Introduction
The financial crisis in recent times has reflected the negative influence on the way of living which is a consequence of macroeconomic instability. Major actions under the economic activity which are advanced economic progress, unachievable debt standards, unpredictability in rates of exchange and fiscal markets, can conclusively result in job seizure and poverty. This may forbid the persuaded target of attaining macroeconomic stability and economic growth. Microeconomic stability is, therefore, a crucial requirement to achieve uninterrupted and stable development. The chief purpose of macroeconomic policies is to obtain economic and social stability in a consistent and parallel manner. Considering the cause of poverty that is unemployment, the crucial objective is to achieve an economy that is significantly near to employment. The basic objective of implementing policies for macroeconomic stability must be to attain economic growth in a stable condition (Cuadrado-Roura, 2009). This objective is assisted by the other simultaneous policies that affirm the main motive which is macroeconomic growth and stability. Thus, the thesis statement can be stated as, “Whether the policies implemented for economic growth and macroeconomic stability are appropriate or not.”
The policies implemented for economic growth and macroeconomic stability
Policies for Economic Growth
The rise in overall demand and supply consequently facilitates the economic growth at sustainable level. Though, the long-term economic growth is completely dependent on the improvisations did in the supply management. Due to a continuous increase in outcomes of the elements, the problems accounted during payments and procedures are expected to occur less frequently. As a solution, eight policies are developed for the government to implement, to ensure the economic growth for a long-term (Costa and Lamoreaux, 2011). These policies to endorse economic growth are further elaborated.
Technology policy: This addresses the policies which can be implemented by the government that provides the privilege of bonus for non-government organizations. The bonuses can comprise of loans at low-interest rates, relaxation in taxes or economic assistance (Koo and Perkins, 2016).
Individual Capital Improvement: It refers to the investments made in serving the basic purpose which is an improvement of human capital. It can be implemented by assigning precise and informative resources for training and education purposes which are crucially recognized for the development of economic growth. This policy chiefly aims at facilitating important tools and techniques to consequently influence the productiveness and skills of people in an optimistic way (Koo and Perkins, 2016).
Flexible Regulations: Foreign Direct Investment is a key source of economic growth for all the countries. Thus, the rigidity in regulations and rules must be made flexible by the government to provide a market that is available to international investors (Koo and Perkins, 2016).
Incentives for Entrepreneurs: The government can assist the entrepreneurs by initiating incentive policies for helping them initiate their own business or widening a pre-existing company or business (Costa and Lamoreaux, 2011).
Tax Amendments: Improvisation and amendments in the tax and profit schemes to gain labor activity and promote work enthusiasm can prove to be a beneficial policy in assisting economic growth. This policy may help the countries that are trying to in recover from inactivity and enhance their supply chain (Costa and Lamoreaux, 2011).
Policy to promote competition and contest: Policies regulating the contestable markets will eventually influence the competition as well. The encouragement to contestability diminishes the forbidding factors for the entrance of new companies in the market. This policy entertains the approach of recently initiated companies (Costa and Lamoreaux, 2011).
Establishing new markets: Policies promoting the establishment of new markets can prove to be vital for economic growth. These markets can prove to be sustainable due to the adaptation of new techniques and procedures of trade (Koo and Perkins, 2016).
Infrastructure Policy: Evolution of infrastructure projects plays a crucial role in the encouragement of economic growth for a long-term at the global level. An infrastructure that stands above the others significantly proves to be beneficial for low-cost transportation of the products (Koo and Perkins, 2016).
Policies for Macroeconomic Stability
Macroeconomic stability can be attained through the implementation of policies that promote the motive of achieving macroeconomic stability. Therefore, four policies that are considered for the government implementation have been described below.
Fiscal Policy: This policy refers to the changes to be brought out in government expenditures and taxes which would conclusively manipulate the overall demand. To develop the overall demand in the economy, the government is expected to increase its investments and reduce the taxes to compatible standards. The government may decrease investments and increases taxes to attain a downfall in the overall demand (Islam, 2014).
Exchange Rates Policy: The drifting exchange rates are accounted as the automatic elements for macroeconomic stability. In crucial circumstances like the fall in demand or incomplete supply which influence the economy in a negative manner, the exchange rates of the market will collide accordingly. This happens due to the declining prices for export and consequently gains competitiveness. It can be observed that the international demand is flexible in price and thus, export income will gain through the growing multiplier effect which presents uplift in overall demand (Islam, 2014).
Labor Market Flexibility: As a consequence of demand-side shock, like economic decline, the overall demand will conclusively fall, and the companies will confront situations of demand downfall of products. The labor market should be made flexible to overcome the excessive labor supply in such circumstances. Thus, flexible policies must be implemented in accordance to the flexible labor market to overcome the excessive labor situations in low demand conditions by reducing the earnings so that the labor does not face unemployment (Montiel and Servén, 2006).
Monetary Policy: It refers to the changes amended in the rate of interest to influence the supply of money. To promote the consistency of economic growth and macroeconomic stability, the government can raise the interest rates and reduce the money supply to forbid expenditure (Montiel and Servén, 2006).
Interpretations and Justifications of Government Adapted Policies
The Sustainable Economic Growth Strategy of UK government follows three paths:
1. Building Economic Foundations: This path illustrates the mandatory civil laws and regulative business, organisational and economic model that is accepted for affirming sustainable growth. It vitally compliments the tasks that enrich the financial and economic capacity at different levels which are supported by the improvisations in the lawful and regulative procedures which are key sources for gaining economic growth and stability. It also encourages the organizations, governments and companies to broaden their scope in national and international markets (Vazquez-Brust, and Sarkis, 2012).
Results
• Private institutions are established as an outcome, which encourages the economic growth in the profit of all individuals.
• It results in outlines that are innovative and assisting in causing sustainable economic growth and employment opportunities.
Governments develop appropriate management of its natural resources in an adequate manner which involves various sectors like agriculture and production. Climate is also put into consideration for the profit of individuals at social and economic levels (Vazquez-Brust, and Sarkis, 2012).
2. Growing Businesses: It enriches the economic practicality, production and competition of small enterprises at non-government level. It assists various tasks to develop micro-businesses with consideration given to women empowerment. This path serves the purpose of increasing production and sustainable growth in companies to accomplish the voids in the value chains. This path works with the approach towards facilitating the economic products and the relevant services to them (Mahtaney, 2013).
Results
• It results in an increase in the entrepreneur projects which are chiefly governed by women.
• An increase in profits and the production is observed as a consequence of the implementation of this path.
• The poorest sections of the population are provided with compatible economic services and credits which conclusively result in growth in business (Mahtaney, 2013).
3. Investment on People: This path focuses on developing the characteristic capabilities of individuals to gain profits and chances in the various aspects of the business. It aims in accelerating the facilitation of information and training for the precise learning of labor and its increase in knowledge and participation. It also enhances the workplace environment which assists the growth of the company as well as its employees. As a consequence, it will influence economic growth and production as an outcome of learning procedures (Amin, 2008).
Results
• An increase in the number of working individuals, significantly women and youngsters which is important for the financial chances in the market.
• An outline of employees and stakeholders who are equally informed and educated regarding the production which will help in gaining the financial status of the companies.
• It results into the expansion of the firms included in non-government sector which conclusively helps in widening their businesses (Amin, 2008).
Conclusion
The implementation of policies to attain long-term economic growth and macroeconomic stability in a short run is adaptable and conclusively optimistic. These policies assist in meeting the needs and requirements of the companies and individuals in the international market. As a result of the implementation of these policies, a government that takes responsibility in adapting influential economy and its management is observed which ensures the stability, security and continuity of business and its procedures enriching the capability to develop the people at all levels. These policies help in building an ambience that encourages entrepreneurs and competitiveness in the international and national market. As a result, the opportunities accounted for expenditures and investments are found to be consistent. The conveyance and information are developed due to the evolution of infrastructure which facilitates the authority to avail individual and corporate growth in international market. The increasing training and knowledge procedures result in a variety of employees relevant to compatible fields which achieve the economic needs. The final aspect that cannot be avoided is the equal opportunities and environmental sustenance for men as well as women. Thus, the thesis statement can be reframed as, “The policies implemented for economic growth and macroeconomic stability are appropriate.”