It may just be a matter of synonyms, but we had to understand what’s really in it
MB June 2020 Special Report | Diversification now or never
“In view of Macau’s own characteristics, the diversification of its economy cannot encompass all aspects, but it can only be ‘adequate,” asserts Professor Li Sheng.
So, “the option for new industries must be made according to the traditional advantages inherited by its history and the modalities technical and commercial consequences of the new world industrial revolution,” adds the Associate Dean of the University of Macau’s Faculty of Social Sciences to whom “it is impossible to develop in Macau a type of economic diversification for all branches of economic activity, similar to medium and large economies.”
That’s why we talk about “adequate diversification”, “distinguishing what should be done from what should not be done.”
The choice of words is not, however, consensual.
On the pages of Macau Business, economist José I. Duarte has drawn attention to the mistakes.
“Official documents usually point out the need for ‘adequate’ diversification. Yet, they never state what is, or what we should understand as adequate. The concept still lacks a definition. Which criteria should be met by an ‘adequate’ diversification? We don’t know,” we wrote last January, proposing an hypothesis: “Let us say that we define it as a reduction in the size of the gambling sector, as measured by its contribution to the region’s gross added value. Measurement issues aside, that would provide an objective metric. The point is that measure is a somewhat poor one.”
But sometimes is ‘adequate’, others ‘moderate’, as the government’s statistical department calls his annual report, ‘Analysis Report of Statistical Indicator System for Moderate Economic Diversification of Macao.’
“We don’t know what that means in practical or objective terms,” stated Mr Duarte (February, 2019). “It does not help that the expressions used in Portuguese and English do not match properly, either. We need to start discussing semantics even before we start contemplating policy goals and tools. The word used in the Portuguese version (‘adequada’) can be more adequately translated as ‘suitable’ or ‘proper’.”
“A moderate diversification, judged by whatever criteria, may be judged as suitable, – insists the Macau Business Senior Analyst – but the words are by no means equivalent. Others, more qualified for the purpose, might delve further into this discrepancy and decide whether it has any practical implication. And, better still, bring to the discussion the contents of the Chinese version. The point here is solely to highlight how ill-defined the concept still is, even after being on the agenda for so long.”
We could go back a little more, but let’s look at December 2014, when President Xi Jinping was in Macau and drew the attention of the Macau SAR Government to how the present and future problems should be managed (“Focus on building a global tourism and leisure centre … promote the Macanese economy’s appropriate diversification and sustainable development. This is of great importance for the interests of the people of Macau.”)
These words were understood by everyone, including the Chief Executive, as another call for economic diversification, preventing Macau from becoming so dependent on gambling.
In his reply, then Chief Executive Chui Sai On said that he would, “actively promote the appropriate diversification of the economy”.
A year later, the Chief Executive was again in Beijing and announced that he would start a study on adequate economic diversification, reducing dependence on gambling.
The study was delivered on March 1, 2016. “Promoting the adequate and diversified development of the economy is an essential option in the sustainable development of Macau,” said the document.
It’s true ChuI Sai On did not lose that goal during his second term: “we will do our utmost to promote an integrated regional development that will allow the consolidation of appropriate industrial diversification in Macau and increase the effectiveness of the adequate diversification of our economy”, even if the results are not what they could be.
One example: in terms of policy about the gambling industry’s sustainable development, from 2016 to 2017, the government first proposed a specific indicator that the growth rate of the total number of gambling tables in the ten years after 2013 should be no more than 3 per cent, and that the addition of new gambling tables should be strictly regulated to adjust the gambling’s industry scale. “However, this study has found that this policy failed to achieve the goal of regulating Macau’s gambling industry scale to make the industry appropriately diversified,” stated a recent study led by Fei Choi, School of Business, Sun Yat-sen University. “This study reveals a new understanding that there must be a significant transition of the gambling industry economy to the non-gambling industry economy to achieve a moderately diversified economy. The local government should consider imposing certain requirements facilitating economic diversification when issuing casino licenses in the coming years” (Sustainable Development for Small Economy and Diversification from a Dominant Industry: Evidence from Macao, by Fei Choi, Chi Tin Hon, Yan Hua Mao and Ivan Ka Wai Lai.)
“Regarding the path to be taken in terms of diversification of Macau, opinions differ, both within the Government and among academics,” defends Macau based scholar Edmund Li Sheng.
According to Professor Sheng “the insufficiency of the investigations is essentially due to the fact that there are few Macau diversification actions put in place, a fact that jeopardizes the access to information from positive sources by academics and their interest. Thus, academics have not reached a consensus on whether Macau’s diversification can be an academic proposition that deserves research, these realities have determined, objectively, that academics have been, are and will be little aware of Macau’s economic evolution, including its adequate diversification.”