For example, Mexico has been attributed as a depression to the economy because it was facing a major decline in mining and a shortage in labor during the time when urban population and demand were growing. Uncertainties caused by the rich countries cause losses for the poor countries. Essentially, the poor countries should solve this problem by specializing in production. It can open markets in poor countries, strengthen their method of production and kickoff local businesses. Vincent Ferraro addresses the possible issues which make this policy difficult to follow.
Introduction: Unemployment generally defined as the number of persons who are willing to work for the current wage rates in society but not employed currently. Unemployment reduces the long run growth potential of the economy. When the situation arises where there are more other resources for the production and no man power leads to wastage of economic resources and lost output of goods and services and this has a great impact on government expenditure directly (Clark, 2003). High unemployment causes less consumption of goods and services and less tax payments results in higher government borrowing requirements. The impact of the unemployment is seen with the individuals and household curtailing the consumption drastically to meet financial
The removal of protections for the manufacturing sector, trade liberalization, and reduced government spending combined with the effects of the drought on agricultural production resulted in economic recession. As a combine result of the factors, the real GDP fell by nearly 8% in 1992. Privatization is one of the IMF/WB conditionality which affected the mass population’s lives. Scott (2001) defines privatization as the term used to refer to the sale of government owned equity in nationalized industry, parastatal or other commercial enterprises, to private investors with or without the loss of government’s control of the organizations. Privatization is associated with higher levels of unemployment with its attendant social ills.
On the other hand, international trade is modified in that inflations causes uncertainty that in turns dejects prolific activity, investing, saving and eventually diminishes the competitive factor of a country in international trade. Inflation is known to cause an economic depression which can lead to more adverse effects for example industries can run out of business, and employed people can be rendered jobless (Handley & Kyle,
Moreover, it causes inflation and imbalanced economic development in market structures which cause economic delay in growth. This leads to delays in investments and starting of industries. Large scale corruption can hurt the economy and impoverishes the population. Moreover, it reduced tax revenues and government’s ability to finance budget expenditures, which is deficit
This failure had a significant impact also on economic sustainability as measured by the growth of GDP. The stagnation of the aggregate income of middle and lower classes consequent to the increase in inequality and poverty brought about a persisting stagnation of aggregate consumption. Since also the aggregate investment in the
Consequently, this leads to a reduced amount of tax revenues and less money able to be spent on education, health, transport etc. Recently, public universities have experienced a decrease in their state funding, leaving them no choice but to raise tuition fees. Given stagnant and declining salaries for middle class in the US, it becomes more difficult to afford these expenses. Nevertheless, education is still indispensable which is the reason why debt can be
This is because education is becoming more and more expensive, especially in poor countries and if you belong from a low income group that means you cannot afford to gain education because you cannot afford to pay the fees. The second problem is, children from poor families due to income inequality are forced to stop their education in order to earn money for the family to survive. Similarly, if you get good quality education you can get better jobs, improving your living standards. As time is passing by, the world is becoming more technological and to use these technologies the world needs more educated workers. This also increases income inequality because educated workers who can use technology get the high paid jobs,
This means that some individuals will be given more benefits than others in economic resources which may end up in a total decline in economic growth. The decline is also instigated by mismanagement of affairs in politics, for example Zimbabwe started off as a thriving economy but through the mishandling of political affairs and misunderstanding of the economic policies that governed the country, the political decisions taken caused an economic decline. The influence of politics on economics is demonstrated by examples of inflation. If a country is under inflation, the economy is forced to cut down on the budget deficit. Economic development affects the evolution of institutions and political change.
High unemployment means that labour resources are not being used efficiently. Hence, full employment should be a major macroeconomic goal of any government because it maximizes output. Inefficiently of using labor resources will cause to high unemployment rate. The result shows that the economics in Malaysia is better with high employment. In economics, unemployment statistics measure the condition and extent of joblessness within an economy.