Background and the Context:
Post-pandemic economic recovery is staggering in industrialized economies with lower growth rate projections as these are trapped in stagflation. On the other hand, emerging economies of the East are showing moderate growth, albeit lower,than in the per-pandemic period. Growth compacts of the East still appear more optimistic than in the west despite popular hype of mixed picture of global economy is about despairs only.
Expansive globalization of past decades has altered the consumer economy and market clusters. It created immense wealth across countries, spectacularly benefiting China, India,Vietnam, Indonesia, Thailand, Ethiopia, Rwanda, the USA, Russia, Mexico, and Brazil, for example, for they could anticipate future economic dividendand market dimension and associated merits of this economic phenomena. This is why policy makers and econo mic planners need to explore innovative novel approaches at creating simple but pragmatic ways to sustainable growth momentum, aligned with people’s prosperity,aspiration, and global peace.
In fact, globalization of market economy era has done miracles for China and India for it has broken most domestic trade barriers by bringing out the best in comparative production advantages in manufacturing and trading environment and accessing larger markets. Economic protectionism cannot bring out the advantages of comparative productivity in isolationism without taking advantages of the advancing technology, innovation, knowledge, free flow of capital, and markets in growing middle-class consumer-base. This is evidenced by the emergence of the orient in global economic domain of the past decades.
Astounding as it may sound, the global economy has provided excellent opportunities for China and Vietnam to grow economically as astute and smart players in the international marketplaces. They have re-oriented policy priorities and restructured institutions for spurring economic growth modules. Of late, India, Bangladesh and Indonesia have geared up along with trend,albeit slowly.During the past three decades, China’s GDP grew by fifty-five times to US 19.9 trillion (2022) from US$ 361billion (1990)over the period and produced 535-dollar billionaires.India’s GDP grew by ten times to US$ 3.5 trillion (2022) from US$ 321(1990) and produced 166-dollar billionaires.Vietnam’s GDP grew by fifty-five times to US$ 1.12 trillion (2021) from US$ 6.472 billion (1990) over the past period and produced 7-dollarbillionaires.
Likewise, Indonesia’s GDP grew to US$ 1.18 trillion (2021) from US$ 106 billion in (1990) and produced 30-dollarbillionaires.Bangladesh grew by ten times to US$416.4 billion (2022) from US$ 31.6 billion (1990) over the decades when ambivalent Nepal followed a path to GDP level of US$ 36.4 billion (2022) from US$ 6.5 billion (1990) during the same period. Neighboring India has already overtaken most industrialized countries of Europe and Asia and according to Forbes and has become a haven for 166-dollarbillionaires,more than industrialized countries. China is now the home of 535-dollar billionaires, only behind the USA (735), and the second largest economy in the world.
During the past decades, the South-Asian economies failed to register similar GDP growth rates what China and Vietnam have achieved. Why is that? Are the business models of China and Vietnam being better than those of the western ‘laisse-faire’ economy? This spectacular growth of China and Vietnam raises critical question about the policy pragmatism,strategies, and business practices in the region. Does it mean economic models of China and Vietnam are more realistic and efficient than other countries? Time to re-think?
Many experts predict Asia Pacific will grow and become a significant consumer market. China, India, and Southeast Asian countries are expected to growth over the coming decades, leading to sustained consumer demand over the period. If this trend is sustained, PwC, in a 2017, predicts China will be the number one economy of the world in 2050(some others predict this date may come sooner than this), followed by India in number 2, USA (3) and Indonesia (4). The other top economies will include Brazil (5), Russia (6), Mexico (7), Japan (8), Germany (9) and the UK (10). If this is not an economic miracle, then what is it?The industrialized G-7 grouping, representing the largest economies of the west plus Japan, will be reconfigured by new economic players from a mix of countries from the Global Southin coming decades.
The truth of the matter is: the consumer is the king of the market economy. The market is where the consumers are.Presently, they are found in large economies with stronger purchasing power. This phenomenon is gradually shifting towards China, India, Indonesia, ASEAN countries and Brazil where growing middle-class is expanding and can capitalize on population dividends. Brazil and Mexico are the largest growing markets in Latin America. The Middle East is catching up with growing,and Nigeria and Ethiopia are in the lead in Africa.
Population size counts in the consumer economy for growth potential in market dynamics.Growth miracles of China, Vietnam, and India are good evidence of this, for example. Countries without a sizeable consumer base must expand their economic collaboration or economic integration with large market economies.Both Switzerland and Singapore, smaller than Nepal in population and territory and with little or no natural resources, have substantial number of middle classes and wealth creations. Switzerland with GDP of US$ 806 billion (2021) and about eight million people is an important economic player in Europe and engages freely with countries in the European Union and rest of the world.Switzerland’s prominence in world affairs is primarily due to its power of wealth and superior technology base.
Similarly, Singapore’s GDP of US$ 397 billion (2021) with a population of 5.5 million plays vital role in the ASEAN and global affairs. It is due to its economic prominence and integration into the ASEAN economy. Both Switzerland and Singapore are highly respected and valued in regional and globe affairs due to their economy-powered diplomacy. It establishes a fact that economy is the real strength for influence, nothing else. Is it not high time for decision-makers and people of Nepal for rethinking? Why is this country with some thirty million people with abundant human and natural capital resources lost in transition to development pathways and economic transformation?Just imagine, during the past three decades Communist Vietnam’s economy grew to over a trillion-dollar economy from US$ 6.5 billion (1990) whereas Nepal continues to struggle at the bottom of the platform with US$36 billion GDP (2022) also from US$ 6 billion during the same period.
In growth strategy, it is important for a nation-state to play an inspirational role as driving force of development and collaborative partner. Open market platform is the only sustainable platform where entrepreneurship, ideas, creativity, capital, labor, and goods flow freely ‘sans- frontier.’ In short, gone are the days of economic sovereignty verbose and super-protectionism if we are to make a country economically strong and prosperous, and lift the population higher up on the economic ladder.
Impact of Globalization and Access to International Market Economy:
The positive impact of trading and market liberalization processes are irreversible.It has created higher economic inter-dependency between the countries and comparative awareness of benefits of development across continents. This is the reality of the present-day political economy. It is uncertain what political-economic construct would emerge from the current Geo-political tension involving three economically powerful countries, and India at the center-stage.This tension could hamper global growth momentum. There are, however, indications that current polarization is developing into the de facto creation of a new economic construct.
With pragmatism, ASEAN has shown that growth is possible. Collaboration between them is in motion (Regional Comprehensive Economic Partnership is an example) with increased intra-region trading, continued flow of capital and goods across the region,visa-free movement of people for enhancing people-to-people contacts, entrepreneurship and business collaboration is expanding. Positive vibes are visible and appear intact despite signs of fissures at the Geo-political arena. Challenges and fear, however, remain for there are politically strong maneuverings emerging at de-coupling multilateral structure, rule of law, trading practices,and restrict market access in the pretext of ‘national security’ because of security construct emanating from the ongoing rivalries between the economic and military powers and Russo-Ukraine conflict.
The consequences of COVID-19 pandemic have affected the labor market, private consumption, innovation, technology. It is changing work profile,human behavior and having profound effects on work culture and business environment. Any transformation will impact both on the market environment and business relations hipsal though they may appear intact at the macroeconomic level.Global doctrines of multinational cooperation, rule base law, human rights, and democracy, massively popular during the aftermath of World War II and invented by the west for political and economic influence,are now under stress. This doctrinal international alliance has,over the years, unfortunately failed to mitigate increased social disparities, economic inequalities and contributed to political divide in several countries.
The major consequence of the coronavirus pandemic was that it demonstrated trust deficit between richer and poorer countries prompting rethinking in the Global Southpsychic.This trust gap was swiftly filled in by China and India through high impact vaccine diplomacy in the middle of pandemic.Both countries have created an aura of reliability and trust with recipient partners across the continents. The impact and political dividends of this may not be known yet precisely but it did create a favorable atmosphere for economic cooperation and instill mutual trust.
(The author, Kedar Neupane is a board member of Nepal Policy Institute, an independent international think-tank, and a retiree United Nations staff. Observations, views, and comments expressed in this piece are the author’s personal. Neupanek1950@gmail.com)