Economic Policy

Economc policy advise for sustainable development-GIZ economic policy advice for sustainable development aims at boosting growth and employment. It is based on the principles of a social and ecological market economy. Our focus is the strengthening of institutions to safeguard macroeconomic stability and to provide a framework conducive for private sector development.

Trade-Development takes place within the context of globalisation. We help our partner countries to enhance their competitiveness with strategies in trade policy. On this basis, they are able to help shape international agreements and provisions for their benefit. Thus we contribute to improving entrepreneurial frameworks for potential export sectors.

Quality infrastructure and consumer protection-Many developing countries and emerging economies lack the organisational systems and structures required to efficiently safeguard the quality of commercial products. This infrastructure is of central importance to any modern economy. We advise our partner countries on developing appropriate systems for assuring the quality of their goods.

The Green Economy-Historically, economic development processes went hand in hand with substantial environmental pollution. Climate change, environmental damage and the over-exploitation of natural resources are the consequences of this development and are major challenges of our times. We support our partner countries in addressing prosperity, climate and environmental protection and social justice as overlapping issues.

Regional economic integration-Entering into regional economic communities can bring numerous advantages for the countries concerned. However, in order for this potential to translate profitably into economic growth and national development, it is essential to first create conducive conditions. We support our partners in these efforts at national and regional level.

Variables designed to apply monetary values to non-monetary aspects of the economy. These variables fall into the following general categories:

Personal Consumption - As mentioned, this is the exact same data used to calculate GDP.
Personal income is a measure of income received from wages and salaries, dividends and interest, rental income, and the like. All are measured in actual dollars and usually expressed in percentage terms. Wages and salaries are the dominant contributor to the aggregate total.

Personal outlays is made up of mostly personal consumption on goods and services, but also includes interest payments made on non-mortgage debt and transfer payments to government or social services.
Income Distribution - GPI is adjusted upward when a greater percentage of the nation's income goes to the poor because an income increase provides a tangible benefit to the poor. GPI is adjusted downward when the majority of a nation's increased income goes to the rich.
Housework, Volunteering, Higher Education - GPI factors in the value of the labor that goes into housework and volunteering. It also factors in the benefit of an increasingly educated populace.

Service of Consumer Durables and Infrastructure - Money spent on durable goods is treated as a cost, while the value the purchases provide is treated as a benefit. Long-lasting goods that provide benefits without having to be frequently repurchased are viewed positively. Goods that wear out quickly and drain consumers' wallets when they must be replaced are viewed negatively. GDP, on the other hand, views all expenditures as good news. Infrastructure spending by the government is treated in a similar manner - if spending provides a long-lasting benefit, GPI views it as a positive; if spending drains the government's coffers, GPI views it as a negative. Again, GDP views all spending as positive.

Changes in Leisure Time - Prosperity should lead to an increase in leisure time. Most modern workers would disagree with this theory. GPI views an increase in leisure as a positive and a decrease in leisure as a negative.
Defensive Expenditures - Defensive expenditures refer to medical insurance, auto insurance, healthcare bills and other expenses that are required to maintain quality of life. GPI views these as a negative. GDP views them positively.
Dependence on Foreign Assets - When a nation is forced to borrow from other nations in order to finance consumption, GPI factors in the result as a negative. If the borrowed money is used for investments and benefits the country, it is viewed as a positive.

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