For economic success it’s not only the numbers that count

We are all used to the magnitude of global efforts at economic stimulus being measured in given amounts, whether monthly sums of monetary injection by central banks into bond markets, or fiscal programmes of state expenditure into capital projects. So much so that it’s pretty dull to repeat any of those numbers.

Such initiatives, international and local, give the sense of securing well-being and the requisite momentum in activity. In this respect such monies are investments in pursuing the upward track and feel-good factor that governments want to see prolonged, if possible in perpetuity.

In reality, there is only so much that central administrations can do to propel the mechanisms that generate wealth in societies relying to some extent on entrepreneurialism to create the value-added for developing real growth.

The West has been reduced to pump-priming by extraordinary means and to an extraordinary degree in an attempt to re-inflate the balloon which burst very loudly and messily several years back, in the financial sector especially and investment markets too. The limits of that strategy have become evident in recent weeks to those not previously aware, with events foreshadowed extensively here. The liquidity bubble has popped.

Naturally, though, an enduring resource base such as is literally embedded in the Gulf presents a viable, alternative business model.

It was reported last week that analysts expect Brent and related oil prices to stay in the triple-digit zone, with seasonal requirements and the onset of additional refinery capacity in Asia and the Middle East assuaging fears of a dip in revenues owing to the relative unresponsiveness of world growth. So this region continues to be well set.

For many years too, China and emerging Asia have appeared well placed in front-running the global trend, whereas the leadership credentials of the US were damaged by the financial crisis, though subsequently burnished again by signs of recovery, as well as by the medium-term outlook of its own energy windfall.

Earlier this month the story broke that China’s sensitivity to its relative standing extends to concern for the rank it holds in the World Bank’s latest Doing Business survey, where its position of 91st in 2013, unchanged from 2012, would seem to belie the rapid pace of growth since embarking on a controlled version of capitalist development.

It was a reminder not only of the distinction between national economic viewpoints and systems, but of the inherent lack of measurement available of the supply side of economies, whose conditioning is critical for giving policymakers the lasting results that their urgent, demand-sided policies ritually seek.

There are issues of quality as well as quantity in the sustainability of encouraging growth. In the case of China, analysts for years have criticised the distortions characterising the economy and financial system, and ultimately relations with the rest of the world in trade and foreign exchange.

While it would be interesting to be able to gauge structural preparedness as the counterpart of the numerical nature of aggregate demand management, what we generally have instead reflects its qualitative nature, in the subjectivity of surveys of criteria like competitiveness, transparency and indeed freedom. China, and other countries not overly committed to the true market economy, can therefore quibble with the methodology brought by the Washington-based supranational agencies, and their famed but variable consensus as to what makes economies tick.

So where does the Gulf sit on that scale, with its particular politico-economic order, its distinct identity but integration with global markets? Reflecting the World Bank’s assessment of the private sector’s ability to function, the UAE’s Doing Business ranking for 2013 rose from 29th to 26th, and Saudi Arabia’s from 23rd to 22nd.

The recognition in the region that those who bring the benefits of financial flows from overseas have their own expectations of market regimes has been digested, in respect of efforts to promote corporate governance and adopt international standards. Recent news of MSCI’s upgrading of the UAE and Qatar in its internationally-regarded indexes, for example, is another piece fitting into that jigsaw.

Meanwhile, China may in principle challenge the World Bank’s approach, just as others may inquire into China’s everyday practices in the broader scheme of things.

We have witnessed this month dramatically in Turkey that economic growth numbers can say one thing, but the reality on the ground — in terms of what it means to be a peaceful, plural and truly prosperous society — can be quite another. Incidentally, Turkey’s Doing Business ranking slipped from 68th to 71st this year; Singapore continues to flatline in the number one spot. Plenty to ponder there.

As long as statistics fail to capture the mood of a people and their ability to maintain their own preferred lives, there can only be argument about the relevance of stated growth data, and indeed governments’ policies to enhance them.