A Country is Not A Company !

"A country is not a company" this is how Krugman (1996) described the fact that being an entrepreneur by running a business successfully is totally different than analyzing an economy and setting economic rules and regulations, and the opposite is true! Understanding economic theories doesn't make a person a successful entrepreneur. This fact has created arguments between economists and businesspeople regarding many economics issues. Krugman (1996) highlighted two of these issues.

The first issue as mentioned in Krugman's (1996) article is the relationship between export and employment. Businesspeople think that specialization in production of a particular good and then exporting it will create jobs and reduce unemployment rates. In contrast, economists believe that exporting will create only export-related jobs and in contrast reduces jobs in other industries. In addition, exporting firms tend to demand for foreign expert labor to increase productivity and leaving citizens jobless (Hill, n.d). The second issue is the effect of foreign investment in the trade balance. Entrepreneurs think that foreign investments lead to trade surplus since foreign firms will operate domestically to feed local needs and export the excess inventory. On the other hand, economists believe that attracting foreign investments will appreciate the host country's currency and as a result increasing the purchasing power of consumers who will start to demand more imported goods. These arguments raise an interesting question: Who is right? Economists or entrepreneurs?

The answer is: both of them are right! In fact, each of them is analyzing economic issues from different aspects based on their critical mind-set. Therefore, developing economies and solving economic problems need collaboration between economists, government and entrepreneurs to ensure having strategic and effective results that will create a well organized government and boost the economy of countries (Schneider, 2013).

References

  Schneider, B. R. (2013). Institutions for Effective Business-Government Collaboration: Micro Mechanisms and Macro Politics in Latin America.

Hill, C. (n.d). International business: Competing in the global marketplace (8th ed.). New York, McGRAW.Hill

Krugman,P. (1996). Harvard Business Review. Retrieved from https://hbr.org/1996/01/a-country-is-not-a-company