Question

Consider a small tropical island nation with the usual swaying palms and sandy beaches.It has a healthy, literate population, and the population growth is stable but its economy has been stagnant for several decades.Until recently, a dictator controlled nearly every aspect of the economy (and rather unsuccessfully).Since his death, the country plans to create a parliamentary system of government.There is arable land for farming with more than adequate output for the population.The island has no known quantities of coal, oil, or other such natural resources.Since the dictator’s death, relations with the rest of the world are improving and trade agreements may be negotiated.

Outline an economic growth plan for this nation which will give it a healthy, stable economy within 5 years. Do this by choosing from the factors which drive economic growth and discussing those which you believe are going to be the most helpful.

Answer 1

Here the best economic factors is to concentrate is the arable, now the country is self- sufficient and there is more arable land. So the new government should use this arable land to produce more so they can trade with these goods with the rest of the world. They also should concentrate on minning the coal and oil and other natural resources. Through opening the trade with the rest of the world they can import the capital goods required for mining. The people in the island are said to be healthy and literarte so there is no need for the foreign human capital to import to work on the mining of the natural resources. since the death of the dictator the country got more freedom, so the individuals got more freedom to invest in the various sectors of the economy. So this would also help the island attain a better economic growth. With the trade the country also able to export the natural resource goods to the rest of the world. The healthy and literate people also can able to rent their services to the world and earn the foreign currency.