Recovering After The Fall

Yesterday I was thinking about the repercussion of the Financial Crisis to he Pacific Island Countries (PIC); particularly Fiji.

How will we recover from such recession? There are theories being created about such situation as this. Predominantly, the father of Economic freedom Dr. Milton Friedman's string theory explained significant areas that we can cling on to and hope for the very best.

String expanded on a board; the more the string being pulled, the faster it will snap back to its normal position. While "snap back" is still a debatable issue, where actually it will snap back and how fast it will be is just not that easy to us PIC. The string represent the demand side of the economy which incorporates the household spending, firms, foreigners, and the government, the board in which the string being taut is the supply side.

The resources are fully employed by high consumption. This has a direct influence on the labor force, capital accumulation and technology advances.

In times of recession as this, this labor force and capital are being idle but will resume to full employment again when spending from the demand side picks up according to Dr. Friedman. But for the PIC, capital could be re-shifted to other parts of the world due to a high number of FDI; laborforce might look to the other side of the fence particularly to Australia and New Zealand. Well the question is weather we can get back to that position or not?