Economic growth and/or economic development strategies

• Explain how each trade, market-based, interventionist, investment, aid and institutional strategy is meant to remove a barrier to growth or development.
• Use an AD/AS diagram, and other diagrams from earlier topics, to show how a strategy affects aggregate demand and potential output.
• Distinguish the roles of humanitarian and development aid, NGOs, the World Bank and the IMF.
• Evaluate the strengths and limitations of a strategy for a named country, stating the conditions on which its success rests.
• Evaluate government intervention against market-oriented approaches to growth and development.
• Evaluate progress towards selected Sustainable Development Goals in two or more countries.

A growth or development strategy is a deliberate approach by a government, often with outside partners, to remove one or more of the barriers in topic 4.9. The three trade strategies differ in how they treat the rest of the world: import substitution turns inwards, export promotion turns outwards, and economic integration opens trade with a chosen group of partners.

Import substitution is a strategy of replacing imported manufactured goods with domestic production by protecting home industries with tariffs, quotas and subsidies (Trade protection, topic 4.2). It answers dependence on primary exports and the lack of an industrial base. The chain: protection raises the price of imports in the home market, so domestic firms can sell there profitably; manufacturing output and employment grow; foreign exchange that would have paid for imports is saved; and workers and managers learn skills that an economy of farms and mines lacks. This is the Infant industry argument (topic 4.3) applied to a whole economy.

• Limitation, inefficiency: firms sheltered from foreign competition have little reason to cut costs or improve quality, so consumers pay more for worse goods, often for decades.
• Limitation, small markets: the home market of a low-income country is often too small for firms to reach the economies of scale that their foreign rivals enjoy.
• Limitation, imported inputs: the new factories still need imported machinery, parts and fuel, so the saving of foreign exchange is smaller than it looks.
• Limitation, rent-seeking: when profits depend on protection, firms spend effort lobbying to keep it, which invites corruption, and trading partners may retaliate.
• Limitation, exporters squeezed: import substitution was often combined with an overvalued currency to make imported machinery cheap, which made farmers' and other exporters' goods dearer abroad.

Export promotion is a strategy of seeking growth through expanding exports and openness to international trade, by helping firms compete in world markets. Its tools are low barriers on imported inputs, a competitive and not overvalued exchange rate, export finance and marketing support, export-processing zones with good infrastructure and simple rules, investment in ports, power and education, and the attraction of foreign direct investment. The chain: firms selling to the world are not limited by the size of the home market, so they can reach Economies of scale; international competition forces them to raise efficiency and quality; export earnings pay for imported capital goods and technology; and labour-intensive manufacturing creates many jobs for workers leaving low-productivity farming. Exports raise aggregate demand in the short run, and the investment and learning they bring raise productive capacity in the long run.

• Limitation, dependence on foreign demand: export-led growth slows when trading partners go into recession or raise their own barriers.
• Limitation, not every country at once: if many developing countries expand the same exports, they compete with one another and push prices down.
• Limitation, working conditions: competing on low labour costs can mean low wages, poor safety and environmental damage, so growth may run ahead of development.
• Limitation, enclaves: where exports come mainly from foreign-owned firms in special zones that import their inputs, links to local suppliers and the spread of skills are weak.
• Limitation, preconditions: the strategy needs infrastructure, an educated workforce and stable policy that many low-income countries do not yet have.

Economic integration as a development strategy means joining or forming a Trading bloc or trade agreement, often with neighbouring developing countries (Economic integration, topic 4.4). The chain: tariff-free access to partners' markets creates a larger market, so firms can grow, specialise and reach economies of scale; competition from partners raises efficiency; a larger market attracts foreign investors; members can bargain as a group in trade negotiations and cooperate on shared roads, railways and power links. Integration among countries at similar income levels lets firms learn to export before they face the most advanced producers, and it can build regional supply chains.

Its limitations are sharpest among low-income neighbours. They often export similar primary products, so they have little to sell to one another. Poor transport links and slow borders may matter more than tariffs, so cutting tariffs alone changes little. Governments that rely on tariff revenue lose it. Gains tend to concentrate in the most industrialised member, where firms already have the scale to serve the larger market. And political disputes between members can stall agreements for years.

Diversification means widening the range of goods and services a country produces and exports, so that it depends less on a few products. Typically it means moving from a few primary commodities into processing, manufacturing and services, or into a wider range of commodities and markets. It answers dependence on the Primary sector and over-specialisation. The chain: with more products and more markets, a fall in the price of any one product has a smaller effect on total export revenue, incomes and the government budget, so growth is steadier and investment easier to plan; and moving into processing captures more Value added at home, with more skilled and better-paid jobs.

There are three main routes. A country can add value to the commodities it already produces, roasting coffee or refining oil instead of exporting them raw. It can build new sectors such as tourism, clothing or business services. And it can use incentives to attract foreign direct investment into industries it does not yet have. The strengths are resilience to price shocks, higher-value production, and the learning and links between industries that a broader economy creates.

The limitations are about preconditions and time. New industries need capital, skills, transport and reliable power that a commodity-dependent economy may lack, and they may need temporary protection or subsidies, with the risks of import substitution. Tariff escalation in rich countries' markets penalises processed exports. Diversification takes decades, and in the meantime the country may be moving resources away from the products it currently produces most cheaply. It is most likely to succeed where the state invests in infrastructure and education and where processed goods can reach markets on equal terms.

A Social enterprise is a business whose main objective is a social or environmental aim. It earns its revenue by selling goods or services in the market and reinvests most of any surplus in that aim. It differs from a charity, which depends mainly on donations, because it pays its own way by trading; it differs from an ordinary firm because profit is a means, not the goal. Common forms are cooperatives of small farmers, fair-trade organisations, Microfinance institutions, and low-cost providers of health care, sanitation, solar energy or schooling.

Social enterprise answers a gap between markets and governments: people with low incomes whom private firms do not serve because there is no profit in it, and whom the state does not reach because it lacks the money or the administrative capacity. The chain: the enterprise sells an affordable good or service, or offers a job, to an under-served group; that group's income, health or skills rise; and because the enterprise covers its costs from sales, it can continue and grow without a stream of donations.

Its strengths are that it is financially self-sustaining, close to the communities it serves, often innovative, and frequently aimed at the poorest households and at women. Its limitations: most social enterprises are small relative to national needs; they find it hard to raise capital to expand; there is pressure to drift towards better-off customers who are cheaper to serve; they cannot replace public infrastructure, schools and health systems; and their effects are hard to measure. Social enterprise works best as a complement to public services, in markets such as solar lighting or small loans where poor customers can pay a price that covers cost.

Market-based policies share one logic: remove the obstacles that stop markets working, so that prices, competition and private incentives allocate resources more efficiently and potential output rises. They are the development versions of the market-based supply-side policies of topic 3.7, a group of supply-side policies.

Trade liberalisation is the reduction or removal of barriers to international trade, such as tariffs, quotas and import licences. The chain: imported inputs and consumer goods become cheaper; domestic firms facing foreign competition must cut costs and improve quality or close; labour and capital move towards the industries in which the country produces at low cost relative to other countries; and if trading partners reciprocate, exporters gain access to larger markets. Its limitations: young domestic industries may be destroyed before they can compete; workers in import-competing industries lose their jobs, and where there is little social insurance the cost falls heavily on them; governments lose tariff revenue, which in some low-income countries is a large share of the total; small farmers may face subsidised imports from rich countries; and the gains depend on having the infrastructure and products to export.

Privatisation is the sale of state-owned enterprises or assets to private owners. The chain: private owners seek profit, so they have an incentive to cut costs, reduce overstaffing and improve service, especially where they face competition; the sale raises revenue and ends the subsidies that loss-making state firms received; and new owners may invest in the business. Its limitations: a state monopoly sold without regulation becomes a private monopoly that can raise prices and cut output; jobs are lost; essential services such as water and electricity may be priced beyond the poor or withdrawn from unprofitable rural areas; where corruption is present, assets may be sold cheaply to the politically connected; and the sale revenue arrives only once.

Deregulation is the reduction or removal of government rules that restrict business activity, such as licences to start a firm, controls on prices or entry, and complex procedures. The chain: the cost and time of starting and running a business fall, so more firms enter, competition and investment rise, and more firms move from the informal to the formal economy, where they can borrow and pay tax. Its limitations: some rules protect workers, consumers, the environment and the stability of banks, and removing them shifts costs onto those groups; and the benefits arise only where markets are competitive, since removing rules from a monopoly simply frees the monopoly.

Interventionist policies use the state to do what markets do not. The first group is Redistribution policy: the use of taxes, transfer payments and wage regulation to reduce inequality in income and wealth. It answers rising inequality and the human capital cycle of topic 4.9.

• Tax policies: a more Progressive tax system, in which the share of income paid rises with income; taxes on wealth and property; lower taxes on necessities; and a wider tax base, so that high earners and large firms pay what the law requires.
• Transfer payments: transfer payments such as pensions, child benefits and cash transfers to poor households. A Conditional cash transfer pays a family on condition that its children attend school and health checks, so it reduces poverty now and builds human capital for later.
• Minimum wages: a Minimum wage is a legal floor under the wages of covered workers, intended to raise the incomes of the lowest paid.

The chain to development: the poor receive more disposable income; because they are poor, they spend most of it on food, health care and schooling, so nutrition improves and children stay in school longer; their human capital and productivity rise, which breaks the human capital version of the poverty cycle; and lower inequality means that a given rate of growth reduces poverty by more. Because the poor spend a large share of extra income, often on locally produced goods, demand in poor regions also rises.

The limitations turn on state capacity and the informal economy. Where most activity is informal, a progressive income tax raises little, because few people are on a payroll the state can see. Higher taxes on the rich can encourage evasion and capital flight where enforcement is weak. Transfers need a budget and accurate targeting, and leak through corruption where administration is poor. Higher tax rates may weaken incentives to work and invest. A minimum wage covers only the formal sector; set above what employers can afford given workers' productivity, it reduces formal employment and pushes work into the informal economy, where the poorest workers already are; and it is hard to enforce.

The second interventionist group is the provision of merit goods. Education and health care are under-consumed in a free market for three reasons: they have positive externalities, so buyers ignore the benefit to others; people with little information undervalue their own long-term benefit; and the poor cannot afford them. Governments therefore provide or subsidise them, along with the infrastructure that markets under-supply.

Education programmes: more and better primary and secondary schooling, literacy programmes and vocational training. The chain: schooling raises Human capital, so labour productivity and earnings rise and the economy's potential output grows; educated workers adopt new technology more readily; and there are external benefits in innovation, public health and civic life. Girls' education has an especially strong second-generation effect: educated mothers tend to have fewer children and invest more in each child's health and schooling. The limitations: the benefits arrive many years after the spending; quality matters more than enrolment, so a school without trained teachers who turn up, or without books, adds little human capital; the budget has other urgent uses; and if the economy creates no jobs for school leavers, the result is graduate unemployment or emigration.

Health programmes: vaccination, maternal and child health care, control of malaria and other endemic diseases, nutrition programmes and clean water. The chain: fewer deaths and less illness mean more days at work and at school, higher productivity and lower household spending on treatment; lower child mortality, after a lag, lowers birth rates, so households invest more in each child. The limitations: the recurrent cost of staff and medicines continues every year; reaching remote rural areas is expensive; and programmes that depend on donor funding are exposed when donors cut aid.

Infrastructure: energy, transport, telecommunications, clean water and sanitation (Infrastructure). The chain: reliable power and cheap transport lower firms' costs and widen their markets; telecommunications connect farmers and small firms to prices and buyers; clean water and sanitation save the hours spent fetching water and prevent water-borne disease; productivity and private investment, including foreign investment, rise. Spending on construction raises aggregate demand while projects are built, and the finished networks raise productive capacity afterwards. The limitations: the capital cost is very high and often financed by borrowing, which adds to indebtedness; construction takes years; maintenance is easily neglected once the ribbon is cut; procurement is a common route for corruption; and large dams or roads can displace communities and damage the environment.

Foreign direct investment (FDI) is long-term investment by a firm from one country in productive assets in another, such as building a factory or a mine, or buying a controlling share of a local firm. The investor is a Multinational corporation: a firm that owns or controls production in more than one country. Inward FDI is a development strategy when the host government sets out to attract it, with tax incentives, export-processing zones, infrastructure and stable rules.

Multinationals invest abroad to gain access to natural resources, lower labour costs, a growing market or a market inside a trading bloc, tax incentives, and stable policy with good infrastructure. FDI addresses three barriers of low-income countries at once: too little saving to finance investment, too little foreign exchange to import capital goods, and too little access to technology and management skills. The chain: capital flows in and finances new plant and equipment, which creates jobs and output; local workers are trained and new technology and management methods are introduced, and some of this spreads to local suppliers and competitors; exports reach world markets through the multinational's own network; the host government collects tax; and some investors build roads, ports or power supply. Aggregate demand rises while the investment takes place, and productive capacity rises once it is in use.

• Profits are repatriated, so less of the value created stays in the host country than the output figures suggest, and the outflow of profits appears as an income debit on the current account (topic 4.6).
• Tax holidays, and transfer pricing between branches of the same firm that moves profits to low-tax countries, can leave the host with little tax revenue.
• Capital-intensive projects, especially in mining and oil, create few local jobs, and senior posts may go to foreign staff.
• Where the multinational imports its inputs and buys little locally, skills and technology spread little, and local competitors may be driven out.
• Weak environmental and labour standards may be exploited, and countries competing for investment may lower them further.
• A large firm can gain political influence over the host government.
• Investment can leave as quickly as it came if costs rise or incentives end.

Foreign aid is the transfer of money, goods or services from a government, an international organisation or a private body to benefit a recipient country and its people, given free or on terms more favourable than commercial ones. A Concessional loan is a loan at a lower interest rate or with a longer repayment period than a commercial lender would offer; a grant does not have to be repaid at all.

Humanitarian aid relieves short-term suffering after disasters, conflict or famine: food, medical supplies, shelter and emergency relief. Its aim is to save lives and to stop a shock from destroying the assets that households need to recover, not to raise growth. Development aid aims to raise living standards and productive capacity over the long term, through grants, concessional loans, funding for particular projects such as schools or roads, and budget support for a government's own programmes.

Official development assistance (ODA) (ODA) is aid given by governments and their official agencies, either directly to a recipient government (bilateral aid) or through international institutions (multilateral aid), on concessional terms and with the economic development and welfare of developing countries as its main purpose. Military assistance is not ODA, and nor is aid from private donors. Some ODA is Tied aid: it must be spent on goods and services from the donor country, which raises the cost of what the recipient buys and reduces the value of the aid.

Non-governmental organisations (NGOs) are independent, non-profit organisations that work for development, humanitarian or environmental aims, funded by donations and grants. They run local projects in health, water, education and farming, deliver emergency relief, and campaign. Their strengths are that they are small and local, often reach the poorest households and remote areas, can work where governments are weak, and can test new approaches. Their limits are that they are small relative to national needs, depend on donors' priorities, and are accountable to their funders rather than to the people they serve.

Debt relief is the cancellation or rescheduling of part or all of a country's external debt, so that revenue that would have gone on interest and repayments can be spent on development. It answers the indebtedness barrier of topic 4.9. The chain: lower debt service frees government revenue for health, education and infrastructure; and with the debt overhang removed, investors no longer expect future tax rises to repay it, so private investment can recover. Under the Heavily Indebted Poor Countries Initiative, launched by the IMF and the World Bank, relief was conditional: countries had to follow agreed policy programmes and adopt a poverty-reduction strategy before reaching the completion point at which debt was cancelled.

Why aid might work: low-income countries lack savings to invest, foreign exchange to import capital goods, and tax revenue to provide public services, and aid can fill each gap. The chain: aid finances investment in infrastructure, health and education, productivity rises, incomes rise, and the poverty cycle is broken at the investment or human capital link.

• Diversion: aid may not reach those it is meant for, where it is stolen or spent on the military or prestige projects.
• Donor motives: aid often follows the donor's political, strategic or commercial interests, not need, and tied aid raises costs.
• Dependency: long-term aid can weaken a government's incentive to build its own tax system and make it answer to donors instead of its citizens.
• Volatility: aid budgets are cut when donors face pressures at home, so recipients cannot plan.
• Unsuitable conditions: policy conditions designed by donors may not fit local circumstances.
• Debt: aid given as loans, even concessional ones, adds to future debt service.
• Local markets: food aid outside emergencies can depress prices for local farmers, and large inflows of foreign currency can push up the exchange rate and hurt exporters.
• Fragmentation: many donors and NGOs, each with its own projects and reports, overload a weak administration.
• Debt relief is one-off: countries can borrow again, newer lenders may sit outside any relief scheme, and relief may reward past mismanagement.

The last limitation has already appeared. UNCTAD reports that in 51 developing countries, home to 3.7 billion people, interest payments exceeded government spending on health or on education, 1.2 billion more people than in 2010. Relief reduced debt burdens in the countries it reached, but new borrowing has rebuilt them.

Multilateral development assistance is finance and advice for development provided by international institutions that are owned and funded by many member governments. The two main ones have different jobs: the World Bank finances long-term development, and the IMF deals with short- to medium-term problems in the balance of payments and macroeconomic stability.

The World Bank is a group of institutions owned by member governments. Its main lending arms are the International Bank for Reconstruction and Development, which lends to middle-income and creditworthy lower-income countries and raises most of its funds by borrowing on financial markets, so it can lend more cheaply than those countries could borrow themselves; and the International Development Association, which gives grants and concessional loans to the poorest countries. It finances projects in infrastructure, health, education, agriculture and the environment, lends in support of policy reforms, and provides research, advice and technical assistance. Its strengths are long-term finance at low cost, expertise, and the ability to coordinate other lenders. Its limitations: loans add to debt; in the 1980s and 1990s its lending was conditional on market-based reforms, such as cutting subsidies and public spending, privatisation and trade liberalisation, which were widely criticised for their social costs; voting power reflects members' financial contributions, so high-income countries dominate its decisions; and some large projects, such as dams, have displaced people and damaged the environment.

The International Monetary Fund (IMF) has 191 member countries and works for international monetary cooperation and financial stability. It does three things: surveillance, which means monitoring members' economies and the world economy and giving policy advice; lending to members in balance-of-payments difficulty, for example when a country cannot pay for essential imports or service its foreign debt; and capacity development, which means technical assistance and training in areas such as tax administration, statistics and central banking. Its role in development is mostly indirect: low inflation and a sustainable balance of payments and debt are preconditions for investment and growth.

Conditionality means that a loan is paid in stages on condition that the borrowing government carries out agreed policies, such as reducing the budget deficit, raising interest rates, allowing the exchange rate to fall, and structural reforms. The aim is to correct the problem that caused the crisis and to ensure that the loan is repaid. The criticisms: spending cuts and tax rises deepen the recession and can squeeze health and education spending, so the poor bear much of the cost; conditions have been said to follow one model whatever the country; the government loses control of its own policy; rescue lending may encourage risky borrowing and lending in future; and voting weighted by members' quotas gives most influence to high-income countries. The balance: countries usually approach the IMF when no one else will lend, and the alternative to a programme is often a disorderly default with deeper falls in output.

Institutional change alters the rules and organisations that shape incentives, so that both markets and public policy work better. Each change below answers a political or social barrier from topic 4.9: weak banking, gender inequality, corruption and insecure property.

Improved access to banking starts with Microfinance: small loans and other financial services, such as savings and insurance, for poor people and small enterprises who lack access to conventional banks, usually without collateral. Lending is often to women and often in groups whose members guarantee each other's repayments, which replaces collateral with peer pressure. The chain: a small loan buys tools, stock or livestock; the borrower earns more from self-employment, repays, and qualifies for a larger loan; safe saving and insurance help the household survive a shock without selling its assets. The strengths: it reaches people banks exclude, repayment is high where groups take responsibility, it can give women more control over income, and many providers are self-financing social enterprises. The limitations: interest rates are high because small loans are costly to administer; many loans pay for consumption or emergencies, not investment; borrowers can become over-indebted; most of the businesses financed stay tiny; and it does not reach the very poorest or create many jobs.

Mobile banking delivers financial services by mobile phone: storing money, sending and receiving payments, paying bills, saving and borrowing, without a bank branch. The chain: transfers become cheap, fast and safe, so money sent from towns to villages arrives when it is needed, including Remittances from relatives working elsewhere; households cope better with shocks and save more securely; small firms can receive payments from distant customers; governments can pay transfers directly; and a record of transactions helps people qualify for credit. Its strengths are rapid spread at low cost and the inclusion of women and rural households. Its limitations: it needs mobile coverage, electricity, identity documents and basic literacy; there are fees, fraud and weak consumer protection; easy digital credit can lead to over-borrowing; and one provider may come to dominate the market.

Increasing women's empowerment means widening women's access to education, income, assets and decision-making: girls' schooling; equal legal rights to own and inherit property, to work, to borrow and to open accounts; access to reproductive health care; political representation; child care; and transfers paid to mothers. The chain: more schooling and earning power for women enlarge and raise the productivity of the labour force; fertility falls; and households spend more on children's nutrition and schooling, so human capital rises in the next generation. It answers Gender inequality, which the Gender Inequality Index measures. Its limitations: social norms change slowly, laws on paper are not always enforced, and progress needs action in many areas at once.

Reducing Corruption uses transparent budgets and public procurement, independent courts, auditors and anti-corruption agencies, a free press, simpler regulations with fewer discretionary permits, digital payments and online government services that remove face-to-face contact with officials, and adequate pay for officials. The chain: less public money is diverted, so services improve; the costs of doing business fall and become predictable, so domestic investment and FDI rise; and citizens are more willing to pay tax. Its limitations: those who gain from corruption often control the institutions that would have to change, progress is slow and easily reversed, and it is hard to measure.

Strengthening Property rights means clear laws on ownership, registries for land and businesses, courts that enforce titles and contracts, and protection against arbitrary seizure. The chain: owners who are secure have an incentive to invest in and maintain their assets; registered assets can be used as collateral, so owners can borrow; and assets can be sold or rented to more productive users. Its limitations: registries and courts are costly to build, a formal title does not guarantee that banks will lend, and the system works only with an honest legal system behind it.

Land rights are the legally recognised rights of individuals or communities to own, use and transfer land. Reform means surveying and titling the land that smallholders, women and communities with customary or collective tenure actually farm, and sometimes redistributing large or unused holdings. The chain: farmers with secure tenure invest in irrigation, soil and trees because they will keep the returns; titles give access to credit; land disputes fall; women's income and bargaining power rise when titles are in their names; and more equal landholding reduces rural poverty. Its limitations: titling is expensive and slow; the powerful may capture the process and dispossess the poor; turning customary rights into individual titles can exclude traditional users; land pledged as collateral can be lost after one bad harvest; and redistribution is politically contested.

This topic has no diagram of its own. Instead, diagrams from earlier topics are used to explain how a strategy works. The most widely useful is the AD/AS diagram, because most strategies aim to raise Long-run aggregate supply (LRAS) by adding to the quantity or quality of the factors of production, while their spending raises Aggregate demand (AD) first. The diagram distinguishes the two effects, which is the difference between a short-run rise in spending and a lasting rise in Potential output.

The poverty cycle is the natural diagram for strategies aimed at the poorest households. Aid that finances schools enters at the human capital link; microfinance and mobile banking enter at the saving and investment links, by giving households a safe place to save and a source of small loans; conditional cash transfers raise income and human capital at the same time. Drawing the arrow at the right point makes the claim precise: it says which link the strategy breaks, and therefore which condition it depends on.

Five tests can be applied to any strategy. Together they turn a list of strengths and weaknesses into a judgement about a particular country.

1. Barrier: which barrier does the strategy address, and is that the binding barrier in this country? Export promotion does little for a country whose binding barrier is that it is landlocked with no port access.
2. Objective: does it raise growth, development or both, and who benefits? A strategy that raises GDP mainly through a foreign-owned mine may do little for the poor.
3. Preconditions: what does it need to work, such as state capacity, infrastructure, finance or honest administration, and does the country have them?
4. Time: when do the costs and the benefits arrive? Education pays off over decades; a debt write-off frees revenue at once.
5. Sustainability: is it sustainable financially (debt), politically (will it survive a change of government) and environmentally?

A broader question is how the strengths and limitations of government intervention compare with those of market-oriented approaches. The market-oriented view is that free prices, competition and private ownership allocate resources best, and that the state's job is to provide stability, property rights and rules. Its policies are trade liberalisation, privatisation, deregulation, openness to FDI and a market-determined exchange rate. The interventionist view is that markets in low-income countries fail in important ways, so the state must provide what they do not and steer investment. Its policies are public provision of education, health and infrastructure, redistribution, regulation and support for chosen industries.

Three conditions decide the comparison. State capacity: where the government is competent and reasonably honest, intervention can achieve a great deal; where it is weak or corrupt, intervention is captured, and the priority is institutional change. Stage of development: early on, basic health, schooling and infrastructure need public provision because no market will supply them to the poor; as firms and markets mature, more can be left to market allocation. Objective: market-oriented policies are generally better at generating growth, while intervention is usually needed to turn growth into broad development, because markets do not by themselves deliver health, education or a fairer distribution.

The Sustainable Development Goals (SDGs) are the 17 goals of the 2030 Agenda, adopted by all UN member states in 2015, which turn Sustainable development into targets for poverty, health, education, gender equality, water, energy, growth, inequality and the environment (topic 4.7). Evaluating progress towards selected goals in two or more countries means comparing evidence, explaining the differences with the barriers and strategies of topics 4.9 and 4.10, and judging how far the evidence can be trusted.

1. Choose two to four goals, each with a measurable indicator: for example the share of people below the international poverty line (SDG 1), life expectancy or maternal mortality (SDG 3), years of schooling (SDG 4) and a gender measure (SDG 5).
2. Choose countries that make a meaningful contrast, such as similar incomes with different results, or different strategies.
3. Compare the values, with their source and date, and where possible the change since 2015 or earlier.
4. Describe the progress: its direction, its speed, and whether it is on track for 2030.
5. Explain the differences using barriers and strategies: which policies, institutions or shocks account for them?
6. Evaluate: look for trade-offs between goals, the reliability and comparability of the data, averages that hide regional or gender gaps, and external shocks.

Describing the progress: Rwanda's HDI rose by 0.238 between 2000 and 2023 and Nigeria's by 0.125, so Rwanda, which started lower, overtook Nigeria. On health, Rwanda leads clearly: life expectancy is 13.3 years higher and maternal mortality about a quarter of Nigeria's. On gender, Rwanda ranks 99th on the Gender Inequality Index and Nigeria 171st. On schooling, Nigeria leads, with 2.7 more years on average. So the answer to 'which country has made more progress?' depends on the goal, but on the health and gender goals the gap is large and favours the poorer country.

Explaining the difference: Nigeria has higher income per head, so income alone cannot explain Rwanda's better health outcomes. Nigeria is a commodity-dependent economy (topic 4.9), and the comparison is consistent with the view that how income is used, through public health spending, institutions and the treatment of women, matters as much as its level. The registry case does not identify which Rwandan policies were responsible, so a careful answer states the pattern and the barriers that fit it, without claiming more.

Evaluating the evidence: both countries lose about a third of their HDI to inequality, so national averages hide large differences between regions and groups. The indicators measure outcomes, not causes. Indices built by different organisations, such as the UN's target-by-target assessment and the SDSN's SDG Index, use different methods and must not be mixed. And none of these measures covers political freedom.

• Trade strategies: import substitution (inward-looking, protection), export promotion (outward-looking, competition in world markets), economic integration (larger regional market).
• Diversification and social enterprise: spreading risk and adding value; self-financing businesses with a social aim.
• Market-based: trade liberalisation, privatisation, deregulation. Interventionist: redistribution through taxes, transfers and minimum wages; provision of education, health and infrastructure.
• Outside resources: inward FDI; humanitarian and development aid, ODA, NGOs and debt relief; the World Bank (long-term development finance) and the IMF (balance-of-payments lending and stability).
• Institutional change: banking access including microfinance and mobile banking, women's empowerment, reducing corruption, property rights and land rights.
• Evaluation: which barrier, which objective, what preconditions, what time horizon, how sustainable; and state capacity decides the balance between market and state.

This set has 9 parts worth 40 marks in all, and the whole set should take about 100 minutes. Every part uses the texts and data below. Answer each part in its writing workspace before you open the feedback under it.