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you are a minister for trade and industry for a developing nation. economic fortunes are not in your country’s favour at this time. you are under pressure to intervene with a series of measures to protect domestic businesses.in the past, it has been practice to restrict interventions and rely on a free market economy. business closures, poor export figures and growing unemployment is forcing your hand. the unions are demanding immediate action against overseas corporations to deter them from taking advantage of the situation. they are demanding job and wage protection. you wish to have the minimum impact on the functioning of the free market, but recognise that more drastic action might be necessary. as the minister for trade and industry, critically evaluate the options
Expert Answer
As a minister for trade, few options i would really consider are :
1) Reducing taxes on imports and exports – Most of the domestic businesses lag because, people are more interested in foreign goods. By reducing taxes on the imports and exports, goods that are produced domestically will have more opportunity to sell in foreign countries. By doing so, we can increase the trade on the domestically produced goods.
2) Inviting foreign investments – Foreign Direct investments (FDI) is very critical for developing and emerging market countries. Big and domestic companies need the sophisticated investors’ funding and expertise to expand their international sales. This will increase the GDP and the economy.
3) Decreasing the interest rates on lending – By decreasing the interest rates, there will be not bea restriction in the lending. So, businesses take business loan to increase their businesses, and to expand their business. Also, people will be wary of the risks that are associated with interest rates, so they take a calculated step while taking a loan from the bank. This will help them to produce more and sell more.
4) Increasing the income tax slabs – This will ensure that people who are worthy of paying taxes should pay a little more towards the development of the country.
5) Decreasing inflation in the economy – Decreasing the cost of the basic goods that are required to live, like food, clothes, shelter, education and medical. These are the important things that need to be reduced to decrease the inflation in the economy. This will ensure that poor gets two square meals a day, children get good education, and people have an affordable medical
6) Increasing the taxes on capital goods – Capital goods are the goods which are used in manufacturing the actual goods. By increasing the taxes on those goods, it will again help to increase the economic position.
All these will ensure economy will be stable, with reduced unemployment, good import and export figures, and profitable businesses.
