In May 2018, immediately after taking the oath for the seventh Prime Minister of Malaysia, Dr. Mahathir Mohamad had announced to take measures to control his country’s escalating public debt. Few days later, his government announced to reducing Ministers’ remuneration by ten percent, canceling the Kuala Lumpur – Singapore high-speed train and requesting citizens to voluntarily donate money; all targeted at helping government to deal with country’s public debt. At the same time, the Government of Uganda, which was enlisted as one of the thirty-nine heavily indebted poor countries by the World Bank in 2012, had amended the existing Excise Duty Bill to tax citizens for using major Social Media platforms and collect necessary resources to finance nation’s debt. Continue reading
The International Labour Organization (ILO) has launched the third edition of Women and Men in the Informal Economy Report this week. As per the report, world’s two billion workers – about 61.2 percent of globe’s employed population – are in informal economy. This data for Asia-Pacific Region is even higher. The region houses 1.3 billion workers, 68.2 percent of region’s total workforce, who are in the informal employment. Globally, Africa tops the list followed by Arab States, Americas, and Europe and Central Asia where 85.5, 68.6, 40 and 25.1 percent of employment is informal respectively. In addition, 93 percent of globe’s informal employment exists in emerging and developing countries like Nepal. Also, men (63 percent) are found to be more into the informal employments than their women (58.1 percent) counterparts. Of 2 billion people employment informally, only 740 million are women.
If an economy has high savings rate, the stock money is normally used as investments in the productive sectors. In case of Nepal, looking at the past trends, the gross domestic savings as percentage of GDP has changed a lot. In recent years, the trend has been moving in a downward direction. As per the available data, in 2016, Nepal’s gross domestic savings as percentage of GDP stood at 3.82 percent. As the country adopts federalism and works to make different parts of Nepal as economically competent as possible with the use of a highly decentralized development model, it is necessary now more than ever to have Nepalis saving more to generate substantial funds necessary to invest in local and regional small, medium and large scale infrastructure development works and other related works that drive local and national economic growth. Continue reading
By now, you must be aware of the fact that Cambridge Analytica, a London-based consulting firm, had harvested data of about 87 million Facebook users to influence latters’ political, business and consumption priorities in countries around the world. Of many ways the data thus collected was processed and used, it’s use in Brexit and also during 2016 US Presidential Election has garnered crucial attention at the moment. The revelations so far indicate that Cambridge Analytica had used the data in building psychographic profile of every British and US voter so as to influence their voting patterns.
The “Economics in Crisis” theme has become one of the favorite themes of discussions among the journalists, economics commentators and the academicians. All of them, in particular, take examples of failure of modern economic theories to correctly predict Global Financial Crisis 2007-2008, Brexit and Trump Presidency in the US and their overall consequences on world economy to justify their arguments.
As a consequence, there has been an ongoing debate that seeks to try to integrate theories from other academic disciplines into the mainstream economic theories to design more holistic policies that result in better policy outcomes. A 2017 work by Neil Irwon, a senior economics correspondent for The New York Times also highlighted this changing shift in economic thinking and policy-making in the US and other major world economies. These shifts in economic thinking became even more evident after Professor Richard Thaler received last year’s Nobel Memorial Prize in Economic Sciences for his contributions to behavioral economics. Professor Thaler was long been considered as one of the main critics of economics, especially after he published his much debated paper – Toward a Positive Theory of Consumer Choice.
These recent changes in economic thinking, especially those related to incorporating behavioral science components into the long-standing economic theories, go beyond simple debates and have long been affecting lives of the people across the world. The governments, private institutions and policy makers in different parts of the world have long been using behavioral science theories to better the net outcomes of their economic and related public policies. Some of the countries that have been using and also benefiting from behavioral science theories include USA, The Netherlands, UK, Singapore and Turkey. Furthermore, besides their considerable influence in economic policies, behavioral science theories – Professor Thaler’s Nudge Theory in particular – also have significant in framing a variety of public policies. For example, countries like Austria, Belgium, France and Spain have proved that effective use of Nudge Theory in organ donation campaigns not only encourages more people to voluntarily donate their organs but also makes overall campaigns more efficient.
In the light of these issues and Nepal’s existing realities, I see ample opportunities for concerned stakeholders in the country to invest in and also engage in researches and discussions focused on identifying applicable behavioral science theories that could best be utilized in ameliorating present economic theories. I have tried to highlight some of these issues in one of my past opinion pieces for The Kathmandu Post.
We all are well aware that Nepal started adopting liberal policies as early as in early 1990s. However, country’s growth since then has been minimal. As expected, people normally blame the decade long Maoist insurgency (1996 – 2006) and ten more years of political transition (2007 – 2017) as key reasons for Nepal’s more than two decades of stagnated growth. But I think, besides aforementioned crises, our failure to update our policies and also formulate new policies as per the changing national and global circumstances also played their roles for minimal growth of the country. I am sure that some of these issues will also be highlighted in World Bank’s upcoming Nepal – Country Diagnostic report. Thus, it is high time that we start discussing about usefulness of behavioral science theories in developing and adopting proper policies that not only drive country’s growth but also help us to maintain existing social, cultural and environmental harmony. What do you think?