What policies can a country adopt to promote economic growth?
Category : Economics
Since there is no single aspect of economics, economic policies and adherence to such remain ambiguous and even conflict-laden at times. Economic policies refer to government’s action in responding to economic endeavors. and listed basic issues involved in faming economic policy. These are the functioning of the market economy and its impact on consumption, distribution of goods and disparities in income. Aside from these, pricing mechanisms, mixed economy models, liberalization, social equality, government priorities, functional autonomy and economic control dictate the local government on which and what economic policies to adopt (1992, ). Development economists suggested an alternative to develop strategies and policy models from a country-to-country or, a most comprehensive, stages-of-development frameworks.
The McKeever Institute of Economic Policy Analysis (MIEPA), on the other hand, is an independent organisation that describes, analyse, promote and recommend sound economic policies. Our task is to uncover and reveal what economic policies a country could adopt that will, in exchange, deliver results upon implementation. Towards this end, we will consider extracting the best economic policies that contribute to national wealth from MIEPA’s database. As our point of reference, we are going to contemplate on three of the developed countries from the list as Australia, France and South Africa. The criteria of policy analysis are divided into six categories as critical internal and external policies, important internal and external policies and beneficial internal and external policies.
Based on this, the highest recorded scores for the three countries and their corresponding average (with 5 as the highest and 1 as the lowest) are as follows: A) critical internal policies – freedom from internal control (5), communication systems (4.5), transportation (4.83) and education (4.6); B) important internal policies – currency (5), institutional stability (4.33) and economic statistics (4.16) and important external policies – protection of foreign currency-earning enterprises (4.16). Economic polices that critical to the well-being and security of the nation-state conforms to freedom from state control, network of communication facilities, good transportation facilities and quality and quality education. The use of single currency, sustainable organisations and accurate statistics that create business opportunities awareness are deemed as the important economic policies that a nation must adopt. The government could adopt policies regarding external export earnings while also protecting the domestic markets. From this point, we could consider five constructs with the highest rates.
Taking it from a developed-countries framework, economic policies on internal control and currency are the two most fundamental policies that could provide a sustainable economy. The overall internal control structure is integrated through a closed-loop approach wherein functions are integrated to one another. Internal control policies and procedures ensures proper authorization of all instructions, segregation of compatible duties, appropriate designation and maintenance of accounting records and documentation, controlled access to both assets and records and periodic presentation to the public of accounting data (. 1994, ).
Tightening of monetary policies ensure a stable and strong currency as well as avoiding competitive distortion of exchange rate stability (, 1998, ). Monetary polices, in addition, addresses the sources of equilibria wherein the government could focus on fiscal problems such as tax rates, tax reforms, income elasticity, removal of subsidies, budget expenditures cuts and restructuring, efficient use of domestic credits and enterprise reforms. Exchange arrangements would also be alter at the benefit of the nation. Such strategy claimed for a more flexible domestic wages and costs, stability of inflation in the currency against the fixed rate while maintaining payments viability. Another feature of currency policies are the impediments to the transmission of monetary impulses that would likely result to reduction of the stability and predictability of monetary aggregates and weakening of links between money and credit growth (, 1994, ).
Transportation, educational and communication systems are the subsequent areas that governments should adopt economic policies for. Transportation instruments, to be efficient, must be guided by comprehensive transportation policies. Such policies consider equity through optimal tax and investment rules and distributional effects of revenue recycling. Optimal tax and investment rules are used to correct transportation externalities. This is done through raising revenues to provide public goods and services, achieve desirable income distribution and control the externalities. Revenue recycling, in addition, assesses the efficiency and equity impacts of transportation policies correctly. This process considers how the revenue is used and how policies are financed (, , 2005, )
Progress is continuously being integrated to the frameworks of knowledge-based disciplines. The efforts to centralize the educational system and the universality of the contents being taught create patterns for education sector that calls for a timely government intervention. They are motivated by the economic implications of educational policies. The connection of education in the labor is being recognized even by the multinationals (, 1995, ). Efforts to prepare students and universities to gain competence, and skills necessary to function in a modern economy in the long run are now in rapid progress.
Communication is both an end and a mean. Communication policy had always been linked to other social and economic policies. An evident convergence between communication and trade policy acknowledge the role of communication and development. Noticed that communications also serve as links for inter-nation activities and so do the systems that undergrid them. Communication policymakers, in lieu, have increased access on factors and a variety of international variables to consider in making decisions. Through this, policies are allocated and prioritized in organisational responsibilities, inconsistencies and jurisdictional disputes will be addressed and possible coordination of communication policy in international labor mechanisms (, 1990, ).
Economic policies depend on the level of economic development of a country. This is not based on political, social or cultural frameworks, as many economists claimed, that hinder economic growth. The thinking of the countries purports not on a short- or medium-tem improvements but rather long-term and sustainable, holistic improvements. Though economic policies are continuously being linked to other societal constructs, it is only right to say that they are indeed interrelated; however, economic policies are only part of an overall strategy of the country, to say.
It is evident that economic policies are legitimately based on competitive perspectives – efforts are always directed and inclined to creating acceleration that create strong pressures and externalities; thus, the governments and states had created, in effect, a more uncertainty and more risks to safety and security. What I am trying to say is that governments created the problems and to address such problems governments created economic policies.
Another point to ponder conforms to the fact that adopting economic policies has marginal costs. Such costs are often felt by those who are the bottom. Other aspects may be jeopardized like poverty. There is a strategy for this however, that is government prioritization. Economic policies must always built upon a sense of equilibrium between the needs of the people and the demand of the society in general while not forgetting the domestic economy.