The Asian miracle: Lessons for policy makers-Part V

For the last 25 years Asian NIC (New Industrialised Countries) economies have grown more than twice as fast as the average rate for the rest of the world.

For the last 25 years Asian NIC (New Industrialised Countries) economies have grown more than twice as fast as the average rate for the rest of the world.

This rapid growth has been due to the “special characteristics” and ‘mindset” in Asian NIC’s such as hard work, diligence, putting a premium on education, masses mobilized to commitment to growth, foreign investments and high levels of entrepreneurship.

The growth of these economies has also been explained by the geo-strategic and geo-economic interest of the USA mainly to counter communism that was spreading in their backyard from China and North Korea; factors that saw massive foreign capital inflows to these economies from western financial markets both for economic as well as strategic reasons.

As pointed out in earlier series, (part l to part lll), the driving force for enormous economic development of the Asian Tigers was the deliberate move to implement massive education (human capital development) with a heavy infusion of science and technology (S+T).

Thus for instance, under the Malaysian vision 2020 (V2020) they decided to transform an agricultural based economy in the early 1970s (which was similar to most African economies) into a technological based economy.

One key objective of this policy was to produce a critical mass of highly trained research and development (R+D) personnel in science and technology by identifying trigger industries such as biotechnology, microelectronics, ICT, and pharmaceutical.

Over the next 30 years the number of science graduates increased by 1150% which translated into an increase of approximately 1,800 science graduates each year for 30 years.

These graduates entered the labour market with skills that were to transform this agrarian economy to a knowledge based economy. A major underpin of the role of S+T in the development of Asia’s NIC is the enrolment of engineers as a percentage of the population between 1990 and 2000, where South Korea had (0.46 and 0.68) Singapore (0.45 and 0.68) Taiwan (0.51 and 0.70) and Malaysia (0.02 and 0.16).

However, another major factor that explains the difference in the development of the two regions is the level of entrepreneurship evident in them. Migrant labour brought in by the British colonial administration especially the Chinese and Indian migrants that are to be found in a number of Asia’s NICs brought with them relatively developed entrepreneurial skills that to a large extent account for the development of these economies.

This is true especially for Singapore and Malaysia whose migrant population of Chinese and Indians control most of the urban commerce, from small scale manufacturing, construction, skilled trades, and finance. The entrepreneurial skills of Chinese migrants in Singapore and Malaysia have been commented upon a century ago by Purcell (1948:58) who observed that “…their success compared to indigenous Malay was because they knew how to handle money and recognize men in relation to money”.

He went on to observe that “…without immigration, Malaya would not be a highly developed country… Malaya is a joint product of British and Chinese enterprise.”

Purcell (1965:94). Recent research show that the entrepreneurial spirit among East Asian Chinese dominant among Asian NIC is predicted by personality characteristics such as risk-taking propensity, persistence, and internal locus of control, as well as by motivational factors such as love for money and desire for security.

Generally, entrepreneurial spirit is associated with beliefs in ethics and self-indulgence for oneself, but not philanthropy. The contribution of Chinese entrepreneurs has also been documented in such countries
as Taiwan, Hong Kong, and Indonesia.

In contrast, African entrepreneurial skills though not widely researched have not evolved compared to what one witnesses among Asian NICs; and although Africa has had a number of migrants from Asia particularly India and of late China, their entrepreneurial skills are yet to make an impact to African economies except a few.

Also good migration policies, political and economic environment will have to be put in place to ensure that such migrants find a second home in Africa, otherwise they will be content to be ‘expatriates’ who remit their savings back home, constituting capital flight from the continent.

Such Asian migrants have also not forgotten what dictator Idi Amin did when he expelled a number of Uganda Indians. Such action though barbaric as it was has had a contagion effect and has seen a number of these Asians remitting most of their savings abroad mainly to UK, Canada, and India.

Research into these remittances points out to massive capital flight that only prudent policy measures and guarantees can reverse. This in a way deters the development of African economies who should have otherwise benefited from this pool of resources.

In addition, the types of migrants that Africa received were different. While Asian migrants were well educated and as such excelled in technology and technological transfers, their counterparts in Africa were mainly in commerce and trade.

African entrepreneurial advancement has also been hampered by high levels of corruption and conspiracy by African political ruling elite with foreign interests made worse by unplanned privatization that saw most public enterprises bought by foreign owned entrepreneurs who more often than not frustrated indigenous African entrepreneurs in developing indigenous entrepreneurial culture.

On a more skeptical note other researchers have of late asserted that, even religious beliefs have defined growth episodes among different regions. They thus point out that, countries that embraced Anglican and Buddhism religious beliefs tended to have out grown their counterparts who embraced other forms of religious beliefs.

Thus, research done in Western Europe and Latin America has tended to collaborate such research arguing in particular that, mainly Catholic countries have not grown at similar pace as their Anglican or Muslim counterparts. Such researchers argue that religious beliefs which were consistent with capitalistic ideology were conducive for resource accumulation and thus growth both at individual and by extension national level.

Although such researchers used none-empirical methodologies that have been questioned by empirical based researchers as to their authenticity and validity nevertheless, they are both unanimous on the role culture plays in development episodes of various countries and point out that, indeed religious beliefs have had tremendous impact on various cultures.

In the case of Africa, no research known so far has been done with regard to the impact of religious beliefs on entrepreneurship and thus development - except to make inferences based on similar research done elsewhere.

However, with regard to colonial responsibility in relation to the development of entrepreneurial culture in Africa, there is some scattered truth in available research that, in some countries, colonial administration did not allow Africans to venture into business for various reasons, mainly out of their concerns that, such activities would finance colonial resistance groups typical of early Africa’s pre-independence economic landscape.

This can not be a sustainable argument however, given that, post-independence African economies strived to promote entrepreneurial skills among its people through creation of such out fits as regional industrial estates where African entrepreneurs were given skills and capital to start up their own businesses.

This also saw the creation of such institutions as Industrial Development Banks, and Agricultural finance banks which were aimed at facilitating African entry into business and commerce. Although this approach was similar to one used in Asian NICs, African economies failed to use these vehicles to promote indigenous entrepreneurial skills mainly due to the fact that, such out fits were only used to serve political patronage so much so that, their impact like many other well intended policies, remain but a blueprint.

With regard to political interference, the problem relates to their close relationship with the government of the day, so that both their lending and indeed their loan recovery programs were influenced by political expedience rather than by economic or financial prudence.

Moreover, the level of education in these economies was very low which meant that, those who qualified for financial assistance were not necessarily skilled to undertake meaningful innovations. Thus at independence and many years thereafter, illiteracy levels in Africa were as high as 80% and as such, such an illiterate population could not be mobilized for development which was the reverse among Asia’s NICs.

The author is a Senior Presidential Advisor on Economic Planning

 

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