Question

Suppose an American buys stock issued by an Argentinian corporation. The Argentinian firm uses the proceeds from the sale to build a new office complex. This is an example of foreign investment in Argentina. Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check all that apply. Protecting property rights and enforcing contracts Pursuing inward-oriented policies Increasing taxes on income from savings Providing tax breaks and patents for firms that pursue research and development in health and sciences

Answer 1

Answer:

Policies consistent with the goal of increasing productivity and growth in developing countries are:

1. Protecting property rights and enforcing contracts

2. Providing tax breaks and patents for firms that pursue research and development in health and sciences

Explanation:

To increase productivity and growth in developing countries, it is important that developing countries enhance the mechanisms for protecting property rights and enforcing contracts.  These are the bases for attracting more foreign direct investments.  The court system should be a system where justice is obtained and a system which can enforce the rights of individuals to own property.  Without this basic ingredient, foreign direct investments will be hard to attract.