Local economies refer to small markets and networking systems contributing to local wealth, opportunities, and prosperity. Within the local economy, money circulates between businesses and residents. These small businesses help countries to enhance their economic growth. In Pakistan, the local economy generates 60% of jobs and contributes 30-40% of the national GDP. Besides this, small businesses employ 49.2% of the private-sector workforce and generate high tax revenue, which funds public education, recreational facilities, and quality health care.
Despite so much importance, Pakistan’s local economy has not fully developed and is experiencing difficulties accessing resources. Currently, the country’s local development policies are not properly designed as costs are too high, making it difficult to start a business or get a job. Thus, reforms are needed to boost the street/local economy and create job opportunities. Local job creation can significantly increase the local employment rate. These increased employment rates can persist in the long run and benefit the country’s economic growth.
Developing the local economy can increase the benefits per job created by better targeting job creation to distressed areas and using workforce programs to link unemployed workers with jobs. The authorities can also devise local development policies that could have a lower cost per job creation. For instance, tax incentives and cash grants to a few large projects are less cost-effective in creating jobs than providing a broader array of businesses with public services. The government should promote needed reforms to local economic development policies within the power and resources of state and local governments to accomplish on their own. However, federal intervention could help by capping some of the largest incentives and providing distressed areas with funding to carry out their development plans.
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