Mobilization Of Resources:
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Baljit Dhaka

Mobilization Of Resources:

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Economics

Mobilization Of Resources:

Introduction:

There are two types of resources from a country’s economic point of view::

Natural Resources – Coal, Petroleum, Natural Gas, Water, Spectrum, etc.

Human Resources – The labor force and intellectual capacity of a nation.

Every country has economic resources within its territory known as domestic resources. It should be available for collective use.

For a country to grow, identification and mobilization of its resources are necessary. It should be available for central and state-level planning.

Resource Mobilization is the identification, organization, and utilization of the available material & financial resources within the country to further its objectives of development missions and plans.

Importance of Resource Mobilization:

Maintains sustainability

All-round expansion of industries

Increases employability and technological advancement

Product and services become better

Quality of life becomes better and economic strength & activity increase which leads to generations of economic resources like savings, investment, tax, the capital.

Mobilization of Resources::

Natural Resources:

India, though a country with sufficient reserves, due to policy bottlenecks, is importing coal and iron. This is increasing our Current Account Deficit.

India is also facing technological obstacles to exploit some of its natural resources.

India is also suffering from domestic factors like political factors, resistance from tribal people to development and exploitation of resources, inter-state conflicts, disputes with neighboring countries, etc.

b.Human Resources:

Organizing human potential for ready use is necessary for the growth of India. In fact, as a country of 125 crore people, India now is eyeing more on its human resource potential. The demographic dividend is also in favor of India.

The mobilization of human resources highlights the need to empower human resources.

Weaker sections like women, children, SC, ST, OBC, etc should be brought into the mainstream.

There should be right employment opportunities for human resources, and when there is a lack of skill the job demands, there should be skill development programs.

Utilize the demographic dividend.

India is currently levering on its technologists – engineers, doctors, and scientists.

c.Financial Resources:

If a country needs to grow, more goods and services should be produced. The production can be done by the government sector, private sector, or in PPP mode. But for that, the economic resources of a country should be mobilized.

In India, despite having a good savings rate, domestic investment is less. Indians are investing in less productive assets like gold and consumer durable.  If India needs to grow, there should be more investments in agriculture, manufacturing, or services.

In India, the tax collected is very less. The tax base has to be widened.

Four factors of production- land, labor, capital, and organization – should come together. There should be an atmosphere for growth and investment.

Organizations do not “spontaneously emerge” but require the mobilization of resources.

In modern capitalistic society, these resources are more “free-flowing” and are easier to mobilize than in more traditional societies. 

Initial Resource Mix: There are various resource needs in a starting organization (technology, labor, capital, organizational structure, societal support, legitimacy, etc.). But the right mix of resources is not always available.

The most important resource of an organization is its people.

More savings and more productive investment.

Issues with mobilization of resources:

1. Limited Domestic public resources:

It makes the least developed countries (LDCs) highly dependent on external resources which limit their policy space and create some dependency.

Their economic vulnerability is further exacerbated by indebtedness.

2. Weak Domestic taxation and fiscal policies:

The fiscal discipline is hardly seen in developing countries. They often resort to deficit financing to pursue development.

The taxes are not broad-based and tax evasion is common in developing countries which squeeze out the chances for public expenditure.

3. Lack of National and sub-regional development banks with rural penetration:

Though India is enjoying the presence of big national and international banks the financial inclusion at the rural level has been a myth.

Moreover, the 2008 financial crisis brought national development banks back onto the policy agenda, as countries sought sources of long-term financing to stimulate economic recoveries, and there is greater international acceptance of such banks. 

However, poorer and smaller developing countries may face greater obstacles in setting up such banks, due to funding and technical constraints.

4. Illicit financial flows from developing countries:

Illicit financial flows involve resources that have been obtained, transferred, or used illegally or illicitly.

A common concern about illicit financial flows from developing countries is the identification of flows considered potentially damaging to economic development.

In developing economies, vital development resources are being lost because of illicit capital flows from developing economies are indicative of deeper structural problems of political governance in these countries.

Concerns over illicit financial flows, therefore, reflect a range of relevant policy concerns. Illicit financial flows need not be illegal if relevant legal frameworks do not adequately reflect wider public social and economic interests.

5. International tax cooperation:

The combating of illicit financial flows has been a core driver of international tax cooperation in recent years.

In general, international tax cooperation assumes particular importance in a world of hyper globalization, in which tax systems in some countries can affect public revenue collection in other countries.

Such cross-national effects can result from tax evasion, for example, if high net worth individuals place financial assets in tax havens, as well as from illicit financial flows arising from the creative accounting or transfer pricing practices of multinational enterprises.

6. Lack of Multilateral development Banks:

Financing needs to support the achievement of the Sustainable Development Goals are considerable.

Lack of financing is not due to a shortfall in global savings; at the global level. Most are in the form of developed country securities and other assets that offer low returns.

Multilateral development banks and other international banks, existing and new, are therefore needed to bridge finance from end-savers to development projects. Hence they can be key players in development by providing long-term financing directly from their funding sources, by tapping into new sources, and by leveraging co-financing of projects with other partners.

Why is Domestic Resource Mobilization (DRM) particularly important?

In low-income countries confronting widespread poverty, mobilizing domestic resources is particularly challenging, which has led to developing countries to rely on foreign aid, foreign direct investment, export earnings, and other external resources. 

Greater reliance on DRM is vital to elevating economic growth, accelerating poverty reduction, and underpinning sustained development.

High-growth economies typically save 20-30 percent or more of their income to finance public and private investment.

DRM is potentially more congruent with domestic ownership than external resources.

Foreign aid invariably carries restrictions and conditionality.

FDI is primarily oriented to the commercial objectives of the investor, not the principal development priorities of the host country.

DRM is more predictable and less volatile than aid, export earnings, or FDI.

Conclusion:

Resource in the form of investment is the most important factor affecting growth. Hence, resource mobilization to boost investment has always been a priority. The task of mobilizing resources involves deliberate decisions on the selection of major investments, control of expenditures, monitoring of performance, and realization of planned level of economic activity. Going further, it also includes the prevention of tax evasion and tax avoidance.