“There might be no country if there is no Economy”, quote seems to be true with respect to what we are actually witnessing in today’s world. The pandemic has made everyone realize the importance of earning, spending, and saving but as they say, what’s done is done and with everything that has happened so far, the world should be ready for the consequences. We are already facing a global recession and as per the calculations the year 2020 was the most devastating year for every country’s economy and I think the worst is yet to come.
It is not a hidden fact anymore that the entire world is going through a tough time and things might get tougher in terms of the economy as there are fewer opportunities for work and more mouths to be fed. The COVID-19 situation introduced a “lethal paralysis” to the economic growth and has affected almost every other country including some of the largest countries such as the USA, China, India, UK, Australia, etc. Recently, China’s President Xi Jinping has proposed a new economic model for their country which aims at a more inward shift in the economy. India is also not behind as the prime minister has announced a whopping 20 lakh crore rupees package to boost up the economy. This is just the beginning as the world is showing signs that the upcoming year is going to be full of some drastic changes in the world economy which is not only important but is the need of the hour.
What is Economic Reform? Why Is it Important in 2021?
The Year 2021 is going to be the year of economic reforms but before we jump into the reasons, you must know what an economic reform is. An economic reform, also known as microeconomic reform, is the step that a government takes to amend the existing norms of the economy to open up some opportunities in the market. It is the deregulation of unnecessary distortions that might be slowing down the overall growth of the economy. Usually, reforms involve either reducing the distortions or implementing changes in the existing important economic policies such as tax policies and competition policies.
After what the world has been through the entire year, all of us are left broken in all ways and 2021 is going to be a crucial year in terms of handling the damage and recovering from it. Some of the important factors that make the upcoming year important for economic reforms are as follows-
- The World Is NOT the Same Any More
Let’s face the fact that almost all the countries were struggling for the past 5 years or so and none of us were ready to face a giant pandemic. Lockdowns, businesses shutting down, recession, unemployment, lack of opportunities, we have seen almost every single thing in the past 12 months and all we can figure out from that is the world is not going to be the same anymore. Prices may rise, wages might take a hit and survival might become even tougher for the common man. The only thing that can ease these conditions up is a firm amendment in economy that introduces some great opportunities and provides support to the countrymen. All the government officials are well aware of the fact & that is why almost every country is looking for a ray of hope and, only responsible economic reforms can bring the change. The world surely isn’t the same and that is why it is more than necessary to bring some changes to the existing norms.
- Economic Reforms Have Always Been the SAVIOURS
From the Past 40 years or so, economic reforms have taken up the charge to introduce the world economy with growth and efficiency. Be it the 2008 global recession or economic declination in different countries at different intervals. The only thing that could help in getting back on the feet was economic reforms. These reforms are not just a type of government policy, they are beyond that. The reforms are designed by a special group of financial scholars who know the economic trends in and out. Majorly the reforms are made with a few key factors in mind such as – Will they help a common man? How will they help in creating new opportunities? is it going to harm the government in any way? Etc. Etc.
The thing here is that economic reforms have always been helpful for the country’s growth and from where I am seeing things, the entire world needs a push start to get back to where we were a year ago.
- The Existing Policies are Becoming a “CHALLENGE”
The World Bank Group President David Malpas, has stated that “While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges—in public health, debt management, budget policies, central banking, and structural reforms—as they try to ensure that this still-fragile global recovery gains traction and sets a foundation for robust growth,” in the 2021 January edition of the world bank’s Global Economic Prospects and I couldn’t agree more.
The entire world has gone through a catastrophic time and not everyone will be able to pay the debt, the heavy taxes, and high prices for treatment. This is a tough time for not only the people but also the government as they also need money to survive and if the taxes stop coming in, the country might never recover.
Economic reforms are not always good though as history has witnessed that some of the policies were nothing less than a disaster for some countries but it is a gamble that you have to play. To ensure that the flow of the world is restored to sanity, you might witness some of the biggest reforms in the global economy this year. More and more countries are working to adapt the single trade model which refers to boosting the use of products that are produced in the same country as it will reduce the burden of importing. Almost every country is willing to bring reforms that can help in making its an economy more and more efficient.
The year 2020 was the year of Economic Uncertainty and where there is uncertainty, reforms become a necessity.
Author’s bio – Darwin Brown is the professor of economics at a reputed University in Australia and provides assignment help, dissertation help to students. He is also a member of Professors’ society of Economics and likes to stay updated with the on-goings of the World.