Trigger 4: The role of the government in economic growth

1. What are the different types of economies? (case studies)

According to Business Dictionary, economic system is "An organised way in which a state or a nation allocates it's resources and apportions goods and services in the national community"(Business Dictionary, 2017) There are at least four different economy types in the world; traditional economic system, command economic system, market economy system and mixed economy system.  Each an every one works differently. As a case study, I will introduce you to North-Korean economy system which is command economy system.

As North Korea is regarded as an unreformed, isolated, tightly controlled, dictatorial country, it is fairly obvious that they would be using command economy system. The government rather that the free market decides what goods should be produced, how much should be produced and also the price at which the goods are offered to sale. The command economy is a key feature of any communist society.

(Investopedia, Command Economy, Prateek Agarwal / Introduction to economics, The Four Types of Economies)

2. What are government policies for economic growth?

Government policies to increase economic growth are focused on trying to increase aggregate demand or increase aggregate supply/productivity. Demand side policies include fiscal policies which mean cutting taxes/increasing government spending and monetary policies which mean cutting interest rates. Supply side policies include privatisation, deregulation, tax cuts, free trade agreements (free market supply side policies) and improved education and training, improved infrastructure. (interventionist supply side policies.

(Tejvan Pettinger, Plocies for Economic Growth, 2017)

3. What are the methods to make a country attractive to FDI?