The Locus of the Financial Crisis - Essay Example

This study argues that a balanced strategy is superior to its unbalanced counterpart for a developing country like Thailand, where the domestic savings rate was quite high. In other words, a balance should be made between the various sectors of the economy: agriculture, manufacturing, service and information, between long and short-term goals, and between domestic and international economic climate in order to achieve sustainable growth. Although an unbalanced growth strategy may lead to a higher short-term growth rate by over-investing in directly productive activities (DPA) over social overhead capital (SOC) or otherwise, much of its success would depend on the external economic climate.

Because an external climate may not be favourable to national development and often depends on political conditions elsewhere, policymakers of dependent capitalist countries should not rely on such an approach. Moreover, a low and sustainable growth rate appears to be better than a rapid but volatile one in terms of various development indexes such as income distribution and poverty alleviation. The only viable alternative to a balanced growth strategy for a national economy is the pursuance of a balanced growth approach by the global economy, because over-investment in a certain sector of a country can be supplemented by an under-investment by another country.

This study argues that a balanced approach should be made across countries not only regarding economic growth but also regarding issues such as self-esteem, freedom, status, or title. For this kind of global co-operation to take place, a concerted effort will be needed from all quarters.Furthermore, the mainstream economic theories (monetarists/rational expectation) should be applied carefully because these theories consider speculation as a factor of stabilization.