The paper "Economic Stability in Indonesia and Singapore" is a perfect example of macro and microeconomics case study. The economic performance of a country is pegged on many factors that affect its macroeconomic, and to a lesser extent, microeconomic conditions. Many a country have found themselves on the right footing on matters economy just by ensuring that the factors that affect both the aforementioned conditions are controlled well enough to ensure that the long term outlook is predictable. This may be done through stochastic processes or through other means that may render a stable environment for business.
Factors that are likely to influence the long-term wellbeing of an economy range from inflation and political stability to output in terms of productivity. The aforementioned factors come together to enhance the economic stability of a country. In lieu of this, we can safely define the economic stability of a country as a set of financial factors that work together as a system to enhance a safe financial standing. Further, factors that favour a good financial standing include low inflation and fluctuation rates that ensure that trade is not greatly interfered with to the point of leading to losses and high unemployment rates.
Other closely related factors include low unemployment rates, influenced by policies that are created by relevant bodies. In most cases, the central bank of a country is an example of a body responsible for such. A country that is economically stable is one with low inflation rates, coupled with low fluctuation rates in their productivity. Productivity, in more ways than one, needs to be kept either constant or higher than it was before. Any reduction in rates of production is a clear indication that the factors contributing to instability are at play and therefore, a country is not economically stable.
Rates of inflation are needed at very low levels if not zero. This is a way of ensuring that cost of production is kept at a healthy low for higher profits. A country with high rates of inflation experiences a fluctuation of costs of production as the much needed foreign exchange becomes hard to come by due to lower investor activity with high inflation costs. Economic stability is a very influential factor that affects international business.
First off, for any country to attract any meaningful investment from foreign companies, its economy has to mirror that of a healthy one that any investor would not have any qualms when wanting to invest in it. Geiersbach (2010) says that the political environment is a key factor considered by foreign investors when they would like to venture into business in any country. Political stability creates favourable conditions for business as war does not provide a healthy environment for business.
In addition to this, political goodwill is likely to lead to the creation of policies that form the best framework for foreign direct investment. Policies created to better international trade will also likely be responsible for the lifting of various trade barriers that affect the flow of goods and services between economies in what is referred to as globalisation. The more goods are allowed to cross from one border to the other, the better the economic prospects of both countries. Advantages of globalization due to reduction or total breaking of barriers and tariffs include the availability of cheaper goods of higher quality as standards are set for this kind of cross-border trade.
Globalization also makes it easier to start a business as cheaper goods may be acquired easily in bulk. It goes without saying that more variety is offered through international trade.
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