Evaluating Economic Growth Policies

In a recent economic analysis of a developing country, policymakers are debating the efficacy of various government policies to enhance economic growth. The country has been struggling with low productivity, high unemployment rates, and limited foreign investment. Three policies are proposed:

1. Increasing government spending on infrastructure projects to stimulate job creation.

2. Implementing strict regulations on foreign direct investment (FDI) to ensure domestic companies are prioritized.

3. Providing tax incentives for small and medium enterprises (SMEs) to encourage innovation and entrepreneurship.

Given these proposals, examine the potential effectiveness of each policy in promoting long-term sustainable growth in the context of this developing economy. Consider both short-term gains and long-term implications when selecting the most appropriate policy.