Sources of Investment & their dynemics
By Manmohan Sinha
Feb,1995
Sources of Investment and their chemistry:
Even though Investment is no guarantee of economic progress,
no economic progress can take place without investment of
money, labor or ideas. Investment is a precondition for
economic progress. If investment no guide to economic
progress and yet Investment is a precondition for progress,
than real key to economic progress can not be in the act of
investment but rather in who is making the investment and
where investment is being made.
We know by now that investment by state does not lead to
economic progress. That means that source of investment is
the major determinant of whether investment will yield
progress or not. So when our politicians tout investment as
a economic penicillin without telling you what each source
of investment brings on the economic table, it amounts to
hoodwinking the public. There are certain sources of
investment that do not bring economic progress. Period.
There are certain sources of investment that might yield
dubious economic gains but might inhibit the political,
social or cultural growth or sovereignty of nation. Some
sources of investment might imperil the social harmony by
creating sharp inequities. Some sources of investment might
impair the cultural and political identity and sovereignty
of nation. Such wide mix of consequences produced by act of
investment and different sources of investment establishes
the cardinal truth that act of investment can not be judged
on its own, sources of investment can not be judged by its
mere economic value, economic progress can not be judged on
its own. Period. Man and nations do not live by bread alone.
No doubt, meeting the economic necessity of nation should be
a top first priority of nation. But nation's priority can
not end just there and other equally pressing national and
people's needs can not be held hostage to a fixation with
material progress. Nation has to provide for people's
cultural and spiritual growth too. Any economic theory that
either does not let you meet the economic needs of nation
has to be shunned no doubt. Any economic theory that does
not allow nation to go beyond the stage of catering to the
economic needs has to be shunned at all cost also. This
caution is added because certain sources of investments come
with embedded economic theories of their own. So when a
nation invites investment from such sources, nation is also
unwittingly inviting and implementing larger economic
theories which have definite consequences that are hard to
get rid of later. That is why critical look at different
sources of investment and their chemistry should be
undertaken in order to avoid falling in the trap of
unnecessary sources of investment and economic theories.
Enlightened and educated nations would be in better position
to pick and choose a healthy mix of investment sources and
put in place a system of checks on unwelcome sources of
investments and economic theories to meet the specific needs
presented by each nations.
Broadly speaking, there are 7 sources of investment:
(1) Investment by Individuals
By individuals, families, friends, relatives, non-
corporate entities.
(2) Investment by Domestic corporate sector
(3) Investment by Domestic Government
(4) Investment By International Agencies
(5) Investment by Non-resident citizens
(6) Investment for Foreign Private sector
By foreign citizens, foreign corporations and financial
institutions.
(7) Investment by Foreign Government
Each source of investment brings different dimension to
economic and political arena.
(1) Investment by Domestic Private citizens:
As private individual does not spend his resources without
expectation of some return, the productivity of investment
is guaranteed. It eliminates wastefulness. Since this kind
of investment eliminates intermediaries, a direct link is
established between individuals, investment, productivity
and economic rewards. And people are not restrained by
restrictive definitions of investment. It allows people to
consider not only money as investment but also land, skills,
ideas, labor, contacts, and almost anything. Thus it brings
about revolution in scope of investment, entrepreneurship
and wealth creation. All without the help of state,
politicians, ideologies, political parties, financial
institutions and anybody else. Thus, not only economic
progress is guaranteed but the fruits of economic progress
also go directly to the people in direct proportion to their
investment without the artificial need for political and
corrupt and wasteful schemes of supervision, administration,
political intervention, controls and redistribution. It
assures that wealth goes directly to the people and only to
those who had directly produced it. It ensures that there is
no misappropriation, robbing, transfer of wealth among
people within nation. The wealth of nation remains within
nation and with the citizens of nation. There is no wealth
transfer to the outside nations, no exploitation and robbing
by the outside nations. When people within nation can not
get to rob other people's wealth using state, it gives no
scope to the foreigners to rob the nation using
international schemes. People become their own destiny-
makers, nations become their own destiny makers.
It should the goal of every nation and its political process
to bring about such economic reality. Nations can uses other
sources of investment in the interim only to reinforce,
supplement in order to bring about the such economic reality
as a goal. Merit of any economic policy, economic theory,
economic measure and source of investment has to be judged
by how much it facilitate and brings about such economic
reality.
(2) Investment by corporate sector:
Investment by corporate sector makes large-scale economic
activity possible. It brings unmatched efficiency and
productivity to investment. It brings collectivism in
economic arena which could undertake things that non-
coporate sector can not. Use of innovation in technology,
administration, financial tools can make it a formidable
tool for economic progress. Inherent motive of profit and
direct rewards gives it vitality and viability. It simply
does not reward inefficiency, wastefulness and failures.
However, if it has so many economic strengths, what it
brings to the non-economic arena can make it only a mixed
blessing.
First of all, corporate sector brings collectivism instead
of individualism. Thus it demotes individuals and family
over a fluid collective. Thus fair distribution of wealth
and economic prosperity to people become big politicized
issue on which seedy ideologies and politicians make
rewarding careers. Corpocracy also demotes man. It gives
primacy to capital, efficiency, profit and subordinates man.
Thus issue of exploitation, disposability of man,
interchangability with another man or inert technology and
techniques gain strength under corpocracy. Man is thus
marginalised, subordinated and exploited and kept numb with
bribery of hedonism, lifestyles which are by the way
available not to all but only to those who strengthen
corpocracy. The division of labor make man vulnerable.
Division of knowledge make man ignorant. Division of
ownership disenfranchises man and make him helpless. Yet
corpocracy thrives on such division of labor, division of
knowledge, division of ownership. The corpocracy is also
expansionist. It seeks to expand commercialization and
conversion of nature into commercial enterprise. It can not
be chained within boundaries of either basic necessity or
geographic/demographic entity of nation. The goal of
corpocracy is not to maximize employment and distribution of
wealth but to minimize payroll and maximization of
concentration of economic power and wealth. The employment
stability or growth is not the inherent need or goal of
corpocracy but rather a function of expansion of
commercialization and market share.
The capital formation of private sector depends on wealth
distribution, entrepreneurial climate, savings rate which
are seldom evenly distributed in any society and it is more
so under corpocracy. Thus, means of production are not
available to all but only few under the corpocracy. The few
would control the economy while rest have to toil for those
few rich. It is thus a complete antithesis of investment by
individuals. Uneven distribution of wealth and restrictive
definition of investment exercises control over means of
production and consequent rewards from economic progress.
This is an inherent flaw of trade and investment based
economic model. It produces 3 classes at national level and
3 worlds at global level. But since alternative economic
models that pre-empt or substitute trade, investment,
property rights in favor of self-sufficiency are too radical
and too far removed from ground realities, they are neither
economically nor political viable forces and hence nation
must focus on working within the least damaging framework of
economic model based on trade, investment and property
rights. We have no choice but to accept that no matter what
be the source of investment, it will always produce
disparities and classes. Any attempt to abolish classes or
to equalize them through state and state-sponsored
ideologies have failed and multiplied problems. Nations have
no choice but to manage the antithesis represented by
investment by non-corporate private sector and investment by
corporate sector. Nation has to produce economic progress by
creating realities that compliment each other rather than
allowing corporate sector to create a negation of non-
corporate sector. There are things that corporate sector can
do well. But corporate sector must not be allowed to gain
upper hand or free rein as it is inherently expansionist,
market-state and dominion conscious and subjugative.
Nation has to manage the economy though private sector made
up of corporate and non-corporate enterprises. However
unevenly progress and wealth might be produced and
distributed among people, but they still remain inside
nation, they are still part and parcel of nation. Goal of
nation's economic policy has to be to expand the overall
progress and wealth of nation and worry only secondarily
that every person is able to participate in the production
of wealth. Nation must not worry that wealth is not
distributed evenly or fairly among people. If that is the
national priority, than it must honestly do the needful to
discard the trade and investment based economic models
altogether and adopt alternatives rooted in decentralized
self-sufficiencies. Best that nation can do under the trade
and investment based economic model is to ensure that
everybody is able to participate in the creation of wealth
and not distribution of wealth.
(3) Investment by Domestic Government:
There is no reason for government to enter into business of
business. It might have a stake in overseeing the nation's
economy but that oversight can not justify usurpation of
economic power in its own hands. Government is known to
expand its role, perpetuate conditions to perpetuate its
role. A government that centralizes all political power as
well as economic power can become tyrant. In an
underdeveloped country where private sector is still
emerging, where capital and skill-formation is slow and
lacking, where nation has no experience with trade and
investment based economic model, state might be tempted to
directly enter into business of producing GNP. It might even
proclaim that it is merely jump-starting the economy. The
infrastructure, literacy, energy, communication,
transportation, defence etc can not be left to private
sector initiative as nation have direct and immediate stake
in their growth and control. Thus, state enters into
investment business with all the good intentions and good
sense. However political process that guides the state and
political parties that guide the political process are all
expansionist, hegemonistic, exclusionary institutions. They
would love to gain control over the bread of nation and pick
winners and losers for political considerations. Thus when
economic power is handed over to state, it attracts those
who would like to play politics with it and hold the nation
hostage. They would keep economic power hostage and release
is it only in exchange for usurpation of powers from people.
thus state would attract power-hungry, corrupt,
unaccountable brokers, intermediaries and politicians. State
would not be able to resist ideologies like socialism and
communism whose primary mission is not economic empowerment
of nation but de-construction of social, cultural and
religious spheres; who distrust historical and traditional
institutions; who distrust individual, people, nation and
private property, private ownership. Thus, economic goals of
state become tangled with ideological and political agenda
and corrupt process. State under such spell acquires
suspicion about people, private sector, decentralization.
Investment and economic decisions ans economic activities
that are no longer governed by pure principles of economics,
productivity, market forces can not but fail to deliver
economic progress. This is what most nations guided by
socialism and communism are finding out. They attest to the
truth that investment by state impoverishes nation. the only
people who benefit and get empowered are politicians, cheer
leaders in media, politicians-cum-businessmen, political
parties, power brokers, political parties with welfare and
empowerment agenda, fake liberation ideologies and statism.
Thus, investment by state represents the complete antithesis
of investment by private sector. Nation has to produce
economic progress by creating realities that compliment each
other rather than allowing Public sector to create a
negation of private sector. There are things that Public
sector can do well (e.g defence, nuclear, space, energy,
communication). But Public sector must not be allowed to
gain upper hand or free rein as it is inherently
inefficient, political, wealth-negating.
Nation must not resort to investment by state for economic
progress. It must do so only for defence and other national
security areas. But for economic progress, it must empower
private sector and particularly non-corporate sector. The
key world is economic decentralization and not economic
centralization in corpocracy or economic centralization in
state or economic centralization in global order where
nation is mere atomized and marginalised entity. The watch
ward is domestic decentralization, domestic liberalization
and domestic privatization. No more economic progress by
remote control. Unless every citizen is allowed to be become
a producer, an economic entity, people can nor have economic
progress and nation can not progress. Period. The reason
word domestic is so critical is because dire straits of
private sector and government sector would otherwise invite
global international ambitious sharks who would pounce on
the nation in its weakest moment for eating up the nation
alive. These sharks will come up with fake promises of fake
utopia and self-serving economic paradigms and bribe their
way inside the nation to peril the very existence of
nationhood and independence. And more importantly, the same
politicians who put the nation on such economic paralysis
will try to rescue their political careers and ensure their
lucrative hegemony by selling the nation to the
international sharks for short-term gains.
(4) Investment by International agencies:
Many nations that followed the economic policies of
promoting investment by corporate sector as a substitute for
investment by non-corporate sector, investment by government
as substitute for investment by private sector, such nations
found their economic policies going nowhere without the
outside reinforcement from international agencies.
International agencies stepped in and reinforced such
defective policies which were never not working for good
reasons. Such nations, instead of discarding wrong-headed
policies, got trapped in their policies as international
agencies reinforced them. So in a way, these nations got
trapped by the international agencies. Their policies would
not succeed without IMF reinforcement.
Even though International agencies are not fiefdoms of any
single nation, G-7 nations collectively drive the policies
and strategies of such agencies. G-7 nations are not doing
this for charity. They have their macro-level and geo-
political objectives in investing in other countries through
IMF/WB. Operations of IMF/WB are not neutral but rooted in
specific ideologies, specific economic theories, specific
political and economic needs of their patron nations. IMF/WB
merely carries out the mandate produced by the domestic
needs of G-7 nations and not the borrower nations. IMF/WB
policies are formulated to serve the domestic political,
ideological, geo-political and economic needs of G-7
nations. Period. IMF/WB are accountable to the political
process of G-7 nations and not the borrowing nations. G-7
nations carry out their economic engineerings and designs on
other nations through such international bodies. It allows
them to side-step their own political apparatus and help
them accomplish their goals though such international
bodies. So when nations depend on such agencies for
investment, they are really allowing their economies to be
macro-managed and channeled into directions that primarily
benefit the patron nations of such agencies.
All the nations who have traditionally depended on IMF/WB
are in the worst economic state. Why? If investment from
IMF/WB were so good and if the remedies and conditionalities
imposed by them were so good, than these nations should be
on their feet by now and not on the life-long life-support
of IMF/WB. For every failure of previous IMF mandated
policies, IMF/WB will blame the next set of hurdles that
they want to clear. For every crisis created by past
blunders, IMF/WB will give you more rescue loans with even
more conditionalities that perform even more macro-
management of your nation until finally IMF/WB takes over
the complete policy-making function of nation. What IMF/WB
have been doing all along is to wipe out the nation's
vitality and to hook the nation on artificial life support
system that only international agencies can sustain. So much
so that even national budgets get prepared by IMF/WB. So
IMF/WB do not stop at just micro-management, they begin to
micro-manage the economy also. They begin to manage the
political process also. They do not just want to formulate
policies, they want to oversee the implementation also.
Their investments comes with two sets of conditionalities.
The other one is kept secret. The risky and highly sensitive
conditionalities are kept secret to avoid political fall
out. (IMF privately admits that it imposes secret
conditionalities to avoid political risks) Now if these
people were do-gooders for the economy and nation, then they
certainly do not need to fear or hide from political process
of nation. It gives credence that these agencies conspire
against the borrower nations to wreck their economies and
political process. All this to achieve ideological, geo-
political and economic interests of G-7 nations. We know
that any investment that is not guided by purely economic
reason is bound to result in lack of progress. Predictably,
all the nations that have depended on IMF/WB in the past are
in mess. They have nowhere to go but to allow patron nations
of IMF/WB to invade and capture their economies. Investment
of G-7 nations in IMF/WB have paid off.
Investment from IMF/WB is risky, a slippery slope of
crisis, more bail-outs and more dependence on foreign dole.
Nations fail to recognize that they are being macro-managed
and steady strings of crisis are produced as a result of the
deliberate macro-management. At the first sign of any
trouble in nation, these agencies toughen their
conditionalities in stead of correcting their macro-
management. So international agencies can engineer crisis on
a nation and in stead of being held accountable, they can
turn it around for even tighter noose on the nation. 'Bail-
out' with even more strings attached!
As soon as nation steps out of its boundary for help, it
will find that nobody is running charities anywhere and that
everything comes with a political cost. Heavy costs. Long-
term costs. If goal of national rulers is to help the
nation, they must avoid international agencies. Solve
national problems within nation with national resources.
Live within your means. And if that keeps you poor, change
the rulers or change the economic model or learn to live
with it.
(5) Investment by Non-resident citizens:
Unlike any other foreign source of investment, investment by
nationals abroad comes with no-strings attached. Bitten by
conditionalities and strings of international agencies, many
nations have found this easy sources to be a life-saver.
Successful non-resident citizens abroad can transfer
valuable wealth, skills, technology, know-how and experience
back to nation at no cost to nation. Unlike foreign
citizens, national citizens abroad do have roots in their
homeland even if their loyalty and allegiance can not be
vouched by any certainty. Some of them do get alienated from
nation and nation's needs and priorities, nation's self-
interests. So investment from Non-resident citizens can
bring in an element of risk for the nation and perhaps a
slippery slope. Many Non residents hold composite marriages
and composite citizenships and composite loyalties. That is
husband and wife and children holding different
citizenships, different national orientation, and different
allegiance to different nations. Thus Investment by Non-
residents paves the way for investment by foreign citizens
who intern can bring in all kind of foreign institutions to
enter into domestic economy. Thus, any National need for
investment from non-resident should be a signal that
nation's economy is in trouble and is about to get into even
larger trouble. Unlike investment by any other foreign
sources, nation would prefer to have investment from its non
resident citizens as there are no overt and direct strings
attached. However an economy that is so desperate that it
needs to depend on outside investments can not just stop
with investment from Non Resident citizens alone. For, it is
a sign that economy is structurally unsound and no amount of
investments can the solve the problems unless structural and
ideological defects are removed.
This source of investment stands in between domestic
investment and foreign investment. As we have established
that domestic investment is the key for progress and as we
will see later that foreign investment is the complete
antithesis of domestic investment, Investment by Non-
resident citizens represents a bridge that links the two. It
paves the way for foreign investment to enter the nation.
The very existence of Non-residents citizens is a sign that
says nation is unable to meet the needs of its citizens and
hence exports them. The very need for investment from non-
resident citizens is a sign that says that nation's economic
policy is on a wrong footing and that policy-makers are
trying to cover up the defects by pumping money from
anywhere they can lay their hands on with out regards to any
consequences.
At the first sight of trouble in the nation, these source of
investment will be the first to flee the nation. Their
investments are fair weather friends. They come to the
nation not only out national concerns but only to help
themselves, their remaining family members in the nation or
to their friends. Nation can not build any sound or lasting
economic policies based on such source of investment. They
can be resorted to only in times of sever crisis but not for
normal functioning of nation's economy.
(6) Investment by Foreign nationals:
Unlike international agencies, this source comes with no
conditionalities and unlike non-resident citizens, this
source is not limited. In fact, this source comes with bribe
of latest and greatest. It is too eager to come to you. Only
if you remove regulatory maze and provide security, this
source will willing to flood your country with investment
and goodies. Nations, that are following such bankrupt
Economic policies that they need all the investments of the
world to satisfy its national needs, have to finally come to
this source that is known for its unlimitedness. So
unlimited need for investment by a nation meets unlimited
reservoir of investment.
This source of investment comes to explore new markets, new
sources of raw material, wage differentials, cost
differentials, difference in regulatory and tax climate. Thy
come for new avenues of profit, savings and wealth for
themselves. In capitalism, nothing happens without such
motives. Industries are in search for greener pastures,
newer and untapped markets, commercially unexplored nations.
Once a given market is commercially saturated, they have to
move on in search of another untapped market. Industries
have to maintain profits, employee base year after year, so
they must constantly acquire fresh markets. Market has
become a presiding deity for market-seekers and market-
providers. All of a sudden nation has ceased to be nation.
It has become a 'market'. Until yesterday, these used to be
called 'third world', 'poor nation', 'under-developed
nation', 'developing nation'. Now all of a sudden such
nations have became 'emerging market', 'underserved market'.
The transformation of nations to market is amazing.
Even tough investments and location of economic operations
are done in market-nation, they are done as an extension of
economic activity back at home. Thus, this kind of economic
activity links two economies in which investor country
acquires ownership interests in the weak market-nation.
Since fruits of economic activity goes to owner, economic
progress achieved by such investment goes to foreign nation.
Consumerism and job-creation goes to market-nation and
wealth-creation goes to foreign nation. Job-creation does
not add wealth to the nation as it as neutralized by
consumerism that transfer wealth to foreign nations. Any
growth in purchasing power is spent right back on foreign
goods to give all gains back to foreign nations. Foreign
Investment does not come alone to market-nation, it joins
the large company of market-seeking goods and services to
tap the existing and newly created wealth of nation. Once
foreign nations become dependent on prosperity at home from
wealth transfer from abroad, foreign states begin to look at
such common-wealth/market as sustainer of their tax-base and
welfare state at home. As market-nations lose their wealth
and capital formation over consumerism, and become dependent
on foreign investment for sustaining their life-styles and
job base, they can not get rid of their dependency on
foreign investment. In the mean while, foreign investment
sucks the wealth out of the country and at the same time
acquire hegemonistic ownership interests in market-nation's
economy. Foreign nations begin to take active interests in
political process of such market-state to safe-guard their
ownership and economic security interests. Prosperity
brought home by investment abroad allow foreign nations to
offer tax-cuts and wage-hikes. So much of domestic
prosperity, domestic statism, domestic employment base,
domestic wage scales, domestic taxation, fitness of
corporate sector come to depend on wealth transfer from
foreign market-nations that foreign states can not remain
helpless spectators about internal affairs and internal
political process of the market-nations.
Growing encroachment of foreigners on nation can produce
strong nationalistic and patriotic counter-force. Thus
political situation becomes very vulnerable inside such
market-nations. It puts the ruling elites very vulnerable.
On the one hand, nationalist challenges make their political
life miserable, while at the same time loss of policy-making
an political sovereignty of nation make them stealthy and
defensive. They sustain their power only at the mercy of
foreign help. In exchange for helping them retain the rule
over nation, foreign interests extract all kinds of self-
serving and one-sided treaties from such puppet rulers.
Foreign interests acquire king-maker powers. They can
overthrow rulers that stand in their way and install rulers
that do their bidding. Anybody who neutralizes the native
patriotic forces is given highest priority and support.
Thus, market nations lose control over its nation-state.
This is how political instability is created by entry of
foreign investment. Another trait of foreign investment is
that it flees at the first sign of political trouble of
their lobbyists. As long as 'economic reformer' are crushing
the opponents, foreign investors feel safe and no amount of
political turmoil can bother them. But should even a small
political setback is received by its allies in politics,
foreign investment begin to flee leaving a total chaos in
the nation. Draconian policy changes imposed by foreign
investors in order to make the economy suitable for them
also unleash its set of political instability. Financial
crisis, inflation crisis, devaluation, collapse of currency,
stock-market collapse can trigger troublesome times for all.
Each bailout bring about more conditionalities and
stringencies taking the flexibility of everybody. Because of
vulnerability faced by foreign investment, foreign
government have to acquire direct stake in the political
process of the market-nation. It can take several form.
Either trigger war with neighbor, helping hand given to
separatist movement, demonization of nation's history and
culture, trade sanctions and embargo, military blockade,
arms twisting on sovereignty negating treaties, organized
international terror though global agencies etc.
If a nation wants to become part of another nation's
economy, another nation's politics or wants to lose its
identity by becoming common wealth and property of rest of
the world, go ahead and commit national suicide. But if the
goals is to benefit nation, you can not be anywhere near
here. The fact that nation is swimming near this territory
implies that rulers of such nations have doomed the nation
and nation can not do anything about it. If you have come
this far, sorry but you can not afford to remain as a nation
much less an independent one.
Tactical use of some foreign technology, some industry,
temporary foreign help to overcome temporary phase might be
ok. But to make a necessity out of it and make it integral
part of economic policy is plain suicide. Nation can not
gain progress from this source. You can lose the nation
using this source of investment. You can get stuck with job
and a lifestyle in exchange for nation and independence.
Foreign investment can create a short-term illusion of
prosperity, job growth, foreign exchange growth, export-
import growth, flood of quality goods and services, latest
technology and flourishing life-styles while losing
everything else. people begin to wake up only when even
these short-term bribes begin to disappear. Unlike wealth,
nation, sovereignty, independence, freedom, these things are
not automatically transferable from one generations to
another. Every body has to bargain and earn them year after
year and generation after generation. One nation loses its
bargaining power, all the goodies of globalism begin to
evaporate. Road to hell is paved with such policies.
(7) Investment by Foreign state:
This is the final act in a long road to dependence on
foreign sources of investment. It completes the antithesis
of investment by domestic sources. Since domestic investment
and foreign investment are complete antithesis of each
other, they bring about opposite consequences.
When a foreign nation's prosperity, wage scale, cost of
living, standard of living, job base, tax-base, political
balance depend on getting wealth from other nations through
free-trade, the state and its political process can not sit
by idle. It has to regard any likely disturbance in wealth
transfer as national crisis and national security issue.
Unlike private foreign investors, foreign state does not run
away at the first sign of rouble in market-nation. In stead,
at the first sign of trouble, it rushes to the market-nation
to intervene politically, diplomatically, economically,
militarily in order to set things right. Rulers can be
overthrown, parties can be made and unmade, local resistance
can be crushed, patriotic forces can be crushed, policies
can be imposed, one-sided treaties and bailouts can be
imposed on nation to restore realities favorable to foreign
nation. Internal democracy can be side-stepped, will of
people can be ignored, genuine opposition can be silenced
using instruments of statism. Foreign private investment may
not have the security of army but foreign states can deploy
CIA, Gun Boat diplomacy and army to safe-guard its
investments, property rights, ownership rights. Foreign
state will not remain idle while its interests are violated
by weaklings. It will bring full weight of its trade-tank-
missionary axis to bear of the market-nation.
Direct investment by foreign state comes when political and
economic crisis grip the market-nation that threaten the
private foreign investments. It comes when crisis threaten
the puppet ruling party that can not survive without
political and economic help from foreign state. You only
have to look at Yelsin, Congress party of India, PRI of
Mexico to see how they are sustained by active state
sponsored help though international agencies, private
foreign investors in the name of saving the reform
government. When all other methods become inadequate, direct
involvement of foreign state becomes essential. And since
state aid has to be approved by political process of foreign
state, all the political and ideological agenda ride with
the state investment. The result. Investment not guided by
purely economic factors meets the fate of assured failure.
It creates vicious cycle where nation goes through series of
crisis and every bailout by foreign state trigger loss of
economic and political sovereignty until nation is left with
none. Thus, investment by foreign state can not be good for
the health and longevity of nation. If investment by
domestic state has proven to be worse, how can investment by
foreign state can be otherwise? Its benefits would be to few
while it would misery for generations.
Normally, investment by international agencies hook the
nation of addiction for foreign dole. Its tough
conditionality lure nation to hunt for no-string-attached
sources of foreign investments. They go for Non-residents.
But they soon find that Non-residents blur the line between
non-resident citizens and foreign citizens. Foreign citizens
blur the line between investment by individuals and
investment by corporate and institutional entities. And they
all in set the stage for investment by foreign state and
eventual acquisition of 'market' by foreign state. Foreign
private sector might treat the acquired nation as market but
foreign state do not treat the acquired market as market. It
treats it as its subject. Welcome to colonialism.
Thus, moral of the whole story is that investment would is
seldom monolithic. Investment by domestic sources is not the
same as investment by foreign source. They both are
antithesis as far as their consequences on nation are
concerned. Unless investment is further qualified by its
source, no judgement can be made weather investment is good
or suicidal. We can not take investment to automatically
imply progress and development. One should really be
suspicious of politicians who wave a magic wand of
investment as a panacea of all ills. We should we suspicious
of them if they put all sources of investment at par and
hide the antithical nature enshrined by different sources.
If they do not qualify investment with the source, they must
have reason for it and not a pretty one. It only proves that
such politicians are part of deliberate hoodwinking of
nation and evil conspiracy against nation.
Today, we are witnessing desperate socialists trying to save
their political careers by desperate measures and quick
salvations. USA is offering them quick paradise for a great
national price. Both sides want to quickly get over with it
like crooks trying to clean up the house before house wakes
up. There is desperate cries and screams of
reforms(globalization) not going far enough and fast enough.
As people numbed by novelty of American TV, Movies, fast
food are still in virtual world to feel the pinch of
economic and political deforms. They are panicking that
their reforms are not going fast enough and not producing
declared results. In India, the deformers are lining up
communists to give lip-support to economic reforms as if
communists are expert on economics or genetically inclined
for national interests. And if Indian communists are
supporting the economic policy, than that is a compelling
case for not following it. It has to be bad for people and
nation for communist to support it. If communists support
it, it has to be bad.
There are no short cuts to economic progress and there is no
alternatives of living within ones boundaries and means.
However long it takes to progress, one has to depend on
local resources, local conditions and local investments.
With it comes pride, dignity, respect and independence.
Without it comes their loss.
By Manmohan Sinha
Feb,1995