Economic Framework
Economic Framework
In an economic world, the economic framework concept is very instrumental for the economic development of any country. An economic framework can be defined as a list of decision guidelines that directs everyone to monetary objectives. The economic framework helps in making an economic decision affecting the country or the individuals in the country.
For my economic framework, nine strategic decisions will help in any economic development. These decisions include increasing the income tax for the imported goods, reducing tax tariffs for the countries exporters, setting a maximum quantity for export, the increasing interest rate for the depositors, reducing the interest rates for the borrowers, giving tax relief for the for commodities produced domestically and increasing progressive tax for the citizens.
A growing economy should increase income taxes for imported goods. This move discourages the importation of goods from other countries and on the other hand, encouraging the exportation of domestic goods to foreign countries (Duflo, 2017). When the country's import volume is reduced, the country's balance of payment is also reduced. Reducing the balance of payments for a country implies that the country's national income will increase over time since some money has been saved and accounts for the final analysis of national income (Duflo, 2017). Moreover, discouraging importations will increase the demand for locally produced goods. An increase in demand will increase a final national income since the locally produced goods and services have a broad market.
There should be a reduction of tax tariffs on exports for a growing economy. Export tax reduction implies that more of the domestic commodities will be exported to foreign countries (Duflo, 2017). Increasing volumes of export imply an increase in the national income for a country since the goods and services sold abroad or in the foreign countries account for the final national income of a country (Duflo, 2017). Due to the unavailability of foreign competition in goods and services, the domestically produced goods and services will be of excellent quality (Duflo, 2017). This will increase their unit price, implying that there will be an increase in income.
A developing economy should consider increasing interest rates for the depositors and reducing the borrowers' interest rates. An increase in the interest rate for the depositors will tend to increase the money that the financial institutions will hold for the borrowers. The bank can use this money to invest in various economic fields (Wheelan, 2019). Again, reduction of interest rates for the borrowers will tend to encourage people to borrow more of the money available in the banks since they will pay at low-interest rates (Wheelan, 2019). Consequently, many people will acquire capital, invest in various fields, and increase their national income.
A growing economy should also set a maximum amount to be exported or imported. In terms of exportation, a country should work on the scarcity of domestically produced goods and services. It should ensure that not all locally produced goods are exported to avoid scarcity (Wheelan, 2019). In terms of importation of goods and services, the country should ensure that no exports flood the domestic market for the locally produced commodities (Wheelan, 2019). The imported goods are usually cheap and unfavorably compete with the locally expensive goods, which leads to country incurring losses.
The country should also consider offering tax relief to locally produced goods (Wheelan, 2019). By taxing less, the production of domestic goods and services will encourage people to produce more. An increase in the country's goods and services implies that the country's income from those goods will also increase. More of the goods and services will be available for sale and hence, increase overall returns.
Besides, the economy should regulate the employment process by limiting the working years in public service. This can be done by lowering the year attainment at which a person has to retire and create a new vacancy for the employment of the others who are unemployed (Wheelan, 2019). This will ensure that the human resource is utilized to its capacity. There are many unemployed people with capacities in different areas, and when they are useful in the production, the country's economy will be improved (Wheelan, 2019).
The progressive tax should be increased for a growing economy. Progressive taxation will tend to ensure that the level of taxation increases as someone’s salaries and wages increase. (Wheelan, 2019) This is a significant move since the government will gain a lot of money for those who earn huge salaries. This amount collected through progressive taxation will be used by the government to develop its economic system in other sectors.
For a growing economy, the government should diversify its industrial sector. When the number of industries is increased, there will be increased employment for the youth. The employed people will now be taxed progressively for the favor of the economy (Wheelan, 2019). The industries will also increase the number of goods and services. As a result, the volumes of trade will be increased, and hence the more the returns (Wheelan, 2019).
In conclusion, I will use the above economic framework in my future since it gives prompt guidelines concerning the economy. In the future, I will need to be employed. I must make a clear budget for my salary since it will undergo taxation. Therefore, the economic framework is fundamental in economically planning for the future.
References
Duflo, E. (2017). Richard t. ely lecture: The economist as plumber. American Economic Review, 107(5), 1-26.
Wheelan, C. (2019). Naked economics: Undressing the dismal science. WW Norton & Company.
