Private Investments in Human Capital Growth in Asian Countries

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This essay will be explaining that why macroeconomics stability is one of the key success factor that contributes to the tremendous economic growth in the last forty years of development in asian countries like singapore, hong kong and south korea. The objective of a government economic policy is to achieve stability. A volatile business cycle is not ideal to the economy as the rapid growth of an economy with high demand and inflation will lead to a recession as the long term inflationary growth will not be sustainable. Macroeconomics stability ensures that the country minimizes its exposure to external shock and volatility against the global market which will in the end leading to sustainable economic growth. Some of the safety…show more content…
The overall national economic output will increase when the employment rate is high. When employment rate is high, the wages of the worker increases then leads to a rise in price for consumer good which causes inflation to increases hence the employment rate has an inverse relationship to inflation. Singapore has been trying to balance between the inflation and unemployment rate because when there is a high volatile fluctuation between the employment rate and inflation, the business cycle span reduces making the economy vulnerable to recession most of the time. Low and stable inflation is a key factor in long term sustainable growth which will lead to a steady, healthy and predictable economy hence attracting foreign investors into singapore to set up business to boost the economy by allowing them to plan for long term strategy. One of the key factor to manage the inflation rate effectively is through monetary policy. Currency stability allow investors to develop long term strategy and minimize exchange rate risk. As Monetary Authority of Singapore(2014) states that adopting the management of exchange rate as it is ideal in terms of the small economy of singapore where it is easier to manage through direct intervention within the foreign market. It is seen as an effective mitigation to curb the high inflation rate for singapore economy However, having just human capital is not sufficient to sustain
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