Growth. Few words hold such powerful resonance across government and the private sector. The financial crisis may have struck some seven years ago, but its toxic shock waves continue to reshape the world around us. Although we may have come through the worst, growth – particularly sustainable growth – remains elusive for many. Take Brazil as an example. Widely envied as a country of robust growth, its economic successes were more fragile than first appeared.
Amid the ongoing struggle with economic imbalances, social inequality and the lingering and invidious presence of unemployment, there has been no shortage of attempts to open up some much-needed chinks of light. From tax reforms to economic zones, deregulation to tailored infrastructure investments, governments around the world have deployed measures large and small in a sustained effort to reset, renew and recharge their economies. Although some pockets of success have emerged, the wider and sought-after public impact has not been forthcoming.
So, what can be done?
The economy, stupid
A little historical perspective rarely goes amiss. Economies are always evolving, bucking, transforming. From agriculture to technology, industry to services, policymakers have long had to juggle competing interests while at the same time striving to offer their citizens a route towards new progress and opportunity. Throw in other more recent phenomena, like climate change and deepening global security concerns, and it is clear that ours is an interconnected landscape scarred by challenges aplenty.
And yet, for most of us, it is the health of our country’s economy that looms largest. Employment insecurities, the proliferation of foodbanks, and increased personal debt are all a testament to how economic forces can negatively impact the day-to-day lives of millions of people. Government, though, possesses the necessary clout to fight back and achieve the growth that is a prerequisite for progress on wellbeing and prosperity.
Although the financial crisis raised concerns about its effectiveness, particularly over its role in regulation and as a system steward, it remains the case that whether you favour more government or less government, the deployment of smart government – which protects public interest and creates an environment in which private enterprise can thrive – has a key role to play.
To help policymakers in this task, The Boston Consulting Group’s latest Sustainable Economic Development Assessment (SEDA) includes a new approach to economic development strategies. Designed for use by both national and local governments, it includes a range of recommendations aimed at fostering growth, promoting employment, and paving the way for improvements in citizen wellbeing. The right tactics depend on a specific government’s reach. For example, while a local government has little influence over financial markets it can have much more of an impact on infrastructure or the environment.
But regardless of the balance of power, effective tools are available to local, regional and national policymakers in the quest for growth and development. To prioritise actions that deliver impact and cost-effectiveness, governments should first eliminate obstacles and remove barriers to market entry. In other words, “first, do no harm.”
Policymakers should next seek to facilitate by, for example, improving capabilities and lowering the cost of doing business. Support for industry-targeted training and infrastructure is another measure to deploy, as is offering incentives through matching funds and guarantees. The final step to take is to subsidise through cash or tax relief, but it should be noted that these are expensive propositions. They may be appropriate in the right circumstances but have often turned out to be wasteful.
We believe that these measures are most effective when implemented in this sequence – removing obstacles first and subsidising last. Unfortunately, most politicians can often be found going straight to the cash or tax relief. While this may win some initial backing at the ballot box, taking a longer-term view – inherently challenging for many in the political arena – is more likely to deliver the sustainable growth and development we seek.
It is equally clear, however, that there is no short-term fix. Borderless in scope, the pursuit of growth and development is here to stay. That’s to be expected: we should always seek to aim high and achieve more. Growth creates new avenues to sustainable prosperity, unlocking windows of opportunity for citizens around the world to lead the fulfilled lives we all aspire to.
This is the prize that awaits. It’s time now to get to work and usher in an age where growth and wellbeing take their rightful place centre stage.
- The time to deliver is now. Sir Michael Barber reflects on the lessons learned and insights gained from a career at the heart of government delivery
- From vision to reality. Government leaders worldwide share the objective of making an impact and getting things done but it’s rarely straightforward – Hans-Paul Buerkner offers some advice
- Reach for the sky. Much of Tony Fernandes’ success is rooted in innovation and a determination to break new ground. The AirAsia chief tells us about his experiences, and how an injection of business nous into the policymaking process would help governments achieve their objectives