Economic Recovery
Economic Recovery
Introduction
Many countries in the world have tried to recover from the economic recession experienced in the world. The countries have established economic recovery policies. The policies are aimed at helping the government recover from the current economic crisis the countries are facing. For example, the United States government established the economic recovery and reinvestment policy. The United States president decided to establish the policy to stimulate economic growth in the country. The economic recovery and reinvestment policy is not doing well. This is because the country is experiencing slow economic growth. Experts have complained about the decline in college education in the country and high rate of school drop outs and lack of credible programs. The experts think that the economic recovery and reinvestment policy is not effective. This paper analyzes the US economy. It analyzes the factors that have led to slow economic growth, challenges that US faces in global competition and reforms to overcome the challenges.
US Economy
There are various factors that have led to slow economic recovery in United States. First, the collapse of the US housing market has contributed a lot to slow economic growth. The collapse of the housing market led to financial crisis. Researchers argue that other sectors in the country have shown some improvement. For example, the manufacturing, service and financial industry have shown some improvement. The housing market has not shown any improvement and this has affected economic recovery in the country. It has led to increase in unemployment in the country and poor living standards (Great brotain:H.M treasury, 2006).
Apart from the housing market, the sovereign debt crisis in Europe has affected economic recovery in United States. The sovereign debt has affected the global financial markets and led to tightening of the credit conditions. This has in turn led to slow economic growth in the country. The United States government is not able to get enough money to boost economic recovery in the country (Great brotain:H.M treasury, 2006).
Moreover, the economic recovery still depends on policy support. The challenges facing the financial sector have affected economic growth in the country. The country has to take further action to prevent the policy from affecting economic recovery in the country. The IMF states that the financial policy has affected economic growth in the country. This has limited the government from achieving the objectives set.
The factors above have slowed down the economic growth in the country. Economists argue that the factors could have adverse effects on the US economy if the government does not look for alternative solutions. The factors might hinder economic growth completely and cause recession (Great brotain:H.M treasury, 2006).
There are various challenges that the United States is facing in global competition. First, most countries do not trust the United States and this has accepted trade with other countries. A large percentage of countries in the country believe that the United States does not encourage transparency. This hinders the countries from transacting with US. The countries have opted to transact with other countries that encourage openness. The US trade policy has affected trade as the United States is not able to trade with other countries. The trade policy has harmful effects on the trading partners (Great brotain:H.M treasury, 2006).
The slow economic growth in the country has made it difficulty for the country to compete with other countries. Though, United States is considered the largest economy in the world, it has faced competition from other economies. Other economies like Japan have become more competitive than US economy. Most countries prefer to trade with powerful countries like Japan as the countries do not have slow economic growth like United States. This has become a major challenge as United States faces stiff competition from other countries. The slow economic growth has affected small business in the country. The economic strength of a country depends on how small businesses are able to compete with other business in the global market. Small businesses in the country do not have enough finances to grow and competes well with other businesses. The slow economic growth in the country has affected how United States competes with other countries in the global market (Great brotain:H.M treasury, 2006).
Another challenge that United States government is facing is expensive labor. Labor in United States is expensive and this has made it difficulty for the country to produce goods at a cheaper cost. Most countries are able to produce goods at a cheaper cost unlike United States. The labor in these countries is cheaper compared to United States. The high cost of labor in United States has made it hard for the country to compete well in the global market (Great brotain:H.M treasury, 2006).
Lastly, taxation has become a major issue in United States. The United States government has increased the amount taxed on foreign firms. This has led to very few investors investing in the country. Investors have opted to invest in other countries that charge low taxes. This has increased competition in the global market.
The United States needs to make some reforms in order to make US economy competitive in the global market. First, the United States government needs to analyze its trade policy. The trade policy has made the countries economy less competitive. The government should review the trade policy by lowering tariffs and quotas so as to encourage transparency. Also, the government should review taxation in the country. The government should tax low rates on foreign firms so as to encourage investors to invest in the country. This will make the countries economy competitive. Lastly, the government should review the economic recovery policy so as to encourage rapid economic growth (Great brotain:H.M treasury, 2006).
Conclusion
The United States is experiencing slow economic growth because of the housing market, the European sovereign debt and the financial policy. The trade policy, slow economic growth and taxation have made it difficulty for US to compete with other countries. The country has to review the trade policy, taxation, economic recovery policy so as to become competitive in the global market.
Reference
- brotain:H.M treasury.(2006).Budget 2006: A Strong and Strengthening Economy; Investing in Britain’s Future economic and Fiscal Strategy Report and Financial Statement and Budget Report; March 2006. The Stationery Office, page 220
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