“The day will come when nations will be judged not by their military or economic strength, nor by the splendour of their capital cities and public buildings, but by the well-being of their peoples, by their levels of health, nutrition and education, by their opportunities to earn a fair reward for their labours, by their ability to participate in the decisions that affect their lives, by the respect that is shown for their civil and political liberties, by the provision that is made for those who are vulnerable and disadvantaged, and by the protection that is afforded to the growing minds and bodies of their children”.
‘The Progress of Nations’, published annually
by the United Nations Children’s Fund, is
a contribution towards that day
New rules for global economy
The ‘status quo’ and underlying rules between the two traditional economic poles of the world, the rich versus the poor countries, has recently changed.
It began when new global players –China, India, Indonesia, Brazil– became able to introduce their products into the rich territories in spite of their ever present social-poverty.
The consequences arising from this scenario in turn beg the following question: If these countries can massively export their products to the Western societies but are unable to import Western products for their own people – due to the low income level of that population, where does the money flow and where is the employment generated?
Not long ago, only the Western regions were both manufacturers and consumers, leaving to the remaining world the slave-like role of providing and supplying them, almost for free, raw materials, natural resources, sources of energy and immigrant labour. This was to make such level of production and consumption possible. However, right now Western economies are scrambling to maintain their consumption level despite the loss of their manufacturing power.
Removing impediments such as dictators, wars, corruption, lack of education in typically ‘poor’ regions and societies has become, not only a moral issue and potential business, but also the hope for the Western economies to invest and trade (to create markets) in those territories.
If the larger societies of the developing countries do not prosper sufficiently and quickly, there will be no way for the West to exploit its own capability – including the human resources – to maintain its present standard of living. For the West, the new markets throughout the globe are not only an opportunity for growth, as it is commonly explained, they are a necessity to survive.
For this reason, Western governments are currently asking, almost pleading, the governments of the largest emerging economies (mainly China and also India, LATAM or Indonesia) to boost their domestic consumption and import developed-countries’ products and services, thus assuming an improvement in the living conditions of their local population. A favourable response to the pleas of the West adheres not only to the imperative of the balance of the global economy but also to the addressing of domestic problems in those countries such as an alarming social inequality and a growing – inasumible for people – inflation.
Consequently, the morally intolerable anachronism of the two socio-economic poles in the world is likely to shift thanks, in no uncertain terms, to the role of the main emerging economies – currently, a very bad business for the developed ones.
It has become necessary to create, develop and sustain, nurture and support, markets for the West beyond the boundaries of its countries and societies; which requires adaptation to the socio-cultural reality of those new markets, and so importantly, promoting their societies, not only benefiting dictators and ‘war lords’ (those who, typically, control the resources). Decreasing world poverty is already, besides a humanitarian goal, a business goal required to give oxygen and breath to the traditional ‘first world’. It is no longer enough, even if it were possible, to take natural resources and leave.
Such a scenario claims the ‘progress of people’ (by empowering them) furthermore the progress and power of nations.
Only through this social perspective it will be possible for any country in the world to succeed in the new ‘economic order’. A view that allows responses aligned with the market rules, not against them, but under business models, trade agreements, management strategies and policies able to bring benefits to all parts involved. The Brazil of Lula’s ruling could be a good example of this. The same way that we can visualise it through the case of the company ‘Ford’ when it decided, at its beginnings, to align the wages of its poor (and exploited) workers with the prices of the new cars, then produced ‘en masse’ – for the first time – thanks to the ‘assembly lines’. Ford saw the necessity of investing in the prosperity of ‘its people’ (the potential market) as a way to assure its own sales.
The ‘win-win’ approach and the ‘Corporate Social Responsibility’ (CSR) applied to the field of ‘global trade’ will be the answer to the future competitiveness of all economies.
What is radically new on the ‘pitch’ is that, not more than two or three ‘players’ have broken, I guess for ever, the existing economic order by invading the world with their cheaper and simpler products; at first, made in their territory by Western companies for their Western markets, but later by the own local companies from these emerging economies though to also target Western markets – hence reaping the benefits.
These bunch of countries have completely destroyed a ‘game’ which the West thought was under control, and they have done so by means of a massive work force and a skilled formed elite. In that way, they have conquered important business areas in Europe and North America as secure platforms to continue conquering new ones.
They have the moral ambition and now, also, the critical factor, the money. The other key factor, the ‘knowledge’, is – thanks to the information technologies (ITs) – too difficult to hide and easy to spread.
Right now, the most powerful economies of the West need the population of the emerging economic regions not only to produce at ‘low cost’ and under harsh working conditions, but also to consume. Western countries will have to compete with these new economies by, ironically, enabling and promoting their historically ignored people.
Debt and service economy
If consumption is basically sustained by debt despite the loss of the ability to produce, there will be no way to stretch the credit card ‘ad infinitum’. Money must return to the ‘buyer’ not only by borrowing it but also by selling things.
And likewise, if we assume that the West will be the great ‘service area’ of the world, moving toward an exclusively service economy, its richness and survival will rely entirely on applying its whole labour to the cited service sector, as well as on delivering those services to the ‘manufacturing societies’. However, why presume that these manufacturing societies are not going to develop their own, large and increasingly sophisticated service sector, even in the western territory?
In any case, the West has lost control of the ‘game’.