The Asian miracle: lessons for policy makers–Part I

From the early 1970s on wards, the countries of East-Asia, the Asian Tigers as they are labeled due to their astonishing development that demystified the conventional economic theory based on western model of development that espoused industrial development as a strategy for over all development.

From the early 1970s on wards, the countries of East-Asia, the Asian Tigers as they are labeled due to their astonishing development that demystified the conventional economic theory based on western model of development that espoused industrial development as a strategy for over all development.

A number of researchers have pointed out that, unlike the western model, The Asian model is premised on capital accumulation and accumulation of human capital which were instrumental to the development of these economies.

This development, has been so spectacular that it has attracted the attention of many academics, researchers, practitioners, and has served a text book case for policy makers in many LDCs (least Developing Countries) especially in Africa.

This growth phenomenon has baffled many economic historians as well as geographical experiences recorded so far leading to researchers to argue that, success in Asian countries was based on up dated version of primitive accumulation and that, their success can be a model if only their high savings rates can be replicated.

This is in  contrast to African economies which took off at the same time and indeed pace as the Asian economies (all after independence in the late 1950s and early 1960s).

Nonetheless, LDCs in Africa recorded dismal and disappointing growth and development over the last two decades prompting a number of scholars to call the phenomenon “a crisis of proportion (Elbadawi and Ndulu, 1994); and “Tragic” (Easterly and Levine, 1996).

This rather extreme contrast in two regions, that so recently shared a similar turbulent past, raises many questions which should be of interest as well as a challenge to policy makers especially in Africa to discern what went wrong with their policies and policy implementation, against what went right with Asian tigers.

Such questions that beg urgent answers are even more pertinent when one considers that, African countries were poised to grow faster than their Asian counter parts considering their resource endowment advantages.

Thus for instance, at independence such countries as Ghana and Kenya (and certainly many other not researched) were said to have had better growth prospects than any country among the Asian tigers.

While commenting on the same diversity, Nissanke (1998:2) points out that “it would be immensely valuable for African researchers, practitioners, and policy makers to have the opportunity to observe directly the economies of East Asia and Southern Asia themselves to discuss economic policy reform directly with the academics, practitioners and policy makers from the Asian region.” 

One caveat that should be kept in perspective however, is that, there are no two countries that are similar so as to assume that development in one can be replicated in the other.

We shall later in these series explore some of the factors we can not replicate in Africa, and which may hold clues as to the differences in the development between the two regions.

What is known in development literature is that, there are some fundamental factors that must be in place for a country to latch into development phase and the rest depends on the model the country pursues to sustain the development.

Nevertheless, many policy makers and indeed some academics in Africa have, for quite sometime now, tended to attribute Africa’s poor development record to its historical past  specifically blaming it on her colonial legacy, and later neo-colonial ‘manipulation by western countries’.

Such attitude holds no ground when one considers that Asian countries had a similar historical environment, which limits the extent to which these arguments can be held to justify the poor development record of many African states 50 years on.

Empirical evidence from various research done in this area so far, suggests that, the failure of the African nation state holds clues to its tragic development record.

What these researchers did not acknowledge (there were no research tool to capture this) was that, African economies at the time, were not capable of creating good governance on their own, nor could they be expected to marshal the human and capital resources necessary to ensure a development process.

Nissanke (1998), commenting on the failure of African state after independence, argues that, whilst all seemed to have a common goal of accelerating the pace of economic growth and thus development, they tended to diverge on such issues as: the role of the state, the degree of openness that could be accommodated, the desirable partner of investment in social services versus economic services, and the government-private sector relations.

The long term results obtained  were not dissimilar, suggesting that, failure was the outcome of a wrong mix of policies which are uncoordinated, absence of institutions, external environment, lack of societal preparedness, which were by and large  constraints overcame by their Asian counter parts.

Elsewhere O’Connel (1996) commenting on such failure, emphasized that, African states have evolved from a shortage of capital diagnosis of the 1960s and 1970s, to a diagnosis of policy failure of the 1980s and, finally, to a diagnosis of institutional failures of late 1990s.

However, other researchers who when comparing the source of growth in Asia with those of Germany, UK, USA and Japan, conclude that, by far the most important source of economic growth in these countries is capital accumulation, accounting for between 48% to 72% of their economic growth.

Others have pointed out that, it is rather a combination of both capital accumulation and human capital accumulation (learning by doing) which have been the productive engine behind the unprecedented growth, pointing out that, physical capital critical in growth process, is rather passive and subsidiary to human capital accumulation.

This contrasts to the above group of industrialized nations where technical progress played a vital role in their development, accounting for between 46% and 71% of their economic growth.

Whereas capital accumulation and indeed human capital development accounts for growth differentials between Africa and Asian countries, it all depended on policy choices each the countries in Asia took, for such development has not been uniform in most Asian economies either.

Rather, Asian countries which have recorded unprecedented growth episodes have combined not only right and consistent policies over time, but also their societal preparedness had an even greater role to play to this end.

It has thus been pointed out that, countries such as Malaysia, Singapore, South Korea, Indonesia, Thailand, and of late Vietnam have all had an element of societal preparedness which is highlighted in the culture of hard work, drive to succeed, and high propensities to save.

Others even argue that, the Chinese culture (of hard work and their strive for excellence) entrenched in most of these countries in part explains their drive to grow at the rates that far exceed the growth recorded elsewhere.

The dismal performance of a number of African economies has also been explained in the context that, factors attendant in Asian region, were not to be found in African countries, and no wonder that, no one country latched into development phase close to the Asian Tigers.

Although many African countries have borrowed a leaf from their Asian counter parts especially in the areas of human capital development, the new paradigm shift has mainly focused on institutional development.

This is even more pertinent considering that, Africa has not been short of capital. Indeed despite massive foreign aid and to a lesser extent direct capital flows, African economies have not developed as expected.

This reinforces the belief that, capital inflows, whether local or foreign, can not make an impact in the absence of a conducive environment characterized by transparency governments, good governance, democratic political economy, conducive economic, social-cultural, and legal environment.

The writer is a Sinior Presidential Advisor on Economic Affairs

E-mail: mnshuti@yahoo.co.uk

 

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