Cash Transfer Programmes (Essay Sample)

ECONOMIC DEVELOPMENT By Name Tutor Institution Date Cash Transfer Programmes From the theory of economic welfare, efficiency allocation and distribution of economic resources is healthy for a growing economy (EMEs). Efficiency distribution of resources, in EMEs, is achieved through the use of cash transfer programmes together with redistributive tax policies. For instance, redistributive tax polices reduce the income (poverty) gap in a country by imposing more tax on high income earners as compared to low income earners. Barrientos (2004) argue that cash transfer programmes more of these programmes, are directed to those areas where poverty is dominant. Though cash transfer programs have effects, the may trigger behavioral characteristics among individuals, which may be positive or negative. The first behavioral characteristic is attributed to consumer spending. Behavioral and economic analysts argue that cash transfer programmes re central in promoting effective (rational) consumption expenditure among households. Pingali (2004) argue that these programmes makes people to know how best to spend their money. With cash transfer programmes, individuals will maintain their consumption behavior patterns over a long period, if the cash inflow is certain. Uninterrupted individual spending is healthy in desirable economic decisions. Also, these programmes will helpful in minimizing anti-social behavior (especially in girls and women) associated with poverty such an early marriages and prostitution (Guardian News and Media Limited 2012). This will help to uplift the social status of women in a society. If not property instituted, cash transfer programmes may promote reckless consumption behavior, and waste of economic resources. For men, cash transfer programmes may form a loophole for anti-social spending behaviors (drug and substance abuse) due to existence of ‘excess and free' money. You can relate these programmes to free money given to ‘youths', by politicians, during political campaigns. How do they spend this money? Obviously irresponsibly! The above analysis postulates that cash transfer programmes have varying effects on individuals' behavior. However, emphasis should be placed on how the whole process will occur. This calls for a high degree of supervision, during the structuring and implementation of these programmes. Import Substitution be an Integral Component of a developing country's growth strategy Import substitution is a government strategy with is aimed restricting industrial imports to promote production and consumption of goods and services. The strategy is mostly applied in emerging economies through the use of high tariffs, and quotas. A tariff takes the form of taxes imposed on imports and exports. Quotas take the form of restrictions on quantities produced and sold (Rittenberg et.al 2008, p.434). Economists argue that import substitution can be used to trigger economic development, especially in developing countries. However, the strategy may have some implications, which are economically undesirable. To analyze this concept, let us focus on the "two sides of the coin”; arguments for and against. The main argument for import substitution is that it can facilitate economic development by protecting local infant industries from unfair competition. The basis of this argument relies on the fact that exports are often cheap than locally produced goods. It is assumed that foreign firms (in advanced economies) produced at low costs (due to economies of scale), which makes the charge low lower prices than those of domestic firms. Ideally, imports create unfair competition in the local market (Alm et.al 2002, p. 300). If imports are allowed to freely penetrate in domestic markets, individual consumers will swift to imports. The prices and sales of domestic products will deteriorate, which may cause domestic firms to collapse. In summary, import substitution promotes domestic employment, innovation, self-reliance, and BOP surplus in developing economies. Lack of competition, due to import substitution polic...