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This paper focuses on the importance of the Commonwealth in global growth. As the developed economies struggle to slowly back to growth, it is the emerging economies that are leading the way. The twists and turns of the financial crisis have confirmed that the global economy is complex and interlinked. Global finance , trade and investment bind nations together, for better or worse, and globalisation has neither been stopped nor even significantly slowd by the financial crises.
Through globalisation we recognise that there are important shared interests between the developed and developing countries. It is not a zero sum game. For example, there is vast potential to develop new markets and increase the purchasing power of developing countries. In this context, it is timely to take a fresh look at the Commonwealth and its emerging markets. Commonwealth businesses are well positioned as leaders in sectors such as ICT , banking and financial services, energy, agriculture and natural resource development. The Commonwealth, contrary to its image as an association based solely on its history, is a dynamic and vital association of societies with vibrant and growing private sectors. Today's Modern Commonwealth is very different from the one created in 1949. In October 1997, following the Edinburgh Declaration, the Commonwealth Business Council was set up to promote trade and investment, and to increase the role of the private sector in national economies-with the economic focus as a key driver for its existence. The Commonwealth's unique selling point is not in its institutions but in its networks, values and the more elusive, but potent "Commonwealth Factor". This derives from a common experience reflected in the similar administrative, legal, financial and business practices that members share-best exemplified in Sub-Saharan Africa, according to the International Financials Corporation's (IFC) Doing Business Report 2010. Seventeen of the top twenty places to do business in Sub-Saharan Africa are Commonwealth countries. A good example of the "Commonwealth Factor" at work is in India's relationship with the UK and other Commonwealth countries. Research by KPMG has demonstrated that UK manufacturing companies are more likely to pick India as a supplier than China, bucking a global trend that suggests China is the country of choice for manufacturers. The UK's role is pivotal to the expansion of Commonwealth trade and investment, given that it remains the largest or second largest investor in many Commonwealth countries. India, for example, is looking for access to cutting-edge expertise, advanced technology, and high-level research and development. In this regard, the experience of UK design, engineering and architectural consultancies and project management companies demonstrate the high quality technical, creative and professional services that UK companies can provide. The success of the expanding Indian economy is widely acknowledged by UK investors. Confidence has been reflected by FDI equity inflows from the UK that were an estimated US$1.2 billion in 2008-2009. The UK's role in Commonwealth trade and investment is also as a financial hub for the association. Therefore, its role is important for companies in the Commonwealth looking to raise capital. A total 22 per cent of UK PLC's revenues comes from developing economies. Investing in these blue chips with emerging market exposure is growing in popularity as both private and business investors look to take advantage of the returns without the risks of direct interaction with emerging markets. The combined thrust of economic growth and democratic values in Commonwealth countries complements the argument made by Nobel Prize winning economist Joseph Stiglitz at the Commonwealth Business Forum held in Trinidad and Tobago in November 2009, regarding the three pillars of successful development strategy: markets, governments, and individuals. He emphasised that development is about transforming the lives of people, not just about transforming economies. Policies need to be looked at based no how they promote growth and how they affect individuals directly. For this to happen, Stiglitz identified communities working together as the fourth pillar of successful development. The Commonwealth offers such a community for the realisation of the "New World" that Joseph Stiglitz says is necessary to make globalisation work for the many rather than the few. |
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