Economic development strategies include monetary, fiscal, and trade/business strategies, used to address economic problems. Governments and growing companies can use these strategies to address economic development issues. Monetary strategy uses monetary policy to correct a malfunctioning system, fiscal strategy reallocates government resources, and trade/business strategy changes the way a country deals with other countries.
Economic development strategy categories include monetary strategy, fiscal strategy, and trade or business strategy. Each strategy is typically used to address a prescribed group of economic problems or symptoms, but some strategies fall into more than one category. In general, the government uses various types of economic development strategies to address undesirable economic conditions such as a sluggish economy or excessive price inflation. Growing companies can use some of these same strategies to address economic development issues within a company. These strategies can be implemented within the country with the government in question or in countries abroad that need assistance for economic adjustment.
Controlling the flow of money can affect an economy. Monetary strategy in economic development uses monetary policy to correct a malfunctioning system. Techniques used as part of this strategy include adjusting debt interest rates, exchange rates and the price of gold.
An example of this type of strategy might include changing interest rates on loans to affect the rate of inflation. Establishing currency control in a developing country is also a policy used for monetary economic development strategy. A government assisting a developing country might also invest money in the country’s economic system in an effort to make it function relatively autonomously.
The fiscal economic development strategy uses a reallocation of government resources to positively influence a developing or ailing economy. Changes in this type of strategy can affect the tax levels paid by individuals and businesses and the funding and existence of government structures and programs. An example of this type of economic development strategy might be reducing military spending to free up enough resources to better fund the education system or adjusting taxes in an effort to reduce income inequality. Another example could include closing tax loopholes used by tax-paying citizens.
Trade or business development strategies make changes to the way a country deals with other countries, mainly in financial terms. This may include increasing or decreasing aid to countries in need of economic assistance or changing policies, costs and rules related to international trade. Techniques used in this type of economic development strategy include limiting import amounts or setting tariffs to raise the cost of importing certain products, and applying subsidies to promote trade in desirable items. An extreme trade strategy might include an embargo, which is essentially a policy that cuts off trade with a particular country or government entity.
Protect your devices with Threat Protection by NordVPN
