The recent developments since the outbreak of the novel coronavirus (COVID-19) pandemic in 2020 are strong reminder of the phrase attributed to the Greek philosopher Heraclitus that “change is the only constant in life”.
What has been more noticeable is the speed of such change, the variation in its severity, and its unpredictability in the light of the conditions of uncertainty.
On the economic front, we observe the challenges confronting the rules and practices governing trade exchange, labour movement and capital flows, with serious implications on the relative economic importance of countries, companies and institutions.
Some may try to deal with these accelerating changes by falling in the mistakes of fighting the last war by applying the rule book used in dealing with previous crises. They may also invoke the tools to confront them, like those entering a new war with old maps and previous plans and conventional weapons that may have achieved success in the past, but are no longer of any use in the light of the latest developments.
There is nothing wrong with drawing on historical experiences, and benefiting from lessons learnt. The problems, however, lie in neglecting the first lesson from history, which is that it does not repeat itself but it may rhyme as per Mark Twain.
We live in a global economy completely different from what it was like last century when the Great Depression began. If at that time it was permissible to divide the world between economically advanced countries, including colonial countries, and others that are lagging behind them economically, including colonies that have suffered from exploitation and depletion of their wealth during the eras of colonial plunder, then today’s world is multipolar and some of these poles were colonised before.
Moreover, it is not realistic today to continue classifying countries based on the post-World War II definitions. Can we still attribute a group of countries as belonging to a so-called first world, and a second group as belonging to the second world, and a final group to be included under the name of the third world?
In fact, the term “Second World” effectively ended with the fall of the Berlin Wall in 1989, and the beginning of the political, economic and social transformation of the countries of the eastern camp.
Likewise, it is not possible to bring together countries with emerging economies that constitute larger shares in the global economy, and have become at the forefront, in terms of output, trade and investment, with countries that still suffer from low per capita income and severe poverty and put them all under the name of the Third World.
It is more appropriate for countries to be recognised according to the progress they make in sustainable development. This should also take into account their ability to develop and respond to the requirements of the new industrial revolution which is primarily based on advances in information technology and digitalisation.
Such advances towards achieving the sustainable development goals or the 2030 development agenda will also depend on the extent to which countries can deal with major disruptions. These disruptions particularly relate to climate change, demography, fragility, inequality, and natural and epidemic shocks, such as the one we are witnessing now.
By 2035, when Daily News Egypt is due to celebrate its 30th anniversary, the ranking of the top five economies will be very different from its first year of publication 15 years ago. The global centre of economic gravity will be moving further towards the eastern hemisphere.
In the post-2030 world, classification as an advanced economy will depend more on mastering information technology and digitalisation as opposed to the traditional criteria used to identify the top seven industrialised countries.
Advances in information technology and digitalisation will be the main determinant of the industrial, agricultural, and service sectors. References to the top 10 or seven major “technological countries”, as they dominate the global economic scene, will be more relevant. However, benefiting from the digital dividend, or suffering from digital divide is a matter of public choice.
Such public choice should be reflected in prioritising both public and private investments namely: investment in human capital; investment in infrastructure, including the digital infrastructure; and investment in resilience, for example in the domains of climate adaptation and mitigation.
One realises that many reform attempts during the last five decades or so in Egypt were incomplete and suffered from major interruptions. In many cases reforms were limited to achieving some monetary, financial, and fiscal targets without necessarily reaching the targets of inclusive growth and sustainable development that can maintain the ultimate goal of progress.
In the game of nations, continued and protracted growth with shared prosperity and accumulation of investment and knowledge are key for sustaining progress. The Egypt Vision 2030, which is compatible with the UN 2030 Agenda for Sustainable Development, can provide an adequate framework for policy coordination and institutional reforms required for such progress.
I would emphasise, however, three transformational approaches that are currently adopted in Egypt to achieve the development goals within the current decade ending 2030. These are, namely, target-based export promotion, digitalisation, and localisation.
Extreme poverty, which reached 4.5% in 2020 can be eliminated within three years. This target is indeed more ambitious than the plans of the sustainable development goals (SDGs), but it is doable if the new rural development programme, starting with 1,500 villages, continues with its promised impact.
Among the policy priorities, there are those with impact that appears in the short term, and others in the medium and long terms, however, their enforcement should be immediate and instant without any delay, to ensure recovery from the effects of the pandemic and the accompanying crises. This requires careful coordination between fiscal and monetary policies and the provision of the necessary financing to enforce these priorities, with greater reliance on mobilizing local resources, and managing the public debt file efficiently. In this regard, the importance of facilitating export and investment procedures and accelerating them without delay is evident. Without them, the need to borrow abroad will increase, along with the risks and costs involved, that should be cautiously regarded.
There should be an injection of public investments in strengthening and developing the infrastructure, including digital transformation projects and its infrastructure. These should be considered as national projects in support of society, developing its economic and competitive capabilities, and stimulating the private sector to participate in them.
Today, economies that are deficient in the fields of high-speed internet, digital platforms and artificial intelligence (AI), are unable to be internationally competitive in production, exports and investment.
There should be an acceleration of measures to localise development and diversify the structure of economic activity. This should include the activation of the mechanisms of competition, modernisation and innovation, and the launch of growth enablers by overcoming the dilemmas of the useless trade-off between centralisation and decentralisation.
Information technology developments have caused breakthroughs in overcoming this dilemma. They have capitalised on the advantages of the centre and the peripherals through approved applications, and specific standards that are easy to follow.
Countries have adopted methods that endeavour to boost the rates of economic growth, even if that was at the expense of increasing pollution, environmental waste, and increasing harmful emissions, then they attempt afterwards to remedy their effects on health, environment and climate in the manner of “grow today and clean-up tomorrow”.
This has proven its failure with regard to privatizing the benefits and nationalising losses, including the exacerbation of imbalances in wealth distribution and incomes, and causing harm to society and the economy.
It is also necessary to be prepared in this regard for the increasing global trend towards mandatory disclosure of activities that could be harmful to the environment and the climate, and their sources of funding.
Achieving the ambitious SDGs by 2030 is still feasible in Egypt, however a more ambitious development approach through joining the Organization of Economic Cooperation and Development (OECD) could be pursued.
This entails more efforts with higher rewards, through anchoring the reforms to long lasting policy discipline, following best practices and institutional effectiveness. The journey towards joining the OECD and fulfilling its demanding requirements and prerequisites by 2035, when Daily News Egypt turns 30, or earlier, could be more important than the destination itself.