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Trade for Geopolitical Stability: Lessons for India and Pakistan

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One of the most volatile zones today apart from the 38th parallel between the North-South Korea is the India-Pakistan border. With attacks and counter-attacks being reported almost every day, the threat of full-fledged war between the two largest nations in the South Asian region cannot be overlooked. Although last time both the countries were at war was in 1999 but the recent decision of the Indian Government on State of Jammu and Kashmir has increased tensions between the two countries. As a result of this rivalry, both the governments have been trying to feed their people with their own narratives and hence it becomes important to ascertain what can be the way out of the age-old conflict between the two nations. While India and Pakistan both are members of various international organizations like UN, WTO, IMF, etc. as well as regional organizations like SAARC, SCO, etc., none of these forums have ever come even an inch closer to resolution of the dispute between the two. Most recently with the decision of India to revoke Article 370, Pakistan has retaliated with the suspension of trade ties with India. The current bilateral trade between the two countries accounts for only a mere 2.1 bn $ and as it only forms 0.83% of total trade between the two countries hence both the countries have nothing to lose in the discourse. This article analyses how trade can ensure regional stability among two major players of the South Asian region.

While trade could have been a measure to ensure harmony between any conflicting nations, yet the first retaliatory measure that countries opt for is to cut off bilateral trade with each other in order to show their resentment over a policy. Although such instances have decreased in number since the formation of World Trade Organization (WTO), yet they cannot be altogether ruled out. At this stage,it is equally important to understand that since the formation of WTO, the world has not seen major wars as it was understood in its traditional meaning as a war between nations. One can equally not neglect the rise of belligerency and insurgency often supported by foreign institutions. Still, one of the credits that cannot be taken away from WTO is that it has ensured that the countries which have higher volume of bilateral trade often prefer peace over war, despite the odds. This claim is not without merit. History is a great educator. A brief comparison before the formation of General Agreement on Tariffs and Trade (GATT) and after the formation of GATT would prove it. The GATT was negotiated between countries in 1948. It was one of the founding pillars on which our modern-day WTO is based.

The countries came to an agreement where they fixed a range for tariffs or bound rate beyond which the tariffs cannot be imposed on import of goods. This mechanism ensures certainty in tariff rates which prevents the countries to turn into protectionist regimes. It would not be wrong to say that the first idea of globalization pursued by international community was not freedom of movement of people but the freedom of movement of goods and services. Prior to GATT, during the early 1930s, also known as the period of the Great Depression, lack of such an affirmation in form of GATT and the consequent fear that imports would throw more people out of work led governments to raise their trade barriers, thus creating a vicious cycle of retaliation. As a result, the world economy shattered, eventually contributing to the outbreak of World War II. Such a protectionist approach with no such affirmation as we find in GATT can easily lead us to a situation where everyone loses. However, a deeper analysis in the post-World War II period would establish that the recovery of Western European nations from the aftermath of the war was much quicker as compared to the Eastern European nations.

The effect was such that most of the western European nations today are part of a customs union with free movement of goods as well as of people. Even the Soviet Union (USSR), which opposed the idea of market economy before its disintegration showed interest in becoming a member of GATT in 1986. Several letters and correspondence between GATT members and USSR prove this point. Much later after its disintegration, during 2000s most of the newly formed nations acceded to the GATT with Russia ultimately joining the WTO in 2008. What was realised much later in form of European Union (EU)found its place in the writings of French Philosopher Montesquieu and Italian Economist Pareto. Montesquieu, in 1748,quoted, peace is a natural effect of commerce. Pareto argued in 1889 that customs union can help to achieve peace between European nations. None of these claims have been proven wrong. Since the formation of EU, none of the surveys have ever claimed of Europe being the centre for next major war between nations. It can be equally argued that this has been made possible because now the focus of nations has shifted from acquiring territories to improving their respective economies. Yet, the importance of economics behind a war cannot be totally neglected. Going by the report of UNICEF conducted by M Humphreys of Harvard University in 2003 came to a similar conclusion stating, countries which trade with each other are less likely to fight each other. He illustrates his argument with how most of the leftist scholars have yet not come out of the mercantilism hangover as the modern trade regime is not based on mercantilism which believed that imports per se are bad for any country.

Another recent example can be seen in the shift that UNDP’s Sustainable Development Goals (SDGs) have brought in contrast to Millennium Development Goals (MDGs). The interlinkage between the idea of development and conflict which was missing in MDGs find their place, and rightly so, in the SDGs. Even the ASEAN which today has become a successful economic bloc was formed with the intention of stopping the spread of communist ideas in the region. Since 1990s the organization has remained an important voice in nearly all the economic platforms. Even scholars from all around the world have supported similar idea.Daniel Griswold, examined the idea that whether free and open markets promote human rights and democracy. He observed, “Economic liberalization provides a counterweight to governmental power and creates space for civil society. The faster growth and greater wealth that accompany trade promote democracy by creating an economically independent and political aware middle class. A sizeable middle class means that more citizens can afford to be educated and take an interest in public affairs. They can afford cell phones, Internet access, and satellite TV. As citizens acquire assets and establish businesses and careers in the private sector, they prefer the continuity and evolutionary reform of a democratic system to the sharp turns and occasional revolutions of more authoritarian systems. People who are allowed to successfully manage their daily economic lives in a relatively free market come to expect and demand more freedom in the political and social realm.”

Turning to the question in context, i.e. South Asia, especially India and Pakistan, this is probably not the first time that someone has come up with the idea of trade as a means to ensure peace and stability in the region. In one of his recent articles,Dr. Ranjan, Professor at South Asian University, arguesThe people of South Asia surely deserve a prosperous and a peaceful future.  The onus is on the leadership of the two biggest countries in the region to deliver. While solving difficult political questions will undoubtedly take time, it won’t be a bad idea to start working towards creating an atmosphere where even difficult questions can be resolved. Increasing bilateral trade can be one such step towards creating such a positive atmosphere.

In a study published by Woodrow Wilson International Centre, “trade relation between India and Pakistan have often blossomed even while political relations wilted. In 1948–49, 56 percent of Pakistan’s exports were sent to India. For the next several years—a period of tense political relations—India was Pakistan’s largest trading partner. Between 1947 and 1965, the two nations entered into 14 bilateral agreements related to trade facilitation.”

Source: Bloomberg (Quint)

In a recent report by World Bank, the potential of trade between the two nations is a whooping 37 bn $. However, in reality it is at 2.4 bn $ which is insignificant for both the countries. The informal trade between the countries stands much higher at 4 bn $, which is routed through UAE. With regards to the Most Favoured Nation (MFN) clause, India granted MFN to Pakistan in 1996 and withdrew it post Pulwama attacks in 2019. Pakistan has yet not reciprocated the same. It is however quite strange that none of the successive governments in India has ever brought the issue to the WTO against Pakistan’s non-compliance of MFN obligations. Even under the regional trade arrangements like South Asian Free Trade Agreement (SAFTA), Pakistan maintains a negative list of over 1200 products which it doesn’t import from India. Apart from these tariff measures there are other non-tariff reasons such as port restrictions prevailing between both the countries which further narrows down the scope of increased trade. The other logistical reasons include the transport restrictions through Wagah Border, where none of the transport vehicles are allowed to move out of the border zone and have to unload their cargo.

The condition worsened post article 370 amendment, when Pakistan decided to suspend all trade ties with India. Although none of the decisions taken by either of the governments ever impacted their respective economies, yet retaliatory measures undertaken by both the countries with respect to not granting or withdrawal of MFN or even suspension of trade cannot be justified if brought before the dispute settlement body of WTO. A measure which goes against the principles enunciated under the WTO agreements is only allowedin cases when they either fall under the category of General Exceptions or National Security Exception. However, a prima facie observation of all the measures ever undertaken by either of the governments shows that none of these qualify either under the general exceptions or national security exception.

The problems pertaining to the conflict between the two nations is not merely political but also dependent upon the perception of ordinary people. Recent survey by Pew Research Centre found that 76 percent of Indians viewed Pakistan as a serious threat and 61 percent of Pakistanis viewed India as a threat, more than 55 percent who viewed Taliban as a threat. Another survey by Pulse Consultant in 2017 found 95 percent of Pakistanis designating India as the worst enemy. This narrative has further been deepened by the media houses in both the countries who often during debates promote the hatred. This public perception depends a lot on the population and what narrative they read and follow. As the median population in both these countries is around 24-28, most of them have not witnessed the horrific impact of either the 1965 war or the 1971 war between the two nations. To change this perception, free trade can be one of the ways. With freer trade in place, it is not only the products which cross borders, but also the ideas and other forms of expressions in form of magazines, news etc. It might not be as effective as educating and spreading awareness among people, yet when the political class of both the countries is occupied with bashing each other at international forums, this can be a good start.

Overall, with such a trade potential between the two nations it is imperative for the governments of both the countries to ensure that their trade policy should be separated from other policies. One suggested method as Raj Bhala, a trade expert, explains can be in form of use of clause 11 of Article XXIV of GATT which deals with the concept of regional trading arrangements. As prior to partition, the entire Indian subcontinent was seen as a single customs territory, the clause provides that the provisions of this Agreement shall not prevent the two countries from entering into special arrangements with respect to the trade between them, pending the establishment of their mutual trade relations on a definitive basis.As it is quite clear from the text of the provision, if India and Pakistan make use of this provision grant of any bilateral preferences between them will not be considered as a violation of any principle of WTO. Unfortunately, as Dr. Ranjan remarks, this has become a forgotten rule.

The countries can ensure better trading network by removing impediments to trade such as trade infrastructure and logistics, changes in their visa policy, easing cross border financial transactions etc. As Zareen F Naqvi, Director of Institutional Research at University of Fraser Valley, Canada, argues in his article, “both India and Pakistan need to tackle their restrictive visa regimes. A number of issues related to trade infrastructure and logistics can be done unilaterally such as the initiation of Electronic Data Interchange (EDI), more efficient customs processing at land border crossings, setting up or upgrading and warehousing, testing and security facilities, and setting up bank branches to ease financial transactions on both sides of the border.

As already proven above through various researches and surveys, trade has the potential to provide political stability to any volatile region. With continuous threat of full-fledged war lurking on both the nations, economic development cannot be ensured as most of the times these countries tend to focus on their military needs. Human development in both these countries still remains low on the HDI index. Today, the future of around 2 billion people in the world rests on few politicians in both these countries. The improvement in standards of living, poverty, employment, etc. rest a lot on the political willingness of the countries. It is the need of the hour to ensure that the two nuclear capable countries should not involve in a full-fledged war with each other as it would lead to a major catastrophe. The economic development of Singapore, Hong Kong, South Korea and Taiwan do show us a path which follows the same narrative of freer trade between nations. Both these nations have to realise that trade ensures the active involvement of manufactures involved in export, civil societies and middle class in foreign relations. Once that is achieved, it would not be easy for any government to go for a fur fledged war as it is peace which ensures that the interests of these sections of the society are preserved.

Samarth Trigunayat is LLM graduate from South Asian University, New Delhi. South Asian University was established by SAARC member nations to enhance cooperation between the member states through the tool of education. The author is currently employed as Young Professional (Law) at Ministry of Commerce, Government of India. The author has previously worked as Assistant Professor at Faculty of Law, Shree Guru Gobind Singh Tricentenary University, Gurugram, India. His area of interest includes International Trade Law, International Investment Law, Feminist Jurisprudence and Constitutional Law. The author can be reached at: lawyer.samarth[at]gmail.com

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Carbon Market Could Drive Climate Action

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Authors: Martin Raiser, Sebastian Eckardt, Giovanni Ruta*

Trading commenced on China’s national emissions trading system (ETS) on Friday. With a trading volume of about 4 billion tons of carbon dioxide or roughly 12 percent of the total global CO2 emissions, the ETS is now the world’s largest carbon market.

While the traded emission volume is large, the first trading day opened, as expected, with a relatively modest price of 48 yuan ($7.4) per ton of CO2. Though this is higher than the global average, which is about $2 per ton, it is much lower than carbon prices in the European Union market where the cost per ton of CO2 recently exceeded $50.

Large volume but low price

The ETS has the potential to play an important role in achieving, and accelerating China’s long-term climate goals — of peaking emissions before 2030 and achieving carbon neutrality before 2060. Under the plan, about 2,200 of China’s largest coal and gas-fired power plants have been allocated free emission rights based on their historical emissions, power output and carbon intensity.

Facilities that cut emissions quickly will be able to sell excess allowances for a profit, while those that exceed their initial allowance will have to pay to purchase additional emission rights or pay a fine. Putting a price tag on CO2 emissions will promote investment in low-carbon technologies and equipment, while carbon trading will ensure emissions are first cut where it is least costly, minimizing abatement costs. This sounds plain and simple, but it will take time for the market to develop and meaningfully contribute to emission reductions.
The initial phase of market development is focused on building credible emissions disclosure and verification systems — the basic infrastructure of any functioning carbon market — encouraging facilities to accurately monitor and report their emissions rather than constraining them. Consequently, allocations given to power companies have been relatively generous, and are tied to power output rather than being set at absolute levels.

Also, the requirements of each individual facility to obtain additional emission rights are capped at 20 percent above the initial allowance and fines for non-compliance are relatively low. This means carbon prices initially are likely to remain relatively low, mitigating the immediate financial impact on power producers and giving them time to adjust.

For carbon trading to develop into a significant policy tool, total emissions and individual allowances will need to tighten over time. Estimates by Tsinghua University suggest that carbon prices will need to be raised to $300-$350 per ton by 2060 to achieve carbon neutrality. And our research at the World Bank suggest a broadly applied carbon price of $50 could help reduce China’s CO2 emissions by almost 25 percent compared with business as usual over the coming decade, while also significantly contributing to reduced air pollution.

Communicating a predictable path for annual emission cap reductions will allow power producers to factor future carbon price increases into their investment decisions today. In addition, experience from the longest-established EU market shows that there are benefits to smoothing out cyclical fluctuations in demand.

For example, carbon emissions naturally decline during periods of lower economic activity. In order to prevent this from affecting carbon prices, the EU introduced a stability reserve mechanism in 2019 to reduce the surplus of allowances and stabilize prices in the market.

Besides, to facilitate the energy transition away from coal, allowances would eventually need to be set at an absolute, mass-based level, which is applied uniformly to all types of power plants — as is done in the EU and other carbon markets.

The current carbon-intensity based allocation mechanism encourages improving efficiency in existing coal power plants and is intended to safeguard reliable energy supply, but it creates few incentives for power producers to divest away from coal.

The effectiveness of the ETS in creating appropriate price incentives would be further enhanced if combined with deeper structural reforms in power markets to allow competitive renewable energy to gain market share.

As the market develops, carbon pricing should become an economy-wide instrument. The power sector accounts for about 30 percent of carbon emissions, but to meet China’s climate goals, mitigation actions are needed in all sectors of the economy. Indeed, the authorities plan to expand the ETS to petro-chemicals, steel and other heavy industries over time.

In other carbon intensive sectors, such as transport, agriculture and construction, emissions trading will be technically challenging because monitoring and verification of emissions is difficult. Faced with similar challenges, several EU member states have introduced complementary carbon taxes applied to sectors not covered by an ETS. Such carbon excise taxes are a relatively simple and efficient instrument, charged in proportion to the carbon content of fuel and a set carbon price.

Finally, while free allowances are still given to some sectors in the EU and other more mature national carbon markets, the majority of initial annual emission rights are auctioned off. This not only ensures consistent market-based price signals, but generates public revenue that can be recycled back into the economy to subsidize abatement costs, offset negative social impacts or rebalance the tax mix by cutting taxes on labor, general consumption or profits.

So far, China’s carbon reduction efforts have relied largely on regulations and administrative targets. Friday’s launch of the national ETS has laid the foundation for a more market-based policy approach. If deployed effectively, China’s carbon market will create powerful incentives to stimulate investment and innovation, accelerate the retirement of less-efficient coal-fired plants, drive down the cost of emission reduction, while generating resources to finance the transition to a low-carbon economy.

(Martin Raiser is the World Bank country director for China, Sebastian Eckardt is the World Bank’s lead economist for China, and Giovanni Ruta is a lead environmental economist of the World Bank.)

(first published on China Daily via World Bank)

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The EU wants to cut emissions, Bulgaria and Eastern Europe will bear the price

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In the last few years, the European Union has been going above and beyond in dealing with climate change. Clearly, this is far from being a case of disinterested endeavour to safeguard the planet and the environment. On the contrary, the EU’s efforts aim at reinforcing its “normative power”.  In effect, the EU has gained some clout on the international stage, even vis-à-vis faraway countries like Vietnam and China. Yet, in doing so the Union embroiled in the apparent rush for more and more ambitious climate standards and targets. Therefore, Brussels needs to start acting and deliver on its promises to keep staying ahead of the pack. Even more so given US President Biden’s strengthened engagement with friends and foes alike on the climate and human rights.

Last week, the European Commission manifested its acknowledgment of this need by unveiling the Fit for 55 (FF55) growth strategy. Overall, this new, beefed-up Green Deal should reduce greenhouse gas emissions to 55% of their 1990 level by 2030. In some analysts’ view, the FF55 plan is a game changer in the long-term race towards climate neutrality alas. In fact, it could “both deepen and broaden the decarbonisation of Europe’s economy to achieve climate neutrality by 2050.” Moreover, they expect the FF55’s 13 measures to generate a number of positive ripple effects across EU economies.

True, wanting to reduce greenhouse gases significantly by 2030 and reaching net-zero-emission by 2050 goal is commendable under many regards. Still, the FF55 includes a number of measures that could impact ordinary people’s life massively across Europe. Nevertheless, the 27 Member States of the EU are responsible for as little as 8% of global emissions. As such, it is necessary to take a deeper look at how the FF55 will affect different countries and demographics.

The transition’s social cost

The realisation that reduction of capitalism’s dependence on fossil fuels will have serious socio-economic consequences is not at all new. Contrariwise, scholars and politicians have been outspoken about an indisputable “conflict between jobs and the environment”, since the early 1990s. Together, the pandemic-induced recession and the signing of the Paris Accord have brought the notion back on the centre stage.

Factually, pushing the energy transition entails facing mass lay-offs, generalised workforce retraining and taxes hikes on ordinary consumers. For instance, these hardships’ seriousness is evident in the progressive abandonment of coal mining for energy generation in the US. Moreover, the energy transition requires strong popular backing in order to be effective. Yet, measures pursued to achieve environmentally friendly growth tend to generate strong, grassroot opposition. Most recently, France’s gilets jaunes protests shows that environmental policies generate social discontent by disfavouring middle and lower classes disproportionately.

The poorest families and countries will bear the costs

One of the FF55’s main policy innovation regards the creation of a carbon trading market for previously exempt sectors. Namely, companies working int the transport and buildings sectors, be they public or private, will have to follow new rules. As it happened in the energy industry before, each company will have to respect a “carbon allowance”. Basically, it is an ‘authorisation to pollute’ which companies can buy from each other — but the total cannot increase. Despite all claims of just transition, this and other measures will have a gigantic, re-distributional effect within and between countries. And it will be of markedly regressive character, meaning that poorer families and countries will pay more.

Taxing transport emission is regressive

Historically, these sectors were trailing behind most others when it comes to decarbonisation for a variety of reasons. First of all, the previous emission trading system did not include them. Moreover, these are far from being well-functioning markets. As a result, even if the cost of emissions was to rise, enterprises and consumer will not react as expected.

Thus, even as they face higher costs, companies will keep utilising older, traditional vehicle and construction technologies. With taunting reverberations on those poorer consumers, who cannot afford to buy an electric car or stop using public transport. Hence, they “will face a higher carbon price while locked into fossil-fuel-based systems with limited alternatives.” Moreover, the EU could worsen these effects by trying to reduce the emission fees on truck-transported goods. Indeed, the commission is proposing a weight-based emission standard that would collaterally favour SUVs over smaller combustion-engine car and motorbikes. 

In a nutshell, higher taxes and fee will strike lower-class consumers, who spend more of their incomes for transportation. Even assuming these households would like to switch to low-emission cars and buildings, current market prices will make it impossible. In fact, all these technologies ten to have low usage costs, but very high costs of acquisition. For instance, the cheapest Tesla sells at over €95,000, whereas a Dacia Sandero “starts at just under €7,000.”

Eastern Europe may not be willing to pay

At this point, it is clear that the FF55 plan will deal a blow to ongoing efforts to reduce inequalities. In addition, one should not forget that EU Member States are as different amongst them as they are within themselves. Yet, the EU is not simply going to tax carbon in sectors that inevitably expose poorer consumers the most. But in doing so it would impose a single price on 27 very diverse societies and economies. Thus, the paradox of having the poorest countries in the EU (i.e., Central- and South-Eastern Europe) pay the FF55’s bill.

To substantiate this claim, one needs to look no further than at a few publicly available data. First, as Figure 2 shows, there is an inverse relation between a country’s wealth and consumers’ expenditures on transport services. Thus, not only do poorer people across the EU spend more on transport, poorer countries do as well. Hence, under the FF55, Bulgarians, Croatians, Romanians and Poles will pay most of the fees and taxes on carbon emission.

Additionally, one should consider that there is also a strict inverse relation between carbon emissions and the minimum national wage. In fact, looking at Figure 3 one sees that countries with lower minimum wages tend to emit more carbon dioxide. On average, countries with a minimum salary of €1 lower emit almost 4.5mln tonnes of carbon dioxide more. But differences in statutory national wages explain almost 32% of the cross-country variation in emissions. So, 1.5 of those extra tonnes are somehow related to lower minimum salaries and, therefore, lower living standards.

The EU’s quest for a just transition: Redistribution or trickle down?

Hence, the pursual of a ‘just’ transitionhas come to mean ensuring quality jobs emerge from these economic changes. However, many of the FF55’s 13 initiatives may worsen disparities both within countries and, more importantly, between them. Thus, the EU has been trying to pre-empt the social losses that would inevitably come about.

From the Just Transition Fund to the Climate Social Fund

In this regard, the European Union went a step forward most countries by creating the Just Transition Fund in May. That is, the EU decided to finance a mix of grants and public-sector loans which aims to provide support to territories facing serious socio-economic challenges arising from the transition towards climate neutrality [… and] facilitate the implementation of the European Green Deal, which aims to make the EU climate-neutral by 2050.

Along these lines, the FF55 introduces a Climate Social Fund (CSF) that will provide “funding […] to support vulnerable European citizens.” The fund will provide over €70bln to support energy investments, and provide direct income support for vulnerable households. The revenues from the selling of carbon allowances to the transport and building sectors should fund most of the CSF. If necessary, the Member States will provide the missing portion.

The EU Commission may give the impression of having design the CSF to favour poorer households and countries. However, it may actually be a false impression. In fact, it is clear that the entire carbon pricing initiative will impact poorer household and countries more strongly. However, only a fourth of the carbon pricing system’s revenues will go to fund the CSF. The remaining portion will finance other FF55 programmes, most of which have a negative impact on poorer communities. Thus, despite the CSF, the final effect of the entire FF55 will be a net redistribution upwards.

Stopping a redistribution to the top

Nevertheless, there is a way to fix the FF55 so that it can work for poorer households and lower-income countries. Given that the CSF is too small for the challenge it should overcome, its total amount should be increased. In fact, the purpose of higher carbon pricing is in any event not to raise revenue but to direct market behaviour towards low-carbon technologies—there is thus a strong argument for redistributing fully the additional revenues

Hence, the largest, politically sustainable share of carbon-pricing revenues from transportation and housing should ideally go to the CSF. In addition, the Commission should remove all the proposed provision that divert CSF money away from social compensation scheme. In fact, poorer families will not gain enough from subsidies to electric car, charging stations and the decarbonisation of housing. One contrary, “using the fund to support electric vehicles would disproportionally favour rich households.”

Finally, the allocation of CSF money to various member states should follow rather different criteria from the current ones. In fact, the Commission already intends to consider a number of important such as: total population and its non-urban share; per capita, gross, national income; share of vulnerable households; and emissions due to fuel combustion per household. But these efforts to look out for the weakest strata in each country could backfire. In fact, according to some calculations, a Member State with lower average wealth and lower “within-country inequality could end up benefiting less than a rich member state with high inequality.”

Conclusion

A number of well-known, respected economist have been arguing that environmental policies should account for social fallouts attentively. Goals such as emission reduction and net-zero economies require strong popular support in order for the transformation to succeed. Or at least, the acquiescence of a majority of the public. Otherwise, the plans of well-intentioned and opportunistic governments alike will derail. After all, this is the main lesson of the currently widespread protest against the mandating of ‘Covid passes’ and vaccines.

If the FF55 will deal poorer households a devastating blow, social unrest may worsen — fast. But as long as it will also hurt Eastern European countries as a whole, there is a chance. Hopefully, European parliamentarians from riotous Hungary or Poland will oppose the FF55 in its current shape. Perhaps, in a few years everyone will be thankful for these two countries strenuous resistance to EU bureaucracy. Or else, richer countries may force Central- and South-Eastern Europe to swallow a bitter medicine. Even though, whatever happens, Europe alone cannot and will not save the planet.

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Entrepreneurialism & Digitalization: Recovery of Midsize Business Economies

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Observe nations around the world, especially those with the largest numbers of IT professionals, rich and well-groomed government departments and their related agencies, with matured bureaucracies and unlimited numbers of computers but still no signs of thriving digital economies buzzing on global platforms. What is so mysterious about digitization of small medium businesses, smoothly leading to ‘virtualization of economies’ creating global bounce of trade? Well, it is surrendering to the realization that entrepreneurialism is the main driving engine of such challenges and not the herds of IT teams, deluxe bureaucracies and accountancy-mindsets.

What is a digital economy? It is definitely not when all businesses have websites and are all doing social media postings, at the outset understanding  digitalization of a single enterprise is already a fine art, and to make it fly on global trade platforms is a science. Unless economic development teams can articulate, what is and how ‘virtualization of economies’ work, uplift and upskill vertical trade sectors and create an entrepreneurial bounce of trades’, the entire exercise of digitization might as well leave to early video game players or early grader IT personnel. Observe how The Silicon Valley and e-Commerce revolutions of the world never created by large IT teams, but categorically by “techie-entrepreneurs” of the day that in turn occupied millions of IT professionals and created hundreds of millions IT experts driving e-commerce of today. Of course, IT teams needed but in very reverse order.

Why is the digital economy an entrepreneurial economy?  Digitization of the economy is simply not an IT exercise rather a strategic entrepreneurial maneuver of placing a midsize business economy on wheels using easily available digital platforms with abundance of software to choose from to make right entrepreneurial-based decisions to create creative bounce. The survival strategies for the post pandemic economies have less to do with accountancy-mindsets and bureaucratic attitudes, as it is all about entrepreneurial global age execution with superior digital performances.

Calling Entrepreneurial Business Mindsets:  The new horizons beyond pandemic call for “simultaneous synchronization” a need to merge ‘mental-blocks’ the lingering ‘productivity-silos’ ‘digital-divides’ ‘mental-divides’ all such negative forces balanced with positive forces of ‘innovative excellence’ and ‘superior-performance’ thrown all in an entrepreneurial-blender to make a great progressive multi-flavored shakes. To mix and match with our realty checks of today and the blended calamites; Economy + SME + MFG + AI + VR + AR + Officeless + Remote + Occupationalism + Globalization + Exports + Upskilling, all in one single sandbox need progressive advancements with entrepreneurial guts and clarity of vision for any serious stable economic balance. If such were a monopoly game, printing of currency would be the norm.  

National Mobilization of Entrepreneurialism: Needed are deep studies of the prolonged trajectory of entrepreneurial intellectualism spanning a millennia… the word ‘entrepreneurialism’ was only invented over a century ago… but our civilization was built on similar principles, driven and strong people. Declare an economic revolution as a critical cure to desolate periods and call the nation but will they listen? With credibility of institution and political promises tanked, audible to the populace now is the grind of mobilizations, thundering deployments of action packed strategies, but how do you fund them? National mobilization of entrepreneurialism is the hidden pulse of the nation, often not new funding dependent rather execution hungry and leadership starved, so what makes it spin? Entrepreneurial warriors

As if a silent revolution mobilized, the nouveau entrepreneurialism in post pandemic economy in action, where talents on wings of digitalization, flying on trading platforms, visible in smart data and shining amongst upskilled midsize economies. Lack of upskilling, lack of global-age expertise, and most importantly lack of entrepreneurialism is what keeps digitization of economies lost in the past. How naïve is it to believe post-pandemic economic issues some PR singsong election campaigns? Only deployment, execution, mobilization will be the message now acceptable by the billions displaced, replaced and misplaced workers, but what is stopping nations, their Ministries and trade groups to have all out discussions and table immediate action plans? Ouch, do not forget the entrepreneurial blood in the economic streams, exciting the bureaucracies and accountancy-mindsets.  The next 100 elections over the coming 500 days will be full of surprises, but serious transformation for survival is inevitable, with or without upskilled ministries of commerce. Which nations and regions are ready to engage in this tactical battlefield of global-age skills?  Study how Expothon Africa is in deployments with selected countries.

The deciding factors: Never ever before in the history of humankind,the economic behaviorism across the world suddenly surrendered to a single calamity, affecting the majority of the global populace suffering in prolonged continuity. The side effect of such complexity juxtaposed with technological access can bring sweeping changes to our assumed complacency. All traditional problem solving and conventional thinking styles now considered too dangerous to economic growth and social balances.  

Recommendation and Survival Strategies: Discover and establish authoritative command on digitization and virtualization of economies, study more on Google.Allow micro-small-medium enterprises a tax-free window on the first USD$5-10 million revenues in exports, this will create local jobs and bring foreign exchange. Allow micro-small-medium enterprises free access to all dormant Intellectual Property, Patents rolled up due to lack of commercialization. Allow Academic Experts on innovative technologies and related skills on free voucher programs to the SME base to uplift ideas and special expertise. Optimization of telecommunication and internet structures worth trillions of dollars with global access at times completely ignored and wasted by wrong mindsets deprived of entrepreneurial undertakings. Allow micro-small-medium enterprises free full time MBA as 12 months interns so MBA graduates can acquire some entrepreneurialism while enterprises can uplift their ideas in practice.

“Allow Million qualified foreign entrepreneurs to park within your nation for 5-10 years under a special full tax-free visa and stay program. Which nations have qualified dialogue on such affairs? Bring in, land million entrepreneurs in your nation, and create 10 million plus jobs and new wealth in following years. Let your own institutions and frontline management learn how such economic developments created.  Be bold, as the time to strategize passed now time to revolutionize has arrived”. “Excerpted from keynote lecture by Naseem Javed, Global Citizen Forum, Dubai, 2013.”

Allow National Mobilization of Entrepreneurialism Protocols mandated to engage trade and exports bodies. Allow National Scoring of entrepreneurialism to measure, identify and differentiate required talents. Digitize from top to bottom and sideways, futurism fully digitized and without real transformation, it is like a nation without any internet. Act wisely. Digitalization of economies without entrepreneurial minds is more like pre-pandemic archives of mostly failures. Needed are the economic revolutions, based on entrepreneurial meritocracy and national mobilization of midsize economy.
The rest is easy 

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