Koleoso Associates

Unleashing Engines of Growth: Bridging Growth Gaps Through Fiscal Innovation. India’s economic ascent is undeniable, yet its journey is marred by widening disparities among its states. The "Growth Convergence and Public Finances of India and its States" report reveals a stark divide: high-income states thrive on strong fiscal health and investments, while low-income states remain trapped in cycles of poverty and fiscal constraints. This imbalance hinders national progress, threatening India’s vision of inclusive growth and global leadership. The Growth Divide High-Income States: Surging ahead with healthy infrastructure, skilled workforces, and private investment inflows. Low-Income States: Struggling with limited fiscal space, over-reliance on central transfers, and inadequate public services. The Cost of Inaction Economic Stagnation: Suboptimal GDP growth as vast potential remains untapped. Social Inequity: Widening poverty exacerbates disparities, undermining unity. Fiscal Vulnerability: Rising debt and stagnant revenue bases jeopardize sustainability. A Call to Action: Transformative Fiscal Innovation Revolutionize Revenue Systems: Modernize tax structures, reduce inefficiencies, and unlock untapped revenue streams. Invest in Development: Prioritize "education", "healthcare", and "infrastructure" to attract private investment and drive growth. Equitable Central Transfers: Reform transfer mechanisms to address developmental disparities and incentivize fiscal performance. Empower Low-Income States: Build human capital, enhance connectivity, and foster environments conducive to private sector engagement. A Vision for India's Future Growth convergence isn’t just an economic necessity, it’s a moral imperative. By empowering its lagging states, India can unlock unparalleled potential, creating a cohesive and dynamic nation. The strength of India lies not in the prosperity of a few - but in the progress of all. This is India’s moment to redefine its fiscal priorities and ignite growth across every corner of the nation.

November 2024 Regional Economic Outlook. Key Insights: Resilient Growth Amid Higher Risks: Asia-Pacific is projected to contribute 60% to global growth in 2024, with regional growth forecast at 4.6%. Emerging Asia outpaces advanced economies due to robust domestic and external demand. Diverging Inflation Trends: Inflation has largely returned to target levels in emerging Asia. Advanced Asia faces slower disinflation due to wage pressures, but progress is expected by 2025. Challenges and Risks: Geopolitical tensions, financial market volatility, and China’s property market correction are key downside risks. Aging populations and trade fragmentation also weigh on long-term prospects. Policy Recommendations: Monetary Policy: Central banks should balance domestic stability with readiness for external shocks. Fiscal Policy: Growth-friendly fiscal consolidation is critical, emphasizing revenue mobilization and efficient spending. Structural Policies: Focus on education, labor market reforms, and investments in tradable services to boost productivity. Conclusion: While short-term growth in Asia-Pacific remains robust, policymakers must address structural challenges and navigate risks to sustain economic momentum. Strategic fiscal, monetary, and structural reforms are essential for long-term resilience.

How to Awaken Europe's Private Sector and Boost Economic Growth The European Union's income per person lags the United States by one-third, primarily due to lower productivity, which stems from challenges at the firm level. European companies, particularly in technology sectors, lag behind their US counterparts in productivity and innovation, with significantly lower research and development (R&D) spending. Additionally, Europe suffers from weaker business dynamism, with fewer successful startups and an overrepresentation of small, low-growth firms. Key Issues: Fragmented Market: EU's internal market lacks the scale and network effects of the US, limiting businesses' ability to grow quickly, especially in technology. Access to Finance: European firms have less access to equity financing and venture capital compared to US companies, hindering innovation and resilience to economic fluctuations. Solutions: Deepen the EU Single Market: Remove trade barriers within the EU and advance the capital markets union to incentivize investment in R&D. Invest in infrastructure and liberalize services trade to expand market access for businesses. Enhance Equity Financing: Encourage venture capital by harmonizing regulations and leveraging the European Investment Fund to support larger funds and startups. Promote Business Dynamism: Ease administrative barriers to starting businesses and reform labor markets to protect workers while allowing flexible layoffs. Make tax and regulatory incentives for small firms temporary to encourage scaling. Invest in Education and Skills: Support tertiary education and address skill mismatches to foster innovation and technology adoption. Conclusion: To bridge the productivity and income gap with the US, Europe must prioritize removing barriers to goods, services, capital, and labor flows within the single market. A coordinated EU and domestic strategy to enhance market integration, finance, business dynamism, and education is essential to revitalizing Europe’s private sector and boosting economic growth.

Policy Priorities for a Healthy Recovery outlines a visionary path to global resilience: Prioritize Education and Training Address the profound economic scars of disrupted education and labour markets by scaling up remedial education, reskilling programs, schools, and teacher training ensuring a skilled workforce to drive future growth. End the Pandemic: Strengthened health systems and pandemic preparedness will secure long-term resilience. Navigate Inflation and Achieve Fiscal Stability: Tackle inflation with precise monetary strategies and prepare emerging markets for potential economic shifts. Fiscal policies must reduce debt without abandoning vulnerable populations, supported by robust debt relief initiatives. This recovery roadmap highlights the transformative power of education and global unity to build a sustainable and inclusive future. Reflection: Like us/Follow-us

Indigenous Governance, Economic Development, Grant Writing, and Government Relations. The next transformation of business thinking lies in the principle of shared value: creating economic value in a way that creates value for society by addressing its needs and challenges. The key shift around creating shared value is that it is about solving social problems related to the business. Services include Indigenous Governance, Economic Development, Grant Writing, and Government Relations. Book a Meeting now at info@koleoso-associates.com 306-550-2454, and 403-714-5267.

Policy Priorities for a Healthy Recovery outlines a visionary path to global resilience: Prioritize Education and Training Address the profound economic scars of disrupted education and labour markets by scaling up remedial education, reskilling programs, schools, and teacher training ensuring a skilled workforce to drive future growth. End the Pandemic: Strengthened health systems and pandemic preparedness will secure long-term resilience. Navigate Inflation and Achieve Fiscal Stability: Tackle inflation with precise monetary strategies and prepare emerging markets for potential economic shifts. Fiscal policies must reduce debt without abandoning vulnerable populations, supported by robust debt relief initiatives. This recovery roadmap highlights the transformative power of education and global unity to build a sustainable and inclusive future. Reflection: Like us/Follow-us

The Effectiveness of Fiscal Policy in Stimulating Economic Activity. This paper reviews the theoretical and empirical literature on fiscal policy, focusing on fiscal multipliers and their effectiveness in stimulating economic activity. Key insights include: Theoretical Perspectives: Demand-Side Effects: Keynesian View: Fiscal expansions, particularly government spending, stimulate demand, leading to positive multipliers, usually greater than one. Crowding Out: Fiscal expansions may increase interest rates or appreciate the exchange rate, reducing private investment or net exports, and lowering the multiplier. Ricardian Equivalence: If households anticipate future taxes to offset government debt, they may save more, reducing the stimulus effect. Supply-Side Effects: Fiscal policies that enhance labour supply, capital formation, or productivity can have long-term growth impacts. Tax cuts or spending targeting infrastructure and human capital tend to yield higher multipliers. Institutional Factors: Long implementation lags, poor fiscal management, and governance issues can weaken fiscal policy effectiveness, especially in developing economies. Empirical Findings Multiplier Size and Variability: Advanced Economies: Spending multipliers range from 0.6 to 1.5, while tax multipliers are smaller (0.3–0.8). Developing Economies: Fiscal multipliers are generally smaller due to structural constraints and weaker institutions. Non-Keynesian Effects: Under certain conditions, fiscal contractions (e.g., spending cuts) can have expansionary effects, particularly when they improve long-term fiscal sustainability and reduce risk premiums. Policy Design and Context: Composition matters: Investments in infrastructure and human capital yield higher returns than generalized consumption subsidies. Initial debt levels, the exchange rate regime, and complementary structural reforms significantly influence fiscal policy outcomes. Policy Implications: Tailored Approaches: Policymakers should adapt fiscal strategies to economic contexts, focusing on high-impact spending and tax measures. Credibility and Sustainability: Transparent, credible fiscal frameworks enhance policy effectiveness and reduce uncertainty. Institutional Reforms: Strengthening fiscal management and reducing inefficiencies are critical, especially in low-income and developing countries.

The IMF Fiscal Monitor explores fiscal policies for addressing low growth and economic challenges, particularly during crises like the COVID-19 pandemic. The report introduces the "IDEAS" framework to guide fiscal interventions: Key Approaches: Investing in the Future. Prioritize "infrastructure", "health", "education", and green technologies to boost sustainable, resilient, and inclusive growth. Address inefficiencies in public investment to maximize returns and minimize fiscal risks. Discretionary Fiscal Measures Deploy targeted fiscal tools, such as temporary tax breaks or direct transfers, during economic downturns to stimulate demand. Enhancing Automatic Stabilizers Strengthen unemployment benefits, social safety nets, and progressive tax systems to reduce economic volatility and support vulnerable populations. Challenges and Opportunities: Low interest rates provide an opportunity for high-return public investment, but high debt levels in some regions necessitate careful fiscal planning. Addressing supply-side bottlenecks (e.g., skills gaps, infrastructure) is critical to unlocking long-term growth potential. Improving the efficiency of fiscal measures can support economic recovery while ensuring fiscal sustainability. Policy Recommendations: Targeted Public Spending: Focus on areas with high economic returns, such as green investments and healthcare. Inclusive Growth: Tailor fiscal policies to support vulnerable groups and reduce inequality. Sustainability: Balance debt management with the need for fiscal stimulus, leveraging private investment where possible. By adopting these strategies, governments can enhance resilience, drive growth, and create a foundation for long-term development.

Education is Hope, Education is the Future (UN News). UN Deputy Secretary-General Amina Mohammed has issued an urgent call to transform education, highlighting its role as a beacon of hope for future generations. Ms. Mohammed stressed that 2024 must be a turning point. She called for world leaders at the Summit of the Future to: Recognize the urgency of investing in education. Secure breakthroughs in financing, and digital cooperation. Education is a fundamental right and the foundation for sustainable development, and equality. "Let’s get to it," she urged.