Policies and Economic Liberalization - AP Comparative Government & Politics

A tax on imported goods. Protects domestic industries by making imports more expensive.

Reduction or elimination of government rules. Allows market forces to operate with fewer constraints.

Increased income inequality. Market rewards may concentrate wealth among skilled workers and capital owners.

International Monetary Fund (IMF). Provides loans conditional on free-market reforms.

Increase efficiency and economic growth. Market forces typically allocate resources more efficiently than government.

Privatization of state-owned enterprises. Transfers government assets to private ownership for efficiency.

Reduction in state intervention in the economy. Shifting from state-controlled to market-driven economics.

Financial aid provided by the government to support an industry. Government support to make domestic products more competitive.

Removing restrictions on financial flows in and out of a country. Allows free movement of investment capital across borders.

United Kingdom. Thatcher's policies included massive privatization and deregulation.

Privatization. Transfers ownership from public to private sector.

Economic instability. Sudden changes can disrupt existing economic structures.

Economic policies imposed by IMF or World Bank on debtor nations. Conditional reforms required for international financial assistance.

Increased competition. Foreign firms compete with domestic producers.

Removing restrictions on foreign service providers. Opens service sectors to international competition.

Central bank actions to control money supply and interest rates. Central bank tools to influence economic activity.

Trade liberalization. Removes barriers protecting domestic markets from foreign firms.

Special Economic Zones. Designated areas with relaxed regulations to attract investment.

Allowing the currency's value to be determined by the market. Market forces determine currency value instead of government control.

International Monetary Fund (IMF). Conditions loans on implementing free-market reforms.

Increased labor mobility. Workers can move more freely between sectors and regions.

Investment liberalization. Removes legal obstacles to foreign investment flows.

Deregulating financial markets and institutions. Reduces government control over banking and investment sectors.

Opening up markets to competition. Increases choices and efficiency through competitive forces.

A limit on the quantity of a good that can be imported. Limits supply to protect domestic producers from foreign competition.

It may lead to exploitation of workers. Reduced regulations may weaken labor protections.

A pact between countries to reduce or eliminate trade barriers. Reduces costs and increases market access for member countries.

Tax reform. Lower taxes attract investment and stimulate business activity.

A restriction other than tariffs that countries use to control imports. Includes quotas, licensing requirements, and technical standards.