In economics we learn that durring a slump in a countrys economy,the government will usually resort to certain avalaible options in order to stimulate economic activity and eventual growth of that economy.The government may decide to take the path of expansionary fiscal policy to stimulate economic activity or take up the path of contractionary fiscal policy to control inflation and other economic factors...to some extent and depending on how bad or good an economy is at that particular time,these aproaches do work.In zambia today the finance minister has told us that the government has taken up the path of expansionary fiscal policy to stimulate growth of our dwindling economy-expansionary fiscal policy is were a government enganges intself into massive spending through construction such as building roads,bridges e.t.c-and for sure our zambian government has taken up this path as can be evidenced in the road constructions taking place such as the link zambia 8000km.The economic essense behind such an aproach is to offload money into an economy through payments to contractors who later employ hundreds of citizens to work in various stages of the constraction process-there is an injection of monies in an economy that stirs up some economic activity of some sort.Unfortunately and with the current state of affairs,zambias economy cannot be stimulated fully with such an approach because our country is not production oriented...we literally produce nothing as a nation.When you look at the construction sector for instance,our only pride of a locally produced product is cement!the rest is imported-so money can be offloaded into the economy but is immediatly syphoned out through major imports leaving zambia with only peanuts to pay the already pathetic wages of the briclklayers and other labourers,even worse is that it is foreign contractors who on many occassions get the contracts to build.In a nutshell,the use of expansionary fiscal policy to stimulate economic growth and activity for our zambia today is an exercise in futility-we should begin to put up policies and create an environment that will start to attract local production of goods and services.
Posted on: Mon, 31 Mar 2014 10:23:04 +0000
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