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The onset of the global crisis in 2008, the burden of Covid 19, the ongoing wars in Russia –Ukraine, and the crisis conflict in the Middle East have disrupted the favorable external economic environment that had made export-led growth strategies viable. It is well-known that export-led growth strategies must sooner or later reach their limits when many countries pursue them simultaneously: competition among economies based on low unit labor costs and light taxation means a race to the bottom, mostly with little gains for economic development but always with potentially severe social consequences.
Developing countries could compensate for the resulting decline in aggregate demand growth through domestic demand if their domestic markets were sufficiently large and if they avoided an import boom, which caused balance of payments problems. Concentrating on household consumption, it was presumed that the sales potential in some large emerging economies is approaching but also that imports might meet most new domestic consumption demand. Sustaining a shift towards a more balanced growth path required changes in the production structure, fostered by product innovation, to make domestic production patterns better correspond to newly emerging demand patterns. The associated new employment and wage opportunities allowed for realizing emerging sales potentials through rising incomes, rather than rising household debt.
Many developing countries, like Bangladesh, have pursued export-led growth strategies over the past three decades. The success of such strategies depends on rapidly growing global demand and the ability of a country to enter market segments with high demand growth and potential for productivity growth. What was new at that juncture, where growth of demand from the developed countries must be expected to remain weak for years to come. Therefore, a rebalancing of the forces of growth towards a greater weight of domestic demand became indispensable. It became a formidable task for all developing countries, though more difficult for some than for others.
Implications for a greater role of consumer demand in developing countries’ growth strategies have often been frowned upon because of these countries’ alleged insufficient market size. However, rapid growth in many of these countries over the past two decades may well have changed the situation. Given that a rebalancing of growth strategies implied changes in developing countries’ policy orientations, it has been crucially important to determine whether the required sales potential exists before considering the adoption of ensuing policy changes. The supply-side focus of the OECD (2013) and the likelihood that developing countries can increase domestic demand and productive capacity which the World Bank (2011) identified as necessary to ensure sustainable growth in developing countries. Adopting a demand-side perspective facilitates an examination of the processes involved in shifting the orientation of a country’s growth strategy from one component of demand (i.e. exports) to another (i.e. domestic demand).
It also allowed the establishment of a link between the orientation of growth strategies and global rebalancing, much of which related to the share of household consumption in aggregate demand. The G20 Leaders’ Statement (2009)at the Pittsburgh Summit called for a rotation of global demand from countries with a current account deficit towards countries with a current account surplus, where domestic expenditure in deficit countries would no longer exceed their income but rapid global growth would be maintained. This is because surplus countries would, at least for a while, record accelerated domestic demand growth over their income. Finally, some of those countries whose export opportunities were adversely affected by a prolonged period of slow growth in developed economies had a risk of falling into the so-called “middle-income trap”, as reduced growth of their manufactured exports significantly slowed down economic growth. It is generally argued that those countries would increasingly need to rely on innovation (i.e. “investment” in the national accounting identity) and household consumption expenditure to continue to catch up to the income levels and standards of living of the developed countries.
Balanced development and International Regimes
The issue of low development is very topical at present times of deepening differences among developing countries and low efficiency of development. The participation of developing countries in world economic and social growth is nowadays a key factor of success and advancement of supranational efforts in economic and political cooperation (the example of the effect of developing countries on supranational bodies and regimes may be the failure of WTO ministerial conference in Cancun). Millennium goals of the WTO conference in Hong Kong pointed at the increasing importance of the development issue for the functioning of the whole global economy and thereby they amended in an inseparable way the interest in this issue from the view of concern about more secure and balanced development of developing regions.
On the global level, the analysis was based on the role, legitimacy, and efficiency of international regimes which, especially in the economic sphere, represent the main tool for the reaction of the global economy to changing conditions resulting from globalization. Ethics and social responsibility of transnational corporations the influence of which is often superior to the recourses of national governments, was also the key factor for understanding the new role of various participants in global economy and politics. The role of transparency and a non-corruption environment in politics and economy penetrates through all levels of governance and therefore it is as important in questions of governance (which suffers from lack of democracy, non-transparency of lobbyists' interest, and insufficient formulation of public interests) as in issues of national governance, which, despite of its close connection to the interrupted continuance of democratic development in many countries does not differ from the situation in advanced countries.
External Obstacles
In addition to the strategic interests and internal capacities of corporations, conditions within countries and local communities also play a crucial—and often an inhibiting—role in determining the private sector’s impact on international development. Several concerns have been identified which are currently limit investors’ ability to invest in and support local communities, including:
• widespread bribery and corruption in country governments;
• political uncertainty and the ongoing threat of violence, terrorism and religious extremism;
• impact of AIDS and other health crises;
• government resistance to foreign investment and development (e.g., bias toward local investment, restrictive trade regulations, etc.);
• lack of judicial reform and reliable legal systems;
• substandard education;
• lack of technology and technical capacity;
• the absence of a free local media;
• poor infrastructure;
• the absence of uniform international standards for global business development
Role of Developing country governments
In this context, the developing country governments must share responsibility and increase accountability. The developing country governments represent the most crucial—and currently the weakest—link in the international development chain. It has been argued that it is ultimately the responsibility of local country governments to provide stable and sustainable environments for investment. The most urgent areas are need to be addressed by local country governments include: reducing corruption and increasing transparency; promoting judicial and political reform; enhancing local capacity in infrastructure, education, technology, fair wages, and other areas that contribute to a stable environment for private sector investment; implementing policies that encourage foreign investment.
Six essential characteristics
1. Triple top-line value production
"The TTL Establishes three simultaneous requirements of sustainable business activities - financial benefits for the company, natural world betterment, and social advantages for employees and members of the local community—with each of these three components recognized as equal in status." Whereas many businesses use the triple bottom line, "triple top line" stresses the importance of initial design and is a term attributable to McDonough and Braungart in their book Cradle to Cradle.
2. Nature-based knowledge and technology
This bio-based principle involves the conscious emulation of natural-world genius in terms of growing food, harnessing energy, constructing things, conducting business healing, processing information, and designing communities.
3. Products of service to products of consumption
Products of service are durable goods routinely leased by the customer that are made of technical materials and are returned to the manufacturer and re-processed into a new generation of products when they are worn out. Products of consumption are shorter-lived items made only of biodegradable materials. They are broken down by the detritus organisms after the products lose their usefulness. These are also non-hazardous to human or environmental health. This principle requires that manufacturing of only these two types of products necessitates the gradual but continual reductions of products of service and their replacement with products of consumption as technological advancements allow.
4. Solar, wind, geothermal, and ocean energy.
The advocacy for employing only sustainable energy technology—solar, wind, ocean, and geothermal—that can meet the energy needs indefinitely without negative effects on life on earth. Many authors, like Paul Hawken, have referred to this as utilizing current solar income.
5. Local-based organizations and economies
This ingredient includes durable, beautiful, and healthy communities with locally owned and operated businesses and locally managed non-profit organizations, along with regional corporations and shareholders working together in a dense web of partnerships and collaborations.
6. Continuous improvement process
Operational processes inside successful organizations include provisions for constant advancements and upgrades as the company does its business. The continuous process of monitoring, analyzing, redesigning, and implementing is used to intensify TTL value production as conditions change and new opportunities emerge.
The writer is a Former Secretary to GoB and Chairman NBR.
Messenger/Fameema
