During the past two days I have been working on an issue which seeks to increase and strengthen trade/economics in emerging markets. By way of definition an emerging market is often fraught with many risks. These risks can be summed in the broad terms of corruption and violence. One of the few ways to combat these risks are through documentation, paper trails, law and regulations. Within the last decade the world has developed a number of agreements and protocols that speak to fair business practices.
One such initiative has been the Global Compact which deals with corporate social responsibility and global trade. The basics of such initiatives are that universal business practices will make trade and commerce easier, more predictable, and be a greater benefit to society. In theory such a set of policy is easily agreed to, however the practice is different.
Emerging markets such as Russia, India, South America, Africa and China all have their own issues. Going into these markets increases the risk factor exponentially. In the realm of peace and security, a strengthened economy will provide employment, which in turn eases the psychological stress as there is hope for the youth to gain an education, health care and stable society.
On another twist of reality in emerging markets we have situations such as Libya and Syria. Just two years ago both were seen as markets to invest in. With the violent replacement of leadership the Syrian market is now seen as “no go zone” and yet Libya still retains its allure. As we look at these two markets we quickly see how important social and political cohesion is to economics. Without broad societal support of government, there is little to no peaceful economy. However, what is available in such an economy is the need to rebuild, educate and prepare society for the coming peace. At the moment we can look to Libya as an example of how a society goes through such a phase.
The moment Gaddafi fell, there was a sigh of relief. Not long after that moment the tribal composition of Libya became very clear. To this day the tribal friction has brought Libya further away from a peaceful society. As the economy weakens due to the unrest, we can expect a downward spiral. At this very moment there is only one market that is of the utmost importance and that is the political economy.
The political economy has many components. Its basic function during violent conflict is to negotiate peace/education. A vast amount of money needs to be spent on brainstorming ideas and rolling out programs which speak to the ideology of peaceful societies. In terms of economics at this stage political/societal education and negotiation is an investment with very little tangible return. However, such a phase is the crux of corporate social responsibility.
In times of chaos the way out is to have a clear and convincing plan that has the widest possible support. In Libya such a situation is increasingly in need. There has to be a larger effort to secure all the ideology of peace which each tribe has. At the moment there is no ideological security, it is more of a take what you can now at all costs and that sentiment is growing.
Now the positive part is that the situation in Libya is not in complete chaos. We have some time to prepare for and deliver a stronger front to secure the overall peace within Libya. The recent elections have not produced a unified front as hoped. Due to that we can look back and ask why that is and retool for the next wave of programing.