Question

You are hired as an economic consultant by a developing country that is experiencing high rate of unemployment, widespread poverty, and out-migration. What economic strategy would you formulate to achieve higher economic growth in the long run aimed at raising the standard of living of the country's population? What effect the prescribed policy measure would have on the nation's PPC?

Answer 1

As we know that, the developing countries of the world are facing the problems of unemployment, poverty and lot of out migration. The people are willing and able to work but is not getting any work to do. The rapid economic growth is a necessary condition to find the possible solution to these problems. Economic growth is an increase in the the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms.

As an economic consultant, my job is to provide the possible solution to these problems. In order to control the problems, the best possible strategy needs to be choosed. In order to control the rapid unemployment rate , the monetary policy , cutting the rate of interest will boost the aggregate demand. When there is more demand for goods and services, there is more production,which in turn needs more men and machinery for production there by will help to decrease unemployment. Another strategy is to provide geographical subsidies to firms to encourage them to invest in depressed areas. Lower taxes will also help to boost Minimum wage plays an important role to reduce unemployment.

Poverty is a condition,when a section of population is not able to fulfill the basic necessities of life. The developing countries like India, Pakistan etc are facing this problem. In India large number of people die due to poverty. In order to control the poverty I as an economic consultant would suggest the use of welfare programs for the poor. The poor should be provided with food, clothes and shelter free of cost. The income support also helps in reducing the poverty in developing countries. The poor should be provided with food stamps. It is very important to reduce poverty because Poor children are much more likely to have lower birth weight, and infants living in poor households face higher rates of food insecurity, which impairs healthy development. As adults, lower-income individuals experience higher rates of illness, disease, and disabilities than those who have higher incomes.

The people of developing countries are migrated to other countries. The reason for this is the better job opportunities, development, safety, educational facilities ,health facilities etc in those countries where they migrate. The migration in some cases leads to brain drain, as we see that many skilled and most educated people of some countries are working in another countries. If on the other hand, the country they belong have the opportunity to work with, it will have helped to solve the problem of unemployment and poverty to some extent. In order to stop the migration the government have to boost the econnomy and provide people with all types of better facilities.

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