Most effective policies at boosting

growth and living standards in poor

countries :
.Investing in Education :
Economic growth and prosperity is the objective of all countries and governments. Human capital is
unarguably among the most important and acknowledged sources of such prosperity. Poor countries
should pay much more attention to raising their skilled human capital, according to research by
Fabio Cerina and Fabio Manca presented at the Royal Economic Societys 2015 annual
conference.
Researchers have come up with the following results :

This research shows that much more attention (and investments) should be devoted
to increasing skilled human capital in poor and developing countries. Crucially, it
shows that the returns to higher education are far higher in countries performing
technology imitation and adoption (those that are poor and far from the so-called
technological frontier) than in rich and developed ones.
The reason for this, which is backed up in the research by both theoretical and
empirical evidence, is simple and lies in the fact that skilled human capital (a noble
fuel) is not only important for innovation (the engine of rich countries growth) but,
even more, for imitation (the engine of poor countries).

Free Trade :
o

Corruption :

Trade liberalization seems to have increased growth and income in developing

countries over the past thirty years, through lower prices, firm-level efficiency
gains and improved access to foreign inputs. However, aggregate gains from
free trade are not necessarily equally distributed, so that trade liberalization
has important costs for some people.
Looking at how firms respond to trade liberalization sheds further light on the
channels through which trade contributes to aggregate growth. Public
perception on globalization often focuses on the costs domestic industries
endure as they lose protection from foreign competition through lost revenue
and market share. Firms, in fact, incurred these costs in the trade
liberalization episodes studied by the researchers. Some firms, usually the
less efficient ones, downsized and went bankrupt. Firms that survived foreign
competition sold their products at lower prices and experienced a loss in
revenue.

At the macro level, the literature generally shows that corruption has a negative,
direct impact on economic growth and development. Corruption also has an indirect
effect on a countrys economic performance by affecting many factors fuelling
economic growth such as investment, taxation, level, composition and effectiveness
of public expenditure. Economists have long identified a number of channels
through which corruption may affect economic growth (Mauro 1995; Tanzi 1997;
Gupta 2000; Gyimah-Brempong 2001, among others): Corruption distorts
incentives and market
forces, leading to misallocation of resources. Corruption diverts talent and
resources,
including human resources, towards lucrative rent-seeking activities, such as
defence, rather than productive activities. Corruption acts as an inefficient tax on
business, ultimately raising production costs and reducing the profitability of
investments. Corruption may also decrease the productivity
of investments by reducing the quality of resources. For example, by undermining
the quality and quantity of health and education services, corruption decreases a
countrys human capital. Rent-seeking behaviour is also likely to create
inefficiencies, fuelling waste of resources and undermining the efficiency of public
expenditure.
Tax Incentives :
http://ctb.ku.edu/en/table-of-contents/implement/changing-policies/taxincentives/main

Resources used :
http://www.transparency.org/files/content/corruptionqas/Impact_of_corruption_on_gr
owth_and_inequality_2014.pdf