1) Evaluate potential strategies that could be adopted by an economy that is heavily dependent on primary products to aid development (25 marks)

Primary product dependency can be defined as the sole reliance on the exporting of commodities. Angola, for example, is largely dependent on the extraction and exporting of crude oil, with the oil sector accounting for 95% of its exports and 75% of tax revenues (Riley, 2016). Primary product dependency is likely to act as a constraint on economic growth and development as commodities as susceptible to price fluctuations due to their price inelasticity of supply and demand. This ultimately leads to uncertainty which makes it difficult to plan and attract investment. 
A potential strategy that could be adopted by an economy is the developing of the tourism industry. Earning foreign currency from tourists is likely to attract increased foreign investment, for example from multinational hotel chains. Although there is a risk that the money could end up being directed solely to tourist areas rather than being used more effectively elsewhere in a country, such as for healthcare and education services. Still, employment is likely to increase in hotels, bars, shops and transport services to cater for increased tourism. Although, employment in the tourism industry may only be seasonal and local jobs may be relatively low-skilled with limited opportunities for promotion; multinational companies may bring in their own management for example. 

BK
Answered by Bryanna K. Economics tutor

1639 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What will happen to the UK economy if investment increases?


Why do rising house prices cause an increase in aggregate demand?


Explain the possible causes of deflation in an economy. (15 Marks)


Analyse how barrier to entry determine the degree of competition in the British transport market.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning