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Economy

Economic competition and competitive practices

Gagliano Giuseppe

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Since enterprises are at the frontlines of geo-economic competition, they must learn how to deal with state influence in this field. They need to acquire a global understanding of the business environment and to develop new strategies to tackle stiff competition. In order to bend market rules and beat competition, economic actors developed new aggressive strategies on the model of military knowledge and underground operations.

The new competitive practices are no more aimed at adjusting to or anticipating other enterprises. Their goal is transforming the operating context and subverting the balance of power through imposing a given enterprise’s rules on its competitors. The final objective is eliminating competitors or at least preventing them from entering the marketplace.

These practices are based on the systematic acquisition of information and on its use for hostile purposes. In order to pursue innovation, export or acquire more market quotas, it is necessary to understand the business environment and to put in place effective operations. The new economic practices are therefore featured with harsh competition to dominate information platforms. The United States offers many examples of the use of offensive operations to reach commercial purposes.

In this context, companies go beyond the mere search of information. They aim at manipulating the facts through new offensive techniques of economic warfare targeting new markets and destabilizing competitors. Here are some examples of competitive strategies used for hostile purposes: offensive benchmarking (attacking a product through counterfeiting), lobbying, social learning, stretch marketing, (acquiring control through regulation, humanitarian intervention, civil and military operations and economic warfare). These practices date back to the end of the Cold War, when economic and cultural clashes replaced military and ideological conflicts.

Benchmarking consists in a comparative evaluation of services or procedures of the most successful enterprises, studying their strengths and weaknesses and identifying possible actions to match or surpass them. Benchmarking can be used for offensive purposes in order to destabilize competition through reaction tests: an alleged client evaluates all the aspects of the service provided and the weaknesses of the system; in some cases, this person purposely provokes accidents in order to have more time to study the situation. Repeated accidents clearly compromise the image of the competitor and obstruct its activities.

As far as counterfeit is concerned, it is true that copying existing products and improve them is the foundation for progress. However, some companies can decide to copy some products while decreasing their functionality, therefore realizing low quality artifacts that acquire some of the market quotas of the original product. The problem emerges when these counterfeit goods do not respect safety norms and became dangerous for the market, with a negative impact on the company producing the original goods.

Lobbying indicates all practices aimed at influencing – directly or indirectly – political, legislative, regulating actors in order to assert a given economic interest. More and more companies are adopting lobbying strategies to defend and promote their interests. Lobbying itself not only is a reprehensible activity, but its systematic use can turn it into a dangerous weapon for economic and cultural competition.

Social learning is another technique to conquer new markets that consists in an accurate psychological action setting up opinion trends to influence decision-making. Through providing what seem to be purely education services – often addressed to the future leadership of a given country – social learning techniques influence public opinion and installs a dependency relationship with the country providing social learnings services.

Stretch marketing originally consisted in coordinating Chinese family networks for business development in any field. Nowadays, this term indicates a careful observation of 1) a given socio-economic market and 2) the information exchange within a given group of partner enterprises, through which a given enterprise can better exploit its business opportunities. Therefore, on the one hand stretch marketing allows anticipating the client needs through controlling information; on the other hand, stretch marketing prevents competitors from enter the market through the sharing of both offensive and defensive techniques within a given group of partner enterprises.

Lobbying and social learning practices contribute to increasing international regulations that lead to the indirect acquisition of new market quotas. These rules represent a competitive weapon to perform technical-economic dominance practices because they prevent the other actors of the system from operating freely. This can be easily observed on the military level with the imposition of the inter-operability: pursuing a maximized standardization of military materials within NATO countries leads to the imposition of a given product or industry on the others.

Another aspect to take into account is humanitarian intelligence. In recent years, several economic domination strategies to conquer the market of developing countries have disguised as humanitarian and development missions.  It is true that development markets have impressive growth potential and can count on natural resources that the West is interested in. As a result, Western countries continuously engage in humanitarian operations and development project in order to obtain long and medium term economic advantages. Besides NGOs, there are a number of governmental organizations that combine their humanitarian mission with strategies pursuing political and economic goals.

Since developing countries often experience the devastating consequences of war, civil-military co-operations (COCIM) aim at leading the country out of the crisis situation and take care of the needs of the population. However, COCIM operations are often used to conquer the infrastructure market and acquire contracts to provide services and materials for the reconstruction of the country, while profiting from public funding. It is possible to observe that as soon as a conflict ends, companies from all over the world compete to get their share in the reconstruction of the country and they rush there in order to quickly identify its needs and to influence the terms of contracts. In order for this strategy to work, military personnel should be accompanied by experts like doctors, engineers, businessmen, teachers, sociologists, ethnologists etc., that provide a better understanding of the region together with its religious, cultural, and linguistic features.

Lastly, manipulation is also an offensive strategy and it relies on the key role played by the media. Information war can easily build or destroy the image of a given company or country through the planned and targeted use of information and telecommunication channels. Information war is based on using false information both to control and protect information sources, and to prevent the opponent from reacting. These subversive disinformation or propaganda techniques can be easily performed in every communication channel, especially the Internet. In this situation it is important to rapidly react with counter information practices and occupy media space with dominant strategies.

At the present moment in which we witness a real war of knowledge, no company is immune from this kind of competition attacks.

Economy

A more effective labour market approach to fighting poverty

Cynthia Samuel-Olonjuwon

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Gainful employment is still the most reliable way of escaping poverty. However, access to both jobs and decent working conditions remains a challenge. Sixty-six per cent of employed people in developing economies and 22 per cent in emerging economies are in either extreme or moderate working poverty, and the problem becomes even more striking when the dependents of these “working poor” are considered.

Thus, it is not just unemployment or inactivity that traps people in poverty, they are also held back by a lack of decent work opportunities, including underemployment or informal employment.

Appropriate labour market policies can play an important role in the fight to eradicate poverty, by increasing access to job opportunities and improving the quality of working conditions. In particular, labour market policies that combine income support for jobless people with active labour market policies (ALMPs).

The new ILO report What works: Promoting pathways to decent work  shows that combining income support with active labour market support allows countries to tackle multiple barriers to decent work. These barriers can be structural, (e.g. lack of education and skills, presence of inequalities) or temporary (e.g. climate-related shocks, economic crises). This policy combination is particularly relevant today, at a time when the world of work is being reshaped by global forces such as international trade, technological progress, demographic shifts and environmental transformations.

Policies that combine income support with ALMPs can help people to adjust to the changes these forces create in the labour market. Income support ensures that people do not fall into poverty during joblessness and that they are not forced to accept any work, irrespective of its quality. At the same time, ALMPs endow people with the skills they need to find quality employment, improving their employability over the medium- to long-term.

New evidence gathered for this report shows that this combination of income support and active support is indeed effective in improving labour market conditions: impact evaluations of selected policies indicate how people who have benefited from this type of integrated approach have higher employment chances and better working conditions.

One example of how this combined approach can produce results is the innovative unemployment benefit scheme unrolled in Mauritius, the “Workfare Programme”. This provides workers with access to income support and three different types of activation measures; training (discontinued in 2016), job placement and start-up support. The programme was also open to those unemployed people who were previously working in an informal job. By extending coverage to the most vulnerable workers, the scheme has helped reduce inequalities and unlock the informality trap.

Another success came through a public works scheme implemented in Uruguay as part of a larger conditional cash transfer programme, the National Social Emergency Plan (PANES). The programme was implemented during a deep economic recession and carefully targeted the poorest and most vulnerable.

Beneficiaries of PANES were given the opportunity to take part in public works. In exchange for full-time work for up to five months, they received a higher level of income support as well as additional job placement help. This approach reached a large share of the population at risk of extreme poverty and who lacked social protection. The report indicates that providing both measures together was critical to the project’s success.

The effects of these policies on poverty eradication cannot be overestimated. By tackling unemployment, underemployment and informality, policies combining income support with ALMPs can directly affect some of the roots of poverty, while enhancing the working conditions and labour market opportunities for millions of women and men in emerging and developing countries.

ILO

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Economy

CPEC vs IMF in Pakistan

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International Monetary Fund (IMF) was created just after World War II (WWII) in 1945. The IMF is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

Pakistan has been knocking doors of IMF since 1958, and it has been 21 agreements with IMF. Generally, the IMF provides loans at very low-interest rates and provides programs of better governance and monitoring too. But for the last 6 decades, Pakistan has suffered a lot, in terms of good governance. Especially last 2 decades, corruption, nepotism, poor planning, bribery, weakening of institution, de-moralization of society, etc were witnessed. We may not blame the IMF for all such evils but must complain that the IMF failed to deliver, what was expected. Of course, it is our country, we are responsible for all evils, and wrongdoings happened to us. We have to act smartly and should have made the right decision and at right times.

IMF also dictates its terms and condition or programs like: devaluation of local currencies, which causes inflation and hike in prices, cut or draw-back of subsidies on basic utilities like fuel, gas, electricity, food, agriculture etc, which causes cost of life rather higher for local people, cut on development expenditures like education, health, infrastructure, and social development etc, which pushes the country even more backward. IMF focusses only on reducing expenditures and collection of taxes to make a country to meet the deadlines of payments. IMF does not care about the development of a country, but emphasizes tax collections and payment of installments on time, to rescue a country from being a default.

While CPEC is an initiative where projects are launched in Power Generation, Infrastructure development under the early harvest program. Pakistan was an energy trust country and facing a severe shortage of Electricity. But after completion of several power projects under CPEC, the shortfall of electricity has been reduced to a great extent. One can witness no load shedding today, while, just a few years back the load shedding was visible throughout the country for several hours a day. Several motorways and highways have been completed. Gwadar port has been operational partially. Infrastructure developments are basic of economic activities.

Projects under CPEC has generated jobs up to 80,000. CPEC was the catalyst to improve GDP by around two percent during 2015-2018. CPEC has lifted the standard and quality of life of the common man in Pakistan. CPEC was instrumental to move the economic activities and circulation of wealth in society. Under CPEC, early harvest projects, 22 projects have been completed at the cost of approximately 19 billion US dollars.

It is understood that early harvest projects were heavy investment and rather slow on returns. But, these projects have provided a strong foundation for the second phase, where Agriculture, Industrialization and Social Sector will be focused. Return on Agriculture and Industrial produce is quick and also generates more jobs. The second phase will contribute toward the social development of Pakistan as well as generate wealth for the nation.  Pakistan’s agriculture sector has huge potential as cultivatable land is huge, workforce is strong and climate is favorable.  Regarding Industrialization, Pakistan is blessed with an abundance of mines and minerals. The raw material is cheap and the labor cost is competitive. Pakistan has 70% of its population under the age of 40 years, which means an abundance of the work force. Pakistan’s domestic market is 220 million and the traditional export market is the whole of the middle-east and the Muslim world.

The major difference between the CPEC and IMF is that CPEC generates wealth, while IMF focuses on tax collection and reducing the developments and growth. China is the latest model of developments in the modern days, China is willing to replicate its experience with Pakistan for its rapid development.

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Eurasian integration: From economics to creation of a center of power

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Russia’s President Vladimir Putin had every reason to congratulate his Armenian colleague Nikol Pashinyan with the outcome of the summit of Eurasian Economic Union (EAEU) leaders that was recently held in Yerevan, where many promising decisions were made, bringing Iran, Singapore and Uzbekistan closer to this international organization.
Creation of various economic associations amid the ongoing process of globalization and toughening competition is a global trend nowadays. And still, the reasons for this process in Eurasia are as much economic, as they are existential.

The “traitorous” decision by the Western Christian powers during the Crimean War to side with the Ottoman Empire, which was widely perceived as a force hostile to the Christian world, came as a shock for Russian society, and above all, for the elite of the Russian Empire, which, throughout the 18th and 19th centuries, had been working hard to expand “the window on Europe,” opened by Peter the Great. The Europeans’ deep-seated rejection of Russia as part of the European world, often spilled out into open hostility.

The Crimean War underscored Christendom’s split along ideological and political lines, which began with the separation of the Roman Catholic and Orthodox Churches in 1054. The rapprochement between Russia and the European powers during and immediately after the Napoleonic wars proved a rather short-lived (and atypical) episode in the history of East-West relations. Before very long, however, Russian society managed to develop an “antidote” that cured the psychological trauma caused by the war: “Russia has only two allies: its army and Navy,” as Emperor Alexander III famously said. Moreover, the complex of “otherness” vis-a-vis Europe quickly turned into a matter of pride for many Russian thinkers, such as Nikolai Danilevsky (“Russia and Europe”), Leo Tolstoy (“War and Peace”), Alexander Blok (“Scythians”), to name just a few. 

While Danilevsky presented Russia as the leader of the still emerging Slavic “cultural-historical type,” the classical “Eurasians” with their idea of “Russia-Eurasia” believed that the cultural code of the Russian people is closer to the Turkic than to the West-Slavic one. What the “Eurasians” failed to delve into, however, was religious difference between the Russian and Turkic peoples, most of the latter being Muslims.

The ambitious experiment of building communism on a planetary scale further alienated Russia from the West, but brought it closer to the countries of the “third world,” primarily those in Asia. During the 1990s, Russia once again reached out to the West, only to be cold-shouldered by it.

This is exactly the response the West gave Turkey at the turn of this century and, just like the Russians before them, the Turks transformed their own complex of rejection from the West into a matter of pride. Today, according to various polls, up to 94.5 percent of Turks view the United States a hostile country. Anti-Americanism (coupled with anti-Western sentiment) is similarly on the rise in much of the Eurasian continent – from China all the way to the Middle East.

Meanwhile, the “Eurasians” theorized about a fundamental idea the entire future of “Russia-Eurasia” was to be built on. Today, most of the Eurasian countries’ foreign policy paradigm is overshadowed by their postcolonial syndrome and their desire for a more equitable world economic order.

“The recurrence of arrogant neo-colonial approaches, where some countries have the right to impose their will on others, is rejected by an absolute majority of members of the world community,” who seek “a more meaningful role in taking key decisions,” Russian Foreign Minister Sergei Lavrov wrote in an article titled “The world at a crossroads, and the system of international relations of the future.”

This goal can only be achieved by joint efforts and closer integration in the Eurasian space, where complex supranational integration formats, such as ASEAN, SCO, the Customs Union and the Common economic space (Russia, Belarus, Armenia, Kyrgyzstan and Kazakhstan) are already being established. Despite the complexity of the search for a mutually acceptable combination of the interests of very dissimilar countries (unlike in the case of the European Union), which have different civilizational affiliations and some even have running conflicts, this process is still moving ahead.

And yet, despite all their specific features, these countries still have very much in common: as a rule, a powerful state (“public”) economic sector, a long tradition of statehood (unlike Europe, not necessarily national) and, as a consequence, a traditional view of state power as something bordering on sacrosanct. And also an inherent rejection of the Western worldview with its mass culture, “rational,” almost materialistic, religion, and the substitution of morality by the criminal code, as the harshest critics of the West claim. Comparing Russia and Europe, the Russian historian Mstislav Shakhmatov stated: “The state of truth and the state of law are two different worldviews: the former is characterized by religious pathos and the latter – by material aspirations (…). Almost a century later, this maxim still rings true with many Eurasian societies.

Integration in our pragmatic century should start with a search for shared economic interests (by the way, the European Union grew out of the European coal and steel association). Speaking at the 2016 international economic forum in St. Petersburg, President Vladimir Putin pitched the idea of creating a large Eurasian partnership which, besides the CIS countries, would also bring on board China, India, Pakistan, Iran, and other countries.

Russia, which is a melting pot of a plethora of ethnic groups and cultures, has every reason to claim the role of a “natural” driving force behind the process of Eurasian integration. According to Turkish political analyst Ferhan Bayir, today “even the ruling Justice and Development Party in Turkey, which is rooted in political Islam, is edging closer to Russia as it increasingly opposes the United States… Even more so Iran, which is not just getting closer to Russia, but is actually working together with it in many parts of the region.”

Europe became a self-sufficient (though flagging) power center even before it united politically, and Eurasia may well become another such center. Since political unity, including in future, is unlikely, the participants of this integration process could still learn how best to respond together to external challenges, just like Russia, Turkey and Iran managed to collaborate in the Syrian conflict. 

It would certainly be great if all countries of the continent (like just anyone else too) could learn to be friends and work together, but awareness of common interests (and, in the era of globalization, of destinies too), can hardly extend to all of Eurasia. Therefore, when we talk about the hypothetical Eurasian community as a center of power, we would have to exclude China, which itself is a power center and the core of a separate civilization. As for India, it will hardly show much interest in close integration as Hindustani civilization is a vivid example of an introverted and self-contained one.

Putting aside the term “center of power,” creating a community of countries with shared economic interests in Eurasia is quite possible. This project will not be hampered by any political incumbrancers, if only its participants agree to find compromises as they go. It won’t be easy, but, as they say, a journey of a thousand miles begins with a single step…

From our partner International Affairs

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