Restoring and Growing National Economies by Promoting Domestic Consumption
As businesses are reopening after prolonged lockdowns caused by the COVID-19 pandemic, governments are strategizing various solutions to boost their economies. The losses are immense worldwide and have put many countries at risk. Thus, the strategies that these governments implement will have to be as effective as possible, especially in promoting domestic consumption. Take a look at some of the tools they can employ.
Taxing and Redistributing Income
The topic of redistribution of income and wealth has always been a contentious issue. Many people believe governments should increase taxes for high-income earners and increase wages for lower-income households. This can help grow spending power for the lower class, while revenues from taxation can boost investment in programs that create jobs.
Advertising is a great way to show consumers what companies can offer. Because imports are still very low, this is a great time to put local brands out there. Discovering good local brands or substitutes for imported goods will provide more options for consumers and might even lead to a loyal following.
Offering credit to businesses will help them navigate the crisis and allow small businesses to stay afloat until sales reach pre-pandemic levels. It will also let consumers make payments on big purchases like cars or homes, helping restore economic activity.
Lower interest rates will lead to a higher consumption rate since consumers will spend more, and businesses will be able to borrow at cheaper rates. Banks will lend to each other, leading to an overall improvement in economic activity.
Government spending on infrastructure and public services will lead to employment, allowing more people to purchase goods and services. Thus, the potential of public infrastructures like transport, manufacturing plants and storage, and communications should not be overlooked.
Apart from increasing household incomes, handing vouchers and coupons can also generate economic activity by encouraging citizens to make more purchases. Some cities in China are even offering vouchers to visitors as well in hopes of boosting tourism.
Healthy Work/Life Balance
People are much more likely to spend more money when rigid work routines don’t hold them back. The economy also benefits from holidays when people take vacations locally, boosting local tourism in the long term.
Organization and Logistics
There has been an abundant amount of waste as exporters struggled to deal with perishable goods that couldn’t ship. This is happening even when there are acute shortages in other areas within the same country. Thus, developing good storage, transport, communications, and marketing is critical to boosting local consumption.
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