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What are the components of strong economies?

The famous economic writer David Skilling developed an approach that mimics indicators to measure countries' economic strength.

كان الكاتب الاقتصادي الشهير "ديفيد سكيلينغ" David Skilling قد طور نهجاً يحاكي المؤشرات لقياس قوة البلدان الاقتصادية.

- It facilitates the assessment of nation-states in terms of their economic “strength”.

The famous economic writer David Skilling had developed an approach that simulates indicators to measure the economic strength of countries.

Skilling's approach explains the factors that a country should focus on in order to be strong, meaning that it does not usually fall victim to the ebb and flow of the global economy and the pressures of social and economic imbalances.

Power in this context does not necessarily mean military power or a large GDP, but rather means, among other values, the ability to stimulate human development, withstand economic shocks, and establish a stable society.

- The concept of a country's strength also extends beyond just a set of policies; Rather, it includes a clear political mentality or culture such as that represented by countries such as Singapore and Switzerland, which are fully aware of the potential impact that external forces such as immigration, fluctuations in currency rates and global trade can have on their societies.

Some research projects in which a number of small developed countries participated showed an important result, which is that countries that score well on the country power scale are also governed by globalization.

What is striking is that these small developed countries also score well in many other criteria, such as “most innovative country” or “most prosperous country.”

- Most of the countries that top these rankings are small, dynamic economies (Singapore, New Zealand, Sweden, Switzerland, Finland, and Norway, to name a few), as well as larger developed countries like the Netherlands, and sometimes the United States.

- These countries share common motives such as education, the rule of law, and the dissemination of education - which is intangible infrastructure.

There are many aspects in which the importance of intangible infrastructure in shaping the future of countries becomes clear compared to its physical counterpart.

- Physical infrastructure is the non-traded capital goods that essentially contribute to the production of infrastructural goods and services required to meet the basic social requirements of economic agents.

The intangible infrastructure is the services and institutions that the state needs to provide the economic, health, and social needs of the population.

These factors can be political, legal, social and economic.

- Political factors include the degree of political stability or the strength of the institutional framework.

While the legal factors include the rule of law, tax policies, and the protection of intellectual and physical property rights.

Examples of social and economic factors include research and development capabilities, business operations, or employee training and education.

There are five specific pillars of soft infrastructure: education, healthcare, finance, business services, and technology.

This framework is the essential factor for resilience in a turbulent world, where productivity and social stability are the two most important political goals.

- What puzzles politicians is that building non-physical infrastructure takes a long time (they cannot make short-term gains), and this in turn attaches paramount importance to the presence of highly efficient institutions and civil service that can prolong the implementation of national development plans.

- For this reason, some non-or partial democratic countries have succeeded in developing “country power” (such as South Korea in the 1980s and 1990s).

- There is also a good long-term relationship between the growth and quality of a country's soft infrastructure, and sharp changes in “country strength” with consequences for economic performance.

Turkey is a clear example of a country in which structural improvements in institutions have been squandered, where deep corruption has become entrenched and many individuals have been removed from the institutions of this system (teachers, judges, army officers).

- It is also important to measure the movement of a country like the United Kingdom, which shows weak institutional and economic performance on several levels.

Evidence of this is what was shown by the Corruption Perceptions Index issued by Transparency International at the beginning of this year, where the United Kingdom’s ranking fell sharply, to its lowest level since 2012.

- Given the weakening of institutions, the undermining of civil servants, and the significant reduction in spending on social infrastructure, the dangerous curve the UK is on is exposed.

Source: Forbes



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