A comment on Krugman's post http://t.co/cjajR3v5

I do agree that the Euro problem is mainly a BOP one which has since transformed into a major fiscal problem as a result of the deepening economic downturn and the sudden shut down of low interest capital flows on which the peripheral countries were so much dependent.

In this respect, the peripheral countries should redirect resources both public and private to the production of goods and services aimed for both local consumption to replace imports and the export market to sustain growth in earnings.If this can be accelerated through the privatisation process it should be done for as long as the investor has a viable long term investment plan in place to create a product and or service which can compete in terms of quality and price in Internatioanal markets.

Equally redundant public sector services which do not add anything to this creative process should be shut down or transformed into production units for its furtherance.

The surplus countries on the other hand should strive to increase consumption thereby accelerate the absorption of imports and provide investment capital and know how to the periphery to incentivise their production.

This will also allow the substitution of part or all of their total exports lost to imports in their local market to exports from the periphery.

No comments:

Post a Comment