Question

250 to 350 words required

In understanding the process of the rapid transformation of economic systems in many nations in the world from the beginning of the 1990s, briefly explain why the freedom to choose the right theoretical foundations still do matter to develop an appropriate economic system for economic growth and better income distribution of a society

Answer 1

All economists have contributed much towards the economic development of the common society right from beginning of 18th century when the role of money acted as the prominent medium of exchange. It was obviously the significant for framing the economic policies are required in order to develop the plans in order to eradicate the poverty and also to finding the way to increase the income level of the common people who are below the poverty line. Let us discuss the planning objectives of economic system for economic growth and also to retain the better income distribution of a society. Such plans are not only uses in the developed countries and also mainly used in the developing countries like Africa, Sri Lanka, India, Bangladesh and many small countries are still unidentified with the low rate of income velocity.

The Economic freedom of choosing the right theoretical foundations lies on liberal situation of free trading with respect to all types of market like Perfect, Imperfect, Monopoly and Oligopoly markets. All people need to choose their own way of investing in the favorable trade in order to increase their earning capacity, Before 1990, there was no stable frame of economic situation took place as not so much technological advancements not re-shaped into structure of comfortable zone. Such comfortable zone always paves the way for smooth running of the economic development of both under-developing economies and developed economies.

After 1990, with the good efforts of such theoretical foundation, many eminent economist formed the cluster of economic development was formed. They are framed based on the following parameters. First one is per capita income. The per capita income is very low in all the developing countries. Such developing countries are need to improve the conditions by improving the GDP. The GDP growth should be calculated with the Aggregate savings, investment, consumer spending habits and the rate of investment. Another factor is also considered here to develop the GDP. i.e. inflation. Inflation is controlled by the increasing the money supply. This in turn reduces the interest rate for the common people who want to invest in the business ventures which lead to earn more profit. Second one is peaceful economic environment. The political environment should be in the safe zone for those investors who can freely trade without the pressure of industrial and regulatory policies.

Starting from 1990, many firms followed the marketing strategy in terms of globalization. As a result, many reforms like G7 summit and WTO treaty agreement favored all the balance of payments in the standard way of reducing the tariff rate of both all imported Goods. In order to earn more foreign reserves many foreign investors got export subsidies from many developed economies. This in turn provided many employment offers to all the people.