Strategies of Economic Development: Readings in the Political Economy of Industrialization
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The lessons drawn from these experiences differed and were often shaped by the pre-analytic predisposition of the observer. Earlier recognition of this performance of the "Four Tigers" was refracted through the prism of neo-liberalism so that the experience appeared shorn of all dirigisme and was cited as irrefutable evidence of the superiority of essentially laissez-faire policies. More specifically, reliance on market forces and the adoption of market-driven export-oriented development strategies was said to have led to efficient exploitation of the comparative advantage of these countries in cheap labour Balassa, ; Little et al.
The first presentation for African consumption of the lessons from Asia from the neo-liberal perspective was the "Berg report" World Bank, , which has been the definitive document on adjustment for 17 years. There have been amendments, subtractions, additions and refinements of the argument, but as Adjustment in Africa World Bank, clearly suggested, the World Bank was almost congenitally tied to the core argument of the Berg report with its faith in the market and a minimalist view of the state.
The report insisted on the dichotomy made in African policy-making between state and market in which these appeared as rival forms thus reviving Manichean discourse that had for years vitiated "development planning" in Africa. Subsequent analysis has shown that neo-classical reading of experiences of development in Asia has been tendentious, deliberately downplaying the role of the state in the "success stories".
These countries were far from paragons of laissez-fairism and, instead, were highly "dirigiste" economies in which the states had "governed markets" to ensure high levels of accumulation, technology absorption and conquest of foreign markets. The general conclusion of this literature is that "market failure" so prominent in development economics is still a problem that warrants government intervention and that since such "failures" differ in intensity, scope and location, a selective set of interventions is required.
The most significant lesson has been the central role played by a "developmental state" in the process of development. This "dirigiste" Asian experience and theoretical developments in economics have revived interest in some of the issues that were central to development studies, unleashing what Krugman has called a "counter-counter revolution". These issues include problems of human capital; possibilities of the state "crowding in" private investment; market imperfections and failures, industrial policy, etc.
In the African case, the failure of structural adjustment programmes has compelled even the most dogmatic institutions to recognize the positive role the state can play in the process of development, beyond acting as a "night watchman". In its book, Sub-Saharan Africa: From Crisis to Sustainable Growth , the World Bank acknowledged the importance of the state in managing development and social change, and brought back on the agenda the pro-active role of the state in development.
However, the return of the state was now premised upon a whole series of proposals about "good governance". In Adjustment in Africa World Bank, and Bureaucrats in Business World Bank, , the World Bank retreated to its more familiar ideological terrain in which a developmental state borders on an oxymoron. One sees in the tortured logic of the presentation of the Asian miracle , especially with respect to industrial policy and its reduction of a complex set of pro-active state policies into a vacuous "market friendliness".
The lesson drawn for Africa by the World Bank was that, in the best of cases, development strategies or, more precisely, industrial policy was either superfluous or, where useful, merely simulated the market, which, in the opinion of some, would have done better without the interventions anyway. The Impossibility Theses The economic crisis of the s, the demise of the theoretical armour for state intervention, the ideological hegemony of neo-conservatism in key funding institutions and donor countries, the palpable failure of "development planning" in many countries, stagnation and the crisis of accumulation in the socialist countries and the changing "mood" towards Third World Countries the Afropessimism, the anti-Thirdworldism, etc.
However, although some of the arguments against state intervention are based on an idealized and dogmatic view of markets, there is now widespread acceptance of "market failure" on the grounds of economies of scale, imperfect information, etc. Consequently, the most important case against developmental states in Africa is not faith in flawless markets, but rather that whatever the degree and extent of "market failure" African states cannot correct them in ways that do not make things worse.
What emerges in the literature on Africa is that what has obviously worked in other "late industrializers" is simply a non-starter in Africa. While it is now admitted that the state has played a central role in the development of Asian countries, it is suggested that replication of the Asian experience is somehow impossible for Africa. The reasons include the a dependence, b lack of ideology, c "softness" of the African state and its proneness to "capture" by special interest groups, d lack of technical and analytical capacity, e the changed international environment that did not permit protection of industrial policies, and f past poor record of performance.
For instance, Peter Lewis, discussing the repricability of the Asian model, states: "While some aspects of this model for instance, greater political insulation of economic policy makers could reasonably be achieved in African countries, the extensive co-ordinated economic interventions of the East Asian states are well beyond the administrative faculties of most African governments" Similar sentiments are explicitly expressed by Callaghy , who argues that African states lack the capacity to pursue the statist model of Asia since Africa is hemmed in as it tries "to navigate between weak states and weak markets and to do so with open political structures".
Lack of Ideology? One argument often advanced by Africans themselves relates to the lack of an ideology of development anchored in some form of nationalist project. This is a recurring theme in political discourse in Africa. Many other political leaders and analysts have elaborated on this lacuna. Onimode talks of the "ideological vacuum" that he attributes to petty bourgeois commitment to their class interests and their fear of "revolutionary pressures", to the obscurantism of imperialist powers and to mass illiteracy "which imposes a culture of silence and passivity and inhibits popular demand for ideological discourse" Thus Claude Ake states: "The ideology of development was exploited as a means of reproducing political hegemony; it got limited attention and served hardly any purpose as a framework for economic transformation" For some, the lack of ideology is inherent to personal rule under which loyalty is not to some overriding societal goals but to individuals, often holding highly idiosyncratic ideologies that they themselves flout with impunity and with no moral qualms Jackson and Rosberg, ; Sandbrook, Consequently, such leaders are said to have no moral basis on which they could demand enthusiastic and internalized compliance to whatever "national project" they launched.
In the more extreme versions the lack of ideology of development is evidence of the cultural rejection of development by African leaders and their followers. However, as I have argued elsewhere Mkandawire, , for most of the first generation of African leaders "development" was certainly a central preoccupation.
Indeed some writers characterize the post-colonial state as "developmentalist" almost by definition. African leaders have always been aware of the need for some "nationalist-cum-developmentalist" ideology for both nation building and development. The quest for an ideology to guide the development process inspired African leaders to propound their own idiosyncratic and often incoherent "ideologies" to "rally the masses" for national unity and development.
If such ideologies are still absent it is definitely not for lack of trying. The centrality of "development" was such that it acquired the status of an ideology "developmentalism" that provided the ideological scaffolding of "development plans" and the authoritarian scaffolding given to it. For some, such an ideology has essentially served purposes of mystification and obfuscation. Thus Gavin Williams, writing about the ruling class in Nigeria, states: "The Nigerian bourgeoisie lacks the commitment of a religious socialist or nationalist character of the rationalising, capital accumulating, surplus expropriating classes of Britain, Russia, Germany, or Japan during their period of industrialisation.
In fact the Nigerian bourgeoisie do have an ideology, in the sense of a theoretical legitimisation of the status quo. My own view is less cynical. By political commitment and social origins most of the leaders were deeply committed to the "eradication of poverty, ignorance and disease", which formed an "unholy trinity" against which nationalist swords were drawn in the post-colonial era. The exigencies of political legitimacy impose "development" on any meaningful political agenda. The Economic Commission for Africa has over the years regularly codified these positions, which were often dismissed peremptorily by the BWIs.
In conclusion, one should note that, if the first generation of African leaders concentrated their energies on the politics of nation building, there are signs of a new leadership whose focus is on the economics of nation building. These new leaders swear by economic growth and seem to view good growth indicators as the main source of their legitimacy. In addition, if the earlier nationalist leaders associated capitalism with foreign control, the new leadership seems much less preoccupied with that.
They have embraced privatization and attraction of foreign capital as centrepieces of their policy initiatives. Ominously, these leaders are more attentive to the apprehensions and appreciation of international organizations than to their domestic capitalists. While assiduously cultivating a good image in the eyes of international financial institutions IFIs and seeking out foreign capital, they tend to have a jaundiced view of domestic capitalists, whom they hold in spite and incessantly vilify for parasitism, failure jointly to set up modern enterprises able to compete internationally, etc.
Considerable empirical work was produced indicating certain historical regularities associated with economic growth, the idea being that once identified they could then be deliberately introduced or manipulated through aid schemes and "development planning" in the underdeveloped countries to initiate or accelerate the growth process. The "developmental state" was seen as not only desirable but possible and able to be facilitated by training programmes, aid, military support, etc. Gendzier, By the mids, this linear view of capitalist development began to lose its dominance largely due to the onslaught of the Dependence School that generally denied that capitalism in the periphery could play its historical progressive role in the Leninists sense of leading to an increase in the productive forces of social labour and in the socialization of labour.
Instead it spoke of processes of an ineluctable "development of underdevelopment". The assertion followed from a rather constricted view of possible "paths" of capitalist accumulation and a highly stereotyped and idealized view of how the "paths" of the developed capitalist countries, which were then posited as models against which current development experiences could be judged, had actually been.
More significant was the fact that this perspective ruled out the possibility of developmental states in Africa that were either led by a national bourgeoisie or capable of nurturing one. This of course meant that either transnationalization processes had obviated the need for such a national bourgeoisie or the asymmetric nature of centre-periphery relations tended to produce class structures that were not conducive to dynamic accumulation and, more specifically, produced a bourgeoisie that was historically condemned to be no more than a "comprador bourgeoisie" subservient to the interests of foreign capital Leys, ; Nabudere, ; Shivji, Such a ruling class could not produce the "captains of industry" needed for the mobilization of resources and acquisition of technology.
Fanon ; was to provide the quintessential characterization of the socio-psychology of this class as essentially born senile and decadent before scaling the heights of enlightenment and industrial revolution. At best, Africa could have "lumpen bourgeoisie", "dependent capitalist" or, worse, "drone capitalist". Such descriptions pointed to one fact, namely, that the African state was not up to its "historical mission" of ensuring capitalist accumulation. They underscored how the African state diverged from the historical "norm" of the capitalist state in the "centre" in which the national bourgeois had created a state that was the linchpin of the industrialization of Europe.
The question that emerged from this analysis was: is the aberration only temporary so that one could envision a set of policies and events that would turn this state into a "normal bourgeois state", or was the historical conjecture such that the position of these peripheral states would remain pathological and that the only solution would be some kind of "delinking" from the "world system"? Most of the countries that openly pursued the capitalist path were considered "neo-colonial" and so beholden to foreign interests that they could not possibly pursue something so eminently "national" as development.
The third position was that, even if capitalist accumulation was possible, transcending of capitalism in the periphery was not on the immediate agenda and there was no point in going through the phase of a nationally directed process of a capitalist accumulation and, therefore, of thinking about appropriate state structures and functions. This argument was the more persuasive when informed by the view that the "revolutionary pressures" were intense and that the revolution was around the corner Ake, There was simply no point in considering possibilities of capitalist accumulation under the aegis of a national bourgeoisie given the apparent imminence of socialist transformation.
Having reduced the choice in the Third World to that between "Barbarism or Socialism", there was no point in pondering the prospects of capitalist accumulation as a feasible, let alone, morally acceptable alternative. The more successful states, in terms of growth, were usually dismissed as neo-colonial and that was that. If a developmental state was to emerge it would be in the transient from a "national democratic phase". The "associated dependent development" allowed for capitalist development in the periphery and in many ways provided the intellectual tools necessary for conceptualizing the possibilities and dynamics of "dependent development".
The prerequisites for such development were, inter alia , that a progressive national alliance be established between the national bourgeoisie and labour and that the alliance constitute a "developmental bloc" able and willing to pursue a strategy of national industrial development over the long term. All this presupposed a "developmental state".
Lack of AUTONOMY One major set of recent "impossibility theorems"are derived from a focus on the internal conditions of African countries and are largely informed by neo-Weberian accounts of state-society relations or by public choice formulations on how the rational pursuit by individuals of their interests has led rather to lack of autonomy of the state and African malaise due to capture by societal interests. Neo-patrimonialism The neo-Weberian critique has focused on the failure of African states to establish themselves as rational-legal institutions and to rise above the "patrimonialism" that affects all of them, regardless of their ideological claims and the moral rectitude of individual leaders.
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Going back to the functions that modernization had assigned to the state, the neo-Weberian highlights the flawed nature of the performance of the post-independence state, especially in its relationship with a society at large from which it has not been able to distance itself adequately so as to perform efficiently. Derived from a mode of production in which the structural interdependence of the various production units is minimal or nil it has no provision from a systemic superstructure to keep it together.
Instead the economy of affection is a myriad of invisible micro-economic networks which, if allowed to penetrate society, gradually wear down the macro-economic structures, and eventually the whole system. The threat of the affective networks stems from their invisibility and intractability" Mired in redistributive activities imposed by affective relations, prebendalism or clientelism, so the argument goes, the state has not been able to provide the bureaucratic order and predictability that capitalists need if they are to engage in long-term investment.
To the Asian "autonomous state" is juxtaposed the African "lame Leviathan" Callaghy, , which is so porous and "penetrated" by society, so beholden to particularistic interest groups, so mired in patron-clientelist relationships, and so lacking in "stateness" it cannot pursue the collective task of development, which demands insulation from such redistributive demands.
It is these relationships that constitute what Bayart terms the "politics of the belly" that has paralysed African economy. Of the "governmentability" i. The experiences of governments which attempted to break free from their grip have either not lasted a long time or have in their turn been absorbed by its practices" There are a number of problems with this approach as we contemplate the prospects of a developmental state in Africa.
One is that it is not always clear whether such state-society relationships are inherent to the level of development and that with passage of time the African state will evolve into a more respectable and recognizably developmental form. Or are they merely conjunctural phenomena attributable to the greed and venality of African leaders spurred on by the dramatic increases in revenue accruing to the state in the post-colonial era? Another problem is that "neo-patrimonial" states in and outside Africa have pursued a wide range of policies including some that are squarely developmental.
In other words, other than indicating the style of governance, neo-patrimonialism does not tell us much about what policies a state will pursue and with what success. In the African case "neo-patrimonialism" has been used to explain import substitution, export orientation, parastatals, privatization, the informal sector development, etc. The result is that, in seeking to explain everything, it explains nothing except perhaps that capitalist relations in their idealized form are not pervasive in Africa.
Even more damning is the fact that some of the features of the African state highlighted by this literature have been a salient aspect of successful developmental states. Accounts of spectacular corruption in the high performing East Asian economies have become frequent in the press following the financial crisis. So, obviously, neo-patrimonialism is not a robust independent variable in explaining low economic growth. The African state is said to be afflicted not only with partenalism, but also with a debilitating strain of "pathological partenalism" Ergas, Much of this speculation fails to spell out exactly what African cultural attributes would produce the pathology of paternalism in Africa.
It also displays ignorance or idealization of the Asian experience and thus occults the very complex processes behind the successful performance of these economies.
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Finally, we should also bear in mind that morally reprehensible or culturally unacceptable though certain "clientelistic" practices may be, we do not have a clear theoretical establishment of how they affect the performance of capitalist economies. Capitalist economies operate with a much broader moral latitude than it is often preached. A very wide range of morally reprehensible behaviour can be integrated into strategies of accumulation effortlessly. Not even the case for the negative effects of corruption and capitalist accumulation has been satisfactorily established, despite the new crusade against corruption.
Public Choice and Rent Seeking The most cogently stated of these critiques is that of public choice school with the work of Bates being the single most comprehensive statement of the critique as far as Africa is concerned. Essentially this critique starts from assumptions of how unregulated markets work. In general, these markets are said to operate in a Pareto optimal way in the sense that the allocation of resources that they generate is such that it can only be improved upon by making somebody worse off.
Given that markets work well, why are "market distortions" by the state tolerated or generated? The state was then essentially a rent generating institution that inhibited efficient allocation of resources. In this literature "rent seeking" invokes the expenditure of resources to capture artificially created rents. It should be stressed that the point of departure of "rent seeking" literature is the perfect market. In real life and, indeed, by this definition, rent would be ubiquitous in any situation in which a state existed to safeguard or transfer rights.
Like "neo-patrimonialism", rent seeking is used in a procrustean manner so that it ultimately assumes the character of a bogeyman. While the concept points to something real in most economies, it has been made to carry more than it can bear. This has been partly because of the anti-statist ideology to which it has become tethered making it serve as an ideological weapon in the statephobia that neo-liberalism has cast so broadly, and partly because of the protean definition assigned to it so as to include anything from Mafia-like activities to the protestations by the Chamber of Commerce over pieces of legislation.
In the case of Africa, rent seeking is conflated or used interchangeably with corruption, patron-clientelism and even the extended African family. Rent seeking usually involves redistribution of income from one group to another. The effect of such redistribution on growth depends on its impact on incentives and the use to which the "winners" put the surplus in their hands. As Catherine Boone notes in the case of Senegal, rents can constitute a form of primitive accumulation, as can be inherited wealth or any form of windfall profit.
She observes that, for the emergence of African capitalism, the key question is: will wealth collected in the form of rents be transformed into capital through productive investment? In most of the literature, rent seeking activities are around firm, industry or sector micro-economic policies, leading to various micro-economic distortions that have all been grouped under "import substitution" policies.
Rent seeking is generally responsible for micro-economic inefficiencies that are often remotely related to the macro-economic imbalances for which rent seeking is usually blamed. Rodrik points out that it was generally macro-economic imbalances and the failure to correct them in time that have accounted for the economic crisis in most developing countries.
The countries that experienced the debt crisis were those that failed to adjust their monetary and fiscal policies and not those that had large micro-economic distortions. The "rent seeking" literature in Africa has tended to blur the distinction between micro-economic distortions and macro-economic balances, tending to believe that the latter was the logical consequence of the former. It is now generally evoked against active policy making even in directions that have been theoretically and empirically demonstrated to be beneficial.
It has become the great caveat that brings the apparently inexorable logic of "market failure" to a dead halt. In other words, while micro-economic distortions were costly, what eventually drove many impost substituting countries to ruin was not so much the inefficiencies induced by rent seeking, but macro-economic imbalances that are not easily attributable to rent seeking groups.
Even in the context of new growth theories, we simply do not have evidence on the precise channels through which rent seeking adversely affects such variables as growth, if at all. In looking at some of the advice given to African countries, it turns out that what is wrong is not rents per se but rents attached to a wrong strategy. This partly explains why advocates of export-oriented strategies admit, albeit surreptitiously and reluctantly, to the need to deploy rents to stimulate export-oriented industries. In the push for exports towards which Africans are now being urged, it is suggested that governments provide selective confessional credits, export subsidies, etc.
This involves creating "rents" in these new activities. It is not clear why these rents will not induce as much lethargy as those given for import substitution industry. Rents can be both "productive" or "unproductive" in their incentive impact. In most models it is assumed that rents are exogenous to the individual firm.
They are out there and the firm allocates resources to get them. It follows from this assumption that such an allocation will leave less resources for productive investments. The pursuit of rents can lead to expansion of productivity activity. In such cases rent seeking becomes a spur to growth as rent seekers attempt to capture as much of the rents as possible.
In a study of Tunisia, Bellin concludes that government mediation of profits and even extensive cronyism can be compatible with productive investment and growth if appropriate political conditions prevail. What matters about rent is its contingency and reciprocity. Much of the writing on Asia, at least up until the current financial crisis, took it for granted that the creation and allocation of rents by the state had played a central role in both creating a nationalist capitalist class and promoting accumulation.
Writers on Asia point to "contingent rents", which have been used to encourage contests among private firms for government incentive and co-ordination schemes Yanagihara, Such rents are paid to reward growth enhancing activities by private firms. Jomo, who has written extensively on Malaysia makes a very clear statement of the issue when he states: " Scale economies or other considerations may well determine that a perfectly competitive situation will be suboptimal, in which case the question arises of how best to distribute or allocate such rents.
Rather than insist on competition in such circumstances in a vain search for efficiency, which would effectively dissipate the rent through the expenditure of rent seeking costs, the state could instead allocate such rents in a manner so as to accelerate and direct the accumulation process, e. Hence, for instance, effective protection policies have been used in Northeast Asia to push import substituting industries to export through the use of conditional incentives. It is not the existence of rents in themselves which should always be the focus of concern, but rather their distribution or allocation and deployment for productive purposes.
In many circumstances, the existence or attraction of rent capture may well be the most effective incentive to encourage productive investment or economic activity, e. Elsewhere Jomo notes: "Rent transfers may well contribute to, rather than undermine further investments in the national economy since rentiers can usually count on further advantages from such investment.
If capital flight is thus discouraged, the greater concentration of wealth associated with such rentier activity may actually have the consequence of raising corporate savings, thus accelerating capital accumulation, growth and structural change" The Asian use of rent seeking to spur firms to expand and export echoes this endogenization of rents. The dependency on rent earned on investment has been used as an instrument by governments to raise the profitability of investment in selected economic activities.
He suggests five reasons for the success in the linking of rent creation to promotion of industrialization. Rents were achievable through activities which served national interests. Rent seeking costs information collection, influence peddling and bargaining were kept low.
Governments acted to close off non-productive channels of wealth accumulation such as urban real estate speculation. Rents were provided on a selective and temporary basis and withdrawn as new industries became mature enough to compete internationally. The realization of rents was related to performance standards. The point of the Asian experience is that the use of "rent seeking" as an argument against a more active developmental state is simply not credible. The relevant issues are "rents" for whom and with what reciprocal obligations for receivers of such rents?
And the answer will lie on the desired income distribution and strategy of development. The denial of an active developmental state for fear of "capture" is tantamount to the denial of the possibilities in Africa of accelerated development achieved by a deliberate "government of the market" towards greater mobilization and developmental allocation of resources including rents. In the African debates, the fear of the damaging effects of rent seeking has not only sustained the argument for a minimalist state, but has also given the foreign experts, who for inexplicable reasons do not engage in rent seeking like all other mortal beings, a moral upper hand.
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Both the rent seeking and neo-patrimonialism argument have been used to seek more autonomous states by suggesting that the key to Asian states was such insulation. Analysis by institutionalists suggests that the view of the autonomy of the state in the "Asian miracle" countries is an oversimplification and the argument for state technocracies pursuing development in complete isolation from societal pressures is a myth and is not empirically founded. In the seminal work on developmental states, Chalmers Johnson underlined as a crucial feature the intimacy of their relationship with the private sector and the intensity of their involvement in the market.
Subsequent writing on other developmental states has underscored this point leading to the useful, albeit problematic, notion of "embedded autonomy" to describe the nature of state autonomy in these societies as circumscribed by the dependence of the state on the activities of the private sector for its development project Evans, Evans has also argued that the much vaunted autonomy is "embedded in a progressively dense web of ties with both non-state and other state actors internal and external through which the state has been able to co-ordinate the economy and implement developmental objectives" In popular parlance such a relationship is encapsulated by such expressions as "Japan Inc.
These essentially corporatist arrangements were central to the edification of the relationship of trust between state and capital. In many countries, independently organized business associations have had considerable influence on state polices. In South Korea, concentration of business and the highly diversified interests of the chaebols obviated the need for organized collective action. Instead business-government relations were managed through direct firm level and even personalistic consultations between the chaebols and state institutions Cheng et al.
Hawes and Liu note that in other Asian countries technocrats, who have enjoyed less autonomy than those in South Korea and Taiwan, have had "to seek allies where they could find them. The World Bank observes that "formal institutions that facilitate communication and co-operation between the private and public secures The "isolation" of these states was not from all particularistic interests but from those of some particular interests or classes.
These problems arise from the tendency to treat conjunctural features of states as if they constituted structural or intrinsic features of African societies. Failure to handle a particular crisis is considered as evidence that the state is non-developmental in both ideology and technical capacity. The result is ambiguity in the use of concepts and their relationship with other variables. Associated with success in Asia, clientelism and close ties between business and the state have been advanced as evidence of "embeddedness" of state autonomy while similar practices in Africa are evidence of "capture".
And now that same "embeddedness" in Asia is advanced as evidence of "crony capitalism" that has ineluctably led to the current Asian financial crisis. Wrong Economic Histories Much of this "impossibility" literature is based on a misreading of the economic history of Africa. It portrayed both post-colonial policy and performance as unmitigated and undifferentiated disasters. And yet the Berg report had in many ways falsified economic performance during the preceding two decades.
First and foremost, it underestimated the enormous importance to African economies of external conjuncture and the role of foreign expertise. African economies generally do well when the global conjuncture is good and poorly when it is bad. It is a lesson that the BWIs have gradually learnt as their own stabilization and adjustment programmes have on several occasions been unscrambled by external factors.
As for foreign expertise, this is one variable that is often conveniently forgotten in looking at the malaise of the African state. Nevertheless, international institutions do, on occasion, admit that their role in African policy making has been a major contributory factor to the policies African countries have pursued. Most policies that are today attributed to neo-patrimonialism and rent seeking were the orthodoxy of the day brought to Africa in well-funded and well-manned packages.
The lack of "policy-ownership" is not a new thing in Africa and, alas, not a thing of the past either. Synthesizing the results of a number of studies on the interaction between the economics and politics in several developing countries, Robert Bates and Anne Krueger, who have contributed richly to the public choice school, state: "One of the most surprising findings in our case studies is the degree to which the intervention of interest groups fails to account for the initiation or lack of initiation of policy reforms" With the exception of a few cases, such "embeddedness" never really developed in Africa.
If there was anything that the state in Africa failed to do it was to allow the local business class effective presence in policy-making. Or, conversely, if there is anything that African business classes failed to do it was to "capture" state policies. Much of the evidence of "capture" is deduced from the fact that gains accrue to identifiable groups or sectors. However, the argumentation here often involves a non sequitor. The fact that a group benefits from a particular set of policies does not prove that they lobbied for those policies, let alone that they have "captured" the state.
Dispensation of rent by states does not establish capture by beneficiaries of such rents. The true test of "capture" is the behaviour of the state during hard times. In the African case, key groups benefiting from putatively "captured" policies such as the vaunted "labour aristocracy" have been dropped from the coalition with surprising ease. Conceptually, state policies were never a "class project" in Africa. Import substitution was neither the result of successful lobbying by rent seeking groups nor a consciously devised strategy to support the emergence of a national bourgeoisie; and even the small capitalists that emerged almost inadvertently, and at times despite state harassment, were to be abruptly left out in the cold as governments danced to the tunes of the BWIs.
Indeed, where intimate relationships emerged they tended to be arbitrary and lacking in reciprocity. For one, colonialism had suppressed the emergence of such a class so that, unlike the case in India, for instance, the national bourgeoisie played a marginal role in the liberation struggle and could easily be marginalized in policy making. The absence of a group of large indigenous capitalists with sizeable capital, organizational resources and entrepreneurial skills, obviated the need for the new states to form an alliance with such classes for its development project.
It also limited the capacity of indigenous capitalists to "capture" state policies. In addition, only in rare cases have the domestic capitalist classes constituted an important base of state revenue. In the mineral rich economies, the state had access to revenue either by directly owning the mines or by relying on foreign capital. In other economies, the state has had access to peasant revenue without any mediation by a capitalist class, not even a merchant one.
Third, despite the many distortions of import substitution, up until the second "oil" crisis many African economies had performed relatively well. One interesting feature is that much of this growth was sustained largely by domestic savings which increased from around 15 per cent in to 25 per cent in see figure 1. The rates of savings and investments compared well with those of East Asia, although they tended to yield lower rates of growth. Although the World Bank tended to use the Ivorian case as evidence of the benefits of its proposed adjustment models, the Ivorian state was highly interventionist and "dirigiste" with the state spearheading development of whole agricultural export activities through parastatals such as SODEPALM, regional development schemes and import substitution industrialization.
And so Africa has had examples of countries whose ideological inclination was clearly "developmentalist" and that pursued policies that produced fairly high rates of growth in the post-colonial era and significant social gains and accumulation of human capital. African bureaucracies were able to extend infrastructure and social senses to degrees that were unimaginable under colonial rule. And, in a sense, "developmental states" are not totally alien to African climes. These experiences need to be critically examined for useful lessons.
Savings increased significantly after independence, reaching, on the average, Close to a third of the countries had savings rates that were higher than 25 per cent by Nor was the failure to pursue labour-intensive, export-oriented strategies a failure to respect comparative advantage. Most development strategies were based on the assumption that, by using the comparative advantage in "land", African countries would industrialize by export minerals or other primary products to earn the necessary foreign exchange for industrialization, which would eventually allow diversification of their export bases.
For these "land rich" economies revealed comparative advantage lay in these "land-intensive" exports rather than in the labour-intensive ones associated with Asia. Such a choice has had enormous implication on the stability, flexibility and social structures of African economies. The inflexibility was re-enforced by the lack of explicit export-investment nexus to diversify export away from monocultural structures. Finally, the assumption by the state of an active role in economic affairs was not always the result of hostility to private investment putatively caused by visceral anti-capitalist reaction induced by colonial experience.
The fact of the matter is that in the immediate post-independence period most African governments pursued what was known as "industrialization-by-invitation" strategies in which the attraction of foreign capital played a central role. Protective measures for industry were often part of the package of incentives demanded by or intended to attract foreign capitalists.
It was the reticence of foreign investment that pushed African governments towards increased reliance on parastatals and joint ventures and escalation of the battle to attract foreign capital using a battery of invectives. There is some sense in which we may be reliving the same experience as once again African governments pursue "beggar-my-neighbour" strategies to attract foreign investment in manufacturing with little sign of success.
The reticence of foreign investment was accompanied by a suspicion of and hostility towards indigenous capital by African states even in those countries that were avowedly capitalist in their ideologies. New International Order A new worrisome "impossibility theorem" comes from debates on globalization as eerily reminiscent of earlier dependence arguments.
The Wealth of Nations
The argument is that the current order does not allow many of the policies that constituted the core of the activities of developmental studies. Protection of industries, financial repression, export promotion subsidies are now ruled out by current WTO arrangements. Maladjusting the African State The significance of these "impossibility arguments" is that the discursive framework they have engendered has produced a knowledge that has been acted upon by key policy-makers in a self-fulfilling manner.
The consequence of these perceptions of the state has been a set of self-fulfilling predicaments. They have led to a set of measures that have so maladjusted African states that they provide proof of the impossibility theorems. To avoid clientelism and rent seeking, the state is squeezed fiscally and even politically. This weakened state then exhibits incapacity to carry out its basic functions partly because of demoralization, moonlighting by the civil servants, corruption, etc.
This is then used to argue that the state in Africa is not capable of being developmental and therefore needs to be stripped down further and be buffeted by legions of foreign experts.
And so we witness in Africa the reinforcement of policies that continue to erode the economic and political capacity of the state even as considerable noise is made about "good governance" and "capacity building". And it to this that we now turn. Undermining State Capacity One central tenet of adjustment has involved "rolling back the state". While it is true that any kind of response to the fiscal crisis of the state may have justified drastic reductions in state expenditure, both the cognitive framework through which the problem was based and the actual solutions proposed led not so much to the "rolling back of the state" but to a drastic erosion of its capacity as a state.
The intention was to create what Johnson characterized as a "soft authoritarian" state whose main task was to create an "enabling environment" for the private sector by augmenting market rationality, reducing risks and uncertainty but not engaging in "market distorting" interventions that characterized policies of Asian developmental states. One could add here the pillage of the state through the stripping of assets and "fire sales" through privatization. The literature informing these possibilities has suggested that public expenditure in Africa is too high largely because of a bloated bureaucracy that drains the state coffers.
The standard policy prescription was retrenchment of the civil service. While the literature on "downsizing" has always assumed the simultaneous introduction of performance enhancing measures, the reduction of the civil service in Africa has usually gone hand in hand with declining real wages and uncertainty even for those that remain on the payroll.
The effect of all this is captured by Janice Aron thus: "The state in Africa has come full circle to the small government of pre-colonial days; but with the additional hysterisis effect from past shocks of a seriously depleted current institutional capability, deterioration in the current quality and scope of social services and infrastructure provision, coupled with a fiscal position highly vulnerable to changes in foreign aid" Critiques of planning are also discussed. EP Production Conditions in Indian Agriculture Alternative theoretical approaches to analysing agrarian questions are discussed in this course, with particular reference to alternative interpretations of observed empirical trends.
EP Structure and Growth of Indian Industries The course begins with the theory necessary to analyse Indian industrial performance. This is used to analyse the structure and performance of Indian industry since independence. It also covers theories of foreign investment. Analysis of contemporary trade and investment patterns in the world economy with special reference to developing countries forms the second part of the course. EP Econometric Methods I The course will cover estimation and inference in the multivariate regression framework. Two estimation approaches — method of moments and maximum likelihood — are emphasized.
EP Econometric Methods II The second course in Econometrics introduces students to estimation of multi-equation models and limited dependent variable models. In addition, some topics of current interest, such as the estimation of demand systems and production functions, will also be covered. Three basic approaches to monetary theory, viz. The literature on financial fragility and debt-deflation is introduced. EP Public Finance This course analyses the role of government in a capitalist economy both from the point of view of development and market failure.
It emphasises the problems of Indian Public Finance and introduces the ideas of Normative Public Finance to the students. EP Labour Economics The formation of labour markets and the development of theory from the mercantilists to turnover models and labour market segmentation form the subject matter of this course. Aspects of employment and wage determination in India in recent years are also discussed. EP Social Choice I The course consists of the following topics: i Elementary logic, ii Calculus of binary relations, iii Arrow's impossibility theorem and related propositions, iv Method of majority decision, v Theories of justice, and vi Strategic aspects of voting.
EP Resource Economics The course covers the following topics: Material balance approach of resource and environmental analysis. Theory of renewable resources. Common property resources. Theory of resource regulation and cases of resource management and policy. Theory of exhaustible resources. Environmental management in a dynamic context. Theory of population in the context of sustainable development.
Poverty, institutions and resource management. Trade, globalization and resource use policies. EP Game Theory with Applications to Economics In this course the basic tools of non- cooperative game theory - Nash equilibrium, subgame perfect, Bayesian Nash and Perfect Baysian equilibrium - are covered exhaustively with examples. Some rudiments of cooperative games are also done. EP Law and Economics The course provides an introduction to the subject of law and economics in which laws and legal rules and procedures are analyzed from the perspective of economic efficiency.
The focus of the course is on economic analysis of laws and doctrines relating to property, contracts and torts. The important topics covered in the course, among others, include the Coase Theorem, liability rules and the various damage measures. Behaviour of the agents is analysed with issues of efficiency and equity in mind. The features of the market for health services are discussed with emphasis placed on the characteristics which make this market different from the markets for other goods and services. EC Financial Structures and Economic Development The course examines the disparate processes of evolution of financial systems in the US, Germany and Japan, and the implications of alternative financial structures for growth, inclusion and stability.
This provides the basis for an assessment of the financial structures and policies adopted by late-industrializing countries and the consequences of financial liberalization in these contexts. EC Database on Indian Economy The course aims to expose students to the database on different aspects of Indian economy. The course will help them understand how to use data to examine the theoretical issues that they are exposed to in basic macro-economic courses and empirical issues they are exposed to in the courses on Indian economy.
EC Issues in the Contemporary International Economy The course takes up issues of current interest in the world economy and examines them both theoretically and empirically. The emphasis is on issues of contemporary relevance, rather than on historical evolution or purely theoretical debates. EC Experimental Methods in Economics This course trains students to conduct laboratory and field experiments in Economics. It introduces the MA student to the different techniques used to conduct laboratory and field experiments that observe the behaviour of economic agents.
EC Auction Theory with Its Applications The aim of the course is to introduce the modern game theoretic literature on auctions. A large part of the course deals with theoretical models. Some basic knowledge of game theory and a willingness to deal with technical issues are the main prerequisites for this course.