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Vivek Joshi Department of Business Manipal University, Dubai
. These principles if being followed will help a government in distributing it productive resources to most profitable ventures or projects thereby increasing the national income and giving prosperity to the nation.Macro Economic Principles • Principles that help an economy in efficient allocation of resources: There are several macro economic principles which help any economy to provide equitable growth to its participants and general public.
Principles • National Income/per capita income and its distribution • Investment and consumption (time preferences and utility preferences) • Aggregate demand and supply + flexibility (Elasticity) • Balance of Payment (Trade deficit): Exports – Imports = Balance of trade .
Principles • • • • Wage Policy Creation of welfare state Exchange rate stability Interest rates and developmental projects • Inflation • Productivity of factors of production • Business Cycle stages (boomrecession.recovery) .depression.
Principles • Industrial growth rate • Gross domestic product & its growth rate • Ex-im measures • Fiscal (tax) measures • Qualitative & Quantitative control on money supply • Efficient pricing mechanism .
Principles • • • • Returns to education Technology as investment Cooperation and coordination Competition – level playing field .
Perhaps the most striking facts in economics concern the large cross-country differences in output and income per person. People in the US are. fifteen times richer than people in India. 3 times richer than those in Mexico. on average. and about fifteen percent richer than the Japanese. .
international profits Chance to earn foreign exchange Competition (Demand & Supply).Prices will fall Better utilization of resources Risk Spread More consumers Increase in national income .Trade makes every one better off • • • • • • • • International trading opportunities National profits vs.
Markets organize economic activity • Profit is the biggest determinant • Better quality at low prices (international product standards) • Customization of products • Efficiency and effectiveness is rewarded • More choice to customer • Demand-Supply-price (equilibrium) • Level playing field (equal opportunity) .
) • Artificial price control (regulated prices) • Control on inflation • Control on competition • Control on resources • Control by visa • Equitable distribution (locals vs. expats) . emirates etc.Government can improve market outcomes • Monopoly (etisalat.
Government can improve market outcomes • • • • Development of infrastructure Introduction of free ports and free zones Income tax is missing Corporate taxation & capital gain tax are almost non-existent • No regulations on quality (infested water in Sharjah. pythons in Hatta pipeline & so on) • Easy access to loans (does everybody has it?) • Employment efforts & improve povertyalleviation programme .
Liberalization & deregulation in UAE • Luke warm liberalization • IMF norms and discussions • Existence of monopolies (telecommunication & civil aviation) • Foreign capital in real estate • Attracting Europeans and US citizens • UAE is investing in foreign countries • Introduction of free trade zones • Introduction of ownership and free hold property .
Liberalization & deregulation in UAE • Development and competition in Banking and financial services sector • Progress in food processing industry • Local sponsorship still continuing • Licensing policy from economic department continues though liberalized • Change in visa norms & citizenship .