Poverty News Blog

from The News International

APEC summit criticised for failing to focus on ending poverty in the region
By By Kaleem Omar
9/9/2007
As leaders of 21 nations met in Sydney on Saturday for a two-day summit of the Asia-Pacific Economic Forum (APEC), representatives of non-governmental organisations, already in the ‘Harbour City’ for a week of meetings among business and political leaders, are calling for “an instant end to poverty.”

Civil liberty groups feel the agenda of the current APEC meeting is not focused on supporting action against poverty.

“There are more than 700 million people in the Asia-Pacific region living on a per capita income of less than one dollar a day. But the Millennium Development Goals, a 15-year action plan to tackle poverty, are nowhere in the agenda of the APEC summit, which is a great tragedy,” said a spokesman for “Make Poverty History” – a coalition of more than 60 aid agencies and community groups.


“APEC should be looking at fair trade, not free trade,” said Ken Davis of Union Aid Abroad, an Australian humanitarian overseas aid agency. “If true prosperity is to be the goal of APEC member countries, then they should be focused on the internationally agreed target of 0.7 per cent of their GDP going to real aid and poverty alleviation,” Davis said.

An “instant end to poverty,” however, is much easier said than done. Poverty is a complex and multi-dimensional phenomenon that extends beyond the notion of income and encompasses social, economic and political exclusion.

Tackling the problems of poverty in developing countries requires an integrated approach, one that promotes accelerated and broad-based economic growth while at the same time maintaining macroeconomic stability, improving governance and consolidating devolution to the grassroots level, investing in human capital and targeted development programmes with an emphasis on social inclusion.

No nation has ever borrowed its way to prosperity. Nor has any developing country ever got rich by exporting cheap, low-value-added goods to the industrialised world.

To build national wealth, what is needed is a systematic methodology that a particular nation can apply to its starting conditions, its major opportunities, its strengths and weaknesses, and the most promising available paths to achieving economic progress or economic revitalisation.

If the focus here was a business firm instead of a nation, we could call this methodology “strategic market management.” In this view, a nation can be thought of as somewhat akin to running a business and, as such, can benefit from adopting a strategic market management approach.

Strategic market management is a continuous self-correcting process that consistently considers where a nation is heading, where it wants to be heading, and how best it can get on to the path of promoting socially responsible development, accelerating economic growth and building national wealth.

Thomas Mun (1571-1641), one of the earliest economic writers on building national wealth, articulated what Philip Kotler, Professor of International Marketing at Northwestern University, Illinois, calls the “mercantilist” view, contending that England must sell to other countries more than she bought from them.

Mun advised the English government to reduce the people’s consumption of foreign goods by raising their prices and putting up protectionist tariffs; to develop home industries to supply most necessities; and to encourage English companies to sell as many English goods abroad as possible. These prescriptions were seen as the best way to build gold reserves in the nation. Mercantilists saw gold, not goods, as the measure of a nation’s wealth.

Francis Quesnay (1694-1774) advanced the “physiocratic” view that wealth consists not in the quantity of accumulated gold in the nation but in the quantity of raw materials enjoyed by the nation; in particular, the surplus of agricultural and mineral products over their cost of production. As Kotler notes, Quesnay saw manufacturing and trade as “relatively sterile activities, at best creating artificial wealth.”

Adam Smith (1725-1790), in his famous treatise “An Inquiry into the Nature and the Causes of the Wealth of Nations”, advanced the view that nations best created value and wealth by using the principle of the division of labour, each worker becoming a specialist and therefore more productive at a single task. Under those circumstances, no one person could make everything he needed; he would gain goods through using the exchange value that he earned by working. Adam Smith saw exchange, private property, and free markets as the foundation for building national wealth.

Karl Marx (1818-1883), in “Das Kapital”, opposed this view and argued that free markets lead to recurrent business cycles and the steady impoverishment of the masses. He held that a nation’s economy would perform better if private property were expropriated and managed by the state in the interests of the proletariat. Under the dictatorship of the proletariat, workers would be paid their true labour value, and the economy would be planned and managed to serve their interests.

John Maynard Keynes (1883-1946) saw flaws in both the free market and the planned economy. He advocated a positive role be played by the government in reducing the severity of the business cycle through the adroit management of the money supply and fiscal policy.

Freidrich von Hayek (1899-1992), on the other hand, held that when government played an active role in owning or regulating business it would stultify economic growth, lead to ultimate domestic disaster, pave the way for totalitarianism and lead the nation down “The Road to Serfdom”.

His thesis was much amplified by the American economist Milton Friedman (1912-2006), who was one of the most articulate opponents of government ownership and/or regulation of the economy, seeing it as a source of great distortions and costs to the whole society.

These themes of the great economists concerning the proper way to build the wealth of a nation have been embroidered, refined and debated in countless writings, speeches, and forums. Important contributions for understanding the economic development process have also been made by such economists as J. Schumpeter, R. F. Harrod, E. D. Domar, Walt Rostow (of “takeoff-stage” fame), John Kenneth Galbraith (author of “The Affluent Society”), and others.

Economic development agencies such as the World Bank and the International Monetary Fund have their own theories (albeit often much criticised theories) to guide their decisions on which countries and economic development projects to fund.

In a study entitled “The Marketing of Nations”, Kotler, the world’s leading marketing guru, and co-authors Somkid Jatusripitak (Professor of International Marketing at NIDA in Bangkok) and Suvit Maesincee (a Bangkok-based consultant for Booz, Allen & Hamilton), have provided a new framework for successfully building national wealth by marketing to the world.

The authors argue that with the rise of the global marketplace, no nation can afford to focus solely on a healthy domestic economy; its leaders must also develop policies – based on a mission and a vision – to guide their day-to-day efforts to grow the nation’s economy. “The Marketing of Nations” is the first study in its field to connect macroeconomic public policy with the microeconomic behaviour of industries, firms, and consumers, and the first to apply strategic planning to the building of national wealth.

Within this strategic framework, nations can assess their strengths and weaknesses, identify their best opportunities, and implement competitive global policies and strategies designed to achieve long-run national prosperity.

With plentiful case material on Japan, the Four Tigers, China, India, Southeast Asia, Latin America and Eastern Europe, the authors provide a comprehensive synthesis of economic, political, and cultural factors that affect economic progress in all nations, both industrial and developing.

“The Marketing of Nations” is the first study in its field to provide operational and management guidance to government and business leaders. It is also the first to bridge the typically large gap between what government officials set as policies at the national level and the actual workings of the business system at the local level. The study shows that national policies must be grounded in a deep understanding of the actual behaviour of producers, distributors, and consumers in the marketplace.

“The Marketing of Nations” offers a road map for future prosperity. It deals lucidly with the major strategic problems of the present and future global economy, explaining how any country can design and implement a feasible long-term path of development. This approach is at the frontier and interstices of economic development, international economics and national marketing strategies for optimal economic performance.