Question

Canada and Indonesia both use economic theories. Some theories may include theories of economic development/growth and international theories. Please STATE which economic theories both countries use and how they use them.

Answer 1

Canada and Indonesia have been growing rapidly in the past few decades. Canada is a mostly Capitalistic economy whereas Indonesia has a dual economy where the Government and private investors work smoothly.

Indonesia follows a planned economic growth policy where the Government make long term plans for 20 years and that is divided in 4 phases of 5 years each which are used for medium term planning. The Government owns most public organisations and also promote foreign investment and local entrepreneurship.

Indonesia has curbed its poverty line with a small portion of the country falling below poverty line. It is the 2nd largest growing country in South East Asia.

The Government promotes medical and educational facilities to educate the labour force. The country is outgrowing in technology. But unfortunately the infant and child mortality rate rises to 126 per 100,000 children born. Though the Government's plan of to cut it down to 102 could not be achieved. A lot of under developed children or retards take birth in this country which is yet to be controlled.

The Government pay subsidies to small and medium group of the society. And the tax rates are proportionate are progressive in nature.

Whereas Canada is a market based economy where the country depends on the market forces to work in the economy. The Bank of Canada is one of the important institution to have helped its growth. The Government expenditure is mostly devoted to infrastructural development and advancement in technology. Though the rate of poverty is not much lower, the employment rate is not much of a concern.

Canada follows a slow growth model though the increased Government spending has increased its rate of growth. Canadian Government follows a negative tax policy and the tax rates are lower. The higher income group is charged more, the middle income group pays lower taxes and the poorer section get transfer payments.

The inequality of income has risen in canada over the past few decades while it has decreased in Indonesia.

Currently Canada has moderate rate of employment due to market oriented economic model, the labour market is working efficiently and the unemployment rate is low though the labour market had always been as issue due to procurement of labour forces.

Both the economies are fast growing countries in today's economy with both of them providing for international trade and investment. The global economic policies of these countries are increasing foreign investment. Indonesian Government keeps on coming up with different plans to promote foreign investments for the benefit of the society and increased employment rate although Indonesia has a devalued currency.