Economyeconomic ruin. Growth or economic development?

economic ruin. Growth or economic development?

(Expansion) – A country that believes, has and wishes to initiate an economic recovery, based on growth, will obtain a nation with high uncertainty. Without a healthy population, its economic, energy, financial and social policy will be a resounding failure.

Let’s change the paradigms, the dogmas and the ideologies that began with the administrations of the past and that continue to this day.

In our country, all administrative administrations have always confused these two terms. Among all of us we must press so that the new economic models that will emerge from 2022 can be differentiated in the future. Currently there are ideological-political issues that do not give the necessary resources to families to be able to cover, not the basic needs, but the that reaches the sum of all the income that each family has. Today the , and the maximum point has not yet been observed.

Today there is a radical change in all world economies, countries will make their strategy within the world market in all the activities they can carry out, by exchanging and interacting with countries within their regions, with the aim of reducing costs due to high uncertainty about the consumption of products and services, within the activities of the primary, secondary and tertiary sectors.

All this derived from high inflation and interest rates of the central banks of the countries that, as a consequence, will have a reduction in the purchasing power of each individual.

So a question arises before all the variables that put pressure on a country’s economy and therefore on its society, what is better to focus on, growth or economic development?

We must first define the difference between both economic parameters:
Growth has to do with the increase in productivity and income of a territory or country.
Development focuses on measuring improvements in the living conditions of a population.

During the pandemic that occurred, and in 2022, some countries focused on economic development to lay the foundations so that the population can face any changes for the future and minimize uncertainty about the control of the economy.

Given the constant uncertainties arising from Russia’s invasion of Ukraine, the increase in raw materials such as crude oil and natural gas, and possible global recessions, everything has led to changes in public policies. , and one of these palpable are those carried out by our commercial neighbor, the United States. The US Senate promoted and approved the law ” “, which emphasizes aid to improve the purchasing power of society and, at the same time, focuses on economic development.

The objective is to reduce costs for families, create well-paid jobs for workers and cause the economy to grow from the bottom up and from the middle out, in order to have sustained growth in the medium and long term.

The world is focused on economic development and not on growth, which is only being used as a parameter gauge. Are the public policies used adequate to deal with the crisis of uncertainties that prevail in this 2022?

In 2023, economic development will be marked and could lead to a contraction in economic growth, derived from high inflation observed at the end of 2022. It will create greater uncertainty and financial stress if employers give workers a salary increase , according to the observed inflation rate.

In other words, if inflation reached 10%, they would give a salary increase of between 6 and 8% or what would be the adjustment, in addition to all the services, supplies and products to make an adjustment in January?

Given this, what public policy exists to keep money circulating? By reducing the amount available to families to buy the basic basket, pay for education, services and other expenses, they will have to decrease in volume and will cause the value chain to shrink based on a contraction in demand, giving rise to a reduction in jobs, tax revenues and will lead to low economic development and therefore poor growth in Mexico.

For this reason, the hypothesis to be followed, as the center of a medium-term vision, should base its growth (CE) and development (DE) on:
– Fuel consumption (CC). It will be an indication of how many products, services and people move within a nation, and how much they exchange between their regions.
– Increase in secondary and tertiary activities (IAST). Some of the economies have collapsed, and may continue, due to the closure of businesses and the lack of new ones, which have caused a greater number of unemployment and people looking for opportunities.
– Have a number of people vaccinated against COVID and its variants (PV), to have a lower number of cases when there is an outbreak of this disease, which affects the mobility of society.

All of the above results in the following formula:

CE = ((DE + IAST) – CC) ^ PV

In Mexico we are concerned about economic growth as a priority, but it cannot be achieved if there is no plan for economic development.

Editor’s note: Ramses Pech is an analyst in the energy and economics industry. He is a partner of Caraiva y Asociados-León & Pech Architects. Follow him on and/or on . The opinions in this column belong exclusively to the author.

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