Outline how each of the following may contribute to economic growth and development in developing countries: i. Domestic economic governance and transparency. ii. Activities of commercial...

      

Outline how each of the following may contribute to economic growth and
development in developing countries:
i. Domestic economic governance and transparency.
ii. Activities of commercial banks and non-bank financial institutions.

  

Answers


Gregory
(i) Economic governance and transparency are about being open and exposed
to constructive criticism and rating on matters pertaining to sound economic
management and performance. In perspective are the following issues:
? Allocation/distribution of national resources
? Strict adherence to established economic management fundamentals
(involves chief executives and public accounting officers such as
permanent secretaries living up to the full extent of ethical standards).
? Tax administration, use and distribution of tax revenue. On tax
administration, control systems should be established to minimize tax
evasion loopholes; equitable distribution of tax revenue with a view to
providing public and merit goods and services for the sole purpose of
improving the general welfare status of the people
? Integrity and relevance of key institutions of the central government e.g the
Central Tender Board (CTB): Contracts should be allowed to attract
competitive bidding and the mode of selection be well defined, with the
results and reasons for selection of a particular bidder published (e.g. in the
print media) for everybody to see; there should also be sufficient room for
appeals for parties (in the bidding process) dissatisfied with the tendering
procedure results.
? Due respect for merit tests – the mode of appointment to public offices or
portfolios, for instance, should pass the merit test based on competence
(itself based on the level of education, skill and professionalism). A
permanent secretary in the Ministry of Roads & Public works, for example,
should be a qualified engineer (Member of the Institution of Engineers);
such human resource status ensures that road construction and maintenance
meet the required specifications, which considerably increase the useful
life of such roads and thereby minimizing waste of pubic funds which
occurs in terms of frequent high cost of reconstruction.
(i) Commercial banks and non- financial institutions may contribute to economic
growth and development from the standpoint of their functions which include:
? Provision of safe deposits for money and other valuables
? Credit creation based on mobilization of savings
? Facilitation of the central bank’s/ government policy initiatives
? Provision of management advisory services
? Employment
? Facilitation of domestic and international trade transactions (e.g. foreign
exchange transactions)
? Insurance services to customers e.g. the Standard Chartered Bank (Kenya)
? Issue of local travelers’ cheques which guards against loss and theft for if
the cheques are lost or stolen, the lost or stolen numbers can be cancelled,
which cannot be done with cash; it’s also safe where large sums of money
is involved.
Gregorymasila1 answered the question on March 2, 2018 at 18:26


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