Alright, time to grab your snorkel, we're diving into the world of economics, specifically focusing on two kinds of policies: market-based and interventionist. Sounds scary? Don't worry, we got this!

First up, we have market-based policies. The Big Idea here is that markets are the best mechanism for growth and development. Ever heard of the Washington Consensus? This is a term often used to describe a set of free-market policies promoted by big names like the IMF and the World Bank since the 1980s.

🎯 Key policies under the Washington Consensus include

• Trade liberalization: This is like the bouncer at the club deciding everyone gets in free. It's about reducing or removing barriers that prevent free trade.
• Privatization: This is when the government sells off its stuff (like companies, airports, etc.) to the private sector.
• Deregulation: This is like removing the rulebook or at least a big chunk of it. It's about relaxing rules and laws for firms and markets.

So, what happens when these policies get to play? Trade liberalization allows developing countries to sell their goods more widely and earn more money. Just like you'd have more customers if you could sell your amazing homemade cupcakes not only in your school but in all schools in the city! But remember, this might not be enough because these countries often lack skilled labour and advanced technology and mostly focus on primary sector products like agriculture.

Privatization and deregulation often lead to more efficient businesses and economic growth. Think of a slow, lumbering government agency suddenly transformed into a fast-paced private company. The aim to earn more profit drives them to cut costs and increase output. Just like you'd find faster ways to bake those cupcakes if you knew you could sell each for more.

However, like a really hard level in a video game, these policies can't fix short-term issues and may even lead to increased unemployment or favouritism towards certain groups. Also, they can increase income inequality, a big problem for developing countries.