Some countries engage in dumping by selling their products at less than cost price in Cambodia. The Cambodian Government wants the country to become a high-income economy by 2050. It uses fiscal, monetary and supply-side policies to increase its economic growth rate. Cambodia subsidises some infant industries. The country has one of the world's largest deficits on the current account of its balance of payments (as a percentage of GDP). Some economists suggest cutting taxes would reduce this deficit.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2025). The mark or mark type is shown in brackets.

1. [2] Drive domestic firms out of the market / increase market share / gain monopoly power in (overseas) market (1). Clear away surplus stock (1) keep price high on the domestic market (1) increase exports / sales / revenue (1).
2. [4] Logical explanation which might include the following. Monetary policy is usually implemented by the central bank (1) supply-side policy by the government (1). Monetary policy may be used to increase or reduce economic activity (1) supply-side policy is only used to increase economic activity (1). They have different policy measures (1) e.g. monetary policy has the rate of interest whereas supply side policy has privatisation (1). Monetary policy aims to influence total demand (1) supply-side policy aims to increase total supply (1). Supply side policies tend to take longer to implement and have an impact (1) than monetary policy which tends to have a more short -term impact (1).
3. [6] Coherent analysis which might include: An infant industry's costs may initially be high (1) government subsidy is an extra payment to an industry (1) some of the subsidy could be used to buy more capital goods / technological innovation (1) employ skilled workers (1) enable an infant industry to grow in size / increase output (1) obtain economies of scale (1) lower (average) cost / improve productivity (1) lower their prices (1) making their products more (internationally) competitive (1) increase demand for their goods (1) increase exports (1) raise quality (1) increase quality competitiveness (1).
4. [8] Why it might: cut in corporation (corporate income) tax may increase willingness and ability to invest higher investment may raise quality and reduce costs increase exports and lower imports cut in personal income tax may increase workers' motivation, raise productivity and cut costs lower corporation (corporate income) tax could be imposed on infant industries attract MNCs which can increase exports and reduce imports cuts in indirect taxes may lead to lower prices which may increase the demand for domestic goods and reduce the demand for imported substitutes cuts in tariffs may make it easier for firms to import cheaper raw materials from abroad which may enable them to reduce prices increasing export competitiveness. Why it might not: cut in personal income tax may increase spending which may increase total demand leading to inflation reducing international competitiveness more imports may be purchased exports may be diverted to the home market reduce tax revenue and lower government spending lower government spending on education, healthcare, transport could reduce productivity lower taxes on imports (tariffs) may increase imports.