Dear sajha economists :)
What would you do in the senerio provided in the question below? Any.. just about any kind of ideas will be greatly appreciated. I'll pray for an A in all the courses youre taking.. .. please help!
Case Question
You have recently been hired as an economic advisor to the newly elected president of the Democratic Republic of Congo (formerly Zaire). Your task is to design a policy that will spur Congo’s economic development. You recognize the government institutions are extremely weak and corruption is rampant due to 40 years of dictatorial rule. You also recognize the private sector is highly fragmented with few indigenous business of significant scale.
The majority of your experience has been in advising the Newly Industrialized nations of Southeast Asia. What lessons from this experience can be useful (if any) for your current assignment? Utilize your knowledge of state-market relations and formal/ informal institutions as a basis for your advise to the government.

Which course is it for? Please be specific.

Obviously it is an Economics question. Please wear your glasses before commenting, puppiffy.
Anyway...Back to the question.
I am an Economics Minor and will try my best (from a Macroeconomic Perspective which probably is the best approach).
This seems like a very specific course since I don't exactly know what the terms "state-market relations" and "formal/informal institutions" are.

Let's work at it systematically:

1st point: Government is not that strong and the private sector is not that strong.
Answer(s): 1) International Loans (since the country's economy is obviously in turmoil, it cannot quite self-finance any operations.
2) Lower Taxes in the corporate sector as well as the (income tax) consumer sector so as to stimulate investment and spending.
3) I am not sure about this but the Keynesian view is that monetary policies work in the short-run hence increase the money supply, which will shift the AD curve to the right in the AS-AD model, and hence increase output in the short run.
4) Since Gov. sector is highly corrupt, it needs a watchdog agency. I am not sure if privatisation initially would help the country.Perhaps later after real GDP is more stable, privatisation will stimulate the economy.
5) Increase in Gov Spending is an expansionary fiscal policy and has the same effect as lowering taxes.
6) Create a centralized Bank. this should precede the expansionary monetary policy mentioned in number 3, of course.

And I am not familiar with the policies of SE Asia so just do what seems the most logical.
I think the basic point is expanding the Real output/GDP. However, this will result in higher inflation which should be balanced by contractionary monetay policy (but not enough to hamper the increase in real GDP).

That's all for now.

Hey Ktmvalleyboy!
Thank you so very much .. so so much for taking time out to help me. words are all i have -- a BIG thankyou.!!!
well, the question is for my Political Economy class..its got me so confused because i am suppose to take the economical advancement of the SE countries in consideration but then most of them .. according to what i have observed seem to have developed a distinctive form of capitalism characterized by active state intervention in the economy and close state-business relations ... which kind of sort of contradicts the approach that seems to be best for Congo to bring about an increase in the GDP ( taking the micro approach) :@:@ i'll make such a bad ecomonic advisor i tell ya! i.e if people hire me at all :D
wats your say ktmvalleyboy? dont you thiink the question is rather contradictory? :s .. or is it just me. :O

So it seems SE Asia has activist Government policy (Keynesian approach).
This might seem contradictory to the definition of capitalism but it's just a guiding hand to the economy provided by the government.

The ultimate aim is to not increase government presence (like socialists or communists maybe) but to increase Real GDP.

So it seems my number 4 above might have to changed a bit. The government should help in the privatisation process along with actively stimulating the economy by the methods defined above.

And I was thinking about this earlier and it seems the situation of Congo slightly resembles the Great depression Era of the US (late 1920's to the 30's) when Real GDP of the US actually went down. Maybe researching this era about what the government did to get out of this state will help you. I know WW II helped the general economy but look at what they did after the war.

And you are welcome!!