However, it should be emphasized that the current account position signals the country's higher
propensity to import as the country gears up for higher growth momentum.
Part of this may be down to a higher
propensity to import in Africa, but that can't possibly be the whole story.
Tax increases should be applied where there is a high
propensity to import so that a reduction in disposable income leads to a greater than proportionate reduction in imports.
Current account surpluses of oil producers including Saudi Arabia is the effect, not the cause, of oil price fluctuations, and their sizeable
propensity to import, hence recycle excess capital.
Mark Andrews, MENA Regional Director, Edexcel, said: "The rapid growth of the economy and the national
propensity to import skilled labour has created huge opportunities in the UAE for education and training providers; however, the lack of sufficient professional players is slowing down the growth of the industry.
Our
propensity to import is also brelow average, suggesting that we are not to any great extent specialising in those activities where we possess some form of competitive advantage.
Furthermore, the
propensity to import is heavily influenced by economic conditions.
Although "Wal-Mex" provides wages and benefits comparable or superior to its chain competitors, its automated pricing and inventory management have led to a net job loss in the retail sector, while its
propensity to import and its market power have stifled domestic entrepreneurship and production.
Although the current account incorporates more than trade in goods and services, our
propensity to import more goods than we export largely explains the current account deficit.
The terms r, sd, mmr, apm, m, and rm denote international reserves, variability measure of the variations in the balance of payments, money market rate, the average
propensity to import, the level of imports and workers' remittances.
It pointed out that the reduction in (what we would call) the
propensity to import would increase national income, and consequently suggested that it was through import substitution that any new industries would create employment.
However, unless there is a total ban on a nation's foreign imports, as y increases the marginal
propensity to import will worsen the trade balance.
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