Some developing countries pursue export-led growth and argue that the overall growth of the economy can be generated not only by increasing the amounts of labour and capital but also by expanding exports. Other developing countries prefer to promote growth by encouraging investment by foreign multinational corporations.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2018). The mark or mark type is shown in brackets.

1. A clear explanation of the export-led growth hypothesis should be provided. Alternative ways of achieving growth should be explained and the difference between achieving growth by internal means should be clearly established. The main part of the discussion should relate to specific problems that might face developing economies which attempt to achieve export-led growth. This should be compared with the costs and benefits of stimulating growth internally using policies to promote direct investment carried out by multinational companies.
2. L4 (18-25) for an answer that evaluates the relative success of each type of policy by using a cost/benefit approach in each case. It is important to recognise the specific conditions required for success in each case and the extent to which this is likely to be achieved in an developing economy. A clear comparison should be in evidence and a conclusion provided based upon the preceding discussion.