Growth is good; sustainable growth better; sustainable & inclusive growth is best
The Bank of Mauritius held its annual dinner in honour of economic operators last evening at the Swami Vivekananda International Convention Centre, Pailles, with over 450 distinguished attendees from across the financial, economic, entrepreneurship and communications space, gracing the exclusive event. (Image: Company)
Achieving growth that is sustainable and inclusive was the key concern on which the Governor Rundheersing Bheenick focused his address at the annual dinner of the Bank of Mauritius (BoM) in honour of Economic Operators held last evening, November 17, 2014.
According to Governor Bheenick, Mauritians must put their minds to the task of planning for both resilience and inclusive and sustainable growth, and audit the results on what he called the ‘triple bottom line’ measuring financial performance, social contribution and green growth.
Some factors that will contribute to this objective are: first and foremost, Mauritius must become a learning country, not just adapting to change, but anticipating it, and thriving on it; secondly, the island economy must increase its productive potential through harnessing knowledge transfer, learning, and investment whether foreign or domestic; and finally, as Mauritius adapts and re-adapts to a rapidly-changing environment, the authorities must ensure life cycle education for all.
According to him, the business sector of the future will not be not capital-or-labour-intensive but knowledge-intensive; malls will be more a gathering place for socialising than shopping; and computer-controlled, driverless, electric transport. He also envisioned an ideal state of ‘universities without students’ where teaching has gone virtual and universities have been transformed into centres for Research and Development and innovation.
He noted that the lives of people can change as towns and cities turn into integrated regions; nation-states fading away with free movement of labour and capital; and laws are harmonised.
“A headlong rush for growth can be the royal road to social instability and economic breakdown,” he cautioned, as nations dive head-first into growing too much, too soon.
As inequality grows rapidly, it has an impact on the role of monetary policy and its redistributive role, hence the Governor advised that bold policies are needed to reverse inequality.
He warned that the island is facing major issues such as massive unemployment and underemployment as well as high level of poverty and the collapse of middle and lower-middle class.
As Mauritius tries to become a high-income country, focus must be placed on the risks inherent in jobless growth, persistent high unemployment, and the widening divide between the haves and the have-nots.
The central bank can contribute in a fairer and more equal society by keeping inflation low, stable and predictable, the governor noted.
“Growth is good, sustainable growth is better, but sustainable & inclusive growth is best of all,” concluded the governor, cautioning that inequality is a ticking time bomb and must be controlled at all costs.
Next up was Raghauram Rajan, Governor of the Reserve Bank of India (RBI), who graced the occasion as guest speaker.
The RBI governor mentioned that in good times where growth is fast and the road is easy, it seems that possible to rectify problems by making promises on social security, health care, pensions but he stressed that promises must also be kept in bad times.
“In times of recession, monetary policy is not used as a tool to increase demand, but to protect yourself against your demand shifting to other countries,” he highlighted, pointing out that most recent monetary policy announcements across countries were about devaluing currencies to become more competitive on the trade front and increase demand for their commodities.
Governor Rajan went on to add, however, that the world does not need more demand but needs more sustainable and inclusive demand.
According to him, restructuring reforms and deleveraging are needed as they are essential to move out of this crisis.
He agreed with Governor Bheenick’s comments that inequality is a ticking time bomb and he added that this issue is coming from technological progress and globalisation.
“We must not to redistribute poverty but we need to distribute opportunity and to distribute opportunity we have to create the possibility of opportunity for those left behind, which means use the money well in long-term investment in people through healthcare, education, and creating a better ‘globalisation’ so that people can benefit from that growth,” he concluded.