Adonis Diaries

Posts Tagged ‘How markets can function in developing countries?

730.  The International Monetary Fund (IMF) failed in its mission; (Mar. 27, 2010)

731.  Not a grain of faith in me darling; (Mar. 28, 2010)

732.  In “Rainbow over the Levant (Near East)” novel: Dialogue; (Mar. 28, 2010)

733.  Militias covering all States in the USA; (Mar. 28, 2010)

734.  Nomad pragmatism versus submission to Allah; (Mar. 30, 2010)

735.  How markets can function in developing countries? (Mar. 31, 2010)

736.  Date Zero: Pre-Islamic period is untouchable to investigation; (April 1, 2010)

How markets can function in developing countries? (Mar. 31, 2010)

            Many developing States have leaned during Globalization to act contrary to the International Monetary Fund (IMF) and World Bank pressured suggestions on policies for economic stability and liberalization of State’s monopolies.  The successful developing countries have learned the main pre-requisites for an adequate functional market working properly. They are:

            First, reforming institutions for control and management of speculative economic investments; they erected barriers and taxing mechanisms that desist speculative financial multinationals from ruin their real economy base.  They trained personnel and expert professionals to target and pinpoint investments that do not benefit their society but force the State to pay high interest rate on superfluous loans that enrich only the speculators.

            Second, successful developing countries focused on reforming institutions such as the legal business system that arbitrate speedily according to compatible modern business laws. Democratic institutions that establish continuity in power successions on timely manner encourage the influx of foreign investment.

            Third, policies of eradicating unemployment by encouraging investment in rural regions and extending greater powers to regional administrators for local economic development have much greater return values on investment. Cheaper land and affordable manpower in rural areas enhances economic development and the consequent investment on appropriate infrastructure, transport, and educational facilities.

            Fourth, policies that encourage banks and financial institutions to opening branches in rural regions with government support in lower interest rates, minimizing paper works and collateral requirements on family businesses.

            Fifth, adopting gradual privatization processes on State’s monopolies for inefficient government assets so that further analysis and evaluations of the process rectify errors in economic assumptions and models.  Privatization into many smaller enterprises should be done to encouraging competition for higher quality products and services. Until the institutions have learned and assimilated the pitfalls of privatization then further phases should be postponed.

            Sixth, the State should intervene to stem galloping inflation to reasonable levels.

            Seventh, budget deficit should not be considered a critical factor that needs to be reduced quickly at the expense of development in real economy and people’s quality of life. The best return in government investments are in education, training in economic sectors that do not require high investment and that put to work many citizens.  Tourism is a highly expensive sector and highly polluting. Unless the government is set to remedy, control, and manage sanitation requirements then it is better to postpone investing on tourism until relevant infrastructures are in place.

            Eight, local and regional economic policies should take priority over highly dense urban centers where land and infrastructure needs are extremely expensive and unable to catch up with the flux of citizens fleeing rural impoverished regions.

            Ninth, custom tariffs should be eliminated on technological imports and highly taxed on luxury items such as expensive cars, expensive beverages, and expensive furniture. In any event, it is the poorer sections in society that are indirectly paying for the tariff barriers, especially basic food stuff.

            Tenth, any economic policy must rely on the power structure within particular economies.  When syndicates are powerful and independent of political party allegiance then syndicates should be represented in parliament and government. When most enterprises are highly indebted then government should facilitate credit extensions for business activities; reducing tax levels on small businesses along with incentives to better control and administration of enterprises keep the market functioning and potentials readily available for further development.

            Eleventh, government should invest in “think tanks” with mission to be informed in timely manners on policies, decision processes, and discussion of world institutions such as IMF, WB, WTO, and UN.

            Most important, developing States with economies that can be salvaged should devalue their currency rate of exchange and promptly default on external debts: every dime paid out to financial multinationals and the IMF loans is actually paid for by the poorer sections in society on speculative investments that benefit speculators only.


adonis49

adonis49

adonis49

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