Globalisation and the challenge to public-private management

Densil A. Williams, Contributor

Ian Boyne, in his In Focus column of August 20, agonised openly about the cavalier treatment the People's National Party (PNP) gave to the idea of a Progressive Agenda. He thinks there is nothing progressive about the agenda as the ideas put forward are devoid of the epistemological and philosophical underpinnings of progressive politics as an ideological movement.

Some would say Boyne's criticism is harsh and he is too pedantic. I would disagree. His ideas resonate with me. We in Jamaica tend to be too careless and sometimes not intellectually rigorous when dealing with very serious and technical issues. We think that we can come to the table to discuss serious issues with only a peripheral knowledge of the subject. We do not place a high enough premium on scholarship in this country. This is one of the reasons we are in such a predicament today. We continue to think that this notion of common sense can ensure our survival in this highly complex, knowledge-based world economy.

As soon as complex ideas are put on the table and Black Swan events are being discussed, you get the common response: "That is too academic, we need practical solutions." It gives the impression that the academe has no place in the discourse on nation building. Academics should lock themselves in an ivory tower and be eccentric. A society that ignores the academe in its developmental quest is a society deemed to failure. The framers of the Progressive Agenda seem to have fallen prey to this line of thinking.

Pathways to prosperity

At a time when Jamaica needs new ideas and a philosophy to guide it along its developmental path, the Progressive Agenda seems not to have answered that call. The ideas put forward in the document are good in most cases, but there is nothing particularly progressive about them, if we take progressive in its purest form. I would suggest that the framers of the document revise it and call it something like 'Pathways to Prosperity', or something of this nature, because a lot of the ideas are good and can help to propel economic development in Jamaica.

However, they are still underpinned by the neoliberal foundations of small government, private-sector-led growth, and the State being a mere facilitator of development, not an active player in the development arena.

However, given the pervasiveness of the globalisation project, the question that must be asked is: Did the framers of the Progressive Agenda have the latitude to be radical and different from the current neoliberal tradition, which is the foundation of this wave of globalisation? In a world that is governed by supranational organisations which basically sing from the same hymn sheet, can a small country like Jamaica dare put forward a counterposition to their neoliberal theology and expect to remain viable?

Jamaica is no China or Brazil. It cannot move markets. If the entire financial sector in Jamaica should collapse tomorrow, it would have only a negligible (if any) impact on Wall Street, Jakarta or the Nikkei markets. Jamaica has to play by the rules of the market. It cannot set the rules. The economist would say that Jamaica is a price-taker. Being a price-taker limits your ability to be as radical in your developmental philosophy as the true progressives like Boyne would want you to be when crafting economic policies, especially in this increasingly globalised world economy. Brazil, Russia, India, China, and, I may add, South Africa (the BRICS), can trumpet alternatives to the neoliberal paradigm and get away with it. They have market power.

Jamaica does not have that luxury. It has to play the hand globalisation has given it. The big issue facing the country today, therefore, is: How do you manage your private and public institutions in a highly inhospitable global environment in order to stimulate economic growth and development? Complaining and whining about the Washington Consensus is bad for development and we need to find a new path will not help us. We cannot change the game at this point. We should now think about how we manage our affairs in an effective way in order to make our citizens better off.

Contradictions with Globalisation

Globalisation brings many contradictions which make it difficult for public policymakers to effectively formulate domestic policy to make their economy vibrant. While on an international scale globalisation will lead to greater efficiency in the allocation of resources, nationally, it will make a domestic economy more vulnerable to external shocks. To guard against this vulnerability, national policymakers will be more inclined to institute domestic policies that are protectionist.

For example, each country likes the idea that globalisation frees up markets so that they can export, but domestic governments try to preserve domestic markets through protectionist policies through the imposition of tariffs and quotas. This will eventually lead to a zero-sum game in the international market because of differences in the objectives of domestic economies. Therefore, instead of globalisation leading to betterment for all, it will lead to some nations being more prosperous while others remain poor, or get poorer.

As is expected, the losers will cry the loudest about the ills of globalisation. It is the job of managers in the policy domain to find creative ways to ensure that their economy manages the contradictions to the benefits of their citizens.

Globalisation and Private-Sector Management

In the private sector, globalisation has forced many firms to find creative ways to generate growth. At a time when competition is very fierce in domestic markets, it is difficult for most firms to achieve growth organically. This is especially true in small economies like Jamaica, where market size is small and industry sectors almost reach their maximum growth potential. To this end, what has been happening is a massive move towards mergers and acquisitions as a new growth strategy. It is happening in telecommunications, banking, manufacturing, and insurance. It will happen soon in higher education.

As we know from the extensive literature on mergers and acquisitions, 85 per cent of these deals end up failing. The real challenge, therefore, for managers, is to ensure that their transaction falls in the 15 per cent success. Doing this is not easy. Proper management of the soft issues such as the fusing of organisational culture, especially when M&A is done across borders, will be critical to ensure success. In a globalised world, most of the M&As will happen outside domestic borders. The challenge to manage in this environment is tremendous.

Concluding thoughts

The pervasiveness of the neoliberal project, which is the cornerstone of the globalisation movement, makes it difficult for small economies like Jamaica to chart a radical alternative course to economic development. Even big countries like China and India could not escape the tentacles of market-led globalisation. These countries have found creative ways to manage the contradictions which globalisation brings. They have ensured that the State is not a mere facilitator of growth, but an active player in the developmental process.

We in Jamaica have not sat down and identified a clear and strategic role for the State in a market-driven economy. The Progressive Agenda was found wanting in this regard. What is needed is not only a philosophical debate on the role of the state in this highly globalised world, but a solutions-oriented discussion on how the State can be a strategic partner in the country's development. Lessons for this exist in Singapore, Taiwan, Brazil, and other countries that have recently transitioned from a mere factor-driven economy to an innovation-driven one.

If we are to overcome the inherent contradictions that globalisation possesses for public-private management, we need to look at how these successful economies have strategically used the State not as a substitute for the market, but as a complement to drive economic development.

Dr Densil A. Williams is senior lecturer of international business and head, Department of Management Studies at UWI, Mona. Email feedback to columns@gleanerjm.com and densilw@yahoo.com.