Saturday, May 15, 2021

Mapping the size and shape of post Covid economic recovery

It was Amarthya Sen the Nobel prize winning economist who revealed after extensive research that famine is avoidable if there is good communications and information to and from the location of the famine prone region. He was talking about a different era.

It is hard to imagine a communications glitch of a high order causing a famine in these days of internet connectivity, wi-fi and all other technical wizardry of our digitized age. But that doesn’t mean that despite this communications revolution that would have been hard to imagine a few decades ago that communities have been kept out of poverty, though mass starvation would have been averted except in the most dire circumstances, such as in war zones etc.

There is no starvation in this country, but the recent lockdowns etc caused economic convulsions that came close on the heels of a five year period in which the economy was essentially laid waste. But the challenges ahead are enormous.

Contrasted

They are both in urban and rural settings. The relative economic inactivity that stems from the global downturn due to Covid will have far reaching repercussions that will seep into rural settings, as workers who have been laid off factory related employment etc. return to their villages.

But yet, the channels of communication that are open between communities can do wonders. While on the subject, it is moot as to why there is a dearth of digital payment acceptance in this country, contrasted to the African continent for instance.

In China it is difficult to pay anything other than with digital cash – but that’s China, the second most powerful economy in the world. But African economies are a different story. But yet some of these business ecosystems have bypassed conventional systems and invested heavily on digital payment platforms.

The point to ponder is, how Sri Lanka could leverage the communications revolution to accelerate economic growth and activity in both urban and rural communities in this time of great economic angst brought on by the pandemic.

This is not the bathala (sweet potato) and manioc era of Sirimavo Bandaranaike. It can never be. Those methods of self reliance and local productivity Mrs.Bandaranaike advocated in the early seventies may have been well intentioned, but her project per se was by and large a disaster. With today’s communications technology it is difficult to imagine that people in any setting, urban rural or megapolis, would be so insular. Make no mistake, there is nothing insular about growing bathala and manioc, but it was the top down nature of that command economy that made for a nightmare outcome of starvation, malnourishment and other maladies in many rural and urban communities during her 70s rule.

Today’s accent on local production can be leveraged by digital payments and digital-connectivity marketing and product awareness, but so far the communities enjoying a new productivity lifestyle have not warmed up to any of these innovations substantially. It’s not necessarily social media that has to be the conduit for greater product leveraging.

Absorbed

There are other methods that can be encouraged on digital platforms. But digital payment facilities etc have been slow in terms of the evolution of new apps that enable such technologies. There is no point in every fisherman and farmer having a smart phone if all they are using it for is to download Hindi movie clips.

Young entrepreneurs in the digital realm have still not been absorbed into the new post Covid economic initiatives, because very often the private sector planners themselves are not exactly in a digital mindset.

They are good at creating campaigns, but in mustering the brainpower for leaps in digital-technologies, they have to be mavericks of sorts too, which they generally aren’t.

While there have been considerable strides made in making use of hi-tech digital communications technologies in the public sector, these initiatives have been halfway measures in some state sector entities. There is for instance an excellent online licensing facility available through the RMV for vehicle owners but in contrast, those who want to register new Companies still face nightmarish roadblocks due to initial digitized initiatives ending up on the gravel roads of bureaucratic red tape, when the tasks of registering new companies reach a certain end-stage.

The bottom line is that the country is at a very primitive stage when it comes to digital payments, and this is partly due to the slow reaction of the rural start up sector.

The fashionable urban innovators have created their own startup ecosystems, and they have been cash rich and good to go anyway, with or without great success in areas such as digital payment application innovation etc.

But this writer’s hunch is that there are rural sector innovators who are rearing to go if a digital economy was created – but they find that there is no support and essentially nobody to fund their start ups.

The second part of the plan for a post Covid economic resurgence should be to be out of the gate early in terms of what’s on offer next year in the global economy. Donald Trump the US President was making a stump speech the other day, and was heard to say that the next year is poised to be the greatest for the US economy. Most would say it’s the bluster to be expected from a president whose presidency is on the line.

But Trump’s pronouncements on the economy have always been spot on, even though you could blame the man for many other things. There is reason to believe that he is right. If the Covid contagion tapers down at some time which it should because nothing lasts forever, there would be opportunities for growth at unprecedented levels. Economies would bounce back on the strength of a spurt of innovation perhaps, due to the fact that markets would be hungry and business would be obsessed with recovery.

Rebound

Those who are ready to be out of the gate, would capitalise on the boom.

In many countries, Covid has wreaked so much havoc that they are not in a state to make that kind of comeback but Sri Lanka has done well in facing the pandemic and could have a head start getting out of the gate and making quick gains on the rebound.

The private sector seems to be up to the task, because it’s captains of industry don’t seem to be worried about negative perceptions. There seem to be none as far as they are concerned and that’s due to the energy with which the economy is back on the road.

The government has not stopped to moan, think and mull over. It’s ready to start small, and start local, and start yesterday.

The private and public sector are both limping back to recovery, but the kind of chaos that the doomsayers predicted has not materialized.

Public sector salaries are being paid, when those such as Victor Ivan, the eternal Cassandra, predicted that they wouldn’t be paid in the Covid aftermath. But paying pubic sector salaries is in and of itself an achievement in this post Covid situation.

If Trump is right, the world economy would follow the US lead. The old order of doing business may change, because the traditionally rich economies are badly Covid hit. But in times of recovery, there will be other more vibrant and growing economies lining up to take up their place.

Debt of course is the other big issue that faces us. But, the system would probably not be able to go on globally unless some debt rationalization happens and the creditor countries and institutions are willing to give way and reschedule – nay completely re-order – debt repayment.

Things will change because they have to.

The rich will learn to coexist because it’s a better option than having to co-perish.

Source: www.dailynews.lk

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