The interplay of Macro-economic factors and Politics
By: Amit Bhushan Date: 28th April 2014
The domestic political compulsions in Afroasian countries undergoing ‘polls’ are forcing the political leadership in those countries to take a hard-look at their macro-economic factors and pronounce policy adjustments to suit local interests. Those leaders or parties who are unable to find a toehold in terms of a suitably aligned program as a promise to prospective voters are being laid by the wayside as country after country seem to be voting to raise a new crop of leaders. The nationalism based on economic interests best depicted in form of a visible anti-corruption bias as well as putting interest related to local workers jobs on the top, seems to be rising. The Afroasian employed class voter seems to be suddenly as conscious of his rights as an ordinary Western voter in US or Europe.
While the above puts pressure on the political leadership to devise ideas to meet those expectations, it is also driving businesses crazy since any change impacts the competitive positioning of the corporates and their long term ability to generate profits. Further the businesses are unsure about the duration of the time till such changes will continue and when is the situation likely to stabilize. The businesses are also feeling the need to hone up their skills to anticipate those changes so that they can adjust as and when such changes hit the markets. Some of the corporates may even want to lead advocacy of such changes to rivet their positioning the markets.
However the initial reaction of most of the large corporates as well as the Trans-National Corporations (TNCs) does not seem to be encouragement for the trend. This is because such changes are likely to enforce tweaking of the present business models of these entities to accommodate the local socio-cultural aspects to a much greater level than present. The is because people seeped in these socio-cultural models are now asserting themselves powerfully and politically as well as through legal means. This is likely to impact the local ‘standards’ for the products forcing the product design, packaging, promotions as well as subsequent make or buy decisions of the local units of the TNCs. It may also have impact on the organization structures of the local units and quite a few TNCs may not be ready to assimilate such changes. This is even as some of the local competitors may have already started to invest in redefining their products and organization structures to reflect their readiness towards such changes taking place in the societies.
While the instant reaction of investors to such wide-impact changes may be that of an assertive resistance. However a deeper analysis could reveal that the changes are likely to propel these nascent economies to a much higher level of harmonious growth witness only during the decade of 80s and early 90s of the previously gone by 20th century. Subsequently we have only witnessed some War-fueled growth or a Chinese raw appetite driven growth and therefore exploration driven or primary commodity driven growth. Such growth was not even handed as it surpassed many even in the resource rich nations and yielded benefits only to a minority who could align themselves to meet this external demand. Now is the chance to spread a wholesome development to the aboriginal societies who are in any case asserting themselves politically to invite such changes in their societies.
This is in line with policy of the Asian manufacturing powerhouses to grow demand domestically and turn away from an export driven model. This is also likely to generate demand for services in the Afroasian economies in line with market dynamics to support telecom, internet, financial industry as well as other sundry services segments. Push can be observed to attract ‘light manufacturing’ industries to low labour cost destination or to consumer destination to generate jobs and employment in local markets. Push is also observed to refine ‘ores and other commodities’ to more value added form subject to local sourcing conditions being supportive to get other necessary materials and to create required infrastructure. There will also be need to customize imported consumer manufactures to suit local taste and usage norms and therefore a suitable local industry in the local markets to customize the products as per taste of people. The local political parties are increasingly seen supportive of such actions to retain their stronghold and are under considerable pressure to actually realize these local aspirations unlike previous years when stated policy was at variance with practiced approach. There also seems to be greater focus to acquire capabilities to develop engineering capabilities for heavy manufacturing as well as local infrastructure development including financing capabilities. This yields investors much opportunity though with a much greater difficulty to identify entities who are moving in to fill this space in the right way.
By: Amit Bhushan Date: 28th April 2014
The domestic political compulsions in Afroasian countries undergoing ‘polls’ are forcing the political leadership in those countries to take a hard-look at their macro-economic factors and pronounce policy adjustments to suit local interests. Those leaders or parties who are unable to find a toehold in terms of a suitably aligned program as a promise to prospective voters are being laid by the wayside as country after country seem to be voting to raise a new crop of leaders. The nationalism based on economic interests best depicted in form of a visible anti-corruption bias as well as putting interest related to local workers jobs on the top, seems to be rising. The Afroasian employed class voter seems to be suddenly as conscious of his rights as an ordinary Western voter in US or Europe.
While the above puts pressure on the political leadership to devise ideas to meet those expectations, it is also driving businesses crazy since any change impacts the competitive positioning of the corporates and their long term ability to generate profits. Further the businesses are unsure about the duration of the time till such changes will continue and when is the situation likely to stabilize. The businesses are also feeling the need to hone up their skills to anticipate those changes so that they can adjust as and when such changes hit the markets. Some of the corporates may even want to lead advocacy of such changes to rivet their positioning the markets.
However the initial reaction of most of the large corporates as well as the Trans-National Corporations (TNCs) does not seem to be encouragement for the trend. This is because such changes are likely to enforce tweaking of the present business models of these entities to accommodate the local socio-cultural aspects to a much greater level than present. The is because people seeped in these socio-cultural models are now asserting themselves powerfully and politically as well as through legal means. This is likely to impact the local ‘standards’ for the products forcing the product design, packaging, promotions as well as subsequent make or buy decisions of the local units of the TNCs. It may also have impact on the organization structures of the local units and quite a few TNCs may not be ready to assimilate such changes. This is even as some of the local competitors may have already started to invest in redefining their products and organization structures to reflect their readiness towards such changes taking place in the societies.
While the instant reaction of investors to such wide-impact changes may be that of an assertive resistance. However a deeper analysis could reveal that the changes are likely to propel these nascent economies to a much higher level of harmonious growth witness only during the decade of 80s and early 90s of the previously gone by 20th century. Subsequently we have only witnessed some War-fueled growth or a Chinese raw appetite driven growth and therefore exploration driven or primary commodity driven growth. Such growth was not even handed as it surpassed many even in the resource rich nations and yielded benefits only to a minority who could align themselves to meet this external demand. Now is the chance to spread a wholesome development to the aboriginal societies who are in any case asserting themselves politically to invite such changes in their societies.
This is in line with policy of the Asian manufacturing powerhouses to grow demand domestically and turn away from an export driven model. This is also likely to generate demand for services in the Afroasian economies in line with market dynamics to support telecom, internet, financial industry as well as other sundry services segments. Push can be observed to attract ‘light manufacturing’ industries to low labour cost destination or to consumer destination to generate jobs and employment in local markets. Push is also observed to refine ‘ores and other commodities’ to more value added form subject to local sourcing conditions being supportive to get other necessary materials and to create required infrastructure. There will also be need to customize imported consumer manufactures to suit local taste and usage norms and therefore a suitable local industry in the local markets to customize the products as per taste of people. The local political parties are increasingly seen supportive of such actions to retain their stronghold and are under considerable pressure to actually realize these local aspirations unlike previous years when stated policy was at variance with practiced approach. There also seems to be greater focus to acquire capabilities to develop engineering capabilities for heavy manufacturing as well as local infrastructure development including financing capabilities. This yields investors much opportunity though with a much greater difficulty to identify entities who are moving in to fill this space in the right way.