Economic Security and Security Sector Reform
Psychological factors/perceptions and individual preferences
significantly influence personal economic decisions such as
choice of job and length of time spent in that job, level of educational achievement, level and type of consumption, savings rate,
and lifestyle. Additionally, when aggregated across the markets
for goods, services, and labor these individual microeconomic
decisions drive the macroeconomic trends that determine the
economic well-being and physical security of the state. For
example, if individual consumers and shopkeepers become
increasingly concerned about the security of bazaars and roadways, or they become pessimistic about the sustainability of the
earning potential of their livelihood, then these individuals will
likely reduce their consumption, production, and overall economic activity. These negative microeconomic trends quickly
become negative macroeconomic trends across the economy,
manifesting themselves as decreased gross domestic product and
increased unemployment--- which reduce the state revenues
needed to pay security providers and prompt political instability due to the increased number of unemployed military aged
males.
In addition to the metrics and psychological factors described
above, individuals seeking personal economic security also look
for some sense of confidence in the long-term sustainability of
their country’s economic system. Accordingly, they assess the
conditions needed for a “sustainable economy” and how well
the state is enabling the economic capacity building systems
that support achievement of those conditions. Two models
help frame these two interdependent concepts: 1) Conditions
needed for a sustainable economy, and 2) Supporting economic
capacity building systems.
Elements of the first model are taken from The Guiding Principles for Stabilization and Reconstruction, co-written by the
U.S. Institute of Peace and the U.S. Army Peacekeeping and
Stability Operations Institute. It asserts that the conditions
needed to achieve a sustainable economy are:
1. Macroeconomic Stabilization: Pursue monetary and fiscal
policies that maintain price and currency exchange rate stabil-
ECONOMIC CAPACITY BUILDING SYSTEMS AND COMMON CHALLENGES
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