Economic growth and development can be measured by a marked improvement in total value of products and services, usually in an annual period. It is referred to as gross domestic product (GDP). Unfortunately, economic growth is hampered by unavoidable economic crises and recessions due to financial and political conditions.
In response, economists and government leaders around the world have debated on how to achieve sustained economic growth and development. So what does it take to improve an economy?
Below are some ways to have great economic development in a county.
Enforce Solid and Effective Economic Planning
Economic planning is defined by key economic decisions as to the proper allocation of resources. These decisions are based on the economic system’s comprehensive assessment or evaluation. Unfortunately, inefficient public enterprises and heavy state bureaucracies impede economic growth, which is evident among developing countries.
When it comes to economic planning, there should be a strong implementation of economic policies, and politicians should have the political will to enforce these policies. Without a strong political will, economic planning objectives or short-term and long-term goals won’t materialize as they’re expected to be. Learn more about attaining great economic growth through a strong political will by visiting this site.
Capitalize on Infrastructure
According to research, infrastructure is considered an economic stimulus, or one factor that drives the economy. If a country has reliable infrastructure, jobs will surely be created. That’s why capitalizing on infrastructure is crucial for economic growth and development because it attracts both local and foreign investors.
Here are the findings of the said economic research about the benefits of capitalizing on infrastructure:
- Investing in additional infrastructure can boost the economy.
- Infrastructure investment stimulates the economy of a country, which is better than tax cuts.
- A lift in economic growth is viable with infrastructure capitalization.
- There’s a rapid growth in transportation, health, and pension fund infrastructure investments.
Make Businesses More Competitive
Regulation is burdensome for businesses, most especially for small businesses because it means more time and money spent on fees, business permits, licenses, and other documents to run a business legally. Complying with regulations is costly for small businesses than those with more than 100 employees.
Government regulation causes undue burden for low-income earners who spend a major income proportion on heavily regulated goods, such as food, healthcare, gasoline, utilities, and transportation. When total regulations rise, it also leads to higher commodities, and the poorest households experience the highest impacts of the fluctuations in prices (price volatility) and fall of money’s purchasing value and general price increases (inflation).
That’s why deregulation is one way to attain economic growth. Deregulation means reducing or removing restrictions or government power to make the business sector more competitive and promote a better business environment for investors. By making businesses more competitive, economic development will follow.
By making the government more business-friendly, it means making the life of investors and consumers a lot easier. This goal can be achieved by eliminating some steps and costs associated with operating a business, most especially at the local level.
Here are the economic benefits of deregulation as published by The White House:
- An economic boom caused by the decrease of administrative costs associated with starting or running a business
- Higher economic growth if the money paid by businesses to the government is allocated to research and development.
- Greater competition and lower prices after eliminating government regulations like licensing and fees
- Annual economic growth rate of 2.3 percent with deregulation
Decrease Corporate Taxes
By reducing corporate taxes (i.e. taxes paid by businesses), companies have more resources to help improve technology, procure capital, and generate more jobs for the people.
In order to achieve this progress, Tax Cuts and Jobs Act was passed by the US congress in 2017, lowering corporate taxes from 35 percent to 21 percent. Moreover, this act lowers personal income tax brackets too. This initiative aims to increase the country’s economic growth and development for the next ten years.
Education and Healthcare
Healthy and educated citizens contribute to great economic development in a county. By investing in education, more people will be knowledgeable and skilled to fill up vacant jobs. Unemployment and underemployment will be reduced, as well as the poverty rate.
By focusing on preventive healthcare services, expect fewer expenses on increasing costs of hospitalization and medications. Effective healthcare policies reduce government insurance claims that consume a huge percentage of a country’s yearly budget.
When it comes to attaining great economic development, a country should have a strong and reliable economic plan. Also, investing in infrastructure can help boost the economy because more investors are attracted to new technologies, innovations, and development. Decreasing corporate taxes and making the government more business-friendly also play vital roles in achieving a more prosperous economy. It’s because businesses are given more freedom and resources to invest in income-generating sources, like more jobs and business expansion.