(An extract from Foreign Direct Investment 2018)
The Executive, the
Government, the Nation’s Leadership must be clear as to diversification vs.
expansion. Revenue generation, from existing sectors and industries, is often
dictated by global market conditions. While expanding such categories, of
sectors and industries, via innovation and greater efficiencies, should
increase national revenues, remember such is linked to the said market
conditions. An investment in new economic categories, never before developed,
by or in the nation, must be well researched. In depth research must examine
pros and cons to measure the needed output of physical and human resources and
time. A side by side comparison, judging feasibilities and returns on
investment, of both the existing and other new options, will guide
diversification decisions.
Global
Competitiveness, Sustainable Development or simply winning a few prestigious
foreign markets, the call for diversification is seen as a solution to many
economic problems. Objectives, which include increasing taxation revenue, job
creation, a greater usage of local materials and, of course, high levels of efficiency.
It is all about earning strong foreign currencies, at projected levels to
purchase essential Goods and Services, not locally produced in the quantity and
quality required, and to build financial reserves, in a sovereign fund for
future generations. Standard of Living, balanced across the nation’s
population, with equity and fairness, and hopefully, with happiness.
The nation has
historically been diversified via invention and exploration. Captured by uninvited
larger and more experienced cultures, which bought their knowledge to expand
sectors and industries, and access to a more developed market. Such existing
economic activities would have been further expanded over centuries, keeping up
with the latest affordable technology and demands of the markets. Now, expanding
existing economic categories requires Foreign Direct Investment which must be
supported by projected returns on investment over the next decade. Plans to
upgrade plant and equipment with maintenance of old technology, short life processes
and methodology, will not attract the necessary investment.
Current
diversification is primarily born of innovation and efficiency. Inviting larger
and more experienced organizations to bring technical know-how to develop
sectors and industries, and access to wider markets. Science and Synergies now move
at such a rapid pace that, research and development changes business models, on
an average of every five to ten years. Hence, researching and developing the
science and the synergy, which drives the next business model is more
attractive to Foreign Direct Investment. The much-needed and essential diversification
must, therefore, be led by examples of future sectors and industries promoted
globally, to remain relevant and beneficial.
Benefits to the
nation; its people, its natural resources, its financial reserves, over time,
is and must be measured and forecast for each existing and newly proposed
category. Researched on a global scale, with various resulting economies of
scale to match the nation’s size, each category and sub-category must indicate
trends, to meet eco-socioeconomic benchmarks, within predetermined schedules.
Categories which fall short, in creating more jobs and/or better-quality jobs,
in sustaining the environment and/or renewing natural resources, in achieving
profitability or taking too long to impact the nation’s financials, must be
quickly abandoned. Focusing currently accessible resources; skilled personnel,
local materials and development soft loans, on categories with better chances
of succeeding.
Economic
Diversification Decisions are left to politicians representing vested
populations, listening to the advice of highly trained public-sector employees.
Experts, who themselves have no personal interest or benefit to get from any
particular choice, that independently gather and analyze the relevant data, comparing
and assigning grades to rate viability. The nation is, therefore, left to
evaluate existing sectors and industries, some of which are declining or dying,
against new economic categories, many of which will require a long time to
mature. Such decisions are best made during expansion periods, decades ago, but
the next best opportunity must be right NOW!
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.
