Local goods and services are good for economic growth
By Petrus Haikela Hanghuwo|
While it’s beneficial to have foreign products that come in the country through international trade, it’s local goods and services which ensure and encourage rapid local economic growth.
Local producers, who include local farmers, local manufacturers, local training institutions, local funeral service providers, etc., are the driving force of any economy. Even though international trade happens on account of comparative and absolute advantage, it’s still encouraged for local suppliers to produce as many products as possible and supply to relevant local markets in order to transcend the dominance of foreign supply.
And when the locals are able to supply to foreign markets as well it becomes a bonus and vital economic tool that is undeniable.
We know that numerous nations are rich in for example minerals, but still heavily rely on foreign supply for much of what they consume. One of the reasons can be poor local supply.
It’s the same as people’s money in their bank accounts; the banks (financial institutions) store and keep the money which the bankers (depositor or account holder) can collect any day or any time.
It does not matter whether the money is kept offshore; it is one and the same thing as keeping it within the borders of your country because it’s still counted as your money although it’s saved up in foreign investment. Likewise, the foreign products which are supplied into the country by foreign firms do not contribute to the economy of the country such that they belong not locally.
What happens in the foreign market is that global companies freely supply to the local markets and withdraw the money to add to their foreign economies respectively leaving the local economy financially empty whereas the consumers of those products are local consumers.
This does not, however, have to compare to the paying of tax by the foreign firms. Hence, the tax paid by the latter is way too little to even boost the local economy.
Nevertheless, this argument does not suggest for a cancellation of trade in foreign goods and services in the local market, because the local market relies on the foreign market in as much as the foreign market rely on the local market.
The paper does encourage local consumers to bear in mind the need to support local products and services in order to help grow the local economy. There are particular goods that the local producers produce yet foreign markets also supply the same to the local market.
This is acceptable for adequate supply of goods to meet the demand of consumers, but it’s still essential that the local consumers consume more of the local products. This will in return encourage local suppliers to supply more as they earn more and the cycle will definitely lead to growth of the economy.
If more goods and services are demanded, producers need to produce more, in producing more, more is sold, when more is sold, more is earned (N$), earning more will similarly inspire producers to employ more local workers in order to produce more and again the cycle restarts.
In the end, more employment is created, more local goods and services are produced and sold which lead to more of the gross domestic products (GDP) and therefore the economy of Namibia will improve, but only if and only if the nation in its entirety sing the song in calling for economic growth.
– Haikela Petrus Hanghuwo (UNAM graduate, 2020)