Public Policy and Its Impact on Economic Growth

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The governments of emerging economies have tried different policy agendas to facilitate development, enhance growth, eradicate poverty, and achieve many such goals crucial to their nation. 

According to Mckinsey, macroeconomic policies may be the first tools countries consider when they want to accelerate economic growth. Many governments have set up their own delivery labs and delivery units to test new approaches to delivering policies. 

Implementing Economic Policy

China is known for using special economic zones to test policies before introducing them broadly. The Monetary Authority of Singapore uses a “regulatory sandbox” to ease regulations temporarily for select private-sector players to encourage innovation in fintech. 

Non-governmental groups, such as the Abdul Latif Jameel Poverty Action Lab (J-PAL) based in Cambridge, Massachusetts, work with governments on randomized control trials, in which the efficacies of interventions are tested and evaluated like science experiments in a lab.

Some governments have also worked to improve the capabilities of the public sector to facilitate the proper implementation of policies. This includes hiring better government clerks, inspectors, and regulators and seeking innovative ways to train them. 

For example, South Korea invested in sending civil servants abroad to learn from the offices of highly regarded countries. China also systematically rotates promising bureaucrats by function and geography to refine the quality of policy implementation in the country. 

Ensuring Uniform Policy

To ensure that opportunities reach all corners of a country and its citizens, a territorial development approach is necessary when designing public policy. This means applying differentiated policies to differentiated needs.

According to the World Bank, the first step to a territorial approach is to assess the development landscape along three key dimensions 

  • Scale, because people and firms often concentrate in just a few places, proving that proximity is valuable.
  • Specialization, because when places are better connected, they can either specialize in what they produce best, or diversify and innovate, both of which allow the benefits of concentration to be spatially spread out.
  • Convergence, because spatial concentration of people and firms can be harnessed to improve living conditions everywhere, enabling the convergence of living standards across the territory.

In Conclusion

Analyzing the various dimensions of a country can then help policymakers identify and prioritize policies that support economic growth while improving living standards across all territories and regions in the country. Even the top-performing regions have room for improvement, and all countries will face new challenges as the global landscape evolves, making public policy even more integral to economic growth. 

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