Compensatory fiscal policies for enhancing labour productivity

Abstract

African economies are dualistic in structure: a large subsistence agricultural sector and a small formal monetary/wage sector and their share in the production of GDP is at the ratio of nearly 4:1 respectively. Population and labor force distribution follows the same pattern. About 85 percent of African population reside in the rural areas and a corresponding percentage of the labor force operate in subsistence agricultural activities. The fiscal policy objectives in developed countries differ noticeably from those of the developing countries in the developed countries fiscal policies aim principally at the stabilization of the economy in the face of inflationary or deflationary pressures, income redistribution through high taxation of incomes and wealth coupled with expenditure measures.