Tuesday, March 28, 2017

LET US NOT REINVENT THE WHEEL OF DEVELOPMENT


BOOK: HOW ASIA WORKS: SUCCESS AND FAILURE IN THE WORLD’S MOST DYNAMIC REGION
AURTHOR: JOE STUDWELL
PP: 402


We hear a lot about the Asian tigers and the development miracle that took place in that part of the world over the second half of the last century.  We hear stories how about almost all Asian nations were at the same level as sub-saharan Africa 50 years ago. The divergent paths of their economies with Asia becoming more and more prosperous and sophisticated while sub-saharan Africa descended into chaos and poverty serve as a useful study of what to do or not to do to drive development.

In this book Studwell, a long time financial journalist in Asia, distils the path to the region’s prosperity down to the jumping in agricultural yields, export driven manufacturing and the directing of financial resources to those two goals.

But first he debunked previous theories about the Asians being congenitally frugal or disciplined people as the basis of their superlative success. In doing so he makes the distinction between Japan, South Korea and Taiwan on the one hand and Malaysia, Thailand and Indonesia on the other. The former being the success stories – The Asian Tigers, while the latter, while having experienced growth have fallen far short of the other three as far as being development models is concerned.

"At the base of their – Asian Tigers,  launches were land reforms, which were successful to varying degrees and served as a signal of the respective political classes’ commitment to long term, equitable development...

Once land reform was done the “gardenisation” of Asia begun in earnest. This was the process of increasing the farm yields, which had several advantages for the underdeveloped nations. One, it was labour intensive creating employment. Two, the improved food yields saved the country valuable foreign currency that would have been spent on food importation and relatedly it created demand for the budding industries which served as the bedrock of these countries next level of development.

The Tigers then pushed into manufacturing, but did not succumb to the seduction of import substitution industries. They developed an industrial policy that emphasised export discipline. Import substitution just promotes inefficiency and entrenched local interest that are not competitive abroad. In their drive to build their manufacturing base they not only supported only companies that were producing for export but also supported several companies in the same industry. This created competition as they favoured these that succeeded in export markets and shut down or merged the unsuccessful ones with the successful companies.

Contrary to popular belief they did not attempt to pick winners but more the policy served to cull inefficient producers. Failure or success was determined by the objective tastes of foreign markets.
And finally they directed financing strategically towards boosting agriculture production and supporting firms to prosper abroad. In the case of Japan and Taiwan through a determined effort to build their internal savings but in South Korea’s case by borrowing abroad.

Studwell also points out that it does not matter much if the banks are state owned banks as in the case of Taiwan and now China or are in private hands as in the case of Japan and South Korea. What matters is whether they are persuaded to support the government’s development agenda.

"This was an interesting finding that stretched to companies as well. That it did not matter whether they were state owned or privately owned but whether they could be compelled to support the development agenda...

One other interesting finding, a distinction between the Asian Tigers and such basket cases as Philippines is that their development agenda were driven by “historians” rather than economists. Technocrats who had studied the process of development in Germany, England and even the US and adopted to their local circumstances rather than kowtowing to liberal economic theorists whose prescriptions had little precedent – and still don’t, to back them up as successful developmental models.

Compelling, hard to refute  case is made for differing economic models at the different stages of development countries have to go through.

The books cuts to the heart of the many developmental questions we are currently grappling with. How do we drive growth? How do we make it more equitable? Which economic forces should the government be aligned with? How can agriculture be supported? And why economic orthodoxy is bound to fail all the time and is the wrong prescription for developing economies?


It is a book on a complicated subject that is written simply enough for anybody to understand.  A priceless handbook, worth its weight in gold and which everybody who is interested in the development questions of our time should, No! Must read.

Monday, March 27, 2017

ANDREW KAWEESI AND THE TRAGEDY OF OUR WASTEFULNESS

Last week Assistant Inspector General of Police Andrew Kawesi was mowed down in cold blood outside his home by motor bike riding assassins.

Kawesi, who had only made 43 in January, was the rising stars in the police, the head of a new generation of leadership in the force.

"His loss is a tragedy not only because of the nature of his death and because he died young and because he had a young family and because he held so much promise, but also because his career was a gamble that did not pay off...

A gamble because a lot was invested in him in anticipation of big things ahead, dreams that were ripped apart in a hail of gunfire that shattered last Friday morning’s pre-weekend routine.

In the last few millions of years that life has existed on this planet, nature has found a way to continue. Floods, earth quakes, plagues, genocide, slavery, colonialism and any number of natural or manmade disasters have come along and done their worst but life, like hope, always springs eternal.

This would not have been possible if nature had placed its bets for survival on a handful of species. 

Don’t have one specii of ants or animals or plants have hundreds, thousands even millions. And when the threats to survival show their heads, as they do every so often, the fittest will survive give birth to an even fitter specii. But even then mutations occur within the specii ensuring that when the next disaster comes around some will survive. The basis for Darwinian natural selection.

This process is going on every day, every hour and every second at all levels of life.

Nature understands, to the extent that there exists a universal conscience, that survival is a numbers game.

When we joined university more than 20 years ago they said that of all the kids we joined primary school with only 0.2 percent of us had made it to Makerere University.

Now there has been a dramatic increase in university in enrollment – we were on 2000 who made it to university in our day but now total university enrolment is upwards of 50,000 annually.

It is true that the cream always rises to the top. It is also true that the more milk you have the more cream there is to rise to the top.

The challenge for us as a nation is that we are way behind the curve not only in our infrastructure and savings but most especially in our human resource.

"A study reported in The Economist about two years ago showed that between human resource and infrastructure development, emphasis should be placed on human resource development. The thinking being that quality individuals in an environment of inadequate infrastructure will find a way to either transcend the problem or bridge it anyway. The opposite – good infrastructure with poor human resource, is an almost unsalvageable situation...

In a situation where there are only a few stars, it only serves to inflate the egos of the stars but does little for the general population.

That Kawesi – as he has been described variously, was the one officer who stood out is testament to his application and diligence, but is also an indictment on the ability of the police force to recruit and retrain talent.

And Ugandan society as whole. The police is not the only institution like this.

As a society we need to first recognise and then appreciate that our people are our biggest resource, which can be leveraged as a force for good or weigh us down.

Maybe because we have high birth rates we treat the population as an infinite resource. We need to change that, urgently.


Let Kawesi ‘s passing serve as an eye opener, a call to action to look out our human resource development as a nation if we are not to be held to ransom by every two-bit terrorist.