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Explain five measures a country experiencing a balance of payment deficit may take to correct this problem

      

Explain five measures a country experiencing a balance of payment deficit may take to correct this problem

  

Answers


Peter
- Through export promotion: - through encouraging people to produce goods for export/through aggressive marketing/diversifying into new markets, granting concessions to producers/exports/compensation schemes.
- Through import restriction: - this may be done through total ban, levying high import duties to discourage consumption of imports.
- Devaluation: - this is the reduction of a country’s currency value relative to other major currencies. The devalued currency becomes cheaper in terms of foreign currency. Exports become cheaper to foreign trading partners while imports become more expensive to the local consumers boosting exports.
- Diversification of exports: - This is by increasing the range of commodities they export, developing countries may reduce their balance of payment deficit, LCD’s can diversify their export by adding value to their products and developing new ones.
- Encouragement of foreign investment: - investment to boost exports through export processing zones.

Musyoxx answered the question on February 28, 2018 at 16:15


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