Theory question 103
Economic SystemsSection B (answer four questions only from this section)
Why are many West African countries trying to adopt a free market system?
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Free markets give incentive (profit motive) and so raise efficiency and productivity.
Public enterprises have performed poorly through waste, corruption and losses; privatisation reduces this burden on government.
Competition improves the quality of goods and services and lowers prices.
Consumer sovereignty: consumers' choices decide what is produced.
It attracts foreign and private investment and capital.
It encourages initiative, innovation and entrepreneurship.
Pressure from the IMF/World Bank (structural adjustment programmes) to deregulate.
It reduces government spending and budget deficits (fewer subsidies).
Give at least five reasons, each briefly explained.