Case study (5) Focus on Diversification
Strengths and weaknesses of interventionist policiesSyllabus: Strengths of Interventionist policies
Discuss the strengths of interventionist policies including:
(PPC shift to right; Shift AS to right)
- the provision of infrastructure,
- investment in human capital,
- the provision of a stable macroeconomic economy and
- the provision of a social safety net.
The remaining case study focuses on a consideration of interventionist policies.
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This article considers agricultural policy within the Philippines and, in particular, examines government intervention to encourage a transition from rice consumption to corn consumption.
- Explain the problems associated with the Philippines relying on rice as a staple food crop.
- In the past in order to stabilize the price of rice the Filipino government had to intervene in the market by using a buffer stock scheme. Using diagrams examine how such a buffer stock arrangement can stabilise the price of commodity such as rice.
- Identify the reasons why the Filipino government want to encourage the replacement of rice production with corn.
- Describe the policies the government is adopting to bring about this transition from rice to corn.
- Would you consider the policies introduced by the government to be market oriented or interventionist? Explain your answer.
- The article states that eventually the government would want corn production to be in the hands of private farmers. Examine the reasons for wanting this.