Wednesday, December 9, 2009
Policy Recommendation
After the civil war ended in 2002 Sierra Leone have wanted to revive the key facets of their economy, agriculture and mining. For Sierra Leone to achieve massive economic growth they are in urgent need of improving and/or adding to the policies they have already established. There are currently a couple trade policies in place to help generate extra revenue through tariffs in Sierra Leone’s economy.
In 2003, Sierra Leone was the first WTO member to benefit from a new facility, the Trade Policy Clinics, to contribute to improving transparency in domestic policies at the national and multilateral level (Trade Policy Review). “Sierra Leone will be receiving technical assistance through different programs, workshops or seminars on a number of issues, including negotiating techniques and meetings to promote awareness among parliamentarians, in an effort to promote the country’s better integration in the multilateral trading system” (Trade Policy Review).
The government aims to secure an economic policy as well as aid to help the delivery of basic food for the entire population by 2007. They want to accomplish this through the following policy objectives: (i) increasing and diversifying domestic food production; (ii) increasing agriculture productivity, rural income, and employment, while ensuring adequate protection of the environment; and (iii) maximize Sierra Leone’s foreign exchange revenue generated by their agriculture through tariffs and other policy based actions. Import restrictions and licensing requirements for plants and seeds in place to preserve the environment when trading in Sierra Leone (Trade Policy Review).
Based on the World Trade Organization, “Sierra Leone's overall objective is to promote growth of Sierra Leones agricultural output so they can restore food security and create tradable surplus among the other countries. The strategy consists of: increasing farm accessibility and productivity; improving farm incentives and security in the countryside; improving access to land, farming implements, and inputs; facilitating access to credit; increasing private participation; rehabilitating partially developed inland valley swamps; and providing returnees with basic agricultural inputs and services” (Trade Policy Review). As said on the World Trade Organization’s website, the reason for domestic support is to encourage investors, promote employment, and increase production (Trade Policy Review).
My major goals to help Sierra Leone achieve economic growth would include: I) Help implement incentives, which encourage investment because if the investor speculates a high rate of return on their money invested either through stock or interest rates then he will be more willing to invest more money, for the assistance of domestic food production either with money, food, more land, and/or tax breaks. II) Improve productivity by helping to increase the human capital by rebuilding the damaged schooling infrastructure and help increase the literacy and overall knowledge throughout Sierra Leone. The new ideas that would be generated by the higher level thinking people would help improve productivity through increased efficiency in everyday tedious tasks. The well-educated people are needed to help with the government where they can administer their high level of thinking to help promote growth for Sierra Leone. III) Help change trade by encouraging foreign investment in firms through high interest rates on bonds and the investment of money within a firm. This would cause an influx in money supply due to the increase and investment and with that money the firms can use it to become more productivity and efficiency through the purchase of new tools, equipment and machinery for the work force. IV) Feed the energy needs of Sierra Leone’s population by establishing a way to provide efficient energy production to help the economic development of the environment and country.
The barriers of doing this would mean that the government would have to raise their trade tariffs to generate greater revenue to help supply the funding for the increase in electrical companies and electrical converters all over the city. This would help achieve growth by helping power the factories and equipment used to make the tasks of the work force easier that are already in place and could potentially allow bigger machines to be created and generate income that was deemed impossible before because of the lack of electrical power. It would take these policies anywhere from 5-25 years to start showing improvement the economic growth of Sierra Leone.
Each policy has many valid points that are to be respected but there also could be some adverse affects as well. The policy on increasing incentives would hinder the short-term growth because for every investment of money within a country there is a part of it being put back into the money supply. Although in the long run it would prove to be worth while because of the increase it would have over time on investment from abroad and how much money they invest would increase as well. To improve the infrastructure of the schools would take around 15-20 years and would cause the government spending to go up thus increasing GDP but increase taxes among the people. All of this in the long run would make for a more self-sufficient government and country.
Works Cited
"TRADE POLICY REVIEW: SIERRA LEONE." World Trade Organization. N.p., 25 Feb. 2007. Web. 3 Dec. 2009.
Money Summary & Analysis
Sierra Leone has a currency of ‘Leones’. The last time it was measured was in 2006 and was said that it took 2,961.7 Leones to equal 1 US Dollar, an increase from 2005 (CIA The World Factbook).
The Leone is a good medium of exchange because its used to buy certain needed or wanted items. It’s also a good unit of account because, although the prices would look high to us, to the people of Sierra Leone they would represent a good way to measure the prices of different goods and services.
The Leones would not be a good store of account although because it would not hold its value when being saved rather than spent as shown by the increasing exchange and inflation rate of 11.7% which is up 22% from the previous year but on average raises about 6.7% each year.
The fiat money are bank notes given value by government decree and is the primary focus of the Central Bank of Sierra Leone rather than commodity money. The Bank of Sierra Leone is the central bank of Sierra Leone. “It issues the country's currency, known as the Leone and formulates and implements monetary policy, including foreign exchange” (CIA The World Factbook).
The inflation rate in Sierra Leone isn’t at a point where it only seems to effect the countries store of value. Consumer price inflation was pushed higher due to the pass-through effects of steady increases in natural resources in 2007 and 2008 (CIA- The World Factbook). I think as the country grows there will be a positive effect to the medium of exchange and unit of account in Sierra Leones money system. Sierra Leone’s money has been losing value ever since the 1980s. Its value is now based on the export earnings of the country but since it does not earn enough from foreign trade so the IMF and World Bank are constantly encouraging them to reduce government spending to maintain a balanced budget (CIA The World Factbook).
Overall, the country money system is at a state where they are able to achieve massive growth if they just implement the right policies. If the trend continues Sierra Leone could experience a decrease in their money’s store of value and unit of account but if acted upon Sierra Leone could achieve economic growth and overall well being.
Works Cited
CIA-The World Factbook. Africa: Sierra Leone. Central Intelligence Agency, 17 Feb. 2009. Web. 30 Nov. 2009.
The Leone is a good medium of exchange because its used to buy certain needed or wanted items. It’s also a good unit of account because, although the prices would look high to us, to the people of Sierra Leone they would represent a good way to measure the prices of different goods and services.
The Leones would not be a good store of account although because it would not hold its value when being saved rather than spent as shown by the increasing exchange and inflation rate of 11.7% which is up 22% from the previous year but on average raises about 6.7% each year.
The fiat money are bank notes given value by government decree and is the primary focus of the Central Bank of Sierra Leone rather than commodity money. The Bank of Sierra Leone is the central bank of Sierra Leone. “It issues the country's currency, known as the Leone and formulates and implements monetary policy, including foreign exchange” (CIA The World Factbook).
The inflation rate in Sierra Leone isn’t at a point where it only seems to effect the countries store of value. Consumer price inflation was pushed higher due to the pass-through effects of steady increases in natural resources in 2007 and 2008 (CIA- The World Factbook). I think as the country grows there will be a positive effect to the medium of exchange and unit of account in Sierra Leones money system. Sierra Leone’s money has been losing value ever since the 1980s. Its value is now based on the export earnings of the country but since it does not earn enough from foreign trade so the IMF and World Bank are constantly encouraging them to reduce government spending to maintain a balanced budget (CIA The World Factbook).
Overall, the country money system is at a state where they are able to achieve massive growth if they just implement the right policies. If the trend continues Sierra Leone could experience a decrease in their money’s store of value and unit of account but if acted upon Sierra Leone could achieve economic growth and overall well being.
Works Cited
CIA-The World Factbook. Africa: Sierra Leone. Central Intelligence Agency, 17 Feb. 2009. Web. 30 Nov. 2009.
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