The most important fact remains: economic development has become a majorconcern of the contemporary world. Reflecting the Reality
The question looms large! Is it still not the fact that vast majority of the world’s population is living close to the perilous border of bare subsistence? This, no doubt, has been the case for a long, long time but only recently it has attracted the interest and attention it deserves.
The OECD’s recent past observation is important on this score ‘….With the number expected to increase until 2028, 3.4 billion people currently live in rural areas, with around 92 percent of the rural population located in developing countries. They are mainly concentrated in Asia and Africa. The situation is particularly fragile in sub-Saharan Africa, the only place where the number of poor has risen steadily in the last decade. Achieving the recently launched Sustainable Development Goals (SDGs) will depend heavily on designing and implementing effective policies to lift millions of rural poor out of poverty’.
Today, the poverty in which the great mass of people live stands at the very top, world economic problems demand lasting solution. Though the impoverished countries, no doubt, themselves place economic development first on the priority list of goals, yet it has come to be widely believed that the world’s population suffering from deprivation and seething with discontent, while the remainder of the world lives in relative affluence.
At this juncture, the main point is that the developed block, to serve their own interest, should see that the laggards are coming up. They get the market. They park the fund. They get the places to bolster international business ventures.
Of course, a special point to note here is that developed countries, individually and collectively, through various international organizations, have joined the battle and declared the intention to help raise the standard of living of the poorer countries.
Innovations steadily
gaining ground
Developed countries have been motivated to accept the growth of less developed countries as an important goal and to help in its realization for humanitarian, political and economic reasons - the political motivation has probably been dominant. The interest of the United States in Latin America, of France in parts of Africa is some of the glaring examples.
And then what about the international business environment where the emerging economies have a greater role to play in as much as already the financial hubs are moving towards the Asian region, among others? Capital market heat is on. FDI, FII target the emerging.
In fact, the global business scenario has been undergoing changes at a speedier rate than ever before – unprecedented transformation indeed. The reality is the fact that this transformation itself has also been causing turbulences- these economies are rightly asking for a greater say in global trade governance.
Actually speaking, a global-friendly-environment encompassing bold leadership, good governance and disciplined multi-lateral trade framework is yet to emerge, though of crucial immediate requirement.
It is beyond any shade of doubt that health of the global economy hinges too heavily on how these emerging perform in the days to come, especially when a number of European economies are also registering not-on-good-going (Germany, Italy) and has a lot still to do to weather the possible storm of recession recurrence.
The then WTO Director-General Pascal Lamy rightly called for a reform in the entire global economic governance system. After 60 years of erosion of coherence and governance, a number of major deficiencies occurred both within the international system and between national systems and the global system, undeniably! The WTO underlaid: full employment of human resources, development, social progress, a stable monetary system, open trade and environmental sustainability to be the shared objectives for the new order while simultaneously stressing on the need for “a greater degree of explicit renunciation of national sovereignty” to establishing the minimum level of collective restraint and governance. Instruments designed to ensure transparency, legitimacy, coherence and efficiency is also of vital importance to the new global governance.
A lot depends on to what extent global cooperation could forge ahead. Massive international support would be required for these economies.
The IMF rightly said ‘it can provide billion….. to help stabilize countries’ economies but the bulk of financing will need to come from the international community’. The actual need is to intensify efforts to achieve peace and stability, economic development and growth, regional trade and investment.
The silver lining (though no question of complacency indeed) - the BRICS economies (Brazil, Russia, India, China, South Africa) plus other emerging market economies (Vietnam, South Africa and some other African and South American economies) has been of late leading from the front as far as economic growth has been concerned.
Some authors have nicely been comparing the ongoing situation with that of the 1930s – terming this ‘as a significant contrast to the last recession of this scale, the Great Depression, after which the US’s return to growth was a key driver for the rest of the world’.
In lieu of conclusion
Short-term policy should, therefore, focus on expanding fiscal space, rehabilitating physical infrastructure using labor-intensive techniques, and providing social safety nets, such as employment protection. The challenge for the developing world should not consist simply of ensuring that national economies return to the commodity export-led type of growth but that the drivers of growth switch to a more value chain-based and intra-regional trade–driven pattern. Addressing the challenges of development requires policies that strengthen the resilience of economies to external shocks, by investing massively in infrastructure.
Creating improved an economic and investment opportunity is the talk of the town! The governments are bound to aim at improving the economic and investment climate in regions’ operating environment and enhance productivity. The emerging governments will have to introduce reality based – not banking on physical and financial benefits alone - incentives to attract both local and international investments in all sectors of the economy. This, in turn, could lead the process of regional development spatially, temporally, functionally and hierarchically.
Yes, on this score it is better to agree that the prime tasks relate: (a) to improving infrastructure and utilities improving multi-modal transportation services that lead to reduction in travel time and costs, improved connectivity and accessibility, increased public transport, and enhanced transport safety and security (b) improving community and social services leading to improving the welfare of residents (reduction in poverty levels, increase in overall income, and provide better schools, health facilities, sports and recreation facilities especially in the low income areas), (c) sustained reduction in crime and mitigation measures against disaster (d) effective legal and government institution - building and sustaining effective governance system; ensuring effective management systems and (e) encouraging and streamlining stakeholder and community consultation; ensuring effective and prudent use of natural, financial, human and institutional resources.
So, no snap shot prescription - huge tasks ahead!