MjumbeGlobal Recession Opens Up Economic DebatesAugust 12, 4788Liberal Economist Rashid OkadigboLiore has not been isolated entirely from the global recession caused by the collapse of the Lourennais stock market and, as of June, the Lourennais state. Though Liore has been immune to the hit taken by the global finance market due to its socialist and protectionist policies preventing foreign direct and portfolio investment in the nation's economy, which has proven its merits against its detractors during the recession. Where Liore's hits are emanating from is the contraction of the international high tech market, one of the top destinations for Liore's refined minerals. Though there is no major trade between Liore and Lourenne and though Lourenne's consumption of Liori minerals is negligible, the ripple effects of the contraction of the Lourennais high tech industry and their economic collapse has caused similar (though smaller scale) contractions in the economies of Lourenne's trade partners, among them being Endralon, one of the largest and most important importers of Liori minerals. These contractions within the Lourennais economic sphere have, unexpectedly to many of the uninformed, caused a massive blow to Liori economic growth due to the nation's heavy reliance on the mineral sector. Because of it's negative effects of the Liori economy, the global recession has opened up a great debate among government and party officials in Yamabiro about the future of the economy, including questions of diversification, liberalization, and a review of trade relations.
Despite division and debate being rife on the economic stage, there has been at least one consensus that has been reached unanimously: the Liori economy cannot grow and survive while reliant on only the mineral industry, and there must be a policy of economic diversification pursued in the future. However, consensus ends at the fact that the one industry economy must be replaced, and there is seemingly no agreement on into what industries to diversify or even by what means diversification should be achieved. As for prospective economic ventures, one of the most hotly debated propositions has been whether or not to exploit the oil and natural gas sources in the eastern savanna to be sold abroad. Proponents argue that oil and natural gas remain essential inputs in the global economy, and are inferior goods that would thrive in global recessions where the incomes of nations and consumers would fall. Opponents reject this idea of finding profit in oil and natural gas exploitation by claiming Liore's sources are far too low to bring significant profit from the international market and that Liore's reserves can at most only fill domestic demand. Another proposed prospect is the development of Liore's tourist industry, making good use of the Liore's unmolested environment and exotic (to foreigners) wildlife, while also developing leisure industries in a select few "tourism cities" which will be open to foreign citizens. In this situation, the pros seem to outweigh the cons, with proponents pointing out potential profit from foreigners coming to Liore and stimulating both the national economy and smaller scale private souvenir markets with foreign wealth (no doubt, when foreign tourists begin to exchange their stronger currencies for LOY to be spent in Liore, the international demand for LOY will increase). Opponents seem to find fault with this plan only on nationalistic grounds, claiming that Liore land is meant for Liori people and is a privilege that is not to be shared, and this argumentation is likely to be ignored by national planners who will likely in the future pursue the development of the tourist industry. The final and most obvious proposition has been to develop Liore's domestic manufacturing industries in areas other than mineral refinement. While this too has become one of the few consensuses in the national debate, division can be found in both exactly what products to manufacture and even how to pursue this development.
Thus comes the debate between planned import substitution and partial liberalization. The most expected position to be held in the debate on how to pursue diversification has been that central planners will choose what specific industries to develop domestically. Though one might believe that planners might choose an industry at random or one that seems to be profitable at the moment, central planners have taken a much more refined and sophisticated positions of diversification through the substitution of imported goods with domestically produced goods. This policy rests on the argumentation that if anything, trade shouldn't be the primary goal of Liori industry and that Liore should pursue autarky in order to distance itself from the international market and its trends. This policy would see tariffs and embargoes placed on certain foreign products while industries dedicated to those products are developed in Liore. Though planners laud this as a way of further isolating and insulating the Liori economy, critics point out a number of flaws, including the possibility of tariffs and embargoes inviting other nations to do the same to Liore's mineral industry, which will remain predominant in Liore for the foreseeable future even after reforms are sought. Critics also point out the fact that just because products that are currently imported will become produced domestically doesn't mean Liore will become isolated from the international market and that the inputs for those products will still have to be imported, especially natural resources that are devoid from Liore. As the saying Liori saying goes, you may be able to pull metal out of the dirt, but that doesn't mean rice will follow.
The most vocal opponents of import substitution have been a group that have been largely absent from Liore since the establishment of the Socialist State: economic liberals. Granted, these liberals are not radicals who wish to see Liore fully transition into a free market capitalist state, but those who seek minor liberalization of the economy while remaining socialist. These liberals have argued for the expansions of foreign trade as well as the breakdown of barriers to trade, as well as small scale privatization of certain sectors of the economy, though keeping these sectors strictly in line with the government. Some more radical liberals argue for the adoption of a dual economy similar to the one in Kalistan, where the government will maintain control over the most important sectors of the economy while allowing privatization in all others. On trade, these liberals believe that if the government expands trade to other nations not currently holding significant relations with Liore and lessening Liore's reliance on certain nations and economic groupings will decrease the effects that the contractions of one economy or one group will have on Liore's by means of reduced imports from those collapsed economies. They argue that if Liore had sought more importers from more diverse geographical positions and geopolitical and international economic groups, that the contractions of Lourenne's and her partners' economies would have less of an effect on Liore. On privatization, they argue that allowing free enterprise and entrepreneurship to naturally guide the diversification and industrialization of the Liori economy will result in a more efficient economy that is in tune with global demand, thus making it more profitable for Liore than if central planners took a shot in the dark as to which industries to develop. Among these liberals is Rashid Okadigbo, an economist and former member of the Prosperity Party who has since come to join the Metzist Workers Power Party and find work in the Planning Ministry. Okadigbo has his own thoughts on how to liberalization, and has come to call for the establishment of special economic zones and free trade zones and export processing zones along Liore's coasts. In these zones, industry would be completely privatized and all laws against foreign investment waived. the thought behind this proposal is to not only allow for the benefits of private industry, but also allow for and encourage foreign investment in certain areas of Liore, allowing for the bringing of foreign industry and capital to Liore for the benefit of their providers and for Liore. This plan, according to Okadigbo, would go hand in hand with the development of a tourism industry in that both would benefit Liore through opening small parts of the nation up to foreigners, whether they be simple middle class workers spending a holiday going on safari in Liore, or large corporations establishing factories along Liore's coasts.
Being left primarily on the backburner of economic debates has been the question of where to seek new economic partners, though it has been a question that has been pondered. Of those who believe foreign trade should not be constricted in the future, it is agreed that Liore cannot maintain its current policy of trading primarily with the same demographic of nation: developed, first-world economies in the northern hemisphere. Of the four major trade deals Liore has struck in recent decades (if one includes last year's arms deal with Kalistan), three have been with nations who fit this demographic, while the last is the still developing nation of Medina in southern Dovani. Clearly, Liore must diversify its trade partners. The first possible group of nations would be those of Majatra and the Majatra Economic Association, specifically Deltaria and Istalia who have considerable technology industries, while also trading with the economic powerhouse that is the Jelbic Khaganate, however economists doubt much profit lies in mineral trade with the Khaganate, due to the new exploitation of Jelbania's reserves. The other group would be those of the east. Included among these nations would be Yingdala, one of the largest economies in Terra, which has already worked with Liore in the past in the granting of funds for the development of a green energy sector. However, when one suggests the furthering of trade in the east, one primarily means a focus on Dovani and third world nations, especially the rising power of Vascania. These thinkers very much share the thoughts of the reigning government in Medina, which itself is pursuing an economic policy of colonial by prioritizing trade with fellow underdeveloped third world nations. Some of the more radical thinkers of this camp argue that Liore should cut off all ties with the first world and work to further develop the economic situation of the third world, however the debate is dominated by pragmatists who oppose breaking off with the west and instead believe thatLiore should simply seek closer trade relations with Vascania, Medina, Ostland, and others.