Economic Development Policies
An economic policy is a course of action that is intended to influence or control the behavior of the economy and are typically implemented by the government. Governments are undertaking them to meet broad economic objectives such as sustainable growth, price stability and high employment among others. Such efforts include; monetary and fiscal policies, regulations of financial institutions, trade and tax policies.
Trade policies are set requirements, priorities, guidelines and regulations for part of the world to country exchange. Such measures are country specific and developed by their leaders. Foreign strategy usually relies on the following parameters; tariffs trade barriers safety and complexity based on the number of concerned parties. Types of trade policies include; national foreign policy whereby each country protects its economy and people’s best interests, bilateral trade policy whereby two countries have their deal agreements to govern trade and business ties, international trade policy whereby multiple countries come into agreement to govern trade and business ties. Foreign economic bodies such as the Organization for economic co-operation and growth, the world trade organization and the international monetary fund describe the principles of international trade policy which include; the overall tariff point which is the average rate of import duty depending on the number of manufactured products on which the price relates, the average amount of non-tariff barriers which is measured as the volume of imports or exports subjected to prohibitions. The tremendous growth of international trade over the past decades has caused effect on globalization. The volume of world trade has increased twenty-seven folds from $296 billion in 1950 to $8 trillion in 2005 (WTO, 2007). As a result of international trade, consumers around the world enjoy a broader selection of products than they would if they were only relying on domestic products. Since global economy is so much interconnected, when large economies suffer recessions, the effects are felt worldwide. Up to 1870, the value of exported goods accounted for less than 10% of global output. Today the value around the world is close to 25%, this shows that there has been more than proportional growth in global trade. Klasing and Milionis (2014).
Tax incentives are ways of reducing taxes for businesses and individuals in exchange for specific desirable investments on their part. Their purpose is to encourage those businesses to engage in behaviors that are responsible and benefits the community. They are used to achieve goals beyond economic growth or job creation such as spreading economic activity throughout the state and focusing on perceived high-value industries. (Francis 2015; Pew Charitable Trusts 2015). They come in four types focusing on jobs, business investments, specific industries and specific locations. They can be used to stimulate action in a broad range of categories such as housing, the environment, health and employment. Francis, Norton (2015).
Supply side policies are government attempts to increase productivity and increase efficiency in the economy. Supply-side theory is an economic theory based on the concept that increasing the supply of goods leads to increase in economic growth. Types of supply-side policies include free-market policies that include policies to increase competitiveness and efficiency and interventionist policy which involve government intervention to overcome market failure. The benefits include lower inflation, lower unemployment and improved economic growth, Barro, Josh (March 2015)
In conclusion, we all should embrace economic policies that ought to benefit us both at individual level and the government. We should also increase productivity of products so as to continue improving the economic growth.
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