As aggregate demand affects the supply (production, employment and inflation) they saw it as the government's role to build it back up using monetary and fiscal policies. Similar to Classical economists, Keynesian believe the economy comprises the same part: consumer spending, government spending, and business investments. However the major difference is that Keynesians believed government spending could help account for the lack of consumer spending and investment. The Keynesian theory also was based on the idea that wages and prices were sticky and that is would give aggregate supply a horizontal line in the short run. Overall, the main idea of the Keynesian Economist was to save and create jobs and
Economic development affects the evolution of institutions and political change. According to Jong-a-Pin (2009) “the higher degrees of political instability lead to lower economic growth”. Political instability also reduces governmental prospects affecting the economy
As long as a few wealthier countries have the power to set the rules to their own advantage, inequality will continue to worsen. The debt system, structural adjustment, free trade agreements, tax evasion, and power asymmetries in the World Bank, the IMF, and the WTO are all major reasons that inequality is getting worse instead of
Ekpo (1995) submitted that inflation rate, real per capita income, political regime, debt service and credit rating were key factors elucidating the inconsistency of FDI flow and impact in Nigeria. Ariyo (1998) found that private local investment contributed significantly to GDP growth between 1970 and 1995 but lacked dependable evidence that all the variables included in his analysis had some influence on economic growth. Oyinlola (1995) in his analysis assumed foreign capital to mean export earnings, foreign loans and direct foreign investment. Using the Chenery and Stout's two-gap model, he resolved from his findings that FDI had negative effect on the economic growth of
RESULTS: Above discussion has shown that because of financial crises Pakistan’s economy affected adversely. It’s main effect on inflation, interest rate, GDP and foreign debt. Real GDP growth rate declined in 2008 as it reached to 1.6% and in 2009 it rose slightly to 3.4%. In 2013-2014 GDP is 4.14% but for development and for economic growth it is very low. So the monitory authority has to change their policies by reducing the size of foreign debt and encourage investment at high level for productivity and economic growth.
Privatization is associated with higher levels of unemployment with its attendant social ills. Chakaodza (1993) states that while privatization may improve efficiency it will do so at the socio-economic and political cost of unemployment as well as depletion of needed foreign currency reserves. ESAP caused high unemployment rate because of its economic reforms. According to Sounders (2000) about 22,000 public service employees have been retrenched, alongside large cutbacks in real recurrent expenditure on services. In addition, the working conditions of the public sector was declining, Sounders (2000) added that, declining conditions of work and uncompetitive pay have chased many better-skilled
In encouraging this substitution, taxes distort behaviour in the economy (Becsi, 1996, p. 24). The distortionary effect of taxes is that factors of production are allocated inefficiently and possibly growth suffers. Taxes reduce the after-tax return to capital and provide individuals with the incentive to substitute away from investing in physical and human capital or in technological progress, causing growth to slow. Easterly and Sergio (1993, p. 418) note that growth models share specific features that link certain taxes to growth rate. Thus they suggest that it is possible to draw the growth effect of tax and to simulate the impact of changes in tax policy in the context of Solow model.
CITY UNIVERSITY COLLEGE OF SCIENCE & TECHNOLOGY MASTER OF BUSINESS ADMINISTRATIVE RESEARCH PROPOSAL NAME: LIEW WEN MIN I/C NO: 880101-35-5088 TITLE: UNEMPLOYMENT IN MALAYSIA LECTURER’S NAME: DR SEGAR RAJA MANICKAM Chapter 1 Introduction In this contemporary world, unemployment is a common issue which facing by many developing country. When one country with high unemployment rate, this directly means that the country labour resources are not fully utilized. Basically, a country that is not fully utilizing its resources will not achieve their maximum output. Hence, full employment need to be considered as macroeconomic goals if a country wants to maximize its output. As compared to other developing country, Malaysia can be said
The decline in the rate of economic growth raises the issue of unemployment. Obadan (1997) and Sagbamah (1997) Growth and unemployment go in reverse track. When the growth rate increases, it will fall unemployment rate.On the other hand, decline in employment (which is unemployment) will guide to decrease in production and thus in economic growth.Unemployment is also the increasing fact in Pakistan. The unemployment rate rise during the period of 1990s because of fiscal reduction and the low rates of economic growth or some other factors in Pakistan (Akhtar&Shahnaz, 2005).The views of different economists that economic growth is important to reduce the unemployment. Solow (1956) suggested that the economic growth result reduction in unemployment because when saving high it
There is domestic and international inequality. ANALYSIS Corruption does not only affect the growth rate of income but also affect inequality and poverty. Corruption affects poverty by first impacting on economic growth factors. Corruptions will lead to lower economic activities, creates inefficient by increasing the business thus hinders income inequality then leads to poverty in economic. In the economic model, corruption discourages foreign and domestic investment (Chetwynd E, Chetwynd F and Spector B 2003).