In a period of impending change, like this one, it is typical for people to cling to latest gadgets or luxuries. So why wouldn’t everyone embrace a BMW, an IPad or a latest Samsung phone? The message here is not to try grease your palms to acquire these titillating objects but rather to call for a rigorous thinking on countries that produced these enticing objects.
An old saying goes like this “Rich countries make rich things”. Germany, America and South Korea are still considered as manufacturing and innovation powerhouses simply because they carved out their way to the normal evolutionary economic path.
The source of Germany’s economic strength extends far beyond the fields of football pitch. Germany does a better job in educating its graduates and training its workforce. It has a comprehensive system of education and vocational training whereby it is compulsory to complete an internship within their field of study. The emphasis of education and vocational training which is part of the formal education system is also prevalent in the corporate world. Every year, most German companies offer on the job training to their employees in order to increase worker productivity and becoming more competitive. This education system in Germany is a major reason for its economic strength. Young people and corporate Germany can always rely on a comprehensive education system. As it is, the individual character of every BMW is a manifestation of quality, innovation and mobility.
American technology giant, Apple – maker of the IPhone and IPad, created history in the quarter ended December 2014. The company posted profit of $ 18 billion, the highest quarterly profit of all time as per Bloomberg. This performance is a testimony of American’s innovative culture. Entrepreneurship and risk taking are key ingredients that allows America to be the most innovative country in the world. This culture of business innovation is led from the top. Embedded in such a culture, corporate America feels empowered to improve their processes. For example, the JOBS (Jumpstart Our Business Startups) Act is a bold attempt to enhance business innovation. This innovation culture drives the market, replaces older technology and offers the end customers value they didn’t dream up. It can thus be inferred that every IPad is built in a classical idiom that characterises American entrepreneurial spirit.
In some circles, South Korea is referred to as the “Republic of Samsung”. This industrial behemoth is a testimony of cutting edge fast moving technology, glorifying itself as a class by itself. South Korea, spoofed some decades ago for its strict government, outdated accounting practices and laughably bad cars and phones, is now a world beater. This transition did not happen by luck. Emphasis on Research and Development (R & D) is the main driver that bolters South Korea global competiveness. As per the OECD figures, this country has seen the fastest growth in R & D over the last decades, surpassing Israel. The much enhanced technology and design are the keys for South Korea economy to compete on the world stage.
Many emerging economies have made great leaps in the league of developing nations. China is a vivid example of such success. It pounded deeply in its demographic by becoming the workshop of the world. However, when the debt curtains started to rise in the developed world eventually leading to the financial crisis, China started to bore the brunt of a decelerating growth. The applause of China growth model then started to fade. This knack of lower economic growth has prompted Chinese policymakers to move the economy from quantity to quality. China has also has to change its focus from export markets to domestic consumption. But the transition is complicated by the previous cycle of overinvestment which has suppressed corporate profitability and left many companies with weak balance sheets.
Within the last two years, the neck-snapping love for India is worth mentioning. No other emerging country has undergone this kind of image upheaval. A new leadership is yet to deliver on hopes of economic recovery but some green shots have started to sprout. The post-1991 liberalisation era is evidenced when complacency started to creep in. India has a long record of abandoning reform when the future looks bright, which helps explain why there was stagnant growth. India will have to break out of its normal path if it wants to achieve a growth rate of 7-8%.
The idea of ‘knowledge and innovation based economy’, as stipulated by the World Bank, has come now. The links between knowledge and innovation and by extension, to productivity are undisputed. Developing economies like China and India has implicit benchmarks viz Germany, America and South Korea that use education and innovation to spur high quality durable growth.
Few countries take the limits of their imagination to the limits of excellence. The spectacular success of Germany, America and South Korea did not come by chance. Adding outrageous value to education, innovation and investing in human beings are the hallmark of economic success.