Answer to Question #317333 in Macroeconomics for Avu

Question

Nature and effects that the war had on economic development discuss using one of the theories of economic development discussed in class and advice on how should policy makers respond to these shocks?

Answer 1

War, in general, causes severe damage to the economy, a decrease in the working population, inflation, uncertainty, an increase in debt, and interruption to regular economic activity.

case of Neocolonialism theory;

As a result of neocolonialism, foreign wealth is employed for exploitation rather than developing the world's less developed regions. Investment expands rather than narrows the worldwide disparity between wealthy and emerging nations under neocolonialism.

The policymakers are recommended to prevent neocolonialism by 

having a strong central government with free and fair elections. They must reduce their export dependence and make foreign capital decisions for themselves rather than by external force.