Macroeconomics
What macroeconomic policy prescriptions/strategies would you recommend for Belize in an effort to foster economic growth and development?
One characteristic that developing countries’ economies share is vulnerability. Belize is small in size, prone to natural disasters and environmental fragility. Belize also has an open economy with a high trade-GDP ratio, but its export base is very narrow, dominated by primary products (bananas, sugar, citrus, etc.) and natural resources. Therefore, the Belizean economy is subject to external disturbances from world goods and financial markets. As a result, the economy experience significant volatility in their economic growth. To enhance the volatility and external shocks the Belize government have introduced various macroeconomic policies to influence aggregate income, total employment (unemployment), economic growth (increase per capita GDP), wages, prices, interest rate and social development (poverty reduction). A macroeconomic policy does not only take into consideration finance but also social development. According to the World Commission on Environment and Development, sustainable development encompasses the assurance that changes “meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland (1987, p.8). In this regard, from past experience in the Belizean context, it is known that the government has implemented at least three macroeconomic policies, namely: Fiscal Policies, Monetary Policies and Supply-Side Policies.
In its purest form, Fiscal Policies refer to discretionary change in government expenditure and/or taxes in order to achieve certain economic goals. In Belize, for example, the government has been committed in spending more in education and health so that the future generation can enjoy a higher standard of living and as a result stimulate economic activity. Fiscal policies, however, tend to also have a negative effect on the
One characteristic that developing countries’ economies share is vulnerability. Belize is small in size, prone to natural disasters and environmental fragility. Belize also has an open economy with a high trade-GDP ratio, but its export base is very narrow, dominated by primary products (bananas, sugar, citrus, etc.) and natural resources. Therefore, the Belizean economy is subject to external disturbances from world goods and financial markets. As a result, the economy experience significant volatility in their economic growth. To enhance the volatility and external shocks the Belize government have introduced various macroeconomic policies to influence aggregate income, total employment (unemployment), economic growth (increase per capita GDP), wages, prices, interest rate and social development (poverty reduction). A macroeconomic policy does not only take into consideration finance but also social development. According to the World Commission on Environment and Development, sustainable development encompasses the assurance that changes “meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland (1987, p.8). In this regard, from past experience in the Belizean context, it is known that the government has implemented at least three macroeconomic policies, namely: Fiscal Policies, Monetary Policies and Supply-Side Policies.
In its purest form, Fiscal Policies refer to discretionary change in government expenditure and/or taxes in order to achieve certain economic goals. In Belize, for example, the government has been committed in spending more in education and health so that the future generation can enjoy a higher standard of living and as a result stimulate economic activity. Fiscal policies, however, tend to also have a negative effect on the
References: ASR purchasing majority shares of BSI complete: Retrieved Oct 7th, 2014, from http://edition.channel5belize.com/archives/76714Based on data from World Bank, World Development Report 1984 (New York: Oxford University Press, 1984). Belize Approved Estimates of Revenue and Expenditure for Fiscal year 2013 -2014: Retrieved Oct 7th, 2014, from http://www.cdn.gov.bz/mof.gov.bz/images/stories/docs/APPROVED%20BUDGET%202013-2014.pdfBelize Interest Rates: Retrieved Oct 7th, 2014 from http://www.tradingeconomics.com/belize/interest-rateBrundtland, G.H. (1987). Our Common Future. Oxford: Oxford University Press. Central America and the Caribbean 2014. The World Factbook: Retried Oct 7th, 2014 from https://www.cia.gov/library/publications/the-world-factbook/geos/ho.htmlCentral Bank of Belize: Annual Report 2014. Retrieved Oct 7th, 2014, from https://www.centralbank.org.bz/publications-research/economic-publications/annual-reportsChannel5belize. (2013). ASR purchase of majority shares of BSI complete. News 5 Retrieved 7 October 2014, from www.htt:/edition.channel5belize.com/archives/76714Draft Country Programme Document for Belize, 2013-2017. UNDP BLZ: retrieved Oct 7th, 2014 from http://www.bz.undp.org/content/dam/belize/docs/UNDP%20BZ%20Publications/Country%20Programme%20Document%202013%20to%202017.pdfIMF World Economic Outlook (WEO) 2014. Retrieved Oct 7th, 2014 from http://www.imf.org/external/pubs/ft/weo/2014/01/Major Economic Indicators (2001-2013 MGD Report card and Outlook Report, eight goals-one nation. UNDP in Belize: Retrieved Oct 7th, 2014, from http://www.bz.undp.org/content/belize/en/home/ourwork/humandevelopment/successstories/mdgs-scorecard-and-outlook-report--eight-goals---one-nation/Slowman J. (2006) Economics Sixth Edition. University of West England and The Economics Network. Pearson Education Statistical Institute of Belize 2014. Retried Oct 7th, 2014 from http://www.sib.org.bz/Super Bond 2012: Retrieved Oct 7th, 2014 from https://www.centralbank.org.bz/docs/rsh-1.7-information-for-creditors/memorandum-to-bondholders-29-november-2012.pdf?sfvrsn=4UNDP. (2013). The Rise of the South: Human Progress in a Diverse World. Human Development Report 2013. Retrieved 7 October 2014, from http://hdr.undp.org/sites/default/files/Country-Profiles/BLZ.pdf