BY BEN BILUA
THE Central Bank of Solomon Islands (CBSI) highlights that the country’s long-term economic growth depends on how the government drives its policies to fully utilize existing resources.
In a statement released recently, CBSI states that the country has enormous resources capable of driving economic growth in the long term but the absence of strong policies continue to be a challenge.
Resources identified in the report includes; Natural resources, Capital, Human Capital and Technological Progress.
“If a country has a plentiful supply of natural resources and the ability to exploit or make use of them then the economy will be able to expand,” the statement said.
“Having plentiful natural resources does not guarantee economic growth however, the means to exploit them must also exist. In some instances the existence of natural resources and who exploits them has caused conflict and led to reduced economic growth for some countries around the world,” it added.
“When we talk about capital we are usually referring to machinery and equipment which helps us produce goods.
“By increasing the stock of machinery in the country we are increasing our ability to produce goods and hence we are expanding our economy.
“To get machinery and equipment, a country must invest and so the level of investment in an economy will impact future economic growth.
“As we said before, we can work overtime for a while to produce more and we can use machines every day, all day but eventually the machine will break so we must continually invest in machinery and equipment.
“When demand in an economy is high so that we are using our machines and equipment every day, all day (we are working at maximum capacity) it signals to the boss that it may be time to invest in more capital.
“We refer to a country’s workforce as human capital.
“Although we cannot determine the quantity of workers we have in an economy we can influence the quality of the workforce.
“By improving education standards, we can improve the quality of the workforce, this again requires investment.
“The existence of machinery and capital which help us produce goods more efficiently is thanks to technological progress. To improve our ability to produce goods in the future we need technological progress to be on going. Investment again is needed, in education and research,” the report stated.
It emphasized that the government must focus on policies which impact the quantity, quality or ability to exploit the areas identified so that the economy can be able to produce more.
It also states that the policies must focus on the supply side to improve the country’s productive capacity of the economy.
For example, there is a need of strong policies on promoting education and training to improve the quality of the workforce, promote research and development to ensure on-going technological progress, investing in infrastructure (roads, wharfs) to improve the ability to exploit resources and promoting sustainable exploitation of natural resources to ensure the sustainability of economic growth.