Thursday, March 1, 2012

Asia’s rising economies and the space to grow, distribute

Asia’s rising economies and the space to grow, distribute
Dinna Wisnu, Jakarta | Wed, 02/29/2012 10:36 AM
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It is nice to “grow up”. Indeed, that is the very feeling that should come with economic growth. Busy streets, people working in high-rise offices, decent houses and healthcare, children with quality education and lively markets are a few indicators of economic growth going right.

Yet, not everyone is happy. Other countries that have developed for over a century had earlier complained.

In international forums, the rising economies are urged to share their growth with ailing Europe and the USA. Numerous “strategic” and “comprehensive” partnerships and forums emerged.

If one looks closer, only few of these partnerships between the “rising” and “ailing” economies are developed on an equal footing.

The heading may be about transfer of technology or promotion of education, but barely any local universities or research institutes obtain any genuine upgrade of knowledge.

If one is lucky, a few students or faculty members may be given a few days visiting abroad for
projects to hold international conferences or serve as visiting professors to teach a few credit hours. But that’s about it.

When it comes to economic cooperation, non-tariff barriers become the new trend. The usually pro-liberal market World Trade Organization (WTO) allows this.

The biggest barrier lately has been focused on “green” requirements. One must calculate carbon emissions in business, pass certification requirements and count how much biodiversity is conserved in plantations and forests.

Young foreign scholars with little knowledge about socioeconomic or political history come to villages to write reports on whether these economies are green enough or not for their governments to support.

Among the elite, diplomats are pulled-out from reality. The variety of international forums has mushroomed. Their frequency has more than doubled in the past decade.

Discussions among heads of state and ministers are intensified and have become so intense that any immediate detrimental consequences to their citizens are considered normal. The obvious examples are the free trade agreements.

These agreements are signed long before there is any clarity on how to improve infrastructure and other trade facilities and long before any step-by-step domestic reform on agricultural, industrial or mining policies.

Any statesman, or even businessman, would know that provision of infrastructure, trade facilities or other common goods cannot be started or left alone to the private sector.

After all, this is the responsibility of the government. No wonder once the agreements materialize there are more protests than support. Policies become harder to reform because insecurity is higher.

Don’t get me wrong. I agree that we must create more partnerships between developed and rising economies to save the earth and prevent climate change while promoting free trade. Yet, the steps taken thus far have been wrong.

The diplomatic steps taken do not solve the problems. If the pattern continues, we are going to witness a serious eruption of anger, disappointment and protests from communities around the world. Not just in the rising economies, but also in developed economies.

Why? Because governments that are detached from society cannot solve society’s problems. With more summits and high-profile talks, more hours are taken away from handling domestic problems.

Too many handshakes and photo-opts have lured leaders to be “rock-stars” on the world stage. International forums can negotiate terms, but what makes a difference is the implementation of the agreements domestically.

Economic growth is different from wealth accumulation and distribution of wealth. What makes any government a hero is when wealth is distributed to as much of the population as possible.

If one wants to be honest, what every human being needs is food, healthcare, housing, education, decent jobs, lifestyle and some refreshing time.

Growth alone cannot deliver these needs to citizens. Even if the government is very responsive, the time lag between economic growth and distribution of wealth is significant.

Let me take the example of Indonesia, India or China. These countries may be rising economies, with increasingly obvious modern living facilities.

Yet, a large number of their population still lives below, or just slightly above, the minimum standard. When people go to malls, buy cars or talk on cell phones, this should not be misunderstood as wealth.

Traditional markets are mostly gone. The big whole-sale air-conditioned shopping centers promise discounts and cheaper products than small traders. People buy cars or motorcycles because they can’t afford houses that are close to their offices.

There are not any decent modes of reliable public transportation. In addition, if one wants to earn decent wages, he or she must be mobile and ready on call, which means that private cars or motorcycles are imperative capital goods.

Cell phones are widely used because they facilitate the demand for cheap mobility, and, of course, a little bit of lifestyle. Their savings and quality of living, however, are far from wealthy.

Speaking of business, cities in Asia may be busy, but there are also serious traffic jams everywhere. In rural areas, many streets are unpaved.

There are forums to encourage investors to come in, but the investors’ complaints remain the same.

They feel that the government is not doing enough to protect and promote their business. Foreign investors and businesses need certainty of profit in their own time frames.

These investors forget that through international forums the government has prioritized them much more than opening business access to local people or build bridges and streets.

Thus, let us keep perspectives in proportion. The rising economies need space to grow wealth and distribute it to the widest possible population in their territories.

Foreign investors and businesses have the door opened and have given room to grow in the economies that actually belong to other nations, hence they share the responsibility to distribute wealth in the community they operate.

Minimum wage is designed to protect workers, not to peg low wage rates. “Green” requirements were initiated for sustainable development, not to curb growth.

No growth will be sustained if the people where the business is operating are marginalized by businesses and government officials. Let us put things back where it should be.

The writer is the director of Paramadina University Graduate School of Diplomacy.

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