Thursday, September 22, 2011

Economic Freedom key to development

Prime Minister Dr Baburam Bhattarai has placed economic growth as one of the key agendas in the Immediate Relief Package-2068.
He has also vowed to boost private sector’s confidence and create conducive environment for investment. But his words do not match the ground reality. The trade union affiliated to his own party UCPN-Maoist has been creating troubles that made the investors more insecure than ever. Due to lack of investment security, investors' confidence is eroding and there has been no new investment in the country in the last one year.
The global indices —Economic Freedom of the World and Global Competitive Index — both reflects the country’s poor investment climate.
Nepal has slipped eight positions down to be ranked at 129th among the 141 economies in this year’s Economic Freedom of the World report from last year’s 121st position due to its failure in ensuring the economic freedom. Nepal continued to be one of the least free countries in the world in case of economic freedom. Nepal continued to degrade in all the five measured areas of economic freedom; size of government, access to sound money, freedom to trade internationally and Regulation of Credit, Labour, and Business and Legal structure and security of property rights.
The Constituent Assembly that is drafting the Constitution has to ensure economic freedom in its preface as the countries that are economically free out-perform non-free nations in indicators of well being. The constitution should ensure freedom of personal choice, voluntary exchange, freedom to compete, and security of private property, if the leaders want Nepal to be a prosperous country.
Ensuring economic freedom can help reduce poverty, increase literacy rate and life expectancy and above all per capital income and propel the growth.
Similarly, Global Competitive Report 2011-12 by World Economic Forum has ranked Nepal at 125th position among 142 economies. Nepal still falls under factor driven country category that needs to focus on institutions, infrastructure, macroeconomic environment and health and primary education as the government's attitude towards market, market integration to reduce cost play key role in overall competitiveness.
Nepal is fast losing its competitive edge not only due to labour-management dispute fuelled by political interest and energy crisis but also due to instable government and policies. The private sector cannot invest at the time, when the government cannot ensure the stable policy that could instill the confidence and only the government spending is not enough to boost the economic growth.
Thus, the private sector has pinned its hope on the Prime Minister but the Prime Minister’s party itself is a stumbling block on the road to prosperity.
In such confusion, the Prime Minister should bring a Common Minimum agenda in consultation with all the political parties and private sector, and discipline his own party cadres and militant trade union. Only the political consensus on the economic agenda can rescue this country that has lost hope on anyone and everyone.
He must be clear that without foreign as well as domestic investment by the private sector, by merely distributing Rs 200,000 under his pet Self-Employment Programme from the government coffer, he cannot generate employment to almost 400,000 youth that enter the job market every year.
He should take leaf from Deng Xiaoping’s policy how he turned China into an economic powerhouse by ensuring the economic freedom in his communist country.In 1978, Deng visited Bangkok, Kuala Lumpur and Singapore, and met Prime Minister Lee Kuan Yew, who advised Deng to open up and institute reforms. Impressed by Lee Kuan Yew, Deng sent tens of thousands of Chinese to Singapore to learn about Singapore's success to help China develop. After the Third Plenum of the 11th Central Committee Congress of the Communist Party of China in December 1978, Deng took over the reins of power and started the economic reforms in capitalist type while maintaining the Communist-style rhetoric.
The commune system was gradually dismantled and the peasants began to have more freedom to manage the land they cultivate and sell their products on the market. He opened China's economy to foreigners and invited Boeing and Coca-Cola to China.
True to his famous phrase ‘do not care if the cat is black or white, what matters is it catches mice or not’, spoken in 1961 that had caused so much criticism, Deng Xiaoping’s four modernisations — economy, agriculture, scientific and technological development and national defence — ambitious plan of opening and liberalisation of the economy has put China in the global map making it a second largest economy after the United States.
India ranks at 94th, and communist China ensuring economic freedom ranks at 92nd position in the Economic Freedom of the World report, but how long will it take UCPN-Maoist to come out of its own ideological dogma?


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