2. STRATEGYSTRATEGY
From Greek “strategia” meaning “commandFrom Greek “strategia” meaning “command
of a general”of a general”
Strategies give overall directionStrategies give overall direction
3. Economic Development StrategyEconomic Development Strategy
CategoriesCategories
Monetary StrategyMonetary Strategy
Fiscal StrategyFiscal Strategy
Commercial StrategyCommercial Strategy
4. Monetary StrategyMonetary Strategy
Uses monetary policy to correct aUses monetary policy to correct a
malfunctioning system.malfunctioning system.
Techniques used within this strategy includeTechniques used within this strategy include
adjusting debt interest rates, currency exchangeadjusting debt interest rates, currency exchange
rates, and the price of gold.rates, and the price of gold.
5. Fiscal StrategyFiscal Strategy
Uses a reallocation of government resources toUses a reallocation of government resources to
positively affect a developing or ailing economy.positively affect a developing or ailing economy.
Changes in this type of strategy can influenceChanges in this type of strategy can influence
the tax levels paid by people and businesses andthe tax levels paid by people and businesses and
the funding and existence of governmentthe funding and existence of government
facilities and programs.facilities and programs.
6. Commercial StrategyCommercial Strategy
Make changes to the way a country deals withMake changes to the way a country deals with
other countries, mainly in a financial sense.other countries, mainly in a financial sense.
Include increasing or reducing aid to countriesInclude increasing or reducing aid to countries
in need of economic assistance or changingin need of economic assistance or changing
policies, costs, and rules relating to internationalpolicies, costs, and rules relating to international
trade.trade.
7. Foreign InvestmentsForeign Investments
When a company or individual from oneWhen a company or individual from one
nation invests in assets or ownership stakesnation invests in assets or ownership stakes
of a company based in another nation.of a company based in another nation.
8. Foreign DirectForeign Direct
InvestmentsInvestments
Occur when a company invests in a businessOccur when a company invests in a business
that is located in another country.that is located in another country.
The company that is investing must have noThe company that is investing must have no
less than 10% of the shares belonging to theless than 10% of the shares belonging to the
foreign company.foreign company.
9. Foreign PortfolioForeign Portfolio
InvetmentsInvetments
Occur when foreign investments are made by aOccur when foreign investments are made by a
company.company.
More temporaryMore temporary
Stocks and bonds are normally tradedStocks and bonds are normally traded
10. Official FlowsOfficial Flows
Occurs between nations instead of betweenOccurs between nations instead of between
companiescompanies
A more developed or economically prosperousA more developed or economically prosperous
nation will invest money in a nation that is lessnation will invest money in a nation that is less
developed.developed.
11. Commercial LoansCommercial Loans
Normally occurs in the form of a bank loan.Normally occurs in the form of a bank loan.
Occur between nations or between businessesOccur between nations or between businesses
that are in different countries.that are in different countries.
12. Foreign AidForeign Aid
There are numerous forms of aid, fromThere are numerous forms of aid, from
humanitarian emergency assistance, to food aid,humanitarian emergency assistance, to food aid,
military assistance, etc.military assistance, etc.
Development aid has long been recognized asDevelopment aid has long been recognized as
crucial to help poor developing nations grow outcrucial to help poor developing nations grow out
of poverty.of poverty.
