Bold Decisions, Wise Choices II
By: Yusuf Mansur
The Irish industrial
development experience was the subject of this column last week when a promise
was made to look at how Jordan could emulate Ireland and become part of the
industrialized world. So let’s look at it.
The starting point for
any notion about creating sustainable economic growth, otherwise known as a competitive advantage, is to know that it takes political will. To increase the
competitiveness of Jordan, the political will and backing must be there to make
it the number one national priority or forget it. For example, in Tunisia, the
issue of competitiveness is the first item on the prime minister’s agenda in
the weekly ministerial meeting. Jordan has an energetic leadership at the top
with enough drive and resolves to make this happen.
Second, developing a
national competitive advantage is not an overnight success story, neither is it
inherent to a nation through some natural endowment or inherited advantage—sea,
water, location, sun, earth, minerals, or even good looks. Anyone who claims
otherwise is simply confused: It takes decades of hard work. Like the Irish and
Tunisian experiences, Jordan needs to have at least a twenty-year horizon. A
clear framework for that horizon can be found in the Vision2020 initiative that
is currently being championed by the Young Entrepreneurs Association. The
vision, albeit not yet detailed enough, is an encompassing document supported
by a team specialized in spreading its content and message to all parts of the
kingdom and to all walks of society. So rallying behind the Vision, which
should belong to everyone, and supporting it, would be part of this national
strategy. In all countries that succeed, competitiveness is a well-understood
concept. Alas, in Jordan, many of the people who use the word actually do not
know what it means.
Third, a powerful and the dynamic coordinating body must be set up early on in the process. Unless all moves are properly coordinated
good effort will be wasted. For instance, suppose that the plan calls for
proper training to increase the quality of the labor force. Unless the plan is
coordinated with industry, the trainees will either leave Jordan to work in the
Gulf or join the ranks of the unemployed. In either case, Jordan will have
wasted the investment. Therefore, public/private inter and intra coordination
is the name of the game.
We could take the
Vision 2020 paradigm or a proper industrial development policy if it exists;
enhance it with detailed mechanisms for change and upgrades for the industrial
sector; establish a body to implement the changes and staff it with the
brightest minds that money can buy—a meritocracy, please; and make the new body
report to the highest authority possible, or close enough, to empower it. This
body is not a Gestapo; it is a promoter, a do-gooder whose goal is to make
Jordanian industry strong, to increase competition and help it thrive in the
face of regional and global challenges. It is a benefactor for industry - not
industrialists. It exists to monitor competitiveness, a bestower of grants to
upgrade industry; a champion for the cause of industry that is at home both in
small, medium or large factories and in the halls of power and policy. Although
this organization will be staffed by bright people, it should not conduct its
own research; let it subcontract and outsource research so that a new society
of consultants can emerge. Jordan does not have enough consultants; they are
the ones that transfer technology, and they need to be cultivated and helped to
develop in order to upgrade the industrial sector.
The information must be
shared between the public and private sectors. It is pathetic that we still
squabble about the number of unemployed in Jordan. Who cares! Just share
the information you have and share it always. Numbers are needed but not only
macro numbers and trends, what is needed is even more detailed micro numbers
that relate to specific exports or products and market outlets. These numbers
are not easy to come by for small and medium-sized enterprises (SME), and the
lack thereof acts as a barrier to SME development and competitiveness (for an
enterprise, competitive advantage means the ability to create sustainable
profits). The government can help by generating, through consultants with some
assistance from its embassies and various departments, the necessary data that
is requested by would-be exporters for export purposes and availing this
information at little or no cost to industry.
Next, Jordan needs to
review its fiscal policy. The only one who graduated in the seventies and never
read a solid research paper in the nineties would argue that monetary policy is
the way out of the dire straits of a recession. Never mind theory and reading
all that difficult jargon, look what the Bush administration did last week to
bolster a dwindling rate of economic growth: it proposed to the congress US$130
billion of tax cuts and government spending—and yes, it is deficit spending
that is being proposed. A stable expansionary (not contractionary as in the
existing Jordanian scenario) fiscal policy lies at the heart of the macro view.
But take care. This is not a call for more employment at government offices, no
sir. This is spending that should go to industrial establishments that want to and
actually do modernize and upgrade. It should boost efforts to export; to hire
new technology in order to access advanced stable markets; to encourage
backward and forward linkages, and to transfer technology. The allocation of
funds must be transparent and include partnerships with the private sector so
that every major funding decision is backed by a committee decision and a solid
study for upgrading.
Who is going to fund
this effort? Jordanians of course. This is a national effort, representing the national will and addressing national aspirations. It, therefore, must be
financed by Jordanians. Public or private funds? Both. The public sector
initially funds the plan and when successes start to shine and become apparent
to all, the private sector gradually replaces public funds with its own
resources.
Finally, the competition
must be encouraged at home and in the domestic market, whether from domestic or
foreign sources. In the domestic market we, need two laws immediately: a
consumer protection law and a competition law. As for foreign competition, it
is coming and it is as strong as ever. In total, Jordan has signed 63
trade-liberalizing agreements, including free trade agreements with the US and
the EU and accession to the WTO. But only when all the Jordanian players move
in a coordinated team-like fashion should competition with foreign producers
become a necessary ingredient for enhancing the competitiveness of the economy.
Opening Jordan without having done the groundwork means early and meaningless
sudden death to many industries. One should not get in the ring with a
professional boxer unless he/she is a pro himself, has a big mouth to talk
himself out of it, or has trained well and readied himself for the fight.
Foreign trade is not as foreign aid; it is not a waltz, not even between
equals. Consequently, the government must work with the industry to get ready
for competition. After all, with the slow demise of foreign aid, the
government’s only source of revenue will eventually become an industry, and no
industry means no revenue and a bankrupt government.
One feels, at the end
of a lengthy article, like Eva Peron: “Have I said too much?” Maybe. But then
maybe not. Any suggestions?
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