Respuesta :
Answer:
Based on Adam Smith LAISSEZ FAIRE approach , EFFICIENCY argument .
Explanation:
- The Laissez Faire ("Let it be") Approach proposed by 'Father of Economics' - 'Adam Smith' stated that : free & state unintervened market mechanism guided by Invisible Hand is socio economicaly best efficient. This is because Individual Self Interest will form base of wealthier & better society .
As per his this approach , government intervention is not only unecessary , but distortionary .
- Empirical EFFICIENCY argument specially applies to Developing Countries. Developing countries have had adopted protectionist (inward looking) policies based on contradictory Infant Industry argument - suggesting developing countries products inability to compete with developed countries markets.
However , protection for a long time was likely to make such economies incompetitive , inefficient and hence Free unintervented markets have been percieved to be best solutions to make them efficient .
Eg : India had adopted state regulated model in 1950-1990 , but structurally transformed in 1991 through New Economic Policy - Liberalisation , Privatisation , Globalisation. This turning point of Indian Economy makes evident the importance of free exchange markets
