Wednesday 26 January 2011

Consultants and Fishermen

Reading this report in yesterday’s Western Mail brought to mind the old story of the consultant and the fisherman.  It’s true, of course, that many Welsh SMEs are not engaged with the export market – but is it really a problem?
The underlying assumptions behind the criticism of companies which are not exporting are that all businesses must want to expand, expansion means always looking for new opportunities, and looking for new opportunities means exporting.  And it isn’t just the newspaper report which is built on those unstated assumptions – the economic development policies pursued by successive governments of all parties at all levels appear to be based on the same assumptions.
I tend to be with the fisherman on this, however; not all businesses want or need to grow, but that doesn’t mean that they’re not useful, or should be considered as failures in any way.  There are limits to economic growth, and economic policy needs to start recognising that fact, not simply continuing as though it were not so.
Neither is exporting necessarily a good thing either.  Indeed, in a world where energy for transportation is going to become increasingly expensive, having more localised businesses is generally likely to be a ‘greener’ approach.
There is a mismatch between the needs at a macro level and the needs at a micro level.  At a macro level, governments are – quite rightly – concerned with ensuring that there are well-paid jobs available for all, and that the country’s total imports and exports are kept in balance.  That is generally translated into economic policy as meaning that all businesses need to be helped to grow and export – but there have been a few points lost in the translation.
A sustainable economic strategy means deliberately encouraging more localised businesses and distributing production rather than merely distributing product.  Meeting more of our own needs locally is just as effective a way of contributing to a reduction in the balance of payments deficit as producing more than we can sell and sending it abroad, whilst importing the same goods and services from elsewhere.  It requires a major shift of thinking to achieve it though.

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