Strategies to Promote Growth/Development

1. Trade Strategies:

Import substitution: Encourage domestic production, by implementing tariffs or quotas. This may increase domestic production, but will hinder international trade from making markets more efficient.

Export promotion: 

Promote selling abroad, by for example implementing export subsidies. This may increase producer revenues and be more efficient, but competition may make this difficult.

Economic Integration:

Become more interdependent with other nations. This may increase consumer choice and investment, but countries will have to find compromises in order to agree on treaties and regulations.

2. Diversification:

Instead of focusing the economy in just a few industries, broadening production is a good way to reduce vulnerability and provide jobs. However, countries lack expertise in these new industries, and they may be hard and costly to start up.

3. Social Enterprise:

Social enterprises are organizations whose objective is to meet social

needs, instead of generating a profit. These organizations can raise 

awareness on issues (and combat them), such as poverty or inequality.

However, they will require funding, which may be difficult for developing

countries.

4. Market-Based Policies:

Trade liberalization:

Remove barriers to trade such as quotas and tariffs. This reduces

the cost of international trade and hence encouraging foreign

investment, but increases competition from abroad.

Privatization:

Turn state-owned enterprises into private businesses, by selling them. This reduces expenditure and generates money from the sale, but private companies may not act in the public’s best interest.

Deregulation:

Remove rules and regulations in an industry. This may reduce inefficiencies, but may also cause more corruption, exploitation, and pollution.

5. Interventionist Policies:

Tax policies:

Decide on how much consumers and firms should be taxed. A progressive tax system can reduce inequalities, but may also reduce incentives for wealthy firms to innovate.

Transfer payments:

Send money to certain parts of the population, without exchanging a good or service (pensions, child benefits, etc.). This may reduce inequalities and promote families, but will cost the government.

Minimum wages:

Set a minimum payment firms must pay their employees. This may increase household savings and reduce inequality, but will make production more expensive for firms and create unemployment.

6. Provision of Merit Goods:

Education programs:

Provide citizens with education and training, so they are better fit and more productive in society. This may increase the productive capacity (LRAS), but will cost a significant amount of money.

Health programs:

Provide citizens with hospitals and medicine, making them healthier and less busy with being ill. This may increase productivity and well-being, but will once again cost.

Infrastructure:

Provide goods and services like energy, transport, telecoms, clean water, and sanitation. This will make production easier and more efficient, but has an opportunity cost as it will require spending.

7. Foreign Direct Investment (FDI):

FDI is capital expenditure (investment) done by firms into other markets. The firms benefit, as they get to produce their goods and services at a lower cost in less developed countries, and the country benefits, as they get higher wages and technological expertise. 

FDI can therefore help with economic growth and development. Many developing countries therefore seek to get firms to invest in them. However, laborers may be exploited, and the firms may not be very willing to share their expertise. 

8. Foreign Aid:

Humanitarian/development aid:

Help developing countries meet their economic development objectives (reduce poverty, eradicate diseases, etc.).

Debt relief:

Forgive past debt developing countries owe. This reduces their debt servicing costs, and they can put that money into something else.

Official Development Assistance (ODA):

Foreign aid from other governments rather than independent organizations. This could help with future influence.

Non-Governmental Organizations (NGOs):

Independent organizations that provide foreign aid, and can pressure governments into doing more. 

9. Multilateral development assistance:

The World Bank:

An internation institution that lends money to developing countries. It usually finances construction projects for infrastructure, which help increase productivity of countries. However, they have been criticized for mainly helping middle-income countries.

International Monetary Fund (IMF):

The IMF oversees global financial systems, in an attempt to gain international monetary cooperation. It can lend money to countries

struggling to pay debt. However, they have been criticized for being too obedient to wealthier countries (as they control more of the IMF).

10. Institutional Change:

Improved access to banking (microfinance/mobile):

Make it easier to borrow small portions of money (microfinance) to encourage entrepreneurship, and make it more accessible (mobile).

Increasing women's empowerment:

Women make up 50% of the population, so increasing equality (by providing more opportunities) would increase economic efficiency.

Reducing corruption:

Corruption/bribery decreases confidence, decreasing FDI and assistance, and hinders development/equality. 

Land & property rights:

Make owning and using land and other assets easier, more straight-forward, and more secure. This may increase investment.