Branding Is Key For Countries

A country’s ‘brand’ matters whether it is an advanced or developing economy. Successful countries identify their image and key products, and prioritize the appropriate policies to strengthen such attributes. This is a more obvious requirement in some sectors, such as tourism, where countries develop hospitality industries and infrastructure such as convenient airport facilities. However, such marketing concepts increasingly apply to countries as a whole.

Branding strategies.

Relatively successful economies can readily identify their “brand.” They draw on their comparative advantages to find ways of encouraging growth by attracting the people, businesses and investment they need. Newly cash-rich countries, such as successful energy and commodity producers, also have ample resources to address the issue of defining and nurturing a “brand,” with some promoting their strong governance and security, others their infrastructure, “connectivity,” tax regime or culture.

Rebranding.

With an unfavorable initial position and few available resources, less successful economies and, particularly, failing states struggle to identify a viable “brand.” However, in the same way that corporate brands and styles have been revived from what had seemed an inevitable decline, some countries have successfully recreated their image:

  • Australia transformed itself from penal colony to one of the most popular property markets and successful developed economies.
  • South Korea, a poor, rural society after WWII, emerged as a rich economy and became identified with efficiency and quality, thereby feeding a virtuous circle through which development reinforces itself.
  • Supported not only by good policies, but also the ability to communicate them successfully to the foreign public, major developing countries have overcome international suspicions to become the envy of many advanced economies.

Overcoming history.

A key lesson from the corporate world is that turning around a weak image can be very profitable. Having a poor economic and political record has practical consequences in terms of being less able to attract foreign investment, and elevating the risk premium in capital markets, reflecting reluctance on the part of investors to get involved:

  • Argentina is an example of such a problem, along with many parts of Africa.
  • By contrast, and in spite of all its fiscal and debt problems, the fact that Greece “rebranded” itself as a euro-area country may mean it is likely to have a “cheaper” crisis, even in the event of a debt restructuring, than would otherwise have been the case.
  • In any case, markets tend to forget quickly past financial misdemeanors once a country has managed to “rebrand” itself as a trustworthy partner offering good return on investment.

The payoff for challenge.

A country’s image as a reliable player in global economic affairs and an agreeable place to visit creates a virtuous circle that makes it desirable to live and make business there, thereby attracting partners and qualified professionals. Although countries with “branding” problems face an uphill battle changing the perception others have of it, history has shown that this is possible to do and that the rewards for those able to overcome the problems are large.

Article by Oxford Analytica, first published on Forbes