Both the G8 and G20 meetings, of the leaders of the world’s largest economies, recently held in Canada, pointed toward ‘Small Business’ as the driving force for growth out of this present global resection. Leaders all called for ‘Small Business’ programs to stimulate economic growth; to create more sustainable jobs, to develop new or lesser developed industries or sectors, to penetrate export markets and reduce import bills.Small Business, a term which should be abandoned because it is very misleading, with different definitions applied by the United Nations, the International Monetary Fund, other international economic agencies and each regional and local development and financial bodies. Notably, the term Small next to Business generally denotes inefficiency rather than size, because every business transactions must find its own critical mass to achieve economies of scale or its best market pricing model. Hence, some transactions are better small and others, well let say a small operator in a large economy can be bigger than many countries, whether measured by asset value, annual revenue or direct and indirect jobs.
Sustainable jobs can certainly be created by more efficient (small, medium or large) business with each efficient transaction stimulating economic growth by helping to develop its sector, to build its export markets and reduce imports. So, efficiency is the true mission. Small teams of differently skilled workers have proven, many times over, to be more efficient in its execution than larger, hierarchy based, paper trail driven employees. This efficient network system exist in larger corporations which have team leaders, rewarded with annual performance based bonuses, operating similar to and resembling an independent business owner, benefiting from hard work by claiming an annual dividend.
Developing growth sectors, by passing the necessary laws to create regulatory agencies that levels the playing field and facilitates a feasible business model, which is market driven, based on innovation with access to cheap funding or guarantees to support such sectors in their infancy, is the work of Governments. Guided by natural and unique resources (goods or services) that gives a competitive advantage, long-term plans to fully monetize the opportunity through vertical and horizontal integration, must be led by Governments and based on consensus with the eventual implementers and operators being private investors.
The term ‘Exports’ is commonly used to express its benefit, the earning of foreign currency both from the foreign sale of mostly locally produced goods and the payment for local services in foreign currency. This foreign currency is very necessary to repay foreign debt, purchase foreign goods and services. The greater the exports and the lesser the imports is the richer the country. Hence, both seeking and satisfying export demand and buy local programs are crucial to increasing local standards of living.
So, the statement coming from G8 and G20 leaders is for Governments to facilitate ‘Efficient Business’ and ‘Responsible Consumption’.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
