As per studies conducted by Blanchard, Jaumotte & Loungani, (2014), infrastructure happens to be a big issue when it comes to the foundation. The American government has not been many allocation funds to cater for its support. Americans have argued that infrastructure has not been given a big priority over the last few years. As much as the United States has been carrying out projects to build highways, American Society of engineers has ranked the United States infrastructure very low. Poor infrastructure in the United States has led to inflation on the gas tax to maintain the efficiency of vehicles. U.S transportation suffers insufficient investment. United States infrastructure has deteriorated and has been passed by countries such as Spain, South Korea, and even Oman. This decline in the management of infrastructure has been attributed to the general trend of underinvestment.
Due to the problem of the infrastructure, the United States economy has been affected primarily in the labour market. The most significant challenge here is to give the citizens adequate living standards. This will require more productivity growth and stabilisation. The income inequalities will also need to be solved so that everyone will be in a position to attain a basic living standard. Depending on how the infrastructure will be invested, it will provide better access to jobs opportunities. Gross domestic income in America has been linked with better infrastructure. Other than this, the federal government goes to the extent of increasing the taxes so that they can be in a position to maintain its expenses.
(Blanchard, Jaumotte & Loungani, (2014) acknowledges that transportation infrastructure systems have always been seen as the best way to transport goods and services most efficiently. This results in the promotion of economies which acts as the backbone of nations competitive and productive economy. America also needs more investment in building factories that reduce the emission of greenhouse gasses in the air. In the process, it will lead to a reduction of energy. Building this infrastructure will bring along new invention and innovation which will boost the economy of the nation. This is because the supply chain is smooth and it calls for more production of goods and services. It is through these processes that the economies will be raised after creating job opportunities.
For smoothening of the United States micro-economies, bridges, highways, airports and waterways had to be liked at and renovated as they get modifications. This change will be inevitable if at all the nation want to bring its micro-economies to a better state. Reinvesting in the United States infrastructure, it will call for policymakers who have unique opportunities to intervene. 2017 seems to take a better action to renovate what has been not working in the past. The building of more pipelines will lead to more comfortable movement of goods and services.
For many years, there have been calls for the United States to put more investment in the infrastructure. This is so because it will create solutions to some American economic problems. Studies show that the current state of the American fiscal policy to finance infrastructure comes from the government. Modification of infrastructure can lead to a long-term or a short-term economic development. Little by little, the state of America will have better economies when the government works tirelessly to bring infrastructure alive.
Select any foreign (non-American) current microeconomic event or market and analysis.
In South Africa, labour markets have been affected due to the issues of poverty and inequality. There have been cases of categories of people who have much access to assets and income than others. This nature of inequalities and poverty has affected the micro-economies in South Africa. Cases of high disparities have called for much political demand for redistribution of resources which can only be met through increasing of taxes on the wealthy in the society. This is done with the aim of accumulating wealth which will late be redistributed to the poor (Omeje, 2013).
Studies have shown that there has been a negative relationship between growth and inequality. High poverty levels and the difference has always led to the poor being restricted to access markets. This is so because the poor do not have collateral in the form of income or assets to acquire what they need to develop their lives. According to some neo-liberal arguments, inequality is a source of incentives for risk-taking while looking for efficiency. On the other hand, raising taxes in some class of people in South Africa may lead to it affecting the economy. This is because it will change the demands and supplies of goods and products in the market.
Analysis by Omeje, (2013), has shown that high-income inequality experienced within a country is prone to trigger higher poverty as it lowers the economic growth. This comes with unemployment of citizens which increases cases of crime since people do not have a source of living. Studies have suggested that some of the reasons why micro economies have been lagging behind are like higher inequality have translated to more enormous social and political instability in South Africa. Poverty levels have been seen as the well-being a way of living and not taken as the entire issue. This makes the poor feel they cannot catch up with the rich which makes them become ignorance on how to boost the economy.
What make South Africa distinct from other African countries are the particular events of colonisation. These are the times when the land belonged to the whites while South Africans were meant to cultivate the land and gain nothing from the same. Poverty has since then been in South Africa where some people have never been in a position to acquire assets which are under their names. Looking at the labour market flexibility, some of the South African business leaders have cited labour regulations and unions as activities which discourage activities of employment creation. There have also been discussions on how to regulate labour hours, incorporating more labour force and also introducing work ethics to see if the economies will be lifted.
The government is trying to incorporate more informal sector that is going to integrate more people who do not have jobs. In the process, this activity will reduce the levels of unemployment while trying to bring back the economies of South Africa to a better position. When people have the opportunities to work and earn their income, it will level the economy hence increasing the level of demands and supplies. High taxes will not have to be charged from the wealthy which affects the economy in its way. South Africa has been reported to have fewer sectors of informal employment about formal sectors. The government needs to fund casual industries so that they can be in a position to reduce inequality and poverty.
Watch the entire video from the link in Module #9: "The Agony of Reform," Episode II from The Commanding Heights
https://www.youtube.com/watch?v=oykvdDm0qwk/ link explains how global economy was born mostly from the 28th century. Recession, inflation and unemployment were a significant issue at that time. The government was seeking to work on the market forces to bring things in position. It called for the markets to be deregulated, privatize some businesses with the aim of bringing a new economic revolution.
The introduction of the free markets brought about new and efficient global economies where people have more leisurely moments to trade. Prisoners were the ones who were used to boost the economy through working on the land. Use of forced labour can both have a positive or an adverse effect. When people work under pressure in the marketplace, they may end up not being productive. This is because they are working tirelessly without rest. As humans, we need to have some rest after a day's hard work. Additionally, monotony needs motivation so that one gains more energy to continue working. Laborers need incentives so as encourage working. This is essential for a better micro-economy.
We can see that the workers were reluctant to work and some were even dozing when told to go in the field. This translated to poor development of the economy since the workers worked hard for nothing till they naturally became exhausted. This quickly leads to collapsing of an economy. To maintain a better economy while in this situation, the government needs to subsidize prices, making it affordable for everyone to acquire goods and services. These assists curb inflation that arises. Such crises of an inflated economy lead to political and social wars which act as a drawback to recovering a better economy.
Deteriorated economy comes along with unemployment since many businesses have collapsed due to expensive raw materials. The increase in crime rates is characterized in such an economy. The government here faces tough moments trying to recover an economy where there is no money. Better policies can assist regain the economy although it requires patience. Privatization of public entities is one way that can support the faster recovery of the economy.
When reforming an economy, there need to be more banking services where there is much money being lent to the citizens. This enables acquire more interest on the loan which acts as a source of revenue. On the other hand, money borrowed assists the citizens to carry out developmental businesses which generate income. The government benefits from the taxes it will charge this business.
Another way to reform an economy requires available labour which is not forced labour. Companies have always hired contract workers who assist produce more goods and services in the name of lifting the economy. Exploiting workers demoralizes their hard work making them produce less since they do not find a source of motivation. Subsidizing the prices of goods and services assists the economy to grow. This is because as much as the rates have been reduced, there is still some tax which is attached to the goods and services and it helps the economy to grow. The more the economy improves, the more the prices become adjusted (https://www.youtube.com/watch?v=oykvdDm0qwk/ ).
Blanchard, O. J., Jaumotte, F., & Loungani, P. (2014). Labor market policies and IMF advice in advanced economies during the Great Recession. IZA Journal of Labor Policy, 3(1), 2.
Omeje, K. (Ed.). (2013). Extractive economies and conflicts in the global south: Multi-regional perspectives on rentier politics. Ashgate Publishing, Ltd.
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