“Look beyond the crisis, forum says”. This is a most welcome news that appeared in Business World on April 24th.
In said forum attended by economists, ours and from the World Bank, we were urged to develop long-term, sustainable competitive advantage. With “shrinking global demand” courtesy of the global economic crisis, countries that are truly competitive will corner the market.
Unfortunately, the converse is likewise true: countries that are not competitive will be losers. And our economists explained that "our problem is competitiveness – the roots of obstacles to growth are less directly linked to the global crisis; they are deep-seated problems that require strategic responses, with or without the crisis."
Like athletes we must gear up because this competition is even more demanding than the Olympics.
As we have seen, big countries are already playing bully because so much is at stake, more than Olympic medals. The WTO will say NO to protectionism but “survival of the fittest” will be the unwritten rule, i.e., more barriers will be erected than competing smaller countries will want to encounter. Why? World leaders are local politicians that pander to populist demands; and which is also why developing countries given little resources make bad economic choices and inflict damaging blows to the economy or why economic reforms become mere rhetoric in many of these countries.
But where is the fairness? “Life is not always fair” as psychologists will tell us. (See: The 5 things we cannot change, by David Richo; “There are certain facts of life that we cannot change—the unavoidable "givens" of human existence”.)
What we need instead is to learn and master Oriental martial arts, i.e., using the big guy’s advantage to our advantage or using leverage over strength?
The writer (then a newly minted professional taking advantage of the consumer credit market freshly made available to him) spent the Christmas holidays many Christmases ago (in 1970) in Singapore when the last few remaining British soldiers were departing this tiny city state and Lee Kuan Yew was personally supervising work at the Singapore Zoo. Here was literally a tiny country that never asked the question: But where is the fairness?
The writer many years later would work with Singaporeans visiting the country countless times (over a decade, including being stranded in Singapore when his plane to Manila was turned back at the onset of People Power as opposition soldiers attacked the Manila International Airport; and this became the new normal for the writer, but that’s an altogether different story) and those couple of scenes would still be etched in his mind against the backdrop of present-day Singapore.
Singapore like the rest of the world is suffering from the shrinking global demand yet they have the foundation and the infrastructure to flex their competitive muscle once the global economic cycle registers an uptick. In the meantime, given their tiny population (4,657,542) they are unable to rely on domestic demand to compensate for shrinking global demand and hence are in a recession. But still, they have the cushion to weather the storm, e.g., in some respects they are better than the US – in 2008 they still registered a budget surplus, their GDP per person is higher at $52,000 versus $47,000 and they have more than twice in foreign exchange reserves.
So how do we use leverage over strength to develop a long-term, sustainable competitive advantage?
We need to recognize that we need capital, technology, research and development, high-value added products, market access, infrastructure and logistics if we are ever to have a chance at these highest-levels of competition? And yet we don’t have them all in abundance or at competitive levels? The key is to acquire them?
In private business, we would incorporate and seek capital in the capital market. In short, we would not be organized like a sole proprietorship, or like a mom and pop operation as they call it in the West. Instead we would be organized like a publicly-owned company. That means giving up full ownership in exchange for the acquisition of and access to requisite resources.
Is this an academic model or a realistic model? This is the model adopted by the Asian tigers as well as former socialist states that have joined the free-market system – and in many cases they gave full ownership to investors whoever they may be.
We want economic progress and reduced poverty? We cannot have our cake and eat it too?
In said forum attended by economists, ours and from the World Bank, we were urged to develop long-term, sustainable competitive advantage. With “shrinking global demand” courtesy of the global economic crisis, countries that are truly competitive will corner the market.
Unfortunately, the converse is likewise true: countries that are not competitive will be losers. And our economists explained that "our problem is competitiveness – the roots of obstacles to growth are less directly linked to the global crisis; they are deep-seated problems that require strategic responses, with or without the crisis."
Like athletes we must gear up because this competition is even more demanding than the Olympics.
As we have seen, big countries are already playing bully because so much is at stake, more than Olympic medals. The WTO will say NO to protectionism but “survival of the fittest” will be the unwritten rule, i.e., more barriers will be erected than competing smaller countries will want to encounter. Why? World leaders are local politicians that pander to populist demands; and which is also why developing countries given little resources make bad economic choices and inflict damaging blows to the economy or why economic reforms become mere rhetoric in many of these countries.
But where is the fairness? “Life is not always fair” as psychologists will tell us. (See: The 5 things we cannot change, by David Richo; “There are certain facts of life that we cannot change—the unavoidable "givens" of human existence”.)
What we need instead is to learn and master Oriental martial arts, i.e., using the big guy’s advantage to our advantage or using leverage over strength?
The writer (then a newly minted professional taking advantage of the consumer credit market freshly made available to him) spent the Christmas holidays many Christmases ago (in 1970) in Singapore when the last few remaining British soldiers were departing this tiny city state and Lee Kuan Yew was personally supervising work at the Singapore Zoo. Here was literally a tiny country that never asked the question: But where is the fairness?
The writer many years later would work with Singaporeans visiting the country countless times (over a decade, including being stranded in Singapore when his plane to Manila was turned back at the onset of People Power as opposition soldiers attacked the Manila International Airport; and this became the new normal for the writer, but that’s an altogether different story) and those couple of scenes would still be etched in his mind against the backdrop of present-day Singapore.
Singapore like the rest of the world is suffering from the shrinking global demand yet they have the foundation and the infrastructure to flex their competitive muscle once the global economic cycle registers an uptick. In the meantime, given their tiny population (4,657,542) they are unable to rely on domestic demand to compensate for shrinking global demand and hence are in a recession. But still, they have the cushion to weather the storm, e.g., in some respects they are better than the US – in 2008 they still registered a budget surplus, their GDP per person is higher at $52,000 versus $47,000 and they have more than twice in foreign exchange reserves.
So how do we use leverage over strength to develop a long-term, sustainable competitive advantage?
We need to recognize that we need capital, technology, research and development, high-value added products, market access, infrastructure and logistics if we are ever to have a chance at these highest-levels of competition? And yet we don’t have them all in abundance or at competitive levels? The key is to acquire them?
In private business, we would incorporate and seek capital in the capital market. In short, we would not be organized like a sole proprietorship, or like a mom and pop operation as they call it in the West. Instead we would be organized like a publicly-owned company. That means giving up full ownership in exchange for the acquisition of and access to requisite resources.
Is this an academic model or a realistic model? This is the model adopted by the Asian tigers as well as former socialist states that have joined the free-market system – and in many cases they gave full ownership to investors whoever they may be.
We want economic progress and reduced poverty? We cannot have our cake and eat it too?
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