OPEN ECONOMY: An identity for competitiveness in a global economy

We often overlook that all industry began informally. Bill Gates and Steve Jobs, as formalised and industrial as their enterprises eventually grew to be, started off in the informal sector.

Individuals keen on international business are likely to come across what is called Hofstede’s Cultural Dimensions Theory.

Developed by Geert Hofstede, this framework for cross-cultural communication finds wide acceptance and application, especially in international management.

It is often referenced by reputable consultancy firms in their advisory role to Fortune 500 companies, as well as multinationals in consideration of their global business dealings.

Hofstede’s theory emphasises the understanding of a nation’s values and cultural dimensions such as uncertainty avoidance, long-term versus short-term orientation, individualism versus collectivism, and indulgence versus restraint.

Hofstede’s theory found great relevance because it worked towards facilitating communication, respect and mutual understanding that fostered cross-cultural business.

As his research was done in the early 1980s, however, the theory has somewhat diminished in accuracy with increased integration of human society on a global scale.

Notwithstanding, I retain interest in Hofstede’s theory because it excluded substantial African representation. In instances of trying to present Africa, the theory over-stretches its generalisations.

It is therefore reasonable to ask if African countries have their own distinct business culture and values.

More specifically, does Zimbabwe have its own business culture and social values that we uphold, and hence respectfully expect our foreign counterparts to acknowledge when interacting with us?

We should put this up for discussion.

I assume that our business conduct is extensively influenced by our colonial background; likewise the eventual assimilative pressures that come with globalisation.

Why is such introspective reflection relevant to our economy?

Well, if there is uncertainty in our identity in terms of how we culturally interact as a nation, especially on a micro-enterprising level, then what cultural and value basis are we aiming to create our new macro-economy?

Cultural awareness and value systems must be factored into our pursuits of creating a new economy. Economics is a social science. It is not a cast-in-stone way of life, or an inherent incidence of how the world works.

Instead, it is a manifestation of how human beings within a given territory choose to socially interact and organise how they conduct enterprise cognisant of their social contracts.

We often miss this point, much to our own detriment. I will focus on two points to illustrate undesirable outcomes of our lacking cultural and value identity.

First, we seek foreign influence and validation for our own economy. I struggle to reconcile how a nation seeking economic self-determination can get unbiased counsel from the same constraining structures it is trying to eventually compete with.

For example, more than 75 percent of debt owed by emerging markets (nations doing well by western metrics and commercial standards) is in United States dollars (USD).

Their companies continue to issue bonds in USD instead of their own local currency, so they face higher costs on debt payments.

This means that most developing countries are subject to, and not in competition with US monetary policy. Similarly, aid to a country like Zimbabwe is in USD.

The fact that we lack the luxury of reasonable exchange rates, in fact a currency altogether, makes settling those loans near impossible and is long-term bondage. How will we ever compete economically?

While my hope is that we have aspirations of becoming an economic player in the global economy, contentment with the current restrictive governance shows otherwise.

Moreover, it is difficult to find congruence between foreign ideals and our own economic aspirations. Just last week, former Secretary of the Treasury of the United States, Larry Summers, revealed that if the US today had the same wealth distribution as in 1979, the top 1 percent would have $1 trillion less, and the bottom 80 percent would have $1 trillion more in wealth.

Clearly, the US is working in the opposite direction of where we are trying to go in terms of equitable wealth distribution and income equality. This lends credence to the fact that western structural reforms are not an ideal fit for correcting Zimbabwe’s historic inequities prior to 1979.

Secondly, for economic growth to occur, enterprise must be ahead of regulation and not vice versa. The misunderstanding of this point is a widespread problem across Africa, especially in Zimbabwe, where it colours our misconceptions of the informal economy.

In our haste to mimic foreign economic structure and design we have somewhat adopted undesirable views on the informal economy. I suggest that as a nation we stop looking at individual entrepreneurial ventures as being outside of already defined economic structures and instead start looking at them as growth avenues of potential future industry and business models.

When individual entrepreneurial activity is allowed to grow unstifled and unrestricted by institutional frameworks, it discovers new means of production and models of enterprise interaction.

In other words, the informal economy is basically a breeding hub for innovation! By allowing fluidity and free competition in such economic activity, chances are significant that industry will eventually develop and grow enough to subsequently warrant institutional structure and formality.

We often overlook that all industry began informally. Bill Gates and Steve Jobs, as formalised and industrial as their enterprises eventually grew to be, started off in the informal sector.

They faced very few initial structural and legal restrictions and their companies were able to grow and develop into noticeable entities that eventually warranted formalisation and structure.

In these cases, and others such as Tesla, entrepreneurs were initially given the freedom to push the limits of their own entrepreneurial creativity. It was only when entrepreneurship crossed undesirable social and economic boundaries that regulation and legal frameworks intervened.

The logic is simple; how can there be formality where industry does not already exist? Regulation cannot develop economic sectors; it can only give them structure and formality.

Unfortunately because we cannot see an economy beyond the sectors and industries that already exist, we perceive informal economic activity as beyond economic acceptability. This deprives us of competitiveness because we are stifling the emergence of home-grown industry.

Industry that develops from a given nation will naturally have a competitive advantage. We often worry about our importing habits. Well, what industries can we say are of our own creation, and we do better than anybody else?

In fact, we should not just look to export products; we should look to export entire industries and have the ambition to export new ways of doing business and economic activity.

Again, I credit these shortcomings to a sheer lack of business culture and value identity of our own.

We must free indigenous entrepreneurship to explore and hopefully discover what perhaps in future we can then design our institutional frameworks around. So, let’s have the debate, is it possible to define Zimbabwe in terms of business culture and values?

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