A RETROGRESSIVE ECONOMIC TENDENCY

Whether it's microeconomics or macroeconomics, prudence at its least is expected in leadership. It’s simply unreasonable to spend more than what you earn unless something overly unavoidable occurs midstream in your planning prompting extra expenditure. Similarly, a country that oversees its imports skyrocketing while exports are at the time dwindling is a tragedy. This should prompt soul searching and should never be taken lightly.

It’s disenchanting when leadership, in whichever level presides over failed economy through lazy and blurred approach or self-seeking unorthodox policies. For underdeveloped countries leadership mostly cares about regime sustenance other than commonsensical economic duty discharge to the masses.

 The basic concern is on consumable products and services provided through imports. These dependencies retrogress as highlighted by Tejvan Pettinger on The effect of a current account surplus as captured on economic help platform. He illustrated this as an economy that exports a greater value of goods and services than it is importing. A country with a current account surplus will have a deficit on the financial/capital account. I.e. a country with a current account surplus will have surplus foreign exchange it can use to invest in other countries.

Simply put, he says that there is no hard and fast rule about what will happen if a country has a current account surplus. In theory, you could expect a current account surplus to boost employment because it is indicative of higher domestic demand.

Tejvan notes that High exports lead to increased employment in the export sector. Lower import spending may mean people are spending more on domestic goods rather than buying foreign goods. Greater demand for domestic goods helps domestic employment. No wonder unemployment in such countries is always high.

With some of these simple economic lessons, you will learn that a country delighting on importations or is a perennial importer and exports insignificant raw products only as a foreign exchange earner can be equated to the nation state that is selling its birthright. It’s as bad as that and especially with the massive skilled and unskilled labor force at its disposal. There should be policies to curb insatiable appetite for imports from the Republic and the masses, which is dangerously in excess as compared to imports. Mostly this is done without considering local manufacturers which can be termed as an economic impotence at its best. These are Lessons for underdeveloped countries and leadership to learn for immediate action before it’s too late.

Interesting enough this is either encouraged, perpetrated or the leadership is flatly an aware due to ignorance. The masses are to blame also due to short-sightedness when making discussions on who is to be the chief officer of the state. This is quite a serious matter that should not be decided on quick gains but wholesale advantage rather than individuals selfishness.

Mostly, it’s about all ranks of leadership in the developing countries to individually or collectively come up with policies that would reverse and encourage entrepreneurship, Intrapreneurship, patriotism within its citizenry by choosing local against imports and expand its product base in satisfying the nation and by extension produce some surplus for export. Detrimental factors like high cost of production which directly affects the pricing of the local products can be explicitly addressed through government think tanks and a genuine desire to do so. Bottleneck from the government in processes and procedures in commerce and industry encouraged by primitive systems can be removed by a willing visionary government. Making informed decision is key

In his Senate testimony to the Senate Finance Committee on U.S. Trade Deficits Causes, Consequences, and Policy Implications in September 1998, Robert E. Scott, EPI economist eloquently made an expose on this prime economic issue. 

He informed the Senate Finance Committee on the importance of addressing import and export imbalance. That they should make no mistake about it, the trade deficit is a problem. It is destroying jobs, depressing wages, hurting our competitiveness and contributing to the stagnation of real incomes that has plagued their economy for the past two decades. The trade deficit results from the use of the U.S. as a “market of last resort” for exports from around the world, and from several macroeconomic problems. Both kinds of problems can and should be addressed with new trade and international policies.

This is the kind of approach developing countries should take by involving technocrats to inform political class on specific economic saboteurs and blatant acts that should be stopped through the law and policies.  Worse of when this deficit is coupled with debts.

The king should be told when he is Stark-naked and he should be ready to dress up accordingly otherwise he will be ashamed and the nation will be chagrinned. In this case, developing countries and underdeveloped countries should have leadership that listens and is ready to change by ensuring that industrialization is achieved which by extension curbs imports, by and large, it attains economic solidity.

Export and import imbalance gives the impression of far-reaching consequences on toddler countries that refuse to understand how to walk.  Simple!