From yesterday continues the argument that economic prosperity depends on productivity rather than the control of resources
SO, the central issue in economic development is how to create the conditions for rapid and sustained productivity. This is where the nexus of science, technology and innovation come into play for it is this nexus that provides the anchor for the upgrade in productivity. Consequently, an important belief that is anchored on the productivity paradigm and the message of prosperity is that the potential for wealth is limitless because it is based on innovation, ideas and insights rather than on limited resources.
The central idea that wealth can be expanded for many by improving and growing productivity becomes self-evident. This revelation confirms the belief that the central mission of science and technology and innovation in national development is to remove boundaries to limitless wealth and prosperity while exterminating the incubus of poverty. The starting point for addressing poverty reduction is economic growth which translates to wealth creation. The rate of growth must be accelerated to achieve the urgent priorities of poverty reduction and employment generation.
The productivity paradigm and the concept of comparative and competitive advantage: The productivity paradigm as the basis for wealth and prosperity represents a radical shift from previous conceptions of the sources of national prosperity. Often, attention is focused on the need to build a sound macro-economic, political and legal environment. It is to be noted however that while macroeconomic conditions are important and necessary, productivity depends on activities in the micro-economy.
Hence, the stability of the macro-economy is not a sufficient basis for economic growth but the micro economy is the driver of productivity growth and hence determines the level of economic growth. In other words, the foundations of productivity rest on two other inter-related factors: the sophistication of company operations (the micro-economy) and strategy as well as the quality of the micro-economic business environment. The productivity paradigm rests on the fundamental truth that prosperity in the nation rests on the level and growth of productivity in the micro-economy.
Any discussion of the productivity paradigm necessarily requires an understanding of the place ofcompetition in economic development. Up to fifty years ago, it was believed that prosperity and wealth in a nation resulted from the possession of natural resources such as land, minerals or a pool of labour thus conferring on the nation what was designated as comparative advantage relative to other nations with less favorable endowments.
The emergence of Japan without much endowment of natural resources enforced on us the need to re-examine the notion of comparative advantage. This concept had to yield to the concept of competitive advantage. This latter concept derives from the recognition that the concept of competitive advantage depends on enhanced productivity through the assembling of resources from wherever to create more valuable products and services. Countries which improve on their standard of living thus steering their citizens away from poverty, are becoming more productive through development of more sophisticated sources of competitive advantage based on knowledge, investment insights and innovation.
The recognition of the economic impact of competition in the economy has led to the axiom that if a firm cannot compete at home, it cannot compete abroad. The need to sharpen competition has therefore led to the development of the cluster concept. A cluster is a geographically concentrated network of industry competitors and the many related and supporting industries and institutions. The cluster-based approach seeks to enhance competition by fostering externalities and removing constraints to productivity and productivity growth. The cluster approach is more decentralized thus stimulating initiatives at the local level.
Towards development on the fast track: In the light of all that has been said it is now obvious that no nation can escape the poverty trap unless it can fast track the process of increasing productivity as the lynch pin for enhanced and fast paced economic growth. What arises in our situation is to ask the question; how can we break through the Gordian knot of underdevelopment? It seems evident that the vicious circle of underwhelming economic growth is driving the citizens into overwhelming poverty and under development which can be broken only through the agency of science, technology and innovations as the foundation of higher productivity stimulating fast paced economic growth.
This is the key to the Chinese miracle. In the last three to five decades, the Growth Commission has flagged 13 countries which have achieved this level of growth, namely Botswana, Brazil, China, Hong Kong, Indonesia, Japan, The Republic of Korea (South Korea), Malaysia, Malta, Oman, Singapore, Taiwan and Thailand. It is important to note that Nigeria achieved a GDP growth of 8% in a particular year in the Jonathan period. So, it is possible to achieve this feat but the challenge is how to sustain it over a decade or more. Additionally, it should be noted that Nigeria’s population growth rate is presently at 3.8% per annum. Hence Nigeria’s challenge is how to grow the GDP, and the economy at the minimum of 11.0% maintained consistently for a decade or perhaps two decades.
