint ventures. 2 Size of businesses The size of businesses: SMEs (small- and medium-size enterprises) large corporations. How businesses grow: organic growth merger/takeover: forward vertical integration backward vertical integration horizontal integration conglomerate integration. Advantages and disadvantages of each type of merger/takeover. Constraints on business growth: size of market access to finance owner objectives government regulation and bureaucracy. Reasons some firms tend to remain small and others grow. Impact of growth of firms on businesses, workers and consumers. Demergers: reasons for demergers impact of demergers on businesses, workers and consumers. 3 Business objectives Different business objectives: profit maximisation revenue maximisation sales volume maximisation. behavioural theories: satisficing. The significance of the divorce of ownership from control for business objectives: the principal-agent problem. Formulae for different business objectives: profit maximisation revenue maximisation sales volume maximisation. 3.3.2 Revenue, costs and profits 1 Revenue Formulae to calculate and understand the relationship between: total revenue average revenue marginal revenue. Price elasticity of demand and its relationship to revenue concepts, including calculations. 2 Costs Derivation of short-run cost curves from the assumption of diminishing marginal productivity. The law of diminishing returns. Formulae to calculate and understand the relationship between: total cost total fixed cost total variable cost average (total) cost average fixed cost average variable cost marginal cost. The relationship between: marginal product and marginal costs average products and average cost total product and total cost short-run and long-run costs. 3 Economies and diseconomies of scale The relationship between long-run cost curves and economies/diseconomies of scale. Minimum efficient scale. Distinction between internal/external economies of scale. Sources of internal economies of scale: financial technical managerial marketing purchasing risk bearing. Sources of external economies of scale: availability of skilled labour access to transport links sharing knowledge. Sources of diseconomies of scale: communication problems coordination problems X-inefficiency. 4 Profits and losses The distinction between normal profit, supernormal profit and losses. Short-run and long-run shutdown points. 3.3.3 Market structures and contestability 1 Efficiency The concepts of: allocative efficiency productive efficiency dynamic efficiency X-inefficiency efficiency/inefficiency in different market structures. 2 Concentration ratio Calculation of n-firm concentration ratios. The significance of concentration ratios. 3 Perfect competition Assumptions of perfect competition. Profit-maximising equilibrium in the short run and long run. The short-run shutdown point. Productive and allocative efficiency in the short run and long run. 4 Monopolistic competition Assumptions of monopolistic competition. Types of product differentiation: physical – product features marketing – advertising, packaging distribution – shop, online, telephone. Profit-maximising equilibrium in the short run and long run. Productive and allocative efficiency in the short run and long run. 5 Oligopoly Assumptions of oligopoly. Barriers to entry and exit: economies of scale limit pricing patents branding sunk costs legal. Interdependence of firms: simple game theory – two firm/two outcome model reasons for collusive and non-collusive behaviour cartels price leadership price wars. Costs and benefits of collusion to producers, consumers, workers and governments. Price competition: price wars predatory pricing limit pricing. Non-price competition: advertising and branding quality endorsement product placement after-sales service. Costs and benefits of price and non-price competition to firms, consumers, employees and suppliers. 6 Monopoly Assumptions of monopoly. Barriers to entry and exit. Profit-maximising equilibrium. Costs and benefits of monopoly to firms and consumers. The concept of 'natural monopoly' and its implications. Conditions necessary for third-degree price discrimination. Costs and benefits of price discrimination to firms and consumers. Productive, allocative and dynamic efficiency. 7 Monopsony Assumptions and conditions for a monopsony to operate. Costs and benefits of a monopsony to firms, consumers and employees. 8 Contestability Characteristics of contestable markets. Implications of contestable markets for behaviour of firms on: profitability pricing decisions (limit pricing). Costs and benefits of contestability for firms and consumers. The significance of sunk costs for contestability. 3.3.4 Labour markets 1 The demand for labour Factors that influence the demand for labour to a particular occupation: demand for the final product (labour as a derived demand) productivity of labour price of the product wage rate relative to price of capital. Factors that influence the elasticity of demand for labour. 2 The supply of labour Factors that influence the supply of labour to a particular occupation: size of population net migration income tax rates level of welfare benefits government regulations trade unions. Factors that influence the elasticity of supply of labour. 3 The determination of wage rates in competitive and non-competitive markets Labour market equilibrium. Causes of changes in the equilibrium wage rate and quantity of labour as a result of shifts in demand curves and supply curves. Wage setting in the public sector/state-owned enterprises. 4 Market failure in the labour market Causes and consequences of the geographical immobility of labour. Causes and consequences of the occupational immobility of labour. 3.3.5 Government intervention 1 Government intervention in product markets The case for government intervention. Measures to control monopolies and mergers: price regulation profit regulation quality standards performance targets referral to regulatory authorities legislation to control mergers and takeovers. Measures to promote competition and contestability: tax incentives and grants to promote small businesses and FDI deregulation privatisation competitive tendering for public sector contracts trade liberalisation. Measures to protect suppliers and employees: local sourcing of raw materials and components employment legislation to protect workers from exploitation barriers to entry of foreign firms restrictions on the monopsony power of firms nationalisation. The impact of each measure on: price profit efficiency quality choice. Limits to government intervention: regulatory capture asymmetric information/information gaps inadequate resources lack of regulatory power. 2 Government intervention in labour markets The case for government intervention. Types of government intervention in labour markets and their effects: maximum wage controls minimum wage controls direct taxes e.g. national insurance contributions; corporation tax measures to reduce geographical and occupational immobility of labour measures to reduce discrimination and exploitation. Unit 4: Developments in the global economy 4.3.1 Causes and effects of globalisation 1 Characteristics of globalisation Increase in trade as a proportion of GDP. Increase in importance of transnational companies (TNCs) and foreign direct investment (FDI). Increase in migration. 2 Causes of globalisation Factors contributing to increased globalisation in the last 50 years: trade liberalisation increased number and size of trading blocs political change (breakdown of the Soviet system and opening up of China) reduced cost of transport and communications increased significance of TNCs. FDI by TNCs: reasons for FDI the impact of FDI on recipient countries. 3 Effects of globalisation Possible benefits of globalisation: increased economic growth increased tax revenue economies of scale lower prices and higher consumer surplus more choice higher living standards. Possible costs of globalisation: displaced workers exploitation of workers environmental impact of increased trade loss of tax revenue from transfer pricing increased income inequality within countries the influence of TNCs on domestic economic policy. 4.3.2 Trade and the global economy 1 Specialisation and comparative advantage Benefits and costs of specialisation and trade in the international context. The theory of comparative advantage: the distinction between absolute and comparative advantage assumptions underlying the theory of comparative advantage limitations of the theory of comparative advantage. 2 Patterns and volume of world trade Factors influencing patterns of trade between countries and causes of changes in these patterns: impact of emerging economies changes in comparative advantage growth in trading blocs and bilateral trading agreements changes in relative exchange rates changes in protectionism between countries. Changes in trade flows between countries, and the reasons for these changes. 3 Terms of trade Understanding and calculation of the terms of trade. Factors influencing a country's terms of trade, changes in: relative inflation rates relative productivity rates relative labour costs the exchange rate the prices of imports and exports. The impact of changes in a country's terms of trade on: export revenues living standards balance of trade. 4 Trade liberalisation and trading blocs The role of the World Trade Organization (WTO) in trade liberalisation. Types of trading blocs: free-trade areas customs unions common markets economic and monetary unions. Costs and benefits of membership of a trading bloc: trade creation trade diversion costs and prices economies of scale transaction costs movement of factors of production. Possible conflicts between trading blocs and the WTO. 5 Restrictions on free trade Reasons for restrictions on free trade: to protect infant and geriatric industries to protect domestic industries and employment to protect national security to prevent dumping to correct a deficit on the current account of the balance of payments to raise revenue. Types of restrictions on free trade: tariffs quotas non-tariff barriers subsidies to domestic producers. Impact of protectionist policies on: consumers producers governments living standards equality. 4.3.3 Balance of payments, exchange rates and international competitiveness 1 Balance of payments Components of the balance of payments: the current account the capital and financial accounts. Causes of deficits and surpluses on the current account. Measures to reduce a country's imbalance on the current account. The significance of global trade imbalances. 2 Exchange rates The distinction between fixed, managed and floating exchange rates. Government intervention in currency markets through: foreign currency transactions the use of interest rates quantitative easing. Factors influencing floating exchange rates: relative interest rates relative inflation rates (purchasing power parity theory) current account of the balance of payments strength of the economy capital flight expectations and speculation global factors, e.g. falls in commodity prices. The distinction between revaluation and appreciation of a currency. The distinction between devaluation and depreciation of a currency. The impact of changes in exchange rates on: the current account of the balance of payments (with reference to Marshall-Lerner condition and to the J-curve effect) the capital and financial accounts of the balance of payments economic growth employment and unemployment rate of inflation FDI flows. Competitive depreciations/devaluations and their consequences. 3 International competitiveness Measures of international competitiveness: relative productivity rates relative unit labour costs relative export prices. Factors influencing international competitiveness: productivity quality of human capital exchange rate wage and non-wage costs regulations quality of infrastructure non-price factors. Measures to increase international competitiveness: policies to improve education and training investment incentives privatisation and deregulation measures to reduce the exchange rate of the currency trade liberalisation. The significance of international competitiveness: advantages for an economy of being internationally competitive problems for an economy of being internationally uncompetitive. 4.3.4 Poverty and inequality 1 Poverty The distinction between absolute and relative poverty. Measures of absolute and relative poverty. Causes of changes in absolute and relative poverty: economic growth education and training welfare benefits changes in tax structure structural changes in the economy aid civil wars and conflict. 2 Inequality The distinction between wealth inequality and income inequality. Measurements of inequality: the Lorenz curve the Gini coefficient. Causes of inequality in income and wealth within countries and between countries. The impact of inequality on: enterprise incentives savings education migration life expectancy. The impact of economic change and development on inequality. The significance of the free market economy (capitalism) for inequality. 4.3.5 The role of the state in the macroeconomy 1 Public expenditure The distinction between capital expenditure, current expenditure and transfer payments. Reasons for the changing size and pattern of public expenditure in an international context: changing incomes changing age distributions changing expectations. The significance of differing levels of public expenditure as a proportion of GDP on: productivity and growth crowding out levels of taxation. 2 Taxation The distinction between, and examples of, direct and indirect taxes. The distinction between progressive, proportional and regressive taxes. The economic effects of changes in direct and indirect tax rates on: incentives to work tax revenues: Laffer curve analysis income distribution real output and employment the price level the trade balance FDI flows. 3 Public sector borrowing and public sector debt The distinction between: fiscal deficits and fiscal surpluses automatic stabilisers and discretionary fiscal policy a fiscal deficit and the national debt structural and cyclical fiscal deficits. Factors influencing the size of fiscal deficits and national debts. The significance of the size of fiscal deficits and national debts: impact on interest rates debt servicing intergenerational equity. 4 Macroeconomic policies How governments use fiscal policy, monetary policy, exchange-rate policy, supply-side policies and direct controls to: reduce fiscal deficits and national debts control the rate of inflation respond to external shocks in the global economy reduce poverty and inequality. Use of demand-side policies in response to the global financial crisis of 2008. Measures to control TNCs: to reduce tax avoidance the regulation of transfer pricing limits to government ability to control TNCs. The impact of policy changes on: local economies national economies the global economy. Problems facing policymakers when applying policies: inaccurate information risks and uncertainties inability to control external shocks. 4.3.6 Growth and development in developing, emerging and developed economies 1 Measures of economic development The three components of the Human Development Index (HDI): education, health, income; how they are measured. Advantages and limitations of the HDI in comparing living standards between countries and over time. Other measures of development: the percentage of adult male labour in agriculture access to clean water energy consumption per capita access to internet per thousand of population access to mobile phones per thousand of population access to doctors per thousand of population. 2 Constraints on growth and development The impact of economic factors in different countries: volatility of commodity prices primary product dependency (the Prebisch-Singer hypothesis) savings gap (the Harrod-Domar model) foreign currency gap capital flight demographic factors (size and age distribution of population; migration) debt (household and overseas) access to credit and banking infrastructure education and skills. The impact of non-economic factors in different countries: corruption poor governance civil wars migration terrorism. 3 Measures to promote growth and development The impact of market-orientated strategies: trade liberalisation promotion of FDI removal of government subsidies privatisation floating exchange rate systems microfinance schemes. The impact of interventionist strategies: development of human capital protectionism managed exchange rates infrastructure development promoting joint ventures with TNCs buffer stock schemes. The impact of other strategies: industrialisation (the Lewis structural dual-sector model) development of tourism development of primary industries debt relief aid. The role of international institutions: the World Bank the International Monetary Fund (IMF) non-government organisations (NGOs). References Pearson Edexcel International Advanced Levels Economics (2018) Specification https://qualifications.pearson.com/en/qualifications/edexcel-international-advanced-levels/economics-2018.html https://qualifications.pearson.com/content/dam/pdf/InternationalAdvancedLevel/Economics/2018/Specification-and-Sample-Assessment/International-A-Level-Economics-spec.pdf