How much we need to leave behind to go forward?

Published in El Pais, 25 Feb 2018

Man is a conservative being. Most of do not like change or to change and when we are insisted to do so, we resist and protest in many ways. Not a strange thing, since many people worked hard to reach a certain state and are not willing to accept the uncertainty and the risks implied in a change. Thinking like this, aren’t we throwing away opportunities?
Economics doesn’t care. If something needs to be changed, it eventually will. The problem is that it leaves casualties. For example, a new technology that reduces the cost of production will be great for the first ones who adapt it, but the last ones are probably ending up closing their business. Sad for them? Yes. Unfair? I don’t think so, because it gives the consumer the chance to access goods and foods for a lower price. A government forcing to stick to the “old way” would be prejudicing the consumers.

China took over a lot of the industrial production of developed countries and now is also taking away production from other countries, like Bolivia. China has become the world factory for everything. Many people now are worried, what are we going to do in Bolivia. Factories are closing, and jobs are disappearing. However, considering that developed countries have only around 20% (and dropping) of their economy depending on traditional industry, there is no need to worry. We only need to change.

For example, if one buys a pair of shoes in the market, less than 10%-20% of its price is actual production, the rest of the price are services such as transport, wholesales, shop, taxes etc. Maybe hard to imagine but 80% of the added value and share for the GDP has nothing to do with a factory.
If you check data from World Bank, agriculture will be going to 5% of the GDP (imagine in USA agriculture is on 1.2% of the GDP). Industry will go to 20% and it leaves 75% for services that add value to products.

This is a great opportunity for Bolivia, if only people are getting prepared and are accepting the change. Banking, computer sciences, marketing, sales, insurances, entertainment, education, health, research, recreation. The new economy is not about goods, it is about service! We just need learn more and leave behind the old stuff and the old way of thinking.

About Arnold Hagens 257 Articles
Arnold Hagens is Economist with strong interest in technology, health and coaching

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