At Davos last week, Russian Prime Minister Dmitry Medvedev made a naked call to the World Economic Forum for investment to flood into Russia. In a message echoing so many of those ringing out around the world, Medvedev declared his country open for business. It provided an interesting insight into what Davos – and the modern global economy – is all about.
Davos is perhaps the natural place for countries to sell themselves; CEOs and fund managers line the corridors, and keynote addresses can be backed up by discussions of economic data in the margins.
But the global contest to pull in the investors spills out far beyond the meetings of the rich and powerful in places like Davos. In fact, wherever you look, countries are bending over backwards to convince the business and investment communities that they are the place to be.
Capital now flows so freely that everyone is a potential investor, and there are few geographical limits as to where that investment could go. What remain are risk assessments and psychological barriers, based on perceptions about a place and the security of an investment therein.
A huge battle for hearts and minds is therefore underway to change these perceptions. Just as the globalised internet age has made everyone a potential investor, it has also made everyone the target audience for rampant destination marketing.
Anyone who tunes into international news channels such as BBC World and CNN – commonplace in cities like Brussels where international TV packages prevail – will have noticed the ample country infomercials in the advertising breaks between newsreels.
Many are purely focused on tourism – these generally feature well-to-do Westerners being wowed by the breath-taking landscapes and wonderful people of the country in question, all capped off by slogans such as Incredible India, Malaysia Truly Asia, or Touching Moments, Experience Macau.
Aside from being sickeningly cheesy (swans and sunsets abound), these adverts have a tendency to patronise the country they are advertising – the locals are portrayed as warm-hearted types engaged in a seemingly endless stream of festivals, dances and other eccentric traditions.
Should it be any surprise that they are simplistic? The idea of branding a country in one minute will always be an exercise in simplifying and stereotyping. Irritating as it is, this is perhaps the unavoidable face of country branding for tourism purposes. And it probably works – a minute full of stereotypes may well suffice to swing a holiday decision.
What is more pernicious is the other face of country branding: the ‘Invest in’ advert. These occur in the same places – on international news channels, before embedded videos on news websites – and are presumably aimed at the same well-to-do, cosmopolitan audience as the tourism ads. Except here the goal is not to convince you that this is a great place to visit, but rather to show that this is a great place to invest, outsource, or set up a new business. Ads like these have become all the rage for countries emerging from the economic shadows and desperate, like Russia, to convey the message that they are ‘open for business’.
The investor figure, as in Grow With Georgia, is typically a debonair Westerner who finds himself pleasantly surprised by the excellent infrastructure, business comforts and general professionalism of the host country. And the hosts are helpful, well-groomed people who look overjoyed to assist in the business venture.
But what is troubling is what is not said. These adverts speak in codes. If an investor is to be convinced to invest in a country in the space of a clean, breezy 30 second montage, there is clearly plenty of detail that will be left aside. So the viewer is invited to read between the lines. Euphemisms such as ‘reform-minded’ and ‘business-friendly’ often crop up in the voiceover. The general message that is meant to transpire from these adverts is pretty much the same regardless of the destination: that salaries are low, the workforce is obedient, regulations are loose, tax arrangements are favourable, and the country is free of anything ugly like social unrest.
The Korean Free Economic Zone is particularly creative in its quest to convince investors of its free-market credentials (as if the name did not suffice) – words like ‘deregulation’ and ‘tax reductions’ appear momentarily in bubble writing on the surface of the ocean. It is as if the creators of the ad, inspired by Inception, want the viewer to emerge thinking that the idea of Korea being a deregulated economy is something he has always known.
The Invest in Macedonia ad is an exception in that it is more brazen about its intentions. ‘In an economic downturn, it’s time to cut costs’, the voiceover announces, before listing average monthly salaries as low as 430 euros as one of the benefits of investing.
The adverts crystallise what is happening, and has been happening for decades, in the global economy. One after another, countries are outbidding each other to be the latest low-cost, low-tax paradise. They are as much as admitting that they will depress domestic wages, forgo tax revenues and do whatever neighbouring countries are doing and more to make life comfortable for investors and companies – providing that business is brought to their shores. This is the ugly side of globalisation. This is the beggar-thy-neighbour economics that tells us that the race to the bottom is well and truly on.
More than 6,000 bilateral investment agreements currently in force between countries. This is testimony to the growing importance of investment as a force in the global economy – a force for good, for bad, for change, or for none of these, depending on the circumstances.
These adverts provide a unique window into this new frontier of the globalized economy. In 30-60 seconds of slick montage the logic of the system is laid wonderfully bare. And the spectacle is troubling, not only because of the stereotyping, but also because of the underhand nature of the messaging.
It raises a set of questions: Is there something fundamentally wrong with the global economy when the things governments tout to a moneyed, international audience – low salaries, unregulated markets, preferential tax arrangements – are the very things they would tell their citizens they are against? And why do countries feel the need to sell themselves so brazenly to investors? Investment is ‘necessary’ to keep an economy growing and create jobs. But should any investment do? Will investments secured against the tacit promise of suppressing salaries and working rights not do more harm than good? Will infrastructural investments funded by foreign capital eventually lead to hikes in the cost of public services, so as to ensure a good return for the investors?
Russian citizens, like so many others, are in the process of finding out.
These are the personal opinions of the author alone