Indigenous vs Global Economics

Indigenous and global economics operate on entirely different scales. Indigenous economics relate the economic decisions made by individuals within their social and cultural context; global economics relates the interactions of regional and national economic bodies on international markets. The fields of indigenous and global economics require entirely different knowledge bases.

Indigenous economics

Indigenous economics are place-specific and the logics of economic decisions vary from place to place. Farmers in France will make different decisions to farmers in Nepal, because of a number of factors. These include, but are not limited to:

–          French farmers benefit from the Common Agricultural Policy of the EU. Nepalese farmers do not.

–          French currency is strong and French buying power is high, meaning that French farmers must compete with large quantities of imported produce. Nepalese farmers do not.

–          The consequence of a bad harvest in Nepal can be far more serious than the consequence of a bad harvest in France.

–          The availability and affordability of technology in France is greater than Nepal.

–          The dominant culture among French farmers is an industrial approach high on inputs and low on labour, while in Nepal is high on labour and low on chemical inputs. The cultural logics among these farmers will affect their future decisions based on what they are comfortable with.

As such, decisions made by actors in indigenous economic situations can vary hugely from place to place and understanding such economies requires not just econometric modelling but strong cultural sensitivity and a thorough briefing of the conditions under which a market operates.

Global economics

Global economics are not place specific. Global economics relate to the way that markets in the U.S. respond to an increase supply from China, or how the price of coffee in Russia is affected by the cost of labour in Brazil. While they still require some geographical understanding of where commodities are produced and where the key areas of demand are, the same set of principles can often be applied to multiple scenarios.

For example, in 2008 and 2009 Latvia suffered a world record recession – a 24% decrease in GDP over two years. The problem has been linked by many economists to the Latvian government’s insistence on maintaining the currency peg between the lat and the euro. The situation bears a number of strong similarities to the recession suffered by Argentina between 1998 and 2001 and economists are able to use the same principles to model how the Latvian economy is likely to fair.

Indigenous economics, then, require a great deal of sociological knowledge in order to understand them completely, while global economics operate in a more abstract, fiscal reality. Global economics can modelled accurately in terms of markets and currencies but indigenous economics often requires meeting face to face with the people making the economic decisions.