IB Economics SLUnit 4 — The Global EconomyPaper 1 & 2Core skill~10 min read
Evaluating Development Strategies
You now know a dozen strategies. The exam almost never asks you to list them — it asks which one is best, and for whom. This page is about the judgement, which is where the difference between a level 2 and a level 4 answer actually lives.
📘 What you need to know
Market-oriented approaches shrink government and let private activity raise real GDP.
Interventionist approaches use the government to supply what markets under-provide.
Neither wins outright. The right answer depends on the country’s institutions, tax base, exports and how urgently results are needed.
When evaluating development policy, the test is lives and living standards, not just real GDP — that is what separates it from supply-side evaluation.
The cleanest technique is to link every policy to a box in the poverty cycle and say where it cuts in.
SDG indicators let you judge progress with data: describe the trend, compare it to the target, and check how recent the data is.
Two camps, one question
Market-oriented economists argue that free markets allocate resources better than any ministry could, so the state should step back. Interventionists argue that markets systematically under-supply schools, clinics and clean water, and that a country full of unhealthy, uneducated workers will never grow no matter how free the market is.
In practice, every successful developing economy has used a mixture. So the useful exam question is not “which side is right” but “which mix fits this country”.
These five are not a magic list. They are simply the things an extract usually tells you, which means they are the things you can actually argue from.
Market-oriented approaches
Pros
Cons
Competitiveness: a more competitive economy attracts foreign firms, and competition lowers costs and drives innovation.
More market failure: with less regulation, negative externalities in production and consumption rise.
Efficiency: resources are allocated by demand and supply rather than by a ministry, which usually means less waste.
A dual economy: a thriving formal sector built around multinationals sits alongside a huge informal sector, and the gap between them widens.
Growth: the chance of profit encourages entrepreneurship, which raises real GDP.
Rising inequality: the gains concentrate among those who already own assets, because they are the ones able to buy more.
More FDI: multinationals prefer open economies with lighter regulation.
No safety net: when the market fails a household, nothing catches it.
Trade liberalisation: removing tariffs and quotas raises trade, growth and household income.
Adjustment costs: firms that cannot compete close, causing structural unemployment while workers retrain.
Government intervention
Pros
Cons
Infrastructure: energy, transport, health and telecoms networks that raise living standards and that no private firm would build alone.
Inefficiency: the state is not chasing profit, so resource allocation can be poor and organisations become large and overstaffed.
Human capital: education raises skills, and skills raise productivity across the whole economy.
Corruption: large tax revenues are tempting to those managing the budgets.
Social welfare: support for the most vulnerable raises the standard of living directly.
Government capture: powerful firms build relationships with ministers and end up steering resources their way.
Stability: intervention can smooth out the swings of the business cycle.
Poor decision-making: ministers often run departments they have no expertise in.
Less inequality: progressive taxation and transfers narrow the gap between rich and poor.
Shifting agendas: short government terms mean policy swings sharply after each election, which creates uncertainty.
Spot the pattern. The market’s weakness is that it ignores people; the government’s weakness is that it can be captured or run badly. Whichever you argue for, the opposite column is your evaluation.
How to evaluate properly
The pros and cons above look a lot like supply-side policy, and students often write a supply-side answer by mistake. There is one clear difference. When you evaluate supply-side policy you are talking about real GDP. When you evaluate development policy you are talking about whether lives get better. Keep asking: does this raise incomes, health, schooling or opportunity for the people in the extract?
🧩 The evaluation routine that always works
Name the strategy and define it in one line. No long introductions.
Say which box of the poverty cycle it attacks. Education hits human capital; microfinance hits investment; a minimum wage hits wages directly.
Chain it forward to higher output, income or living standards. Cause, consequence, therefore.
Give the cost: opportunity cost, time lag, who loses, or what could go wrong.
Say what it depends on using one of the five factors from the diagram above.
Judge. Take a position, and say under what conditions you would change your mind.
The sentence that earns evaluation marks
“This policy is likely to work here because … , but it depends on … , so on balance …”
Reading progress towards the SDGs
The Sustainable Development Goals come with measurable indicators, and you may be handed one as a chart. Typical examples are the share of the population that is undernourished, the share of adults with an account at a bank or mobile money provider, or intentional homicides per 100,000 people. You are not expected to remember the numbers. You are expected to read them properly.
The numbers here are made up so you can practise the technique. In the exam the shape of the line matters far more than any single value.
🧩 Describing an indicator in four moves
Overall direction: has it improved or worsened between the first and last year? Quote both values.
Shape: steady, erratic, fast then flat, or reversing near the end. Name the turning point year.
Against the target: how far is the latest value from where it needs to be?
Limitations: how old is the data, and does one indicator really capture the goal?
Watch for indicators where a falling number is good news — undernourishment, homicides, child mortality. Students lose easy marks by calling a downward line “poor progress”.
Worked examples
WORKED EXAMPLE 1
Using the chart above, describe the country’s progress on this indicator. [3 marks]
Overall direction, with numbers
The indicator falls from about 28 in 2000 to about 8 in 2020, so this is clear progress.
Shape
Most of the improvement came before 2010; since then the line has flattened and is barely moving.
Against the target
The latest value still sits above the target line, so the goal has not been met.
Improved overall, but progress has stalledThree moves, three marks. Do not write a fourth paragraph.
WORKED EXAMPLE 2
Evaluate market-oriented policies as a means of promoting economic development in a low-income country. [15 marks — plan]
Define and frame
Market-oriented = liberalisation, privatisation, deregulation. Development means living standards, not only real GDP.
For
Competition and open trade raise output and FDI → more employment → higher household income → the poverty cycle is cut at the wage box.
AgainstMarket failure, inequality and a dual economy; the poorest may see no gain at all; structural unemployment during adjustment.
It depends on
Institutional strength (weak courts mean liberalisation just invites exploitation); what the country exports; whether infrastructure can support exporters.
Judgement
Useful for raising output, but on its own it does not deliver development. Pair it with merit good provision.
Necessary but not sufficient
💡 Exam tip
Never write a strategy without its cost. Every single one has an opportunity cost, a time lag or a losing group.
Anchor everything to the poverty cycle. “This policy intervenes at the low human capital stage” is a sentence examiners reward.
Keep development separate from growth in your conclusion. A policy can raise GDP and leave the poorest exactly where they were.
Use the extract’s own numbers when describing progress. Two values and a direction is usually enough.
“It depends on” needs a because. Name the specific condition, not just the phrase.
A short, decisive conclusion beats a long balanced one. Take a side, then state what would change your mind.
⚠ Common mix-up
Writing a supply-side answer. The lists overlap, but development questions are judged on living standards, not on real GDP alone.
Treating “balanced” as “evaluative”. Two lists with no judgement is description. Evaluation means deciding.
Assuming market versus government is a real choice. Almost every country uses both; the argument is about the mix.
Misreading indicators where down is good. Check what the axis is measuring before you describe the trend.
Ignoring how old the data is. A chart ending several years ago cannot tell you the situation now.
Judging a whole country on one indicator. One SDG measure is a slice, not a picture.
Up next: go back to Poverty Traps and Economic Barriers and reread it. Now that you know every strategy, you will see exactly which box of the cycle each one was designed to attack — and that is the fastest revision you can do for this unit.
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