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Supply-Side Evaluation - Coggle Diagram

- - - - Can help to improve the allocation of resources by improving allocative efficiency and productive efficiency.
      - Example: competition will pressure firms to lower their costs and improve efficiency, labour market reforms will reduce structural and frictional unemployment, and incentive-related policies will improve productivity and efficiency.
    - - Market-based policies are aimed at increasing free-market efficiency and hence the government does not incur any explicit costs which would otherwise be a burden on the government budget.
  - - - Example: labour market reforms = hurt low income earners or people relying on unemployment benefits
    - - take a long time
        
        Go through drafting, presenting, voting, and signing process
    - - Example: deregulation may have detrimental effects on the environment.
    - - a individual or group of individuals who have a personal interest in becoming involved in certain policies or desisions.
      - Exampel: anti-monopoly regulations may benefit society, but the companies involved in the antitrust law may oppose this policy as it limits their market power.
- - - - Allow governments to support specific sectors of the economy which are deemed important for growth.
      - Example: governments may target specific sectors providing merit goods, such as education and healthcare. According to the World Bank’s latest data, government spending on education accounted for 2.8% of Haiti’s GDP in 2018, while spending on healthcare accounted for 7.69% of GDP in the same year.
  - - - supply-side policies such as investments on education, training, health care, R&D, and infrastructure can be extremely costly for the government and may lead to a budget deficit. There is also an opportunity cost incurred when the government spends money on improving the supply side of the economy.
    - - take a long time to take effect
      - Example: it may take decades for investments on education to affect the potential output of an economy.