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Economies 'built on sand' - Part B

Dickson Igwe. Photo: Provided
Dickson Igwe

Countries that depend upon a single product and a single market for their economic existence put all their eggs into a single basket. When that basket takes a hit, deep recession and depression are the results.

One product cultures—countries that depend on a single commodity or product for their economic existence—generate a visionless and narrow outlook, driven by the lack of a broader economic vision.

The combined effort of the country’s manpower in terms of ideas and physical effort is given over to the production of the one product and revenue generator.

The one product is a cash cow that prevents the country’s leaders from possessing a wider vision. It is a culture of ‘’easy money’’ that triggers dependency on the single product. The single product is a single polarity that drives the economy. The monoculture is a blinder that prevents clear sight, and panoramic thinking.

The preceding in turn negatively impacts the wider society. One-product cultures, such as oil-producing countries drive an entitlement culture. There is a deception that there will always be ‘’ bread on the breakfast table.’’ Laziness, corruption, and crime are often on an upward curve, in one-product economies.

Then, skills that should drive alternative revenue streams, and that can diversify and build resilience into the economy, are lost. The population focuses on the single knowledge and narrow skills-set that drives the single industry.  There is a loss of alternative markets that should have generated diverse employment options. This reduces productivity, as innovation is unnecessary and the population rushes into the one single industry for work and prosperity.

All economic and employment effort is put into the one economic culture. There is a neglect of alternative economies such as local manufacturing, food production, craft making, boat making, and more.

Then, as is inevitable, when the gravy train hits the ‘’proverbial buffer,’’ and is derailed, such as in the Virgin Islands with Hurricanes Irma and Maria, and then the UK decision imposing public registers of ownership in the financial services, the vulnerability of the one culture economy is ‘’rudely exposed.’’  

One product economies historically ignore the critical importance of collecting and utilising tax revenues and promoting social equity. Monocultures are often a top-down, trickle-down economics type. The single culture is an ‘’ all powerful commercial shrine.’’ There is great inequality, social and economic, in economies that are monocultures.

There is underinvestment in alternative revenue generators. There is overinvestment in the single product, in terms of resource allocation.

The economy is over-centralised. It is driven by the one single product. Political and social power is derived from links to the single economic generator. The preceding leads to an entitlement culture and poor governance.

The single product economy is overwhelmingly an import economy. This is because resources, efforts, and energies, are directed into the one product line. There are no natural and human resources directed into alternative economies and alternative revenue generators. The population becomes dependent upon imports. There is a loss of sufficiency.

There is an unhealthy exchange. The single product is the single export. Everything the country consumes from food and drink, to electronics and appliances are imported in exchange for the single product. The preceding undermines the productive capacity of the economy.

This dependence on foreign markets for consumption harms the social and physical capital. The mono-economy further destroys local markets. It prevents food sufficiency, flat lines economic productivity, and builds eternal trade and budgetary deficits. 

Corruption and conflict of interest is a common denominator of economic monocultures. National debt increases. But it is the type of external debt that is dead weight. The options of paying back the national debt are limited to the single revenue-generating product. This is risky and more arduous than in a multiple product market economy.

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3 Responses to “Economies 'built on sand' - Part B”

  • Good piece but, (02/06/2018, 18:16) Like (11) Dislike (0) Reply
    The powers to be are not listening. We needed a 25 years diversified and sustainable, economic and development plan which should be followed regardless of any government change, except for few adjustments due to emerging or changing dynamics we can also benefit from. It is still not late if they listen and take heed. All the ideas that they need to make this happen is right here in our country.

    • Who is listening? (03/06/2018, 14:56) Like (8) Dislike (2) Reply
      It is the people who are responsible and have not been listening. Just because the cash cow has continued to deliver the people have not complained. They have accepted "no leadership" for years in return for an easy coin. The writing has been on this wall for about five years now and still the people live in is too late mate! Lack of fresh ideas.
  • Absolutly! (03/06/2018, 07:51) Like (9) Dislike (0) Reply
    The world is not staying still for the bvi. Economies that fail to diversify lose in the end. Venezuela is a prime example.

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