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Absorptive capacity
Economical 06/23/2024
Yasser Al-Metwally
Absorption capacity is a vital concept for understanding the dynamics of the economy and controlling growth in a truly balanced and sustainable way.
The absorptive capacity of a country's economy is measured by the extent of its investments in exchange goods (agricultural goods and manufacturing industries).
According to this statement, the absorptive capacity of the Iraqi economy is very low as it depends on oil wealth and its high returns, which cause a structural imbalance in operational functions.
Here, economists recommend the importance of investing in exchange goods that lead to increased production and provide job opportunities, thus reducing dependence on unilateral oil resources.
There is a rich experience that is close to our Arab environment, which is the Egyptian crisis and the attempts to confront it, as it is the best experience in this regard.
The chief Egyptian economist says that it is not possible to rely entirely on investments flowing into the country unless they are accompanied by increasing production efficiency and achieving stability in the exchange system, the exchange rate, and prices in general.
The exchange rate system is intended to value the currency in dollars only, and
this is specification, as it calls for valuing the currency in a basket of currencies to mitigate differences in crises.
This warning comes in the wake of the lending policy that Egypt achieved as a result of floating the pound and changing the interest rate, and obtained a credit rating rating for its banks encouraging to attract investments.
Despite this, the famous economist believes that treatments like this are not reassuring, as the rapid entry and exit of hot money causes a structural imbalance.
In the Egyptian economy, according to his belief, it saves the state from thinking about production, and here lies the warning.
We mention this experience of Egypt here due to some similarities with the signs of the financial crisis in our country, whether in the lack of liquidity, the fluctuation of the exchange rate, and the rise in prices.
However, the difference is that Iraq is an oil country that depends on oil revenues in all its accounts, while Egypt was a productive country that relied on industry, agriculture, and tourism, but production there has declined recently.
The conclusion of the analysis is that focusing on revitalizing the productive sectors and investing in them is the most prominent and important factor in addressing the structural imbalances in the Iraqi economy that limit its absorptive capacity.
One of the other most important challenges that the Iraqi economy still faces is external and internal debts and the high costs of debt service.
It is true that the service projects that Iraq has recently initiated are to serve the community, but the need requires embarking on projects with a rapid production return to alleviate the burden on the budget, reduce the deficit rate, and think about addressing it.
It is a set of ideas that we market and put before decision-makers and economic policy makers in our country as a reminder of their importance when thinking about future investments.
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Economical 06/23/2024
Yasser Al-Metwally
Absorption capacity is a vital concept for understanding the dynamics of the economy and controlling growth in a truly balanced and sustainable way.
The absorptive capacity of a country's economy is measured by the extent of its investments in exchange goods (agricultural goods and manufacturing industries).
According to this statement, the absorptive capacity of the Iraqi economy is very low as it depends on oil wealth and its high returns, which cause a structural imbalance in operational functions.
Here, economists recommend the importance of investing in exchange goods that lead to increased production and provide job opportunities, thus reducing dependence on unilateral oil resources.
There is a rich experience that is close to our Arab environment, which is the Egyptian crisis and the attempts to confront it, as it is the best experience in this regard.
The chief Egyptian economist says that it is not possible to rely entirely on investments flowing into the country unless they are accompanied by increasing production efficiency and achieving stability in the exchange system, the exchange rate, and prices in general.
The exchange rate system is intended to value the currency in dollars only, and
this is specification, as it calls for valuing the currency in a basket of currencies to mitigate differences in crises.
This warning comes in the wake of the lending policy that Egypt achieved as a result of floating the pound and changing the interest rate, and obtained a credit rating rating for its banks encouraging to attract investments.
Despite this, the famous economist believes that treatments like this are not reassuring, as the rapid entry and exit of hot money causes a structural imbalance.
In the Egyptian economy, according to his belief, it saves the state from thinking about production, and here lies the warning.
We mention this experience of Egypt here due to some similarities with the signs of the financial crisis in our country, whether in the lack of liquidity, the fluctuation of the exchange rate, and the rise in prices.
However, the difference is that Iraq is an oil country that depends on oil revenues in all its accounts, while Egypt was a productive country that relied on industry, agriculture, and tourism, but production there has declined recently.
The conclusion of the analysis is that focusing on revitalizing the productive sectors and investing in them is the most prominent and important factor in addressing the structural imbalances in the Iraqi economy that limit its absorptive capacity.
One of the other most important challenges that the Iraqi economy still faces is external and internal debts and the high costs of debt service.
It is true that the service projects that Iraq has recently initiated are to serve the community, but the need requires embarking on projects with a rapid production return to alleviate the burden on the budget, reduce the deficit rate, and think about addressing it.
It is a set of ideas that we market and put before decision-makers and economic policy makers in our country as a reminder of their importance when thinking about future investments.
[You must be registered and logged in to see this link.]
