Loosened fiscal policy increases capital flow
Name
Loosened fiscal policy increases capital inflow
Description
With loosened fiscal policy government can increase foreign capital inflow. Loosened fiscal policy for software industry in developing countries will result in shifting the industry from developed world to other regions of the world.
Enablers
- Globalization
Globalization results in increasing interdependence of countries around the globe. However, fiscal policy remains one of the tools governments can use as a competitive advantage to attract foreign investors.
- Economic growth
Economic growth results in higher GDP as well as in higher revenues in national budgets. Consequently, it is easier for governments to implement tax advantages for software industry, which can in turn result in higher employment rates.
- Economic slowdown
In times of economic slowdown governments are still willing to offer special tax treatment to software industry, since this would result in higher employment rates and higher income tax revenues.
Inhibitors
All the forces acting as enablers for loosened fiscal policy increases capital inflow can act as disablers too, under certain condition. For example:
- Economy
On the other hand, in times of economic slowdown governments might simply cut their expenses and stop loose fiscal policy.
- Lobbies
Manufacturers of proprietary software, in case of being an important employer in the country, can lobby for preferred tax treatment of proprietary software by the government.
Paradigms
Nil
Experts
Timing
The forces affecting economy continuously change.