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Imports and Exports of a country.

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Introduction

Imports and Exports of a country Countries (developing and industrialized or developed countries) all over the world are engaged in commerce (import and export) that generates revenues. However, global market fluctuations in good and services seasonally may cause depressions in growth and productivity resulting in lower revenues. These problems appear to be greater in developing countries whose population further diminishes increases in revenues. Unrestrained spending or misguided fiscal policies along with slow growth and productivity in the government and private sectors, trade imbalances, excessive national debt and\ combinations of these factors are responsible for poor economic growth or disaster and fiscal chaos. This discussion is focused on measures taken by an industrialized nation and a developing country and how these decisions affect the exchange rate of their respective countries. Here are two examples. The United States of America is one of the most industrialized and developed nations in the Western hemisphere. With a population of over 300 millions inhabitants, this country generates billions of dollars in revenues through trade, manufactures and other businesses in and out of the country. ...read more.

Middle

Homeowners were attracted to refinance because of the low interest rates. Homeowners, the banking industries, financial institutions and all associated businesses experienced increases in growth and productivity. The reduced interest rate also helped to sustain the economy by keeping people employed. In related industries, it meant home improvement materials, increased manufacturing and distribution, sales to countries that need such materials for housing. Reduced interest rates also means that the corporate sector can also borrow money at low rates for retooling, improving machinery, building new factories, and manufacturing merchandise, distributing and sales. The decreased interest rate in the US means strong borrowing to do business both at home and oversea. Abroad, the improving US economy and strong revenue collection means strong dollar or comparable exchange rates relative to the host countries. It means that the dollar can buy more, trade deficit can be reduced and jobs can be maintained at home. Overall, a reduced interest rate during a period of reduced productivity or no growth, unemployment and fiscal irresponsibility in the government is a panacea for stimulating an ailing economy. ...read more.

Conclusion

Externally, a weaken economy creates trade deficits and diminish revenue collection as the exchange rates of the currency is devaluated. Given this bleak economic outlook, the government has embarked on bold economic recovery initiatives that will restore fiscal integrity and promote strong exchange rates through the following objectives. To achieve these objectives, the following policies have been adopted: strengthening revenue collection through a speedy rebuilding of the integrity and capacity of the Kenyan Revenue Authority and proper tax system; reducing wage bill as part of total expenditure reformation thus resetting wage standards for public and civil servants and finally restructuring the financial sector to increase efficiency and decrease government liabilities. Fiscal program is aimed at restoring fiscal integrity and debt sustainability, providing resources for poverty reduction spending and positioning the economy on a sustaining, poverty-reducing growth path. Tax reform will improve neutrality, simplicity and revenue-yielding capacity aimed at broadening the tax base. The PRSP will be expanded to tackle poverty by providing opportunities for the poor through reformation in agricultural sector and encouraging medium growth and small-scale enterprises among others. Accepting this loan will enable the government to put strong economic measures in place to combat policy deficiencies that will promote strong exchange rates. ...read more.

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