Advantages (Merits) of unbalanced growth strategy
- It encourages specialization in the economy. This results into economies of large scale, low prices in the domestic market, and competitiveness of commodities on the world market.
- It increases the country’s participation in international trade. The strategy increases the production of high quality goods and services for exports basing on comparative advantage. This enables the country to earn foreign exchange which is used to import capital and consumer goods which cannot be produced locally.
- The strategy encourages the exploitation and utilization of local resources. This is because it is based on the locally available resources rather than on the imports. This helps to improve on the productive capacities in the economy hence rapid economic growth and development.
- It is suitable for developing countries with resource constraints. This enables countries to inject the available scarce resources in sectors which have maximum positive impact on the economy. This ensures maximum use of the limited resources in the economy.
- The strategy promotes induced investments in the economy. This enables entrepreneurs to take on risks leading to innovations and inventions in other sectors.
- It allows easy planning and minimizes wastage of resources. This is because a few selected sectors are considered.
- It generates more employment opportunities. More resources are allocated to those sectors where most of the labour force is required rather than in all sectors;
- 8. It is suitable for developing countries with small markets. This is because it does not involve massive production of commodities like for the case of balanced growth strategy.
- It reduces the dependence of the economy on other economies. This is because it is based on the available resources and it does not call for countries to borrow from foreign countries.
- In case of any failure, less is lost as compared to balanced growth strategy in which massive resources are invested.
CATEGORIES Economics
TAGS Dr. Bbosa Science
