The Asian miracle: Lessons for policy makers—Part VII

Public policy is yet another factor that differentiates the growth trends in Asia’s NIC (Newly Industrialized Countries) and their African counter parts, where the former designed growth enhancing policies that were pursued consistently over time, compared to African countries whose policies were ad-hoc, frequently changed and or ignored by various regimes that came to power after independence. Of interest to development researchers was the inability to discern and ignorance as to the role of public policy in development by a number of post independence African ruling elite, although similar cases of the same abound in Africa today, and yet these policies are designed to guide the actions/reactions of both public and private sectors economic agents. Thus, it has been pointed out by many researchers that, policy failure accounts to a large extent, to the failure of African economies to develop as expected. What is ironic though is that, African economies are still haunted by the same problem though in a different mask. Today, most of such economies adorn some of the best policies drawn by the best consultants paid by multi-national and bilateral partners, but lay on shelves un-implemented. It is thus not uncommon to find up to three policies for the same sector, and drawn for the same governments during its term of office, on request by officials who have changed office. It is thus not that African economies are short of ‘policy’ documents, white papers, etc. Rather, it is short of technocrats who understand full the process of policy formulation, policy implementation and monitoring. With regard to policy implementation, this has largely failed because of lack of qualified, competent and independent implementers. As pointed in earlier articles, bipartisan politics also take their toll in policy implementation especially where civil and public service is highly politicized which is the case among a number of African economies where royalty is owed to a clique of given ruling elite rather than to the nation state. Under such a situation, civil service changes with the change of government and as such no incentives by such a civil or public service to act long-term. Although researchers have not been able to present empirically the role of public policy in economic development, nevertheless, it is not possible to expect such growth to take place in a vacuum or a midst hostile or even contradictory government policies. Such policies as national savings and investment policies, control of inflation, taxation policies, interest rate policies and wider macroeconomic policies such as the role economic sectors in development, are all crucial to economic activities. Even if economic agents may not participate in designing of these policies, nevertheless, they do respond to the same policies and are, to a greater extent, influenced by them in their decision making process. African growth and thus development has been severely impaired by lack of growth enhancing environment, be it at economic level or in terms of stable and effective governance structures. Whereas it is true that, failure was as a result of wrong mix of policies, institutions and to some extent external factors, it is equally true that societal preparedness cannot be and should not be under-estimated. That is why, however well intended policies and policy mix may seem to be, in the absence of quality human capital, they are bound to fail to yield the desired out comes. Policy differential between East Asian economies and Africa has been significant virtually in all areas of development and so were policy out comes. This is traced to the period after 1975, for before this period the two regions seem to have been at par as far as main growth fundamentals and indicators are concerned. Policy differential thereafter, seems to have arisen in policy commitment especially at political level where the will and commitment was weak or lacking altogether among African countries compared to their East Asian Counterparts. This was also a period characterized by neocolonial African dictators and despots who were not so much concerned with the growth and development of their economies as to their power dynamics. Such leaders could not be counted upon to design any meaningful policies nor implements a few colonial policies left behind despite having been party to such. Nonetheless, most African economies inherited weak and centralized governments whose structures took time to change compared to their Asian counterparts, and as such the center had no capacity to design let alone implement any meaningful policy. In contrast, Asia’ NIC pursued strong, and well focused policies which are widely acknowledged to have played a significant role in their development. The implementation of growth strategies meant that, these Asian governments pursued not only active policies, but also promoted the production and dissemination of knowledge and technology, going beyond just the protection of intellectual property through patent and copy rights. Also such policies as the role of foreign investments, as well as the role of private sector in development, became ‘a stimulus-response’ within which government policy was able to attain the desired effects and changes in the economy. As pointed out earlier, Olson (1996:19-20) when commenting on the role of economic policies in economic development points out that “…a country’s institutions and economic policies are decisive for its economic performance, and this suggest that, poor countries on average have poor economic policies and institutions than rich countries…”. The problem of poor policies is closely linked to and influenced by, the social capability that has been so wanting among African countries in comparison to their Asian counterparts and the most urgent policy framework that could unlock all these are policies designed to ensure high levels of social capability which will in turn unlock other economic fundamental. Without this, no meaningful development policy framework can be expected, nor any commitment to such, and expecting any policy out comes amidst such environment is but, economic idealism. Nonetheless, whereas the role of public policy in development is not debatable, what is controversial is the type of policies that have to be in place to ensure growth and thus development. Some countries have a adopted the so-called market friendly policies and others ‘development state’ type of polices, and yet others a balance of the two depending on the stage of development a country has reached. In case of African economies, ‘development state’ type of policies would induce growth where governments would have to intervene especially in the absence of a vibrant private sector. Market friendly policies are ideal under conditions where the private sector is the lead sector and governments have to put in place policies to facilitate their operations. This also calls for appropriate regulation to ensure that private players do not circumvent common good in the extreme in pursuit of their cardinal objective of wealth maximization. The author is a Senior Presidential Advisor on Economic Affairs.