America: Will it be the rising tide that will float up all stranded ships?
The attention of the whole world was focussed for the past few days on the American presidential election. President Obama’s faltering step in the first of the three presidential debates preceding the election of November 6th was a signal that all was not going well on the side of the incumbent president. He is normally a first class public speaker the like of which has not been seen for many years. Yet he had looked somewhat undetermined and bit too passive during this first confrontation to the point of losing the debate. He recovered some of the lost ground in the next two debates but not without pepping up the campaign of his rival, Governor Mitt Romney. An air of greater confidence to the effect that the presidential barracks could be shaken up after all, took hold of the Republican camp despite Mitt Romney taking on roundabout contradictory stands on major issues within short intervals. President Obama was no longer given as a clear winner after his misstep in the first debate. Something cynical had started churning up against him in the backstage.
Countries and financial markets were gripped by the uncertainty of the presidential outcome over the two past weeks. Tension was high as much in America as in the world outside as to who would effectively win. Why? It’s because what happens in America impacts directly on a number of international issues. The softer stance on public policy of Barack Obama was in stark contrast to the conservative policies being advocated by Mitt Romney and his vice president designate Paul Ryan. Domestic tax policies might help or hinder the recent slow uptake of the American economy. Gridlock at the level of American political institutions could frustrate policy-making and stifle the latest semblance of growth burgeoning up in America. There was suspense on what course the economy will take until the election outcome became known. The fog of uncertainty will hopefully lift up now that President Obama has secured a second mandate. It is by raising the economy firm and fast that the president will be able to suppress the spectre of racism which has subtly raised its ugly head during the campaign.
Despite all that may be said about current inherent weaknesses of the American economy, it is throwing up a ray of hope, for the whole world. The fundamental reason for entertaining such optimism is that America has been and still remains the workhouse for advances in original technology. It is the birthplace of innovative technologies to come. Things like Apple’s iPads did not occur by chance. It took time to deliver the product but once it emerged on global markets, it set off a huge wave of global demand despite the international economic downturn, including for its clones made by other countries. This kind of breakthrough work is continuing behind the veil of economic downturn in America. Economic history shows that different phases of higher growth phases have been preceded by technological breakthroughs.
This trend of fundamental research and engineering of the next generation of innovating technologies in diverse fields in America will get translated into higher levels of productivity across the board. It is this productivity rise that will spur the next round of global economic growth. Those countries which will embrace the new generation of innovative technologies will lead the world again. America will be the first one to strike that chord as things stand today. Next will be the turn of Europe. Countries which embrace the coming higher platform from which goods and services will henceforth be delivered with greater efficiency will take their place beside the global leaders. We in Mauritius have to keep our eyes open to the opportunities and take a regional lead if possible.
In contrast, countries which stick to past methods will remain stuck and fail to take advantage of the global economy as it unfolds in the next phase. At best, they will copy with a lag bits and pieces of the emerging architecture of well-supported businesses worldwide. An economy like that of Mauritius will stand to gain a lot by re-adapting its economic machinery, re-defining itself, cutting at the edges, chipping away blockages that have set in during the years of complacency and widening space for more profitable areas of economic activity. It cannot remain passive once the tide swells up around the new America most likely to emerge from out of the recession, now that the elections are behind.
There is no reason why we should not have been producing high-tech TV sets for regional markets; why not sell parts of smartphones to companies producing them for global markets? Why not produce and sell the engines that power different parts of motor vehicles today? Why not go out to export quality foods to upcoming middle classes in nearby markets increasingly going for eating out? What’s wrong if we started producing watches and high precision goods for the middle class market? We must arm ourselves with ambition enough to capture new markets and not hesitate to get hold of the latest in technology to widen our business field. It is moving out in these directions that will give us real resilience. That means we have to learn in all these fields from those who are delivering the best of all you have to the world. It is not a sin to be in such company.
Knowing quite well the limitations in terms of demand from our internal market, we have no choice in Mauritius but to keep matching our production structure for external demand of a more varied and sophisticated type. We will have to bring up this transformation in an altogether changing external environment. A more dynamic private sector is required to take up the challenge of this “brave new world”. It will require fast adaptation to the emerging new environment of the next generation of technologies. The world will most probably no longer grow at the same sustained high growth rates we saw in the two decades preceding the economic recession of 2008. It will be tougher to cut edges in this slower-growing global environment.
Mauritius has worked best with the world whenever we have been able to change course depending on our inherent strengths at the appropriate time. In colonial days, it was our capacity to produce ever increasing quantities of sugar for export at remunerative prices. We diversified successfully into textiles and tourism once we realized that sugar was limiting our economic scope and international preferences for our export trade were running out just as well. Unless we refresh ourselves, the markets we’ve secured post sugar may slip out. If we want to go the further step, it will have to be off the beaten track. If we persist to remain on the beaten track, we risk being overtaken very soon by better performers on the global market. As America and Europe lead a more certain way out of the current stalemate, it would be good to learn from them and extend our reach when time is still on our side. Let us be one among the ships that will float again when the tide pours in.