2.1. Economic Policy Economic policy refers to the actions that are intended to control or influence the behaviour of the economy by governments. Such as the systems for setting levels of taxation, the money supply, government budgets and interest rates as well as the national ownership, labour market, and many other areas of government interventions into the economy. (Wikipedia, 2014) There are the three important economic policies goals that are generally accepted which are economic growth, price stability and full employment. In this report, we will mainly discuss on economic growth.
Capital market is the market for long term loans and equity capital. The stock market plays a vital role in economic development of a nation, since it acts as mediator between borrowers and lenders. A well-function stock market will contribute to development of an economy through two important channels such as boosting saving and allowing for more efficient allocation of resources Baskin, J. (1989). Stock market is an important part of the economy of a country.
The fiscal policy is primarily an instrument in the hands of the government whereby it estimates its revenues and expenditures in the economy. This is a very important tool as it would define the flow of money from different sources, indicating the level of activity in the economy. It also defines the broad policies of the government indicating the outwards flow of money in to different sectors of the economy to maintain the overall health of the economy and fulfill its social goals. Apart from the fiscal policy every country has monetary policy at its disposal. This is primarily a tool at the disposal of the central bank of a country which uses different tools to manage the macro economic variables of a country to keep the economy stable or to stabilize it in situations of fluctuations.
The checklist of issues of political factors include: tax policies, trade regulations, political stability, social and environmental policy, government and local government policies (Harrison, 2010). 2. Economic factor Economic factor examines the outside economic issues that can play a role in a company’s success. Economic factor has a significant influence on how company does business and how profitable they are. Items to consider include interest rate, exchange rate, economic growth, inflation, monetary policy, unemployment, income distribution, infrastructure costs and availability, consumer expenditure, foreign direct investment (Jeff, 2008).
The Economic factors are determinants of an economy’s performance that directly impacts a company. These factors include inflation rates, interest rates, exchange rates and economic growth. These affect how businesses operate and make decisions. The economic climate in the country is of major concern to every company as it has impacts on the business and consumer spending. For example, the exchange rates can affect the costs of the supply and price of imported goods and exporting goods in an economy.
Authors adds threshold values of total credit to the private sector and deposit money bank assets, above which the total effect of remittance on growth is positive. Azam and khan (2011) Running the linear regression of two remittance receiving and same features countries i.e. Azerbaijan and Arminia. They empirically proves that workers remittance are significant for the acceleration of growth in the field of study. Recommending to formulate the policies and encouraging to utilize more efficiently in order to improve society living standard.
For example Acemoglu and Rob-inson, who write that “Institutions are the fundamental cause of economic growth and development differences across countries”, or Bogart. The lat-ter’s main focus is on the growth of a country’s economy brought about by institutional change in the long run. Institutional change is another fun-damental issue: it is about the introduction of new institutions which re-place old ones, and it can be due to many factors (such as government de-crees, or market-led processes). According to North, bad institutions are eventually replaced by good institutions, however there is evidence of the persistence of bad institutions in many different countries. As Persson (2010) says: “a common mistake made by economists and historians alike is to ascribe efficiency characteristics to institutions because they are pervasive and long-lived”.
4.0 Implementation 4.1 Broader perspective Globalization is affected by various factors that drive towards its existence and formation in the society and a set of these macroeconomic factors. As per this analysis we can get an overview of the current economy of the country that helps the researcher to make relevant suggestions and recommendations that can benefit the economy as well as society to make them believe and trust that the globalization enhances their behaviour and life style. PEST Analysis: Source: Visual.ly website PEST Analysis of Saudi Arabia Political environment Giddens and Griffiths (2006, p. 59) states that mainly there are three reasons why politics has become one of the main drivers of globalization.
It analyzes individually provides a partial concept or partial figure of a country It is concerned with the overall performance of the economy However it is only concerned with the individual entities. Firstly, let me start by explaining the meaning of macroeconomic and microeconomic. Macroeconomics is the division of economics which help us to study the behavior and performance of an economy; it also helps us to focus on the aggregate changes in the economy for example Gross Domestic Product (GDP), inflation and unemployment. Macroeconomics focused on the determinants of total national output, it studies the national income not only the household or individual income but the overall price level; it also analyze the demand of total employment in the economy not only the