The Nation Seeks to Encourage Capital Formation and Wants to Increase the Rate of Saving of its Own Residents and Encourage Foreigners Investors

Fiscal Policy

Introduction

Economy of a country tends to decide the fate of any country thus it is important for a country to improve its economic condition in order to survive in this world with pride. In today's world, every other decision stands linked to the economic picture of a country. To improve, the condition of an economy there are few steps, which needs to, be taken before the country can stand on its own feet. For any economy to rise it is essential that it tends to provide the investor favorable conditions, it is the prime responsibility of the government to facilitate the investors irrespective of their origin.

However, the foreign investors should be addressed more significantly as compared to the local investors (Roger, 2008). Other than that, capital formation and rate of saving also play a crucial role in improving the economic condition. However, in the context of this paper we would be throwing light on the above indicated aspects and analyze the role of each aspect in improving the overall economic picture of the country. 

Discussion

Encourage Foreign Investors

Foreign Investors are essential for any economy to grow and strengthen, since, in the context of the economics, foreign investment tends to act as a driving force. Foreign Investment also tends to play a significant role in relation to the Capital Formation. It is through the foreign investment that nay government intends to maintain a balance of payment. Without the existence of foreign investment, it is almost impossible for an economy to grow. Foreign Investment tends to create an inflow of foreign capital into the local economy to strengthen that economy. Plus it also tends to enhance the present skills of the workers and above all it helps to create more job opportunities. In my opinion, there are numerous tools through which a government can restore or attract the interest of a foreign investor. 

Favorable Exchange Control

Exchange Control tends to interpret itself as the limitation, on the part of the government which tends to be in place in order to restrict the foreign currency, or local currency to be purchased or traded. However, this limitation is based with the other policies of the government. By giving leverage to the foreign investor in this regard would boost the confidence of foreign investor. It is important to keep in view that the limit tends to adjusted s per the investment; it does not mean that there would be no limit at all (Peter, 1995). Tax Incentives

Tax incentive by the host county is another factor which the investor tends to keep in mind before investing. Therefore by adopting policies which tend to provide tax incentives to the investor in the form of tax exemption on certain raw materials, tax holidays and other forms of tax concessions. These steps tend to be taken to create a competitive environment within the local market and ultimately the consumer and the economy will benefit from ...