How We Can Promote Economic Growth In The Open Economy?

Increasing the growth of output in open economies involves more than just waving a magic wand that will attract investors or savers. The saving and investing climate involves a wide array of policies, including a stable macroeconomic environment; secure property rights, and above all a predictable and attractive climate for investment. We view some of the ways that open economies can improve their rates by using the global marketplace to their best advantage.

Over the long run the single most important way of increasing per capita output and living standards is to ensure that the country adopts best practice techniques in its production processes. It does little good to have a high investment rate if the investments are in the wrong technology.

This point was abundantly shown in the last years of Soviet central planning, when the investment rate was extremely high but much investment was poorly designed, left unfinished or made in unproductive sectors. Moreover, individual small countries do not need to start from scratch in designing their own turbines, machinery, computers and management systems.