The Microeconomic Case of Economic

MICROECONOMIC POLICY TOOLS TO INCREASE COMPETITIVENESS

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5 July 2010

Introduction

In response to unbalanced growth in the economy , structural change is inevitable . The unbalanced growth produces winners and losers and consequently wide gaps in income and wealth distribution . Structural change is the process of adjusting an economy in response to growth (Archbold 2001 . Microeconomic policy is the application of the principles of microeconomic theory by the government in order to accelerate growth through structural

change (Archbold 2001 Microeconomic policies involve measures to improve efficiency in operation of organizations and markets in order to influence aggregate supply levels . Although microeconomic policies are mainly aimed at increasing efficient use of resources , the policies also focuses on income and wealth distribution (Bell 1993

Discussion

The government has a role to play in ensuring that its policies achieve what is economically and socially good for everyone in the country . The government has in the recent years shifted its focus towards microeconomic reforms . This is as a result of the realization that most economic problems are caused by structural factors uncontrollable by macro-economic policies . The government identified lack of competitiveness by local producers and high levels of structural unemployment caused by supply side factors as major problems to be tackled . To address this issues the government has shifted its policies on lifting productivity , improving flexibility and promoting efficient production from available resources (Archbold 2001

One of the microeconomic policy tools that the...