The economy as we know it is influenced by a lot of stuff like government policies, politics, human sentiments, among others. The government makes policies that impacts the economic growth. Public policies have a wide range including education, infrastructure, business, science and technology, among others.
When you hear public policy, in economic terms it means, areas that are being impacted by government actions including and not limited to infrastructure, education, law, science, technology, among others. All these, have effects on the growth of the economy.
Just as we have defined public policy as actions of the government, what is economic growth? These 2 go together and have effects on each other. Economic growth simply means an increase in work output. Output of work is measured in GDP which from our school days we know stands for Gross Domestic Product. It is the total value of all the goods and service produced within a year with those sold to customer and clients.
The prices of goods do not tend to reduce. They only go up and the reasons we are given for their increment even if rectified still does not see a price reduction. This is called inflation. Inflation and population are two factors that have effects on economic growth. When there is inflation, it would affect GDP and so to nuke this effect or reduce it, GDP is adjusted by using what is termed in economics as "real GDP". The result of this is to keep the prices of the goods reduce or at least at a similar price to the just ended year.
Public policy makers, the government and stakeholders alternatively use what is called "fine refinement". This one deals with the individuals and it is hear we start to hear of phrases like per capita. When you divide the real GDP by the population size, you obtain the per capita or the per capita real GDP. These per capita and economic growth then become affected by policies made by the government. This is due to the fact that per capita affects the amount of goods and services provided by the nation.
Government public policies aim to help in economic growth. They aim to do this by introducing policies which promote fair competition, business or working conditions, among others.
The government as we know and have seen always have a different motive and sometimes do not use the right policies. They talk a big game in their campaign messages but when they are appointed and asked to work, they cannot do same in the real world. A perfect example is the current government of Ghana who repeatedly held online classes to educate the people of Ghana on economics and how to improve it when they were not in power.
They have been finally elected and have the power to effect change now but they haven’t been able to do anything. Few months back, the price of oil was skyrocketing everyday and the cedi was depreciating. All they do is keep blaming the past government and coming up with ridiculous policies.
The relationship between public policies and economic growth can be good or bad. Some of the policies affect it positively while others have a negative effect. Due to this you cannot for certain say government policies are a good thing or a bad thing. We can only debate on them as they are initiated.
Ghana imposed taxes on mobile money banking which effectively reduced the use of banks some months back as a way to earn more money for the nation. That was met with public displeasure and a lot of debates but they still went ahead and passed the law. What was feared happened and the profits these mobile money vendors used to make reduced because people were no longer patronizing them as much. Even I started to keep more cash on me instead of electronic cash.
They realized this and reviewed the law to taxany transfer you make instead of the former 100 Ghana cedes threshold. Of course, this has been debated too but one thing about this government is that they get to do what they want. Because they’ve left a lot of us with no choice, they are getting our money because after all we still have to use mobile money.
Although, it is a debate as to whether the policies are positive or negative, it stands to reason that if the right channels are used and the most efficient policies are targeted, the policies will have great positive economic growth.
It is no secret or surprise that the government public policies have impact on economic growth. The human capital, technology and physical capital is manipulated for economic growth.
The level of education and the policies brought about to educate the youth is a big factor. It is said that the human capital is the greatest resource a nation can have but some nations have lot of their human capital emigrating. Economic growth is one of them. When policies like increased funding for education is put in place, there is rise in the level of education empowering the labor force which results into production of quality work force and not just
quantity.
If infrastructure of a nation is improved, it creates room for positive economic growth. If roads for example are put in place, transportation of goods and services become a lot easier and stress free. Goods reach their target market on time and perishable goods do not perish. They are then sold and everyone is happy.
Public policies on technology should be implemented. These should not be done for only governmental projects but policies for the private sector should be done too. They should be granted grants and contracts which will create fair competition in the market. No one should think they own a contract but instead, both private and the public side should be made to battle for it. It keeps everyone on their toes. When there is positive competition, the best people are awarded contracts and there is positive economic growth.
Public policies are raised or introduced to promote the supply and maintain our level of natural resources. Such public policies are known as resource conservation policies. In resource conservation policies, mining, fishing and pollution are regulated by public policies. These are all done to ensure these resources are not abused and are sustainable for the future thereby promoting economic growth.
The policies we see imposed on our taxes, they fall under fiscal public policies. Fiscal policies also controls government spending on education, health, science, infrastructure and technology. Money spent by government on projects that fall under these and the regulation laws tend to promote economic growth because these monies are put to good use. When the government needs to cut taxes, supply side fiscal policies are used and when there is a need for the government to increase expenditure, expansionary fiscal policies are introduced.
An example, when the there was a need to increase employment in the United States around 1930 to 1960s, the government of US imposed expansionary fiscal policies to increase spending and create more employment to increase economic growth. Governments realized that using expansionary policies wouldn't work long term and so they shifted to supply fiscal policies where instead, they will cut taxes which would encourage business to invest more of their money to produce goods of high quality and employ more. This was introduced in the 1980s.Donald Trump used this during his time as president of U.S.
There are a lot of other public policies which increase economic growth. Some have effects immediately, others not so much.
Introduction of policies like infrastructure which involves the building of schools, ports, hospitals, interchanges and highways will help economic growth because they will serve the nation long term. The federal reserve also has a great use case of public policies because it deals with the monetary policies. An example when the Federal Reserve made use of public policies is in 2022 when they increased interest rates on money borrowed to help fight inflation.
In conclusion, government public policies like fiscal policies, monetary policies and a whole lot of other policies have effect on infrastructure, the private business side, schools and education, which in turn have effect on economic growth. Some of these policies we like, and others we do not like.
Thank you.