By Ufuoma Ubiebor
With economic troubles mounting now more than before due to the changing world order of where we are, where we are going — the rises and declines of past leading empires that puts today’s political, economic and socio situation– into perspective of the big picture — it requires us to tighten belts and put on a long-lens so as to accelerate into a new phase of economic growth — it is only economic growth that can improve the living standard of citizens in developing countries.
However, it’s necessary to understand how an economy works so as to achieve true economic growth. An economy in its broad sense works like a machine, it is relatively a simple machine at the most fundamental level, yet it is still not understood in its simplest form.
The law of physics gives us the concept of potential and kinetic energy, when a ball is held high above the ground, it has a lot of potential energy and when the ball is released and in motion, this turns into kinetic energy, when the ball is on the ground at rest, it has neither, thus illustrates an economy has analogous dynamics and must be governed in that tradition for true economic growth and sustainability.
An economy consist of policies, transactions done in zillion times, productivity growth, short-term debt cycles, long-term debt cycles etc. while a machine consist of several parts with definite function working together in performing a particular task — however, a machine in this context consist of systems, processes, workflows, procedures etc. thus illustrates they are interrelated. Since an economy is relatively a simple machine base on principle, therefore there is a relationship between an economy and machine, it is logical to integrate both words as” economic machine “. It’s necessary to understand how the economic machine works. An economic machine is fundamental in economic management and development, it is the driver of an economy — it is collaborative and operates across the various sectors of an economy and could help provide day to day solutions and solve society’s most complex challenges if properly utilised — the reason why the economic machine doesn’t work efficiently the way it should, is due to human shortcomings– because the machine has a dependency on human resource for its utilisation.
Overtime, there is a school of thought that it is “functional intelligence” that is most needed to drive the economic machine for optimum performance, but it is not true, it is the spirit of “Entrepreneurship” which makes one to develop an entrepreneurial mindset which brings change and innovation that is most needed to drive the economic machine, since we understand that an economy has analogous dynamics. In addition, an economy thrives on two fundamental resource — the human resource (people) and the natural resource — which translates into productivity growth through proper utilisation of both resources.
Moreover, the human resource is fundamental because of its natural intelligence and ability to learn and develop self which the natural resource cannot do being a dumb silent resource.
In understanding the concept of an economy, knowing humans are the most predominant resource, we must then invest properly into the two critical sectors that fosters sustained economic growth in an economy — the educational and judicial sector.
Firstly, the educational sector, it is the most fundamental sector to invest in, in an economy, because it is only through education our minds as people can be properly transformed and frontiers expanded to see things on a broader perspective — understand the dynamics of the current world we live in today — harness the natural resources on our land to its maximum level.
The evolution of industrialisation, digitalisation, climate change etc. are all knowledge process (innovation) they are inextricably linked to education, meaning they have been achieved through continuous research and development (R&D) in schools globally by people and have contributed positively to the GDP of the global economy which have translated to sustained economic growth for economies in the world.
Secondly, the judicial sector, is also fundamental as education, because it is meant to bring in proper discipline and justice into an entire system which would translate into a functional economy and would eventually lead to sustained economic growth.
Today, most global corporations have their European headquarters in Britain, this is not because Britain is the finest city in Europe neither because it is the biggest or most organised, one of the reasons is because Britain has one of the best judicial sector in the world and most global organisation feel safe to invest there because their judiciary system works well — which we all know the implications for businesses and this has translated to sustained economic growth in their economy overtime through continuous taxation process.
Ubiebor is an Abuja-based Management Consultant