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View Full Version : Eja's The "Basics" Debates: Economics and Finance



Enforcer
Jan 25, 2009, 09:38 PM
charles4u

Economics:

Economics aims to explain how economies work and how economic agents interact. Economic analysis is applied throughout society, in business and finance, education, health, law, politics, social institutions. An economy is the business of one place to another, Activities related to the production and distribution of goods and services in a particular geographic region (In this case Nigeria).

Here are the things involved in a perfect and growing economy:

1. The government prints notes at a regular rate and maintain a balance sustainable annual budget with a positive use (If no corruption).
2. The government (If no corruption) create infrastructures which will lead to development and increase in employment.
3. People put their money into shops and businesses, by playing the stock market.
4. The infrastructures and growing businesses make more jobs, and that makes a better employment rate in the region or country.


Here are the things involved in a bad economy:

1. The government prints too much money with increase in annual budget without economy growth, which means interest rates and inflation will go up. Those rates go up because money won't have as much value anymore when there's too many Naira bills around. For example, if everyone had 10,000 Notes, no one would care about having 200 Notes anymore -- they wouldn't be worth much and prices will increase.
2. Because of vast amount in budget with corruption and no positive impact in the economy, fewer companies would be able to manage the economic ups and downs. They would have to shut down, which would mean fewer jobs.
3. More people would be poor or even homeless, and fewer people would have money to buy things and play the stock market.
4. Thus, more companies would shut down and employment rates would drop.


An economy is a lot like the enviroment, Everything depends on each other. That is why economies country like China goes high, because more people are bringing and creating businesses there, and more jobs and more money is coming to their market which is leading to a constant and systainable growth in their economy.


Finance:

finance refers to the concepts of time, money and risk and how they are interrelated. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important. Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), as well as by a wide variety of organizations including schools and non-profit organizations.

In this case I will choose from public finance (government), The proper role of government provides a starting point for the analysis of public finance. In theory, Sponsoring/Assisting/Supporting/Contributing to the private and public sectors or markets. But in a case were there is no assistance or support from the government then there wont be increase in growth for the private sectors or market.

The case of Nigeria is related to poor financial system and a high rate of corruption, Good governance is an essential part of a framework for economic and financial management which also includes: macroeconomic stability; commitment to social and economic equity; and the promotion of efficient institutions through structural reforms such as trade liberalization and domestic deregulation.
Poor governance may result from factors such as incompetence, ignorance, lack of efficient institutions, the pursuit of economically inefficient ideologies, or misguided economic models.

NOTE : Poor governance often leads to corruption and corruption is an important element of poor governance.

Corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. Most importantly, the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.

In a country were there is no transparency in governance and a high rate of corruption, surely the economy and the financial system will deteriorate..if not collapse. A better country needs a better government and a better government needs a better positive people to handle it which will lead to a positively growing economy with a strong financial system that will sustain the country in all aspect of development.

Thank you.


I guess the intention of eja is that a different thread is started with each of the 4 groups, as it would be too clumsy if the four debates are on one thread. So I have started this thread using charles4u post. The debate can now start.

Eja, if you want it all in one thread, I will delete this. The final decision is yours.

Ishola Taiwo
Jan 27, 2009, 08:45 AM
Thanks Enforcer. This is right.