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Climbing up the economic ladder

29 Apr. 2012 12:17 AM IST

Countries like Dubai, China, Hong Kong, Singapore, South Korea, Thailand, etc. are achieving rapid economic development as a result of adopting good economic planning which are worthy of emulation. Their plans are characterized by very clear goals and well-defined strategies. But more importantly, they are successful because they faithfully follow up by implementation.
India too, follows a mechanism of economic planning for the development of the country. For example, the Planning Commission has the task of devising objectives and strategies in the form of a five year plan. The first five year plan was launched in 1951. Till date, we have completed ten five year plans and the eleventh plan (2007 to 2012) is in progress. But as an expert team of U.N. organization observed, one of the main shortcomings of Indian planning has been with reference to its implementation. Plans are formulated after a good deal of deliberations but the targets are not achieved due to inefficient administration, redtape, dishonesty, and corruption.
In the case of our Nagaland State, we rely almost entirely on the economic planning of India. This is not to say that our politicians have no development plans of their own. Probably they all have many good ideas. As a matter of fact, the Members of our Nagaland Legislative Assembly have just completed their Eleventh Session and during which our Governor Nikhil Kumar presented a list of what they plan to accomplish in the next five years.
To develop a strong economy, we must first identify the obstacles that are hindering our economic growth so we can avoid them. Then we must put together an economic growth planning and faithfully work at it to achieve our desired goals. Since economic growth is a process, we must build blocks upon blocks and graduate from one stage to the next, each stage representing a higher level of income and development than the preceding one. As such, the progression is normally from a subsistence economy to a commercial economy, to an emerging-market economy, to a high-tech economy.
So where are we (the Naga people) in our climb on the economic ladder? Sadly, even after almost half a century of the statehood of Nagaland, we are still struggling at the bottom---subsistence economy. We hardly have any revenue-generating industry worth mentioning. Development of our infrastructure like roads, transport facilities, modern communication system, irrigation facilities, power generation and water supply continues to be awfully inadequate.  Our public education system and healthcare services are in disarray. If these basic essentials remain unaddressed, we will have no economic foundation to stand on.
Since over 70 percent of our population live in rural areas and depend on agriculture, the government must accelerate the spread of scientific knowledge on farming to increase productivity. This could be done by providing necessary adaptive research, giving qualified technicians to train farmers, and grouping farmers into farmer cooperatives. The government must also set up fertilizer plants, build buffer stocks of agro-products, initiate a public distribution system, and guarantee fair sale prices for output. Agriculture could grow by leaps and bounds through the use of high-yield variety seeds (also making hybrid seeds naturally), chemical fertilizers, insecticides and pesticides, creative irrigation, and mechanical tools. And if the local agronomic conditions are sufficiently favorable, even poor farming families can save and accumulate capital to invest beyond the stage of subsistence farming.
When our agricultural economy and its allied sectors grow, we can become a commercial economy in which both rural and urban households are part of the monetary system. We will not only be growing cash crops, but we will be selling them as well. And as earnings rise, the range of “exports” will also increase beyond a few primary commodities. At this stage, banking could spread across rural areas, offering door-step facility for deposits. All transaction services could be made right where people are. Savings could be encouraged through high rate of interest and loans could be provided against certain assets as collateral or local community as guarantor.
With sufficient growth in “exports” and savings, the commercial economy becomes an emerging-market economy which is characterized by saving and investment, manufacturing and labor-intensive assembly operation, export and import. Manufacturing exports may include industrial products (automobile components, semiconductor products, consumer appliances), information-based services (business process operations, business consulting) and possibly the construction services as well. As market grows, foreign investors come, bringing with them not only capital but also know-how, technology, and linkages to wider global market. At this stage, the economy is not only importing technologies from abroad but is also improving them.
The final step to becoming a high-income society is the transition to a high-tech economy which is characterized by a widespread university-aged population, extensive public financing of scientific studies, wide-ranging private-sector-led research, a sophisticated knowledge-based society. By now foreign exchange is also earned by exporting knowledge and technological advances.
At every step along the growth path from subsistence to commerce to emerging market to high-tech economy, the government actions are required. During the initial stages of economic development, government responsibilities involve investing in basic infrastructure such as good roads, adequate power supply (especially in rural areas), access to safe drinking water, healthcare services, plus a good educational foundation for children.
In the later stages, the government must concern itself with intermodal transport (land-, sea-, and air-based freights) and invest heavily in higher education and scientific innovation. Throughout the entire growth process, the government must ensure a stable monetary system to monitor the long-run behavior of the price level, the inflation rate, and other nominal variables.
Also, it must make sure that there is a reliable legal system to enforce contracts and property rights so that nobody gets away with wrongdoing. Of course, nothing is ever perfect even in developed countries. Still, outright lawlessness and violence must be contained to guarantee a conducive atmosphere for free market. In short, the government must ensure that all the conditions of a functioning economy are in place and working effectively so we can successfully climb up the economic ladder to the top.

   
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About the Author 
Mazie Nakhro, PhD