Pa­ram­e­ters of Progress

Mov­ing for­ward but on cer­tain con­di­tions.

Southasia - - CONTENTS - By Al­mas Jawaid The writer is an HR pro­fes­sional and a free­lance con­trib­u­tor. She writes on so­cial and cul­tural is­sues.

Bhutan has won the honor of be­ing rec­og­nized at the 87th freest econ­omy in the world out of 157 coun­tries and ter­ri­to­ries by the Fraser In­sti­tute, a Cana­dian pub­lic pol­icy think tank. Ac­cord­ing to the re­port, the de­gree of eco­nomic free­dom in Bhutan is the best among not just South Asian na­tions but also among gi­ants such as Rus­sia (which ranked 99th), China (111th), In­dia (114th) and Brazil (118th). The coun­try has been fea­tured for the first time on the World Eco­nomic Free­dom list that mea­sures the de­gree to which poli­cies and in­sti­tu­tions of a par­tic­u­lar coun­try are sup­port­ive of eco­nomic free­dom. To put it sim­ply, eco­nomic free­dom oc­curs when in­di­vid­u­als en­joy the right to choose their trade, mar­ket, trans­ac­tions and re­sources with­out the use of vi­o­lence, theft and/or fraud. As per the re­port, the govern­ment’s role in an eco­nom­i­cally free na­tion is lim­ited to pro­tec­tion of its peo­ple and their prop­erty by up­hold­ing the rule of law and safe­guard­ing their rights. The less the govern­ment in­ter­venes in busi­ness and trade trans­ac­tions, the bet­ter it is for the econ­omy.

Be­ing in­cluded for the first time since its pub­li­ca­tion in 1996, Bhutan has scored a to­tal of 6.86 in the mea­sure of eco­nomic free­dom. The av­er­age score of the top 10 coun­tries is 9.4 and the av­er­age score of the world is 8.1 while that of the SAARC coun­tries is 6.6.

The re­port mea­sures de­grees of free­dom in five ma­jor ar­eas with 24 com­po­nents and 42 dis­tinct vari­ables which in­clude size of govern­ment, le­gal sys­tem and se­cu­rity of prop­erty rights, sound money, free­dom to trade in­ter­na­tion­ally etc. Data from the World Bank, IMF and other in­sti­tu­tions were also con­sid­ered.

Ac­cord­ing to the World Bank, in the last 20 years, Bhutan has out­paced other South Asian coun­tries in terms of poverty re­duc­tion and Bhutan’s poverty re­duc­tion leads coun­tries with sim­i­lar 1990 poverty lev­els like In­dia, In­done­sia, Su­dan, Cam­bo­dia and Pak­istan. Bhutan per­formed very well in the area of rule of law where the peo­ple have the free­dom to choose their re­sources and mar­ket with the law pro­tect­ing their rights, elim­i­nat­ing the threat of fraud or any other vi­o­la­tion of law. While its rank is the best in South Asia, Bhutan falls be­hind in size of govern­ment on the world av­er­age (6.6 vs. 8) which is for govern­ment con­sump­tion and govern­ment en­ter­prise or in­vest­ment. Bhutan also falls be­hind the world av­er­age in sound money (6.9 vs. 8.1 ) which is free­dom to own for­eign cur­rency bank ac­counts and also on free­dom to trade which is the same as that of Nepal (6.5 vs. 7). This has to do with reg­u­la­tory trade bar­ri­ers and con­trols on the move­ment of cap­i­tal and peo­ple.

For a coun­try that has long be­lieved in and pro­moted the con­cept of Gross Na­tional Hap­pi­ness (GNH), ex­perts agree that en­hanc­ing eco­nomic free­dom would lead to fur­ther hap­pi­ness among Bhutan’s peo­ple. GNH cov­ers many is­sues that the GDP mea­sure does not cover. En­hanc­ing eco­nomic free­dom would, there­fore, lead to speedy eco­nomic growth and swift poverty re­duc­tion, thus sup­port­ing the GNH model and strength­en­ing Bhutan’s po­si­tion in the world.

Ex­perts also say that eco­nomic free­dom in­creases life con­trol fac­tors such as trust, em­ploy­ment, health and education, all of which are not just in­di­ca­tors of a pro­gres­sive coun­try but are fac­tors that can lead to hap­pi­ness among in­di­vid­u­als. “Cor­rup­tion, for in­stance, de­creases hap­pi­ness but eco­nomic free­dom de­creases cor­rup­tion,” says Fred McMa­hon, a Fraser In­sti­tute fel­low who man­ages the world eco­nomic free­dom net­work. “If more per­mis­sions are re­quired to do some­thing, there emerges a need to pay off some­one and if no per­mis­sion is re­quired, there is no one to pay off,” he adds. Coun­tries with lit­tle cor­rup­tion are pros­per­ous and happy na­tions by de­fault so Bhutan can cer­tainly stand to ben­e­fit on the global front given its GNH mea­sure.

At the same time, how­ever, hap­pi­ness or eco­nomic free­dom does not mean an ab­so­lute lack of govern­ment in­ter­ven­tion. In fact, the lat­ter is nec­es­sary to main­tain se­cu­rity and en­sure that peo­ple abide by the rules of the game. If the govern­ment makes and im­ple­ments laws to pro­tect the peo­ple, prop­erty and in­tel­lec­tual rights, then busi­ness­men need not worry about crime or prop­erty theft. It’s the role of the govern­ment to give sub­si­dies and tax ben­e­fits for spe­cific ar­eas, ex­plains McMa­hon. Hav­ing said that, if the govern­ment in­ter­feres or tries to do too much in busi­ness, it can quickly turn into So­cial­ist or Com­mu­nist ide­ol­ogy, which has had mixed re­sults to date. Given the lack of govern­ment in­ter­ven­tion in such mat­ters, more and more op­por­tu­ni­ties are of­fered to the Bhutanese peo­ple to carry out ac­tiv­i­ties that lead to eco­nomic well­be­ing by meet­ing their own needs as well as pro­vid­ing ser­vices that ful­fill oth­ers’ needs.

To­day, Bhutan’s big­gest chal­lenge is the ef­fi­cient use of avail­able re­sources to achieve eco­nomic in­de­pen­dence. The only way to­wards this goal is to pro­mote a busi­ness model that would en­able each in­di­vid­ual to be pro­duc­tive, cre­ative, hard­work­ing and risk tak­ing. A ci­ti­zen can only look up to the state to pro­vide an en­abling plat­form to nur­ture its risk-tak­ing ap­ti­tude to be a cre­ative en­tre­pre­neur. A sim­ple step to­wards such ob­jec­tive could be an ini­tia­tive on the part of the govern­ment to spell out clear and sta­ble reg­u­la­tions on each po­ten­tial sec­tor; ac­tive par­tic­i­pa­tion of the state in pro­mot­ing and tak­ing own­er­ship in ev­ery busi­ness unit along with pri­vate en­trepreneurs. Only then, Bhutan could pos­si­bly har­ness the best of its hu­man as well as other nat­u­ral cap­i­tal to re­al­ize its monarch’s and the na­tion’s dream of re­al­iz­ing eco­nomic self-re­liance.

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