please write a short ib essay based on this article. If you have experience with IB economics, that would be great!
Question:
Using information from the text/data and your knowledge of economics, evaluate the view that a balance between market-oriented policies and government intervention is needed in order to promote economic development in Cuba.
Article:
“Urban farms to feed Cuban cities”
The Cuban government has launched a project to surround its cities and towns with thousands of organic farms to make the growing of fruit, vegetables and the raising of livestock low cost and environmentally friendly.
The government hopes this new approach to urban farming will make food cheaper and more abundant. It is also hoped that transport and fuel costs will be reduced and that urban dwellers will be encouraged to leave their city jobs and work in the farming sector. The farms are mostly privately-owned with some cooperatives, and more land has been leased to them. These private farmers and cooperatives own about 40% of Cubaâ€s farmland and produce about 70 % of food grown.
In the past farmers had to purchase their subsidized resources from the government. However, they can now purchase their own seed, equipment and other materials directly from suppliers. They can choose what they want to grow. Farmers are also allowed to sell some of their produce to licensed government sellers or sell directly to consumers at roadside stands. Farmers can also vary the price of the products they sell. These changes allow for greater reliance on the price mechanism and for a more ef cient allocation of resources.
However, the Cuban government still plays a major role in production and support of the rest of the agricultural economy. It continues to hold a monopoly over essential foods such as rice, beans, pork and bananas by controlling the production, distribution and land use for these foods. Prices for these commodities are set by the government, which also provides infrastructure, schooling and overall direction to the economy. Nevertheless, poor planning and corruption continue to be obstacles to economic development.
Not all urban farmers can see the long term bene ts of this and are concerned about greater competition between producers and the possibility of rising input prices which may result if subsidies end. However, they are encouraged that the reforms allow them to make more decisions about what to produce and how to sell. They believe that more food will be available for sale and consumption. Foreign and local experts welcome the project and expect that as the market mechanism becomes more important, economic growth and economic development will be stimulated.
Markscheme:
Relevant concepts are recognized and developed in reasonable depth. There is clear knowledge/understanding. There is some effective application/analysis. There is synthesis/evaluation, supported by appropriate theory and evidence.
Command term
“Evaluate†requires candidates to make an appraisal by weighing up the strengths and limitations.
Responses may include:
explanation of market-oriented policies
explanation of government intervention/interventionist policies
explanation of economic development. Advantages of market-oriented policies: • greater opportunity/reward for innovation by producers • greater efficiency in production • freedom for producers to choose what to produce (paragraph3) • freedom to vary price (paragraph3) • improvement in efficiency of allocation of resources (paragraph3) • the possibility that competition will lead to lower prices for consumers (paragraph 2) • reduction in the need for imports of food • the incentive function of the price mechanism may lead to a greater output of food (paragraph5).
Disadvantages of market-oriented policies: • possibility of greater competition leading to lower incomes for farmers (paragraph 5)
could lead to market failures
could lead to inflation
could lead to unemployment
increase in income inequality
the ending of subsidies will raise costs to producers (paragraph5).
Advantages of government intervention:
a monopoly over essential foods (paragraph 4) may ensure equity of distribution
fuller employment of resources due to planned production
provision of needed infrastructure
provision of social safety net
possibility for income redistribution
can redistribute income
encourages investment in human capital
possibility to correct market failures.
purchase of subsidised seed and equipment from the government (paragraph3) reduces costs for farmers
Disadvantages of government intervention:
• set prices for resources and goods and services possibly leading to inefficiency • lack of incentives for economic participants • poor planning and corruption remain a problem (paragraph4) • excessive bureaucracy may be a feature of the economy.
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