Fiscal policy may be a good tool to curb unemployment in a country like South Africa, where there are other factors that influence the employment (i.e trade union power, high unskilled labor force and kind of their political structure) ?
FISCAL POLICY: The idea that government expenditure would lead to the creation of job, and therefore, per capita income makes sense in theory and may have work for many countries. However, mere increase in government expenditure itself without targeting job creation would not have that effect. The building of roads, power dams, etc. in the US had helped the US eased its way out of recession, but similar effect is difficult to repeat in other countries. Poorly managed fiscal policy generally lead to deficit spending or corruption and the regular Joe and his family do not see a penny of the "trickle down effect" that suppose to come. If tax incentive is use to attract foreign investment to come and invest---and create job, this would be more targeted fiscal policy. generally, the policy would designated a certain territory or industry sector to help ease unemployment through its tax incentive tools. However, fiscal policy alone may not be enough to curve unemployment especially in a case such that of South Africa where unemployment is 25%.
MONETARY POLICY: generally, emerging economies, such as India for example, would use monetary policy to target employment. The rationale is that if the interest is low, companies would borrow money to expand and the expansion leads to job creation. Low interest also help stimulate spending. The combined effect is to fuel the economy and reduce unemployment. South Africa has 25% unemployment and a large labor pool of unskilled workers; both fiscal and monetary policy tools could be used if carefully crafted and implemented.
UNSKILLED LABOR FORCE: This input factor should be exploited. Thirty years ago, the ASEAN countries were unskilled labor region. It attracted labor intensive manufacturing, such as textile manufacturing for export to the advanced economies. In time, the economy grew and employed people. Today, the ASEAN moves up a notch to semi-skilled and skilled manufacturing assembly. South Africa, having its own deep sea port and strategically located in the continent of a large market and well connected to the outside world--could use the large pool of unskilled labor to its advantage. Tax incentive (fiscal policy) and labor interest rate (monetary policy) may be used to attract FDI inflow and relieve the current job market stagnation.
http://beta2.statssa.gov.za/?page_id=737&id=1
Absolutely, as long as the emerging economy does not suffer the vicissitudes of balance of payments constraints...
Keynesian ideology is pretty good sometimes, but it causes heavy dependency on the government, which may later causes longrun problems. Raising government expenditure to create employment will work in the shortrun and fail in the mid to long term as long as the project undertaken by government have got a life span. The problem also comes because of the level of unemployment in the economy and hence poverty levels. Most projects undertaken by governments to cater for unemployment are low salary PROJECTS AND CONSIDERING INCOME AWARDED TO THE EMPLOYED, IT WILL NOT TAKE THEM ANYWHERE FAR FROM POVERTY (STATUS QUO). Such projects only favors the bureacrats/politicians access to corruption on the funds. The concept need a deep and proper synthesis.
http://ssrn.com/abstract=2511829
It is an old stoy. As, for instance, Pasinetti 1998 shows, the problem with the efficency of the fiscal policy may be treated as a problem of sustainability of the public debt: the public debt is defined as sustainable when the ratio D/Y decreases or, at least,
remains constant. (Conversely it is defined as unsustainable when the ratio D/Y is increasing). It may well happen that the financial markets interpret a high (D/Y) ratio as a risk factor and impose an even higher (i-g) differential. It is by this route that a high (D/Y) ratio may contribute (even without objective reasons) to generate fragility in the public financial sector. Consequently to have a fiscal policy that curbs unemployment (also in the long run) we should have that the rate of growth (g) is higher than the rate of interest (i) and well regualetd financial markets .
See http://www.siecon.org/online/wp-content/uploads/2011/11/The-Myth-or-Folly-of-the-Maastricht-Parameter.pdf
You may understand economic policy management as a kind of art. This is one of the main messages Keynes tried to put forward. There is no definitive answer, although there are generalities and regularities. For instance of the adversities, when the economic system is trending down, but there is no lack in the general state of confidence, raising public spendings may help to stabilize the cycle. When the state of confidence is ill, increasing public expenditures may give speed to the descending cycle (Brazil nowadays). The monetary policy going one way and the fiscal policy the other way round may disrupt expectations and so forth. Economic policy is a matter of pragmatism intending public welfare, not of certain mechanic system. As economics is a moral or social science, and not a natural one, feeling the moment and giving the right doses is the best way to pursue economic policy's goals.
Fiscal policy is the use of government revenue collection (mainly taxes) and expenditure (spending) to influence the economy. when the government changes the levels of taxation and government spending, it influences aggregate demand and the level of economic activity. Fiscal policy can be used to promote economic growth, but is very important consider Quality Spending, because it has to be in productive areas to curb unemployment.
Fiscal policy alone will not curb unemployment in any country. TOP TAX SYSTEM with liberalized banking sector will remove unemployment, corruption, economic recession, black money and societal inequalities. Read full paper that is available on Researchgate
Article Liberalize the banking sector
Fiscal policy tools are used by governments that influence the economy. These primarily include changes to levels of taxation and government spending. To stimulate growth, taxes are lowered and spending is increased, often involving borrowing through issuing government debt. Most governments in the world used this policy to promote economic growth by Pandemic Covid 19. In a first step, fiscal policy to engage is to increase aggregate demand and after full employment.