The Lessons for Economic Growth from the Developmentalists

Jan 31 , 2021
By Ayele Tirfie Woldemichael (Prof.)

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The economic model of Ethiopia's developmentalism was borrowed from the East and Southeast Asians. Despite successes in poverty reduction – which is no small feat - it was a model that was never taken to its full potential for the lack of decentralised planning, writes Ayele Tirfie Woldemichael (Prof.), author of several books and an alumnus of Oregon State University and the University of Stuttgart.

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Ethiopians have lived through three different regimes with divergent socioeconomic visions. After the violent demise of the Imperial government, the Dergue, a military regime condemned nearly everything its predecessor believed in and did and declared itself the guardian angel of the nation’s interest.

Little of the past was taken as a basis to build on. It established its political direction with allied policy guides and completed its course with near-destruction of the fabric of the politico-economic system.

The EPRDF came after, labeling the Dergue as an agent of destruction that never cared for development and human lives. It then came up with its own political and policy directions and planted its relatively novel idea of federalism drawn based on ethnic self-determination. It also established itself as a guardian angel of the system of ethnic federalism.

Both of these ill-conceived turns of politics made the country a nation of experiments in growth and development. The missing phenomenon here has been political stability with a democratic environment as a channel for people’s voices. This is without mentioning a continuity or the sustainability of policy guides with necessary adjustments to meet changing conditions for people-centred, growth-based development.

The EPRDF’s economic view, considering that it was the most recent and perhaps had the most consequential effect in terms of structural transformation, is worth pondering.

The economic model of the developmental state was borrowed from the East and Southeast Asians. The concept originated in Singapore (with a population of 5.6 million) following the short-lived merger with Malaysia. The strategy meant complete cooperation between the public and private sectors to bring about social and economic equality based on high growth and development. It worked. Institutional quality for effective implementation of the model has been first class. The nexus of complementarity between democracy, growth and equality is fully realised. Basic in all these was the visionary leadership.

By 2015, 90pc of Singaporeans were homeowners and per capita income stood at around 70,000 dollars. The gross domestic product (GDP) was 323.9 billion dollars with a growth rate of 4.3pc.

With 1.3 million people, Mauritius borrowed the strategy and applied it to the great advantage of it people. It raised its per capita GDP from 400 dollars in the 1980s to 6,700 dollars by 2015. A great majority of its population (87pc) are currently homeowners. Mauritius decided that military spending was a waste. Transportation for elders and school children became the responsibility of the government, the former because of what they have done for society, the latter because they are the nation’s future. Also provided to all citizens are free healthcare and free college education. The nation's attribute has not been the availability of natural resources but a genuine commitment for equitable growth and development.

Ethiopia borrowed the idea of the developmental state but not the practice. Inequality, instability and inadequacy of social services including quality-based education and health services became the living burdens of Ethiopians. Granted, between the 1990s and the 2010s, poverty was halved and famines, despite two major droughts in the early 2000s and mid-2010s, were avoided. This is no easy feat. Unfortunately, it did not produce political stability.

There are lessons that could be taken and certain measures that could be considered as a way forward. Decentralised planning, harmonised with the overarching central plan is critical. This should be strengthened with developed and empowered human capacity as well as institutional competence at a regional level.

A focused agricultural policy with an emphasis on incentives and access to credit and inputs for small farmers should be at the top of the agenda, as should land reform that gives ownership rights with entitlement to private individuals. This effort could be complemented by continuing to aggressively support labor-saving technology, improved seeds, market infrastructure, fair pricing policy and demonstration farms. Such policies should be undertaken with the view that securing agricultural efficiency is the bedrock to economic development and the success of other sectors.

The people bearing the brunt of under-development and poverty, the problems afflicting them, the soil they depend on, the resource potential and the bad health conditions along with their causal factors, are all in the regions. Down-to-earth planning and implementation are supposed to be based on these realities. Anything else is imaginary and without any development effects, and thus decentralisation should be put into effect.

The sooner we abandon that unworkable practice of exclusive centralised planning by a national centre and decentralise to involve regional centres and the people in the decision-making process, the earlier we achieve results in terms of equitably diffusing lasting socioeconomic benefits across geographic space and society.

Time is of the essence. Arthur Wellesley, the Duke of Wellington, was a British national famous for defeating France's Napoleon at the Battle of Waterloo in the 19th century. He was once asked what the secret of his success in life was, and he put it memorably as follows:

“I do the day’s business in the day,” he answered, “never procrastinate by putting off action and making empty excuses for doing so.”

A great lesson of universal truth for success. It is also an important attribute to internalise for an administration governing a country with vast developmental potential.

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PUBLISHED ON Jan 31,2021 [ VOL 21 , NO 1083]

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