Introduction labour force growth, can affect the quantity

Introduction

In order for a country’s
economy to grow, there are 2 important things needed to achieve that. That
would be an increase of productivity or an increase in inputs, or both. Things
such as the level of skills in the labour, infrastructure, labour force growth,
can affect the quantity and quality of its inputs. Things such as developed
financial markets and rule of law can all affect an economy’s ability to create
output. Government can adopt supply side policies and fiscal policy to increase education and training, reduce
unemployment, improve transport and infrastructure. (Loretta J, 2015)

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Fiscal
policy

The government can first
adopt fiscal policy to reduce unemployment problem in its economy. Fiscal
policy is about maintaining the country’s economy by adjusting its spending tax
and its spending level so it would have an impact on the country’s economy. It
is based on the belief of John Maynard Keynes’s, a British economist who
regarded that government could make adjustments to the economic performance by
monitoring it’s spending and the tax rates based of Keynesian economics. Based
on the Keynesian economics, this would improve unemployment rates and by
monitoring the interest rate it could stabilized the business cycles. The main objective
here is to put more spending power in the consumer’s pocket so they would spend
more, which would improve firm’s businesses. This will allow firms to get more
money which will enable them to expand their business and able to hire more
people to work and upgrading their workers. An increase in government spending
would also increase output therefore resulting in the increase of employment in
the country. (Rendahl, 2016)

Unemployed can obtain
new skills set and knowledge through education and training, which will enable
them to find more decent jobs. Government can implement better education system
to train the professionals as well as the general workers. With advance courses
and school to upgrade the workers, that could enable the workers to keep up
with the latest technology advances and skills sets. With the unemployed
equipped with better knowledge and skills required for a job, they will be
hired more quickly. (Sage, 2013) To allow firms and workers to have more
spending power to send their workers or themselves for upgrading course, higher
education, advance skills lesson the government could implement tax breaks and
subsidies to the unemployed or companies. The government could also reduce
minimum wages to enable firms to hire more works and not causing a real wage
unemployment. (Sedghi, 2014) To encourage the unemployed to quickly find a job,
the government could also provide benefits to the workers such that after
working in a private sectors for a few years. They would be given a chance to
take on a job in the public sectors, people will quickly find a job as they
will have job security in the future. Government could also give benefits and
tax breaks to firms so that the firms can setup factory in the discouraged
areas where it’s unfavourable, this way the people living in those areas will
have chances of getting employed. (Asit K, 2016)

Supply Side Policies

To be able to shift
the aggregate supply to the right and increasing productivity, the government
can adopt supply side policies such as Free-market supply side policies and
Interventionist supply side policies. Free market supply side policies could
increase the country’s overall competitiveness and competition enabling the
firms to strive for better results. (Economicshelp, n.d) One way is to through
privatisation, due to profit motives the firms are more efficient in running
their businesses and will develop better services. With firms being privatise
and having profit motives there is this increase in competition that would spur
greater improvements in efficiency, therefore increase in productivity. Through
privatisation, there will not be any government political interference. There
are arguments saying that governments make poor economic managers as they are
more motivated by political pressures instead of business sense and sound
economic. With politics in place, the government would only have short term
views. They will not be willing to invest in infrastructure that would benefit
the firm in the long term, instead they would be more concern of the current
projects that would benefit them for the next election. Private firms will be
getting pressure from the shareholders to perform efficiently. Due to if the
firm itself is being inefficient then the firm itself would face the risk of
being taken over. A government owned firm doesn’t have the pressure to perform
efficiently so it is easier for them to be inefficient. (Economicshelp, n.d)

 

Interventionist supply
side policies is another approach which involves government intervention to
overcome market failures. The government can improve healthcare benefits,
implementing yearly free check-up would improve the nation’s health. Due to
time lost to ill-health can be a substantial costs for businesses. With
improvements on nation’s health, this would also improve the overall labour
productivity. Government can also build more affordable homes, this makes it
easier for the unemployed to move to expensive states to find jobs which also
reduce geographical immobility. Another point for government to build more
affordable homes could enable more jobs being available to then nation. The
government can provide better education and training schemes. Providing
subsidies to firms for sending their workers to training. With better education
and training, this can improve labour productivity and would increase aggregate
supply. With all this training and education in place, this could improve the
human capital of the nation. There are many positive impact for improving human
capital. Having the workers undergo trainings, there are more opportunities for
advancement and they would have better understanding their work. With more
training and educational lessons, workers can expose to latest technology that
would benefit the firms that could provide faster and more efficient
productivity.

Is economic growth always beneficial to the country?

Economic growth for a
country could be bad and good, depends on how fast is the economic growth.
Economic growth can increase the living standards of the people, providing
higher income, more jobs, and better life but sometimes growth only occurs in
the minority which only some benefit. Economic growth can also result in high
inflation due to the increase in demand for goods and services. Moreover there
might be results of more exploitation of economic resources, which might become
a problem for the future generations. This could create lots of externalities
such as pollution, congestions on the road, which will cause strains to the
world’s land and scarce resources therefore is bad for the economy. If an
economic grow too fast, causing a temporary boom in output. That temporary boom
will most likely not continue to surge upwards, it will cause the country’s
economy to follow by a downturn or recession. Another issue for fast economic
growth would be income inequality, often economic growth would benefits mostly
the rich because they already have assets and high paying jobs. Which the rich
will focus on encouraging outcomes that would benefit them and also diverting
resources that are for productive purposes to further enhance growth purposes
that are less productive. Income inequality would cause adverse effects like,
economic inefficiency, solidarity, undermining of social stability and the
unfairness to some parts of the society. (Economist, 2013) Economic growth is a
major field of study, there are both positive and negative effects of economic
growth on society.

Conclusion

There are many other
policies the government can implement and adopt to achieve long term economic
growth. This essay has examined 2 kind of policies, Fiscal policy and Supply
Side policies. Some of the things in Fiscal policy and Supply side policies that
the government could implement or adopt would be monitoring it’s spending and
tax rates, providing education and training, privatisation, provide subsidies
to firms, improving nation’s health and building more affordable homes. In
addition, the essay also discussed will economic growth always be beneficial to
the country. The essay mentioned about the positive and negative effects about
economic growth, which include inflation, pollution, congestion, temporary
boom, and income inequality that comes along with economic growth. In
conclusion, there are many policies that government can implement and adopt but
there are many changes that can also improve the policies that would
make a balance and beneficial one for everyone.

 

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