Politics Of Policy | Choose Your Growth
As the world debates growth, countries are realizing that everyone has to follow a different path. A monochromatic view on growth makes it ugly for everyone
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The young Chan Chun Sing is a Minister in the Prime Minister’s office in Singapore. I discussed with him the meaning of growth in an insightful conversation at the St Gallen Symposium earlier this month.
As he often says, Singapore is probably the only country that did not have to fight for its independence. Singapore was expelled from Malaysia in 1965. Since then the country overcame the “tyranny of geography” to become an economic powerhouse that consistently grew despite geo-political challenges.
Today, as a leading economy of the world Singapore has to choose its growth. As an island state, Singapore has to be very clear about its priorities, says Minister Chan.
Singapore was a trading post in colonial Asia. In modern times, its efficient port was an engine of growth. For future then, was an even bigger and better port the right decision? Is investing in trading infrastructure the best option to maintain growth? These questions were deliberated by the country and the answer was a strong no. There were geographical limits that could not be overcome. Singapore then chose the path of being a financial services hub. It also chose to maintain its strength in port services by deciding to go global as a manager of port services across the world.
The point is “Each country has to choose the nature, quality and pace of growth,” says Minister Chan.
Global growth is a sum of its parts. It is not always sensible to force higher growth on some countries and berate lower growth on others. IMF predicts that global GDP growth will rise from 3.1 per cent last year to 3.4 per cent this year and 3.7 per cent in 2017.While the world bemoans a “low” 6 per cent growth rate of China, the fact is that the country is still responsible for 1 per cent of global growth, Danny Leipziger, MD of Growth Dialogue and Professor at George Washington University told me at the St Gallen Symposium.
The theme for the symposium was apt for our times: Growth—The Good, The Bad and The Ugly. But what is good for one is ugly for the other. This was clearly the message from the debates at the Symposium. In many ways the growth debate is purely GDP oriented when much of the world is looking for answers beyond GDP. Sometimes, economic and market analysts become cheerleaders for any rise in consumption that can raise average economic indicators without going into the details.
The discussion on climate change is as much about nature of growth as about sustainable development. Growth measured in purely consumption terms has to factor in the disparity across the world. Wasteful consumption in emerging markets that matches that of the developed world can’t be sustained. However, curbing the consumption by the poor is not acceptable too.
There are two contradictory forces at play in the world. Global corporations driven by consumption are keen that the emerging markets raise their purchases of products. Climate change pacts on the other hand want to limit consumption by the poor while maintaining the levels of the rich.
This approach is unlikely to succeed. Emerging markets have to set targets that are independent of the expectations of the rest of world.
Perhaps the answer lies in another approach. The quality, definition and sustainability of growth is as important as the statistics that drive it. A country shouldn’t have to move from being equally poor to unequally rich. Increase in consumption is seen as a final arbiter of growth. However unless consumption is spread across all socio-economic strata, it does not improve the wellbeing of society. High consumption spread on a narrow base is not as good as lower levels of consumption spread across all sections of society.
In the end the growth figures should be able to reflect in improving quality of life at all levels and not just better bottomlines. Policy makers have to look at growth that suits their economy and society, like Singapore. A common global approach will not work.