Zimbastori Vs Undebekistan

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Question 2

- The interconnection mission will signal the growth of infrastructure industry as construction of roadways, bridges, loading docks etcetera will become the central focus.

Transportation and automobile industry will flourish as the government proposes to interconnect the 3000 islands.

Roadways, aviation and waterways will prove to be a lucrative investment sector with an improvement in infrastructure.

Such infrastructural projects will require a large amount of iron and steel and this the iron and steel industry will grow exponentially.

A flourishing infrastructure will support the local small and medium scale businesses in Amersberg.

Electrification will lead to a shift from an agriculturally dependent low-GDP country to a manufacturing unit. Infrastructure investments lead to increased efficiency of business activities and reduces production and logistic costs. The remaining agriculture will get mechanized and the agricultural mechanization related industries will grow.

The electronic and electrical goods industry will also flourish under this decision to electrify the nation.

With better infrastructure, tourism is bound to flourish as the country becomes more accessible to people.

Construction industry will benefit with the proposed infrastructural developmental projects.

With increased communications, the telecom industry is likely to witness tremendous growth in the country. The country’s improved infrastructure and energy efficiency is also likely to attract foreign investments. The increasing private investments by local and foreign bodies can be used to fund constructions or capital intensive industries like telecom in an electrified nation.

Logistic industry will experience monumental growth as logistic outsourcing will boom with the improved infrastructure.

- Such a massive infrastructural transformation will require an abundant labour force which is easily available within the country. Thus this project is likely to create jobs for the resident population. This leads to increased income and higher purchasing power.

Thus, consumer markets for fast moving consumer goods will witness growth.

Better electrification coupled with an increase in purchasing power will lead to a growth in demand of electronics and electricals.

Better connectivity and improved roadways will also prompt the explosion in automobile and transportation industry.

Banking might also experience augmentation as people earn more and private investments rise.

Tourism will also prosper with better infrastructure as the country becomes more accessible and navigable.

The increase in tourism coupled with the high purchasing power of the local population will also catapult the food and beverage industry to new heights.

- Executional uncertainties casts doubt on the heavy investment in infrastructural development. If country obtains the funds for such investments via loans, a failure of this project would indicate a sharp rise in the debt for Amersberg.

Such high-expenditure government spending projects are often plagued with corruption. If corruption increases in the country, it may hamper the success of the project and not reap returns.

For a low GDP country like Amersberg, heavy investment in infrastructure may have negative short term implications on the prevalent agriculture-based economy as investment in the agricultural sector that currently fuels the economy would decrease.

Such projects are long-term in nature and generally do not reap returns instantly. This will bog down the economy in the short-run as the government does not enjoy any return on its investments in the short-run.

There also exists a risk of governmental changes in such long-term projects. If the ruling party changed while the project is underway, the new party may not approve of such high infrastructural spending and change the pattern of spending or even stop it all together. This will stop the infrastructural development and the country will not be able to reap any returns on its investments.

High infrastructural developments might also lead to increased property prices.

- With the infrastructure sector providing more jobs, the purchasing power of the working class will increase. This will lead to an increase in the supply of money in the market which will fuel an increase in the demand of consumer goods. This might lead to an inflation in the short term if the market forces are allowed to function freely.

As infrastructure projects do not yield immediate results, the government will face a deficit in the short-run as the expenditures will surpass the income. However, in the long run, the infrastructural developments will yield positive results and stabilize the economy.

Question 3

Kresselberg will be instituting a universal healthcare and subsidizing healthcare for all residents for 95%. The government however plans to acquire the capital to fund this by increasing corporate taxation. This increase in corporate taxation will increase the cost of production for corporations working in such a condition. This leads to lower wages for employees and ultimately higher price of end products.

It would be very difficult to continue producing in such conditions in a perfectly competitive global market if the corporate taxes continue to remain the same in the countries where the competitors for the corporation function.

Now, considering that the country has become a member of ASEAN and goods can flow across borders without taxes, the manufacturing industry will be thwarted.