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The developmental state: the nature of statal policy and institutional reform
 

The developmental state: the nature of statal policy and institutional reform

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Political leadership in Africa requires intimate knowledge of public policy analysis, formulation and management and development of strategic plans and implementing them to achieve results. This is ...

Political leadership in Africa requires intimate knowledge of public policy analysis, formulation and management and development of strategic plans and implementing them to achieve results. This is augured in a need for an independent review of the capacities of institutions as regards the rights-based approach to developing the institutions and developing knowledge management systems, stopping the brain drain and turning it to brain-gain. More important is leadership and management capacity building: reinventing the quality of training and education in human qualities development to build a core civil service: focusing on political, social and economic governance of the state’s oversight responsibilities.

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    The developmental state: the nature of statal policy and institutional reform The developmental state: the nature of statal policy and institutional reform Presentation Transcript

    • Managing Developmental States:Policy and Institutional Reforms in AfricaAn Ethiopian case
      BT Costantinos, PhD
      School of Graduate Studies, Department of Public
      Management and Policy, College of Management, Information and Economic Sciences, Addis Ababa University
      National Conference on
      Management for Effectiveness,
      Efficiency and Ethics
       
      Ethiopian Management Institute
      June 30-July 1, 2011
      2011
    • Contents
      Introduction
      Research questions
      The Developmental State:
      Definition: tautology, redundancy or pleonasm
      Ideological forces behind developmentalist dirigisme
      Rise and fall of developmental states:
      The Japanese Miracle and the East Asian Tigers
      African Developmental States:
      Analytical disconnects , good practices - wrong lessons, government and market failure, neo-patrimonialism and rent seeking
      A Global Order emerging:
      Self-fulfilling predicaments, rolling back the state
      New public management
      NPM, The Washington Consensus, The New Structural Economics, Trade and Investment Policy Priorities
      Can Ethiopia nurture a developmental state
      Conclusion and recommendations
    • PART I
      Africa’s Experiments,
      Prescriptions and Global Good Practices
    • Research Questions
      How can a developmental state emerge? What are its characteristics and functions?
      Is the model recommended for all African countries?
      Did the concept evolve into solid development theory so far?
      Who determines public interests? How are they articulated and aggregated?
      How do we ensure it can effectively guide economic transformation and development?
      How can we ensure that it is accountable and that it acts in the interest of its citizens?
    • Ideological forces: Developmentalist Dirigisme
      Nationalism, catch up with other developed nations
      The centrality of ideology: naïveté of the de-politicised quest for technocratic governance,
      French dirigisme:
      Commissariat généraldu plan
      development of meritocratic technocracy: the ÉcoleNationaled'Administration , ÉcolePolytechnique
      • The Japanese and East Asian Miracle
      The claim of developmental states as a success is contentious, but supported by the historical record.
      East Asian Tigers’ place as a bulwark against communist expansion in East Asia meant that they received favourable treatment from the US
      depicted as centres of self-serving ‘crony capitalism’
    • Ideological forces: Developmentalist dirigisme
      Nationalism, catch up with other developed nations
      The centrality of ideology: naïveté of the de-politicised quest for technocratic governance,
      French dirigisme:
      Commissariat généraldu plan
      development of meritocratic technocracy: the ÉcoleNationaled'Administration , ÉcolePolytechnique
      • The Japanese and East Asian Miracle
      The claim of DSs as a success is contentious, but supported by the historical record.
      East Asian Tigers’ place as a bulwark against communist expansion meant that it received especially favourable treatment from the US
      depicted as centres of self-serving ‘crony capitalism’.
    • Problem Statement
      One remarkable feature of the discourse on the state and development in Africa is the disjuncture between an analytical tradition that insists on the impossibility of DSs in Africa and a prescriptive literature that presupposes their existence
      The African state is today the most demonised social institution, vilified for its weaknesses, its over-extension, its interference with the smooth functioning of the markets, its repressive character, its dependence on foreign powers, its simultaneous ubiquity & its absence, etc.
      The state, once the cornerstone of development, is now the millstone around otherwise efficient markets.
      Early criticism of the state in Africa came from the neo-Marxists
      Petty bourgeois state, the neo-colonial state and the dependent state.
      the state become dysfunctional in terms of the larger societal issues, but also a real nuisance in la vie quotidienne of its citizens, as evidenced by the withdrawal from state-dominated economic and social spaces
    • Africa’s track record
      1960–1972, 26 countries had growth in excess of 2%, 13 countries achieved 3.5%. 16 countries had <2 %. 10 countries negative growth
      During 1973–2000, economic growth faltered. 13 countries saw growth in excess of 2%. Negative growth almost doubled to 18 nations. 22 countries recorded growth rates of less than 2%, and 16 less than 1 %.
      2000–2007, 25 countries grew in excess of 2%, 14 countries recorded negative growth rates; 14 countries recorded positive growth rates of less than 2 %, and six of them less than 1 %
      1960–2007, 16 African countries had growth rates in excess of 2 %; 11 countries recorded negative growth rates; and 26 countries recorded positive growth rates of less than 2 %, and 12 of them less than 1%
      Among the major features of the African growth processes, especially those of sub-Saharan Africa, is their relatively high volatility
    • Democracy, governance and development
      AU commitment to strengthening governance for development through many instruments
      Policy orientation is situated within a wider commitment to sustainable development, rooted in democratic governance: fundamental to development.
    • The Africa experiment – so far
      Planning development processes: “encouraging signs”
      Development frameworks: developing countries need development “frameworks” rather than narrow “models”:
      Development strategies
      “Comprehensive Development Framework”;
      “framework for rethinking development” or
      “new structural economic framework” interdependence of social, structural, human, governance, environmental, economic and financial…
      1999 WB and IMF :Poverty Reduction Strategy Papers
      Specific, measurable and inclusive strategies: “shared growth in Africa”
      Development plans:
      UN Millennium Summit: MDGs on global partnership for development.
      Each goal has quantitative indicators to gauge progress.
      NEPAD is another of such kind
    • Africa’s Efforts … Problem Statement
      In reality, state-led development model often failed to construct DSs
      Why?
      • the rise of dictatorships lacking strategic partnership with the indigenous private and business sector;
      • The state played multiple roles as investor, banker, trader and primary employer, rather than carefully nurturing a local entrepreneurial class;
      • Low savings and investment rates, flawed industrialization strategies, poor performance of the agricultural sector, low investment in research and technology;
      • Extreme dependence and consequent shocks,
    • Asian comparative performance…
      Reasons behind the Asian economic “miracle”
      • Large investments in physical and human capital,
      • Amarket friendly environment and appropriate macroeconomic policy frameworks
      • Strong institutions: efficient resource allocation and infrastructure, and an efficient school system
      • profitable investments: credit/ interest rate policy
      • State policy interventions: subsidized credits, public investments in research and technology, and development of export-marketing institutions.
      • Surrogate ‘workshops’ for corporate America and Europe
    • The case of Malaysia:
      Has been compared to African countries in terms of initial conditions and growth performance
      In 1960, it had a real per capita income of $2,195 in 2005 PPP dollars;by 2007, its real per capita income had reached $17,891, an average annual rate of increase over the period of 4.6 %, characterized by very low volatility (coefficient of variation of 0.8)
      Structural transformation of a predominant agricultural economy to a more industrialized economy, and then a knowledge-based economy
      Lesson to be drawn:
      Successful economic transformation was achieved by deliberate state involvement, based as it was on a disciplined planning process
      Involvement included formulation of relevant development policies, creation of institutions and provision of investment
      It involved three successive “outline perspective plans” drafted under an overall “2020 Vision”.
    • PART TWO
    • The Developmental State
      A DS is defined as “a state that puts development as the top priority and is able to design effective instruments to promote such a goal”.
      The instruments should include
      forging of new formal institutions,
      the weaving of formal and informal networks of collaboration amongst citizens and officials and
      the utilization of new opportunities for trade and profitable production”
      A DS is thus understood as:
      an interventionist state, which can identify priorities, set targets, develop strategies, coordination among various sectors and stakeholders, and establish systems for achieving short & long-term goals.
      A DS can establish clear economic and social objectives, and influence the direction and pace of development.
    • Concepts and Features of DSs…
      Ideology “ Software” and agency “Hardware” :
      a developmentalist ideology;
      the requisite institutions, norms and standards and meritocratic civil service
      Vision setting, leadership, capacity and ideology
      Leadership can articulate DS ideology and vision
      Building an elite coalition for support
      Building technical capacity and popular support
      Strong sense of nationalism and commitment
      It is about building constituency and halting a rent seeking epidemic
      Relative state autonomy in formulating and implementing policy
      National Development Planning
    • Governing development
      Governing development focuses on three axes:
      Urgent need for economic diversification & structural transformation,
      The state in structural transformation,
      How the construction of DS might enhance and speed up the economic transformation process.
      Structural transformation can be seen as:
      • Change in sectoral composition of output (or GDP)
      • The sectoral pattern of labour employment
      • Sustained increase in real per capita incomes
      • Transforming agrarian to industrial economies remains a major development challenge.
      • Key lessons from the recent global crisis is to diversify the economy that can create jobs and wealth and enable countries to withstand external shocks
    • Constructing DS in Ethiopia:
      Characterization: An effective DS should have the following characteristics:
      Political will and capacity to articulate and implement policies
      to expand human capabilities,
      enhance equity and
      promote economic and social transformation.
      It should have the political will and mandate ,
      Policies must be derived from a consultative process not manipulated by technocratic/ socio-political elite,
      existence of competent and neutral bureaucracy,
      Establish complementarities among social and economic policies, governance system that ensure focus, context, contents and implementation modalities
    • Unchecked intervention, which is beyond the level needed to correct market failure that risks efficient resource allocation,
      The entire state apparatus may be captured by elites or powerful special interest groups so that the course no longer reflects those goals derived from democratically organized public deliberations.
      At a lower level, weak integrity and professionalism may lead to rent seeking, breeding waste and inefficiency.
      Inappropriate behavior of regulatory agencies: corrupt regulators may be caught by those which are meant to be regulated,
      Both public and private producers may also find it more profitable to invest resources in rent seeking rather than actual production,
      Similarly, consumers who receive subsidies may also resell their allocations for gain
      The potential pitfalls of state intervention
    • Policy Recommendations
      Enhancing the state’s role in transformation: The role of the state in achieving rapid and sustained economic growth and development combined with deep structural transformation must be channeled through a disciplined planning approach…
      Building African DSs: The above role is best performed by states that are both developmental and democratic:
      A good constitution, the rule of law, independent judiciary, representative political institutions, effective regulatory institutions and property rights enforcement,
      A competent and professional bureaucracy whose recruitment and advancement are based strictly on merit,
      An agency charged with the responsibility of overall development planning and implementation
      A developmentalist coalition among committed political leadership, the bureaucracy, private sector and civil society .
    • Policy Recommendations
      Ensuring the effectiveness of African DSs
      Avoiding the pitfalls of state intervention: carrot and stick approach to rent distribution
      Enhancing stakeholder participation
      Establish democratic deliberative institutions.
      Empower these institutions to promote stakeholder ownership of development, enhanced citizen oversight over government activities...
      Use the market to motivating economic agents,
    • Policy Recommendations
      Establish and empower regulatory agencies to set and enforce product quality standards for all producers,
      Establish competition policy and enforce competition law against anti-competitive behavior by public and private producers.
      Empower the bureaucracy to transparently determine the extent and allocation of rents, and the terms and conditions for their allocation and elimination,
      Ensure that the bureaucracy has both the autonomy and capacity to respond quickly to changing local and global situations
      Forge close, interactive and synergic relations between the bureaucracy and the private sector
    • Mainstreaming Policy , Strategy, Structure and Process in Developmental States
      Situation Analysis
      Evaluation
      Response Analysis
      The elite Coalition
      Monitoring, Strategic
      Information Management
      Policy & Institutional arrangements
      Sustained Implementation of Activities
      National and regional operational Plans
      Divestiture of state enterprises and decentralised management of businesses and public works
      Entry points: national and regional frameworks, advocacy, partnership and internal and external domains
    • Acknowledgements:
      The 2011 PhD candidates, Dept. of Public Management and Policy , AAU and
      The John Hopkins University MARCH Research Team
      Abeba Beyene PhD GSR/6318/03;
      Alazar Amare, PhD GSR; 6313/03
      AyenachewAseffa PhD GSR/6319/03;
      Berhanu Temesgen PhD GSR/6316/03;
      BikilaHurissa PhD GSR/6314/03;
      GirmawAssemie PhD GSR/6320/03;
      NegaWubie PhD GSR/6312/03;
      SewagegneDelele PhD GSR/6321/03;
      Tamrat Getachew PhD GSR/6317/03;
      YetnayetAyele PhD GSR/6315/03
      Thank You
      BT Costantinos, PhD
      School of Graduate Studies, Department of Management and Public Policy, College of Management, Information and Economic Sciences, Addis Ababa University