5 The Internal Factors That Have Influenced the Growth of Suriname Economy

5
The Internal Factors That Have Influenced the Growth of Suriname Economy
The 1991 Suriname coup was one of the significant economic turnarounds that affected the country’s economy. Besides the successive coup, the country’s economy was highly affected by the fall of the international bauxite market in the 1980s. Many factors influence the growth and decline of the country’s economy. The Gross Domestic Product (GDP) is one of the essential measures of economic growth or decline. Statistical data are significant determinants of Suriname’s GDP and economic growth indicators. Based on the research, the bauxite market is the essential determinant of the economic growth of Suriname; its market decline did not negatively affect the growth of the Suriname economy. Significantly, the country’s leadership has been a major determinant of economic growth. I analyse various internal factors that influence the rise and fall of Suriname’s economy from its independence to 2019, such as political stability, corruption and many others.
Understanding various internal factors that influence a country’s economy is important to both the leaders and policymakers—besides, the internal factors as essential to local and international investors. The current literature shows that the investors pay particular attention to internal factors such as political stability, the population, the leadership, and other factors before establishing an investment. Significantly, the internal factors attract or repel investors. Therefore, analysing major internal factors that influenced the growth of Suriname will serve not only the Surinamese but also other countries. The statistical data analysed can also help forecast the future of a country’s economy. For instance, based on the statistical data on the annual GDP mean, the country’s economy dropped significantly. However, after the 1991 core, the mean value of GDP indicated a growth which depicts economic growth.
Most research has addressed the general factors that affect the economy. There is no detailed research that has centred on internal factors. Therefore, analysing the internal factors will substantially contribute to and supplement various studies on the economic growth of Suriname and other countries. For instance, the fluctuation of 1980 and the fall of the bauxite market. The bauxite market is an external factor. Another research has emphasised the political aspects and how they have influenced the decline of Suriname’s growth. The focus on the political factor fails to acknowledge other internal factors such as culture, technology and legal environments.
Term Paper II: Sources of Context, Logic, & Data
Effects of political instability on economic performance
In this work, the study examines the connection between economic growth and political instability. The study focuses on several issues that social scientists disagree on, such as causal direction and how political instability is quantified. In terms of causation, the study investigates the concept that political instability causes economic growth to slow down, as well as the notion that political instability and economic growth are linked.
In research undertaken by scholars (Dalyop, G. T. 2019), the underlying concept that supports how systems of political and economic connections relate to one another was examined. The study focuses on three types of political leadership: anarchical, tyranny, and democratic. Under anarchical, the nation is ruled by “roving bandits” who have no regard for the general good. Citizens have no incentive to create since they rely on their army to increase their wealth. As a result, total revenue in anarchy is extremely low. “Stationary bandits” come in and establish an autocrat with a thievery monopoly. Because these rulers have a vested interest in their peoples’ productivity, they prefer to tax modestly and provide certain public goods. As a result, people will be more driven to create at a greater level (Tang, & Tan, 2015). Autocrats, on the other hand, continue to seek to expand their own wealth by taking a significant amount of rent from the population.
Two other two theories as to why political Instability slows the growth of an economy are presented by Cumming, & Wu, (2016). In the first piece, the theme of uncertainty is used. The high likelihood of government change, which may be viewed as political instability, usually results in ambiguity about previous initiatives. In response, investors will leave the economy, and potential investors will look for a more secure investment environment. According to the second theory, insecurity reduces the supply of both labour and capital. As a result, investing is discouraged because of the greater chance of incurring losses. Instability political instability also promotes capital flight and brain drain and impeding the creation of asset ownership, which are required to achieve productivity improvements.
The direction of causality is a fundamental challenge in this study; does a politically stable atmosphere cultivate the growth of that economy, or is it that growth of the economy brings about stability politically? This study is empirically broken into 2 different causations. The first contends that Instability in politics leads to a slower growing economy. The second school of thought contends that the economy’s performance influences stability politically, whereas the third contends that causality is bidirectional. Furthermore, empirical research is split regarding how to characterize and analyze political Instability to adopt multiple approaches to the cause. According to (Nawaz, 2015), political instability produces slower economic progress. The dependent economic variable in both publications was GDP, while the measure of political Instability was changed in power. However, the authors differ in measuring transitions in power (d’Agostino, & Pieroni, 2016). Other scholars provide numerical ratings to every nation by aggregating chances of a transition in power across numerous years. Researchers found that economies expand more slowly during times and in countries where power changes are frequent, using a variable set to 0 if there are more than seven government transfers and 1 if there aren’t.
According to Sirowy, & Inkeles, (2017), They both used GDP as a predictor economic variable and established their measures of political instability. They propose two indices for gauging political instability, one for moderate and the other for extreme unpredictability, rather than relying on government actions.
As assessed by a lack of free speech, political Instability produces reduced economic growth, as discussed above. However, the study was unable to conclude that Instability in terms of politics and the growth of the economy is remote and mutually related. The study also examined how economies react to Instability in terms of indifference in politics. Political Instability is a multifaceted term that is difficult to describe with a single metric. In some locations, government transitions may not be regarded as instability signals, while coups d’etats are practically non-existent in others.
Term Paper III: Logic & Theory:
Impact of Political Instability on a Country’s Economic Growth. The progress and development of a country are greatly dependent on its economy. Among the factors that can stagnate economic growth is political Instability. Political Instability and instability are likely to cause reduced economic growth in many regions. Córdova (2001) highlights Suriname as an example of a nation whose economy failed from 1980 to 1985. Prior to this period of economic failure, Suriname had five years since it gained full control of democracy, since it attained independence from the Dutch in 1955.
My expectations are supported by the fact that when there is political Instability in a country, there is reduction in people’s total output, thus negatively impacting the economy (Nawaz, 2015). The reasoning supports most of the claims the author has made. For example, they state that countries with both a high propensity for government turnovers and economic instability, are likely to have investors leave and experience brain drain since people feel that the economy is unstable. People need secure investment environments for their businesses to thrive, and Investors are not usually available in such environments. The types of leaders a country have also affected its economy. For example, anarchical nations have little output while democratic ones have high output. On the other hand, countries with autocratic leaders experience little growth since those in power typically aim to increase their fortune at the taxpayer’s expense (Nawaz, 2015).
The study also does not have a specific definition for what political Instability means. Is it just a change of leadership? Or not at all? Do these changes have to be violent, and are changes that happen often but peacefully considered Instability? According to the World Bank, political stability may hurt a country’s economic growth in some cases, especially if it was gained through oppression or having a person in power that cannot be voted out (Hussain, 2014). A country can also be politically stable but have extremely high levels of corruption that limit its growth and development.
Additionally, according to Hussain, (2014) democracies which have been touted as proponents of economic growth, may also be unstable. At some point, democracy can demoralize the public, thus impairing its impact (Hussain, 2014). Some democracies may also be stagnant and resistant to change, limiting the country’s level of economic change. Countries do not only experience brain drain because of political instability.
In conclusion, it is apparent that political instability and Instability hurt a country’s economic growth. However, this is not an indisputable fact, and other determinants need to be open to the possibility that more factors are limiting economic growth. Among other factors that can cause economic failure are strict government policies and mandates, lack of education in the populace, or corruption
Paper 4:
The Role of the Data Obtained.
During the pre-coup and post-coup eras, Suriname’s economy had a declining trend and a more positive one, however it afterwards endured a catastrophic slide until 2020..
Suriname’s economic data has both strengths and disadvantages when it was gathered for the purpose of forecasting fluctuations. The data was collected over a time span that allows for sound inferences to be drawn. Shocks in domestic prices, currency exchange rates, and the availability of money all have an impact on a country’s economic activity (Gavin, 2019).
Term paper 5 The Economic Fluctuations in Suriname Since 1975.
The three of the four downturns since 1975 that have occurred between 1981 and 1982, 1990 to 1991, and 2007 to 2009. The substantial decline in technology-driven increased productivity has been a major factor in the previous three recessions. There was a 2.7 percent annual rate of productivity growth between 1995 and 2004, and a 1.3 percent rate between 2005 and 2014.
There have been both global and local fluctuations in Suriname’s economy. During the period from 1975 until the early 1980s, the economy flourished in the United States before it began to slump. According to data analysis and statistics on the country’s economic realities, the situation has worsened in recent months. The results also show that a nation’s economy cannot be favourably impacted if there have been several coups and constant changes in its leadership in the post-coup period.
GDP growth (annual %) – Suriname
Source: The World Bank Data
The Surinamese economy has thrived in spite of the country’s political and economic instability. There were positive effects on growth and inflation management, while the financial system was able to handle a rise in public debt. If the government can restore ties with its creditors, revise the constitution, and establish a stable investment environment via better governance and transparency, things will look up.
Term paper 6 Politics as Major Turmoil in Suriname’s Economy
As the government’s financial capacity diminishes as a result of political upheaval, the economy suffers. In these times, the economy starts to descend into a spiral. Military rule ousted the legitimately elected parliament in 1980, resulting in a decline in economic activity. The financial crisis forced the government to reduce its overseas investments and balance of payments.
Political turmoil has been blamed heavily for Suriname’s economic woes and skyrocketing inflation rates. The government suggested to develop a safe investment environment for investors in order to ensure normalcy in the country’s economy. Capitalists and investors should be treated fairly by democratic governments, which should serve as primary proponents of economic progress in the country.