Development Tips for Developing Economies

A grid of six central policies to improve both the productive activity of enterprises and the institutional framework that defines the underlying economic functions could be as follows:

1. Reduction of frictions from taxes and labor contributions, e.g. reduction of insurance contributions, solidarity contributions, income integration in a single tax scale, etc.

2. Implementation of programs to support small and medium enterprises for their access to financing investments related to digital upgrades, new technologies and new production methods.

3. Increase budget expenditure on research and development and reduce production costs through more favorable tax treatment of depreciation for investments mainly in fixed equipment and innovation.

4. Simplification of the complex tax code by minimizing the exceptions in order to exclude any mechanism of tax evasion and shadow economic activity.

5. Development of a universal framework for the implementation of electronic payments in real time, in all sectors of the economy.

6. Strengthen the special sections of the courts for highly specialized financial cases, at the same time investigating the mechanisms of out-of-court dispute resolution.

The state’s assistance in this direction is crucial, which can be expressed in a small and medium-sized enterprise merger incentive bill, in order to broaden the potential range of their financing capacity. Additionally, there should be corporate loan arrangements. In the future, the central goal and ultimate denominator for any developing economy should be the systematic increase in real per capita income.

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