Answer to Question #140558 in Macroeconomics for Hani

Question

Impacts of covid-19 is the vulnerability of economies dependent on foreign aid, foreign investment and trade and hence the importance of domestic investment. Discuss the importance of domestic investment for self-sufficiency, economic expansion and employment. You can use any Pacific Island country as a case study. Discuss how the government can promote domestic investment

Answer 1

The impact of COVID-19 has had a very negative impact on the world's economies. Due to the closure of borders, the economies of countries that are export-oriented have fallen. New Zealand is a developed country with a market economy based on agriculture, manufacturing, food processing, and tourism. The country's economy is export-oriented. The main trading partners are Australia, the United States, Japan, and China. In these difficult conditions, state support for the economy is necessary. The share of the public sector in the New Zealand economy is small. To prevent a decline in economic growth and an increase in unemployment the New Zealand government needs to take the following measures:

• state support for enterprises and organizations: subsidies, cheap loans, debt cancellation, reduction of tax rates, deferrals for all types of tax payments and loans
• -state support for the population: subsidies, grants, support for the unemployed and the poor with benefits;
• reduction of the discount rate;
• increasing the state's share in the country's economy (state corporations, the state's share in the capital of private companies);
• merging public and private capital to open new businesses-co-financing;
• reduction of public expenditures on the state administration apparatus