OPEN ECONOMY: Economic perspective, Govt fostering private enterprise

It is necessary to stay informed on what goes on in the global economy. I will share two stories. As background to the first story, it would be helpful to understand that over the past few years, China has been faced with the challenge of air pollution.

When President Xi Jinping was party secretary, he asked a reputable global consultancy firm for its top 100 articles on sustainability.

Caught off-guard by his prompt request, the consultancy firm only had about 63 articles on hand to submit.

Within a fortnight, President Xi sent a gratuitous note back to the consultancy firm advising it that if ever asked for a similar request, the firm should send 17 of the articles; which he ranked in order of the best.

The Chinese leader then took his research to Beijing to be discussed within climate change forums.

Today, China is in advanced stages of implementing policies on industrial reforms to reduce emissions and effect climate change control.

Now, of course there is the “wow-factor” of a policymaker engaging from an advisory level on the progressive topic.

Set that aside, however, and appreciate the perspective with which Xi approaches his decision analysis on the issue. Solving the climate problem would best be approached from an angle where businesses do not simply face the wrath of stern regulation; rather they are given the chance with the support of policymakers to re-assess their operational functions from a long-term financial strategic viewpoint.

Instead of simply enforcing taxes or punitive legislation, which would immediately give the Chinese government large sums of revenue, Xi chooses to seek solutions that not only cut undesirable environmental effects but present opportunities for sustained economic competitiveness for the same enterprises culpable of high emissions.

In doing so, he shows an understanding of the implications on economic growth that ill-advised regulation can have for China.

The second story is presently taking place in the Pacific.

It may be the most pivotal event on the global economy for years to come.

The Trans-Pacific Partnership is a proposed free trade agreement between the US and 11 other countries in Asia and on the Pacific.

It is a big deal because the 12 countries together also account for around 40 percent of global GDP.

The treaty is supposedly meant to boost the US economy and curb Chinese dominance in the region.

Hence, it is written to leverage labour rights, environmental practices, financial regulation and product standardisation in favour of the operational competencies of US companies.

The treaty is estimated to bring about US$78 billion of income to American companies.

I found these two stories to be very relevant because they provide good case studies for us to assess our economic perspectives as a nation.

We can look at these and apply two categories of assessment.

First, do we have a shared understanding of national interests between Government and business?

In both cases you can see that there is strong co-operation between governments and business, much so that government acts as an advancing agent for business.

How does such a relationship come about in our case?

Well, Government and business need to buy into a defined ideal of what is national economic interest.

I suggest we do better in defining what we can call “patriotic business”.

That is enterprise that exists as a function to advance our national economic goals. It takes effort from both Government and business to create and agree upon such an idealistic vision. As it is, Government’s constitutional mandate to foster an environment that expands our private enterprise. Government should understand that in itself it is not an expansive economic entity.

Hence, it should seek economic growth and strive to achieve national economic interests only through a growing private sector. Sure, our national debt burden has made Government impulsive to contractive fiscal policy (imposing tax regimes at any opportune moment like fuel duties), but that is counter-intuitive because a shrinking private sector offers no sustainable tax revenue.

Government itself can never generate enough income to pay back our debt, only private enterprise can expand to a point of such fiscal capability.

However, private enterprise itself must show and prove that it conducts itself and acts in a manner that serves national economic interest.

That is its only justification to demand an enabling environment for its expansion.

I think if a defined ideal of national economic interest exists, we can work towards building stronger co-operation between Government and business.

Second, how do we view the global economy?

The global economy must be seen as a competitive field to expand a country’s respective private sector.

It is a battle ground for greater reach into foreign markets; as you can see from global trade agreements.

I find that we are a defensive nation where we act to mitigate foreign effect on our own economy, instead of offensively acting to advance our own enterprise and influence on the global economy.

We aim for a low bar that is to create internal industry that exists to satisfy our relatively small economy.

We should adopt a culture of greater economic ambition; to create industry that expands past our borders and gains foreign market share.

If we adopt such a culture then we can focus on producing quality, working efficiently, and becoming self-dependent in meeting cross-border standard compliance.

I hope Youth and Indigenisation Minister Christopher Mushohwe can be offered a re-take on his first speech as minister.

It is incorrect to say the world needs Zimbabwe more than we need the world. It may yet to be in some Zimbabweans’ imagination, but not only must we need the world, it should be our aspiration to further our economic footprints on the global economy. Anything less seems to be a simple lack of ambition. A country’s economic perspectives determine its economic circumstance; or at least how it runs its economy. Some of our perspectives are not competitive and do not propel our economy towards economic might. I think it’s time we begin to strive to become an economic force.

Maybe that will come with shifting our economic perspectives.

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