Market-Oriented vs Government Intervention Approaches

This extract explains government intervention in development through provision of merit goods and infrastructure, and contrasts it with market-based growth from inward foreign direct investment (FDI). It outlines how education and health programmes generate positive externalities, why these are under-provided in ELDCs, and why large-scale infrastructure in energy, transport, telecommunications, and sanitation supports growth and attracts FDI. It also describes what FDI is, why MNCs invest abroad, and how globalization and WTO-led trade liberalization have increased FDI to ELDCs.