Economic development is typically the main goal for countries worldwide. Most African countries have seen their development hampered since their independence for varying reasons. Be it copper, crude oil, uranium and even diamonds, we have a vast array of natural resources on this continent which makes the stagnation in development for most countries all the more worrying.
Many reasons can be cited for this stagnation such as colonialism, bad governance, or even Africa’s poor integration into the international community. For example, when Zambia attained independence in 1964, it was the richest country in sub-Saharan Africa. Twenty years later it was one of the poorest. It had changed from an International Bank for Reconstruction and Development (IBRD) borrower to an International Development Association (IDA) -only client, with nearly 70 percent of its population living in poverty. Zambia’s decline was the result of steep decreases in the international price of copper, higher prices of oil and industrial inputs, falling copper production, economic and public sector mismanagement, and postponement of adjustment, which led the country into heavy debt.
Whatever the biggest factor of the country’s decline may be, we now need to find pragmatic ways to overcome what is plaguing our beloved continent. One solution could be to look at the progress of the Asian Tigers who are largely driven by the Confucius culture.
‘Asian Tigers’ is the name given to the four Asian economies of Hong Kong, Singapore, South Korea and Taiwan. These countries underwent rapid industrialisation and maintained exceptionally high growth rates (in excess of 7 percent a year) between the early 1960’s and 1990’s. By the early 21st century, all four had developed into high income economies, specialising in areas of competitive advantage.
How did these countries do it? Economic success was achieved through key policies imposed by governments such as policies with a deep focus on exports. These countries focused on export-oriented industrial development to richer countries. They also encouraged the development of human capital in that their citizens should develop specialised skills in order to improve productivity. This kind of policy can fill in labour gaps in certain sectors so as to reduce the amount of jobs taken by foreigners in African countries.
For a country that lacks territory and natural resources, Singapore’s economic ascension is nothing short of remarkable. By embracing globalization, free-market capitalism, education, and imposing strict pragmatic policies, the country has been able to overcome their geographic disadvantages and become a leader in global commerce. The country was strategic in the way in which they embraced globalisation. They used multinationals to educate their domestic, unskilled workers in information technology, pharmaceuticals and electronics. This paid great dividends for them and by the 1990’s they had gone from merely exporting textiles, garments, and basic electronics to engaging in wafer fabrication, logistics, biotech research, pharmaceuticals, integrated circuit design, and aerospace engineering. It would be a giant leap forward if African countries can increase exports of tertiary products as well and not only natural resources.
With regards to trade, these countries adopted exchange rate policies that favoured exporters, export incentives and selective tariff protection; financial repression, slowing financial sector development and consumer lending to provide cheap financing to industry- for exports. For all the natural resource wealth we have in Africa, we too should aim to improve the terms of trade with regards to our exports. At present, many African countries are unable to utilise these natural resources to turn them into finished goods due to a lack of advanced industrial technology.
The least that can be done is to improve our terms of trade when it comes to exports. The policies in Africa cannot be sustained, and the actual losses will catch up even if terms of trade do not deteriorate further. The complacency engendered by the relatively high gross domestic product (GDP) growth rates is misplaced, given the very rapid rate of population growth in Africa both in absolute terms and compared to other global regions. Given the fragile fiscal positions and mounting debts of many African countries, these policies are only possible if the economy adjusts to a sustainable path. Time is of the essence, and a conscious break with a policy of short-sighted comfort is required. In terms of imports, strict tariffs should be placed in order to make it more expensive to import foreign goods. Though this may seem somewhat extreme, it will encourage increased traffic and hopefully demand for local goods. If our governments can increase subsidies for local business it will encourage their growth and hopefully in turn the quality of local services and goods. This then allows policymakers to increase the number of taxpaying businesses in the long term, especially if they cannot improve the terms with foreign businesses.
Culturally, the Confucius culture largely shaped the mind-set of the tigers. This culture is often characterised as a system of social and ethical philosophy. It is built on an ancient religious foundation to establish the social values, institutions, and transcendent ideals of Chinese society. It also encourages respect and hard work which are instilled in individuals from a young age.
If we as Africans can instill this kind of productivity in our people, then it will go a long way towards our multi-faceted development as a continent. When you live by such means, people begin to respect each other’s time, space and efforts. The goal should be to end up living in communities that are well looked after, working in places where people are always pragmatic, productive and time sensitive, and to have high social capital among our people. It may all seem like a pipedream at the moment, but with one step at a time we can move forward and make Africa a better place.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of The Best of Africa.
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