War and the Economy
War is an outbreak of a tension built over between two or multiple
parties, it could be usually between countries or Groups within the country. The
reason could be the difference of opinion between the participants in war, the
trigger event provoking one such participant will be major reason for the
outbreak of the war.
The war between the countries will be in alliance of few countries
supporting the main participants in providing ancillaries’ or directly involving
in the war.
The war affects the peace of people living in the region, leaving them
with trauma carrying it for the life. It affects the livelihood of them, their
education gets denied, people might lose their job, becomes refugees in other
places or sometimes losing their own life
War officially ending at the tables may continue to affect the economy for
a while.
How it affects the economy
An economy is activity related to production, distribution, trade,
consumption of goods or services produced or rendered in a region.
War results in the weakening of an economy, where businesses are shut
down or mutilated resulting in the unemployment, fall in GDP. Amidst war, the
funds would be deployed in the war over the other requirements. It might make
the value of currency go down, making imports costlier and inflation rates
rocketing. Government may exploit natural resources to fund the war which will
result in monopoly of that particular product line. Countries which have
borrowed huge sum of money has to repay the same through increase in tax and
price of the product, it will result in cut in spending money to the public causes
and welfare. The borrowing cost of the country will be increased due to the poor
credibility. The foreign direct investors might avoid investing in countries that
were affected in the war.
How economic crises were dealt
Japan being one of the most hit country after the world war II by major
cities getting destroyed, inflation getting skyrocketed dealt economic crisis
through policies implemented.
It invested on technical education like Engineering, R&D which created
job resulted in stopping unemployment and boosted productivity. It focused on
creating products which were exported especially electronic gadgets, created
brand like Sony, Honda, Panasonic etc., Japan’s banks supported the key
industries and absorbed temporary losses to ensure long term stability.
Japan could be the one which transformed itself from the most affected
country to most successful country within few decades.
Drafting the policy that enhances the countries recovery post the war is
the only mantra to recover back it’s own status, the policies implemented should
be sound, frequent changes to be done for coping up with the plan.
The clear goals to be set to overcome this crisis should include increasing
the GDP for the year, reduce unemployment by below percentage as per country
and it’s nature, rebuilding its own strength back again and by stabilizing the
inflation.
How audit can help
Once the war gets subtle, the funds may be directed via foreign aids or
any other sources, the audit of expenditure to ensure funds are spent only on
intended purpose may in large help to jump back to the economy. Audit help
businesses rebuild the company’s financial system and provide comfort to
shareholders and creditors.
Following World War II, Japan adopted a disciplined approach to
recovery. The Dodge Plan introduced tight monetary controls, budget balancing,
and financial stabilization. Auditors in both public institutions and the private
sector ensured the proper implementation of policies, tracking expenditures, and
improving transparency. Their role helped and paved the way for the Japanese
Economic Miracle.
Conclusion
War leaves behind more economic wounds, disrupts in finances and
livelihood destabilization. The pathway to recover is complex and demands not
only sound policy but also strict financial disciplines. The auditors may help
restore public trust, protect against misuse of resources, and support the
government and institutions.
