Tuesday, February 3, 2009

Economic shock therapy

The recent trade agreements signed by the Maldives and CII of India clearly demonstrate the economic policy of MDP. 15 MoU's were signed between Maldivian government and various private companies of India. Not much detail have been released to the public, but if history is any indication, this will result in many Indian companies making investments that will bring economic progress.

However, one is left thinking, what are the long term consequences of privatising the infrastructure of this country. What will happen to the local companies and also the local labour force. Anni is very much right leaning and his policy of frantic trade liberalisation is arguably the Maldivian version of Economic Shock Therapy, that was carried out in Chile, Poland, former USSR etc albeit without the immediate human cost.

One question still remains is how successful will this experiment be. Will it be `successful' as in Poland or will result in the rise of the oligarchs.

15 comments:

M Shahdy said...
This comment has been removed by the author.
M Shahdy said...

Good point. I think one of the most important factors that has to come in is a good regulatory regime to ensure that these PPP projects are implemented and run according to how it is envisaged.

Cheers to your blog!

f i Я a s said...

good points/questions you've raised here. but how can we, as regular citizens, get the government to answer those and be held accountable for their actions??

i guess we have to make the public more aware of these "deals" then put more pressure on the government... public awareness is the key!

this is a good start... kudos for the good cause!!!

meekaaku said...

Look at the way this is being done. Everything is happening so fast. Anni said in the press conference that actual work will start on the next day (right after signing the agreement). Its happening so fast that by the time people realise or the opposition gets moving, it will be too late. Everything would be contracted out.

For example he chose his words wisely "alifun yaa ah" IGMH get management overhaul in 3 months.
Meaning the change will be big and quick.

f i Я a s said...

shock and awe bro... shock and awe!!!

axee said...

If you look at smaller countries that have gone through similar market liberalizations resulted in local labour force being enslaved by multinational cooperation.

No to globalization and free trade as it exists!!

M Shahdy said...

whoa axee, so this is what you were upto in the jungles of sarawak!

M Shahdy said...

ey, is this a moderated blog? if the owner of this blog does not tolerate free speech, then he should not be writing about the issues that he is!!!! no to moderation!

*you will be officially classed a dictator if you do not post this comment! hehe

meekaaku said...

No to moderation, no to globalisation right?

Maybe I could silence you by giving you a high post in my dictatorship :).

axee said...

It is my understanding contributors M. Shahdy and Meekaaku are supporters of market liberalisation. I will suggest anyone of similar mindset to re-think on the issue based on the unique geography, demography, work ethics and culture of Maldives.

meekaaku said...

I am very much for market liberalisation as long as it makes the participants compete. Let the consumers decide. As such just privatising without allowing competition will do no good. We don't have to look too far to see what happens when there is no competition.

Anonymous said...

Im not agaist Trade liberilization, but i have my reserves over it. Privatizing public transportation system, sewage system, power system is not good i think. Also does this mean some foreign fish companies can sell fish at a cheaper rate that could eventually put our fishermen out of job?

meekaaku said...

Anon@8:30
That could certainly happen, which means the local fisherman will have to compete fiercely, go bankrupt or get employed at the foreign company.

This could be mitigated if there are sound financial institutions in Maldives that can give low interest long term loans or other financial instruments. Still it would be a hard job.

M Shahdy said...

No to Silence!

bembeast said...

everybody have to know more...