The British newspaper The Economist pointed out the structural effects imposed by the transformations of the global economy due to emerging green technologies and fragmented trade relations, which makes the state play a major role, especially in rich countries, where governments allocate huge budgets to strategic industries.
Many developing countries are seeking to implement ambitious growth plans with the aim of transforming into high-income countries within a record period not exceeding 25 years.
According to the newspaper, the diversification plans adopted by India, Indonesia and Saudi Arabia emphasize global integration and participation in green supply chains, which indicates a shift from previous development strategies.
In many ways, the developing world chooses to rely on globalization as a way to get through, as Indonesia has witnessed economic development and the expansion of infrastructure and foreign investments significantly over the past years, and a report by the Financial Times stated that since 2014 – with the exception of the period of the Corona epidemic – growth Indonesia’s GDP is about 5% annually.
Indonesia is the world’s largest producer of nickel, an important metal on which new technologies, such as electric cars and batteries, are based.
According to World Bank data for 2022, India ranks fifth in the G20 with a gross domestic product estimated at $3.39 trillion, which represents about 3.37% of the global product of $100.56 trillion.
The Indian economy witnessed positive growth rates of 6.4% in 2013 and rose to 8.3% in 2016, and even after the Corona pandemic, it achieved growth of 9.1% in 2021 and 7% in 2022.
India benefited from globalization and transformed from an agricultural economy to a diversified economy, as the contribution of agriculture to output decreased from 30 to 15%, according to a study issued by Cairo University.
The Indian service sector has become the fastest growing in the world and represents 60% of the economy, with a focus on industry through the “Made in India” initiative since 2014, to achieve global competition with China and America.
Software industry
On the other hand, a study issued by Zagazig University indicated that India has been a major center for computer experts since the 1960s, which has led to the advancement of the software industry in the country.
The study stated that in 2016, India had about 3.7 million direct workers in the software industry, and indirect employment was estimated at about 10 million workers.
Software exports from India reached $173 billion in the same year, contributing 9.3% of the domestic product, with the country targeting to increase the value of software exports to $350 billion by 2025, and India controls 56% of the global technology business market.
Saudi investments
A recent report stated that the Saudi Public Investment Fund spent about $31.5 billion in 2023 out of a total of $123.8 billion for sovereign wealth funds in the world.
The report indicated that Saudi sovereign spending on transitioning away from energy dependence reached $25.9 billion in 2023.
Gulf funds now own about 40% of sovereign wealth fund investments, and the Saudi fund’s individual spending was not disclosed, but investments in sports and shares acquired from international companies were prominent.
In a press statement, the fund indicated that it plans to launch an airline and an electric car brand and owns a stake worth $8.1 billion in well-known companies, and investment indicators for government institutions for the year 2024 expect it to exceed the previous record assets of $50.8 trillion.
But The Economist believes that these trends entail inherent risks, noting that some governments risk distorting their economies by implementing massive industrial policies.
It quotes experts that the large spending in Saudi Arabia through the Public Investment Fund and the protectionist measures taken by India raise concerns about excessive dependence on certain industries.
In the midst of the protectionist policy adopted by developed countries, developing countries may succumb to the temptation to follow suit, which may negate the effectiveness of their development strategies.
The newspaper points to several historical lessons, most notably the slowdown in growth in Africa as a result of incorrect policies in the 1970s and 1980s, stressing the dangers of choosing industries without careful study.
She said the evolving nature of manufacturing – which is now more capital-intensive – challenges policymakers’ ability to identify industries suitable for development. Instead, investing in public goods such as infrastructure and education while keeping economies open provides a more beneficial and stable path.
