From time to time, countries all over the world find themselves in tremendous amounts of financial and economic difficulties and are forced to take tough corrective measures to restore macroeconomic stability.
These difficulties often manifest themselves in several forms; for example, fiscal imbalances, huge debt problems, unproductive current and capital expenditures, underperformance of the main productive sectors of the economy, weak financial institutions, lack of international competitiveness of major exports, structural unemployment, and inflexibility in the structure of economies, among others.
Logically, a natural response from most governments is to figure out what sort of economic remedies are most likely to work to resolve those problems. In many cases, the remedies put forward are often a reflection of the political and economic ideology of those in authority. Consequently, some in the public domain embrace the efforts of the government and offer additional solutions to bring about the desired changes in the country’s economic fortunes. In other cases, strong opposition is mounted against the ideas put forward by the government, with or without creditable alternatives. At the end, the effectiveness of the measures actually implemented can only be determined over time.
Against that backdrop, the United States (US) presents a rather interesting case in relation to how a country can recover from a recession and troubling financial circumstances in the midst of very controversial economic remedies. It is no secret that in order to turn the economy around, the Obama Administration engaged in a massive stimulus programme that saw billions of dollars spent on bailouts of known industries as well as on improving the country’s infrastructure, among other things. What is interesting is that the Republicans, on the other hand, were strongly advocating tax cuts as the preferred option to get the economy back on a growth and development path so that those willing and able to work can once again do so in the free market place.
Clearly, after five years of economic manoeuvrings by the Obama Administration, the rate of unemployment in the US has fallen from a high of 10 per cent in October 2009 to 5.9 per cent at the end of September 2014. Further, the economy is also showing signs of recovery, with growth rate of 4.6 per cent in the second quarter of 2014.
To this author, these statistical data suggest that economic recovery is not only possible if a government is bold and creative in its approach to the management of the economy but also that it can be achieved within a relatively short time period once those in authority hold onto their conviction that the policies they have implemented can and will work. There can be no denying that President Obama had very strong faith in his approach to getting the local economy back on track and today the results of his efforts are apparent to the entire world.
The message, therefore, to our governments in the Caribbean cannot be any clearer: If you want to bring about economic recovery you have to not only design and implement appropriate policies but also be firm in your conviction that those policies will work. If you don’t stay the course, it is highly unlikely that the desired outcomes will materialise any time soon. Have you gotten the message?