Question

You have been hired to advise on economic policy by the Government of Backwardistan, a poor country run by a benevolent monarch. Queen Linda V descends from the Dewan dynasty that has ruled the country for nearly 250 years. She wants to improve her people’s economic and social wellbeing. She has been following a family policy of not allowing free trade in order that her local business could thrive. Also, foreign investment is restricted as well as most internet access. Backwardistan has a significant amount of natural resources as well as a fast learning, low cost labor force. Queen Linda is adamant about not letting foreigners exploit her people’s resources and labor force and believes that computers and the internet would cause more harm than good.

1. What are three policies (of many) that you would advise Queen Linda to enact immediately to improve her economy? Show, either in writing or graphically, how each one should improve economic development and activity in Backwardistan. Describe in detail who will be the winners and losers of each policy and why you are recommending it.
2. What impact will allowing internet access have on economic development and social norms? Is Queen Linda correct to restrict access?
3. Is Queen Linda’s desire to protect her country’s natural resources and labor force helping or hurting her citizens? What changes would you advise?

Answer 1

The concept of people's social and economic wellbeing has changed rapidly in today's highly dynamic and sophisticated world.So if the queen really wants to make improvements,she has to understand certain factors which are very crucial for the wellbeing of the people and the growth and development of the nation.Initially the need and wants of the small numbers of people were limited,the economy was highly centralised and self sufficient and barter system of exchange was practised but with the passage of time,today the population has increased,the world has been converted into a global village.And if the dynastic approach of the queen continues,the country will remain segregated and as its name suggests it will remain backwardistan forever.In order to achieve her desired goal,she needs to improve her misconceptions and adapt itself as per the changing trends in the world economy.The 3 immediate she needs to take urgently are as follows:-

• Open economy-The very first thing she has to do is coverting her economy from closed to an open economy.It means that she needs to promote trade among countries around the world i.e.cross border trade needs to be carried out.This can be done through following a policy of Liberalisation,privatisation and Globalisation.Liberalisation means freeing the economy of the country from unnecessary controls and removing hindrances and trade barriers.Privatisation means the govt. of that country needs to disinvest its funds from areas which are less crucial with certain necessary regulations and allow the private sector to invest in such areas.Globalisation means connecting/integrating the country with the outer world.
• Promote internet usage and its access:-No doubt internet has certain drawbacks and negative aspects too but they are not a cause of much concern.We can deal with such issues very comfortably,if we are aware,active and cautious with certain regulations on its issues.Solutions to such problems can be found.Internet has proved itself to be one of the most powerful tool in the current scenario that plays a very significant role in the growth of the society and improving people's being.This step can prove to be a milestone and masterstroke in the history of the country.unnecessary control over internet should be removed and its easy and equal access to all should be ensured with control.
• Major and minor policy changes:-As she is taking a transformative step,no doubt there would be challenges to cope up,but she needs to bring all major and minor policy changes wherever required to achieve the above mentioned goals.She needs to create awareness among the general public make them comfortable with these changes and its positive impacts.

The above mentioned changes can bring out miraculous changes in the economy.In today's world,in order to grow a country needs capital,raw materials,latest technology and innovative ideas.No doubt,the country has abundant natural resources but they are not being utilised most effectively,efficiently to maximise the people's wellbeing.With liberalisation,there would be cross border trade that will provide best quality of goods and services at a much cheaper rates to its people.Availability of more goods and services to the people cheaply is bound to make positive changes in the lives of the people.With privatisation,she can use her funds in more crucial areas rather than investing them in less important areas.Globalisation can lead to exchange of people,ideas and technology and much more.These steps can bring foreign investment in the country more capital and latest technology would be brought alongwith them it will ensure best utilisation of its resources.People would get more earning opportunities,thus more income and improving there life.The people and businesses can invest and work abroad to bring remittances to the country.And still there are much benefits.

No doubt there would be some problems in the economy with internal traders and businesses facing difficulties but at the same time this would force them to adapt themselves as per the world scenario taking them to newer heights.The people of that country would be most benefitted with wider choices at cheaper costs.

Internet is something which brings the whole world on our screen with a single click of a button.This can prove to be boon in bringing above changes in the society and can bring miraculous changes in the lives of the people.It can smoothen and strengthen the administration and make easy access of public to the services and much much more.

The Queen is not doing her best for her subjects with the current policies ,so she needs to keep her preconceptions aside and make the above mentioned changes.