What Drives The Economy

I have always found the phrase economic growth to be rather nebulous and damn near impossible to accurately measure. Matters are made worse when every country’s stats body makes up its own formulae for calculating GDP, GNI and all sorts of other metrics that measure everything but ignore empty plates in the slums.

All this will ofcourse not prevent me from contributing my expert opinion on economic matters.

I think economics should be simplified for easy consumption by the public instead of making it sound like advanced space science.

At the core of it i suppose the economy is driven by exchange of goods and services. The more fluid the exchange and the bigger the catalog of goods and services that can be exchanged the healthier the economy gets and the bigger it grows.

An example is often given of a classroom experiment conducted by a trainer. He gave one student a dollar and asked him to buy something from one of his classmates. What he bought was just something trivial like a pen or a piece of string and as the exchanges dominoed around the room, there was a lot of interaction between  the buyers and sellers with haggling and negotiations. All surrounding one dollar worth of exchange currency. The result was that there was a lot of emotional fulfillment from the exercise and though there was no real net change of status of the participants materially or financially, there was benefit in terms of the experience and social lubrication that trade offered.

I thus tend to think the economy is less about how much money is flowing and rather how fast or how easy it is to transfer money or facilitate exchange of goods and services.

This is where the beauty of Mpesa and e-commerce companies that lubricate such transactions and enable citizens to buy and sell goods and services faster than they have done before. I have personally benefited from local classifieds here where all sorts of products are listed by regular people. Its almost like a flea market or garage sale of sorts only that its all run virtually. All this smoothens the transaction process and enhances social interactions not to mention that bargains are to be had as well.

Of course brick and mortar businesses(In this part of the world its more cement and iron sheets) benefit from the same liberation offered by the advanced technology

In this light then its rather strange that our govt keeps systems that are a nightmare for individuals and small businesses to navigate government business or take care of things such as taxes and claims. The only bodies that are able to do this comfortably are deep pocketed multinationals and even then comes at a great cost to them.

Well to their credit government bodies have started getting more open to possibilities of sharing data and reducing the bureaucracy involved with business registration and general transactions involved with the authorities. More needs to be done though.

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