Economic issues on changing international cooperation

Up to 2019, the increasingly multi-polared world has experienced changing landscapes in international cooperation.

Cooperation between more developed and less developed world has gone through various phases.

The unfolding developments are ones in which the hither-to donors and development partners are increasingly exiting the aid gate and entering the business cooperation gate and correctly so.

This change has many and far-reaching implications for governments and the world of business as partly outlined in what follows.
The implications of the shift from aid to business cooperation implies reduced external source of funds for donor-dependent governments.

This means a more troubled fiscal space for governments that factor-in donor money substantially in their budgets. Such governments have to substantially increase their efforts to collect revenues through domestic resources mobilization (DRM). DRM includes collection of internal taxes and non-tax revenues as well as external revenues including borrowing.

The reduced revenue will also make it more necessary for governments to increase their fiscal discipline.

Economic diplomacy
Countries need to increase their economic diplomacy initiatives. Economic diplomacy involves steering international processes towards contributing to a country’s efforts at economic development.

This is done through elaborating arrangements for accessing technical assistance, financing in form f grant or loan, trade including export and import of goods and services and attracting and retaining investments in general and Foreign Direct Investments (FDIs) in particular various countries source countries.
It is said that economic diplomacy is highly marked as the vision of Tanzania’s diplomacy. The vision under the new foreign policy is to become an effective promoter of Tanzania’s economic and other natural interests abroad.

The focus is on advancing economic diplomacy to attain Tanzania’s development goals in general such as attaining middle income economy status through industrialization.

This can be done through promoting investments, trade, official development assistance (ODA) and various kinds of collaborations in various sectors and fields.

Diplomatic missions
Among the areas that need to change very quickly is that of the nature of diplomatic missions.

Developing countries like Tanzania will need to staff its diplomatic missions abroad with less diplomats per se and more business-minded folk.

Needed in these missions in the new cooperation landscape are people who are aware of business and investment opportunities as well as procedures that would-be trade partners and investors need to follow back home.

Foreign representations
Needed in the countries’ representations abroad are more people with great network with, and understanding of the private sector and mentalities of captains and titans of the industry in the foreign country and back home.

Fewer diplomats and more people with huge understanding of complex business and investment situations are needed in the new scenario.

Foreign representations need people with high understanding of business acumen as well as business match-making skills.

Radicals would call for private sector people to occupy some spaces in foreign representations.

Given what diplomacy and what business are, there is a need to optimally mix diplomacy with business.

State-supported investments
Some countries are said to have funded their private sector actors to find partners in the developing world and even support their establishments.

Others have sent fact-finding missions by way of studies on business-match making potentials.

The key issues in business match-making include understanding what works and what does not work when a foreign investor partners with a local one.

We are also likely to see more state-funded investors establishing themselves in developing countries.

One needs to interrogate the extent to which parties in the developing countries are aware of as well as capable and willing to support the private sectors to cope with this new reality.
The change from aid to business cooperation implies unfolding opportunities to the world of business.

One is likely to see more developed-countries’ facilitated joint ventures as well as more business and investments collaborations. The point should be the extent to which the local private sector are strategically positioned to benefit from the unfolding new reality.

Partnerships
Developing countries including Tanzania should call for better and more meaningful partnerships. Before the unfolding type of cooperation, the existing partnership was arguably not one of equality between partners.

There has been a partnership punctuated by the dependency of developed countries to the developed ones.

It has been a partnership where the big brother dictates terms. In the new era, this needs to be changed. Parties to meaningful partnerships need, among other things, huge negotiation skills.

The author is professor of economics, a researcher and consultant based at Mzumbe University Dar es Salaam Business School.