Sri Lanka is not the incident, it is the outcome of the poor debt management for the said government along the years and accumulated and accelerated by the COVID-19 pandemic and Russia-Ukraine conflict. If you read carefully, it is the first domino to fall, and we can expect to see the rest most likely join the fall, and where proactive intervention is required to prevent the financial crisis becoming global scale.
Just like the corporation and enterprise that fell during the period, it was due to similar context, poor management, one in the enterprise level, one in the country management level. The principle for sound management regardless of context remains the same, the business or economic or math sense, read from the figure, revenue and expenses, and the risk for debt if it can not be controlled. Surprise to said so, most of the person in charge (PIC) who make the debt decision, do not has the proper and sound business management background, they are either placement in the position due to political decision, not really based on the merit, background and experience capable to perform the right roles and responsibilities. As such, how can you expect the said government to not fall? Like a personal individual who does not have the economic and math sense, it will fall into an over debt trap, it is the same for the business enterprise, and to the country.
As you do a quick scan, Sri Lanka most likely be the first, and more will follow as you can read from their public debt ratio and practically once the said country can not repay back whatever loan they take, it will reach the same destiny, to fall. Sri Lanka is just the recent mirror and example.
Most of the country who being elected to rule the country, for those who are fail to staffing with the right people and give them the authority to execute the right things to do, or even worse, staffing with the wrong people do not even fit, it the result of fail to get the right things do right in the first place. This is the reason why, regardless of business enterprise or government, strong and competent leadership, you either possess it or you don’t, it will reflect via the team surrounding you. Great leaders make accomplishment and achievement is not by luck, it is the result of them getting the right things to be right. Great leader is one who is confident and capable and willing to pick and use others who are better than them to do the job and provide full support. If you come across when the leader is doing things in the reverse manner, you may expect it to matter for the time for big problems to pop up in the near future.
With the short term for this 2 years where in the global recession and most of the global fund will be sucking into US due to high interest rate interplay for US government attempt to combat inflation, we will expect for the coming of new era where we will notice for more country that fail as result of the wrong decision they are made, no one to be blame.
In a 1989 published business book by Michael Porter, The Competitive Advantage of Nations, or well known as Michael Porter’s Diamond Model (or Theory of National Competitive Advantage of Industries), the framework talks about identifying and focusing on certain industries within a particular nation to be competitive internationally. Porter argues that any company’s ability to compete in the international arena is based mainly on an interrelated set of location advantages that certain industries in different nations possess, namely: Firm Strategy, Structure and Rivalry; Factor Conditions; Demand Conditions; and Related and Supporting Industries. Despite it and other related business classics already in the market for so many years, it seems a lot of political leaders fail to even be the reader, and fail to help the nation to develop competitive advantage for the nation. And the even worst is borrowing huge amounts of debt for the wrong reason and resulting in the situation they are trapped in today. Foreign direct investment (FDI) will go into the country and make business sense for those multinational corporations under the macro-environment analysis. Is Sri Lanka the current government knowing about their own strengths and what they should do to attract FDI? From the result it seems nope at the time.
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