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Developmental State

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Content TOC o 1-3 h z u HYPERLINK l _Toc373563772 1. Introduction PAGEREF _Toc373563772 h 1 HYPERLINK l _Toc373563773 1.1 Background PAGEREF _Toc373563773 h 1 HYPERLINK l _Toc373563774 1.2 Objective of the Study PAGEREF _Toc373563774 h 1 HYPERLINK l _Toc373563775 1.3 Significance of the study PAGEREF _Toc373563775 h 2 HYPERLINK l _Toc373563776 1.4 Methodology PAGEREF _Toc373563776 h 2 HYPERLINK l _Toc373563777 1.5 Limitation and scope of the study PAGEREF _Toc373563777 h 2 HYPERLINK l _Toc373563778 1.6 Organization of the study PAGEREF _Toc373563778 h 2 HYPERLINK l _Toc373563779 2. Brief profile of Ethiopia and South Africa PAGEREF _Toc373563779 h 3 HYPERLINK l _Toc373563780 2.1 Ethiopia PAGEREF _Toc373563780 h 3 HYPERLINK l _Toc373563781 2.2 South Africa PAGEREF _Toc373563781 h 3 HYPERLINK l _Toc373563782 3. The Developmental State Paradigm and Its Replicability in Africa PAGEREF _Toc373563782 h 4 HYPERLINK l _Toc373563783 4. Comparative Perspective of Developmental State Paradigm in Ethiopia and South Africa PAGEREF _Toc373563783 h 6 HYPERLINK l _Toc373563784 4.1 Economic Growth PAGEREF _Toc373563784 h 7 HYPERLINK l _Toc373563785 4.2 Land Ownership PAGEREF _Toc373563785 h 7 HYPERLINK l _Toc373563786 4.3 Income Distribution PAGEREF _Toc373563786 h 8 HYPERLINK l _Toc373563787 4.4 Extreme Poverty PAGEREF _Toc373563787 h 8 HYPERLINK l _Toc373563788 4.5 Democratization Democratic Developmental State PAGEREF _Toc373563788 h 9 HYPERLINK l _Toc373563789 4.6 Corruption PAGEREF _Toc373563789 h 9 HYPERLINK l _Toc373563790 5. Conclusion PAGEREF _Toc373563790 h 10 HYPERLINK l _Toc373563791 References PAGEREF _Toc373563791 h 12 Introduction Background The term developmental state is used by scholars to refer to the phenomenon of state-led macroeconomic planning in East Asia in the late twentieth century. In this model the state has independent political power as well as control over the economy. The core idea of the theory of developmental state is that the state should make development its top priority and intervene in the economy to facilitate growth and industrial transformation. A developmental state, according to Bolesta (2007 105) could be conceptualized as between liberal open economic model and a centrally planned economy. It is thus neither capitalist nor socialist. It rather tries to capture the advantages of private enterprise and the capacity of the state to muster economic development. In this context, the state itself leads the industrialization drive. Most African states have not been able to achieve impressive growth and development over the last decades at a time when Asia experienced rapid growth and successes in poverty reduction. Experiences in these countries offer examples of strongly state-driven development and seem particularly appealing to numerous observers and policy-makers in Africa. The debate on possible developmental states in Africa has thus appeared on the agenda of public discussions at a time when the international policy context appears more favorable for their emergence. Objective of the Study The general objective of this brief study is to assess the implementation of developmental state paradigm in Africa using a comparative perspective of Ethiopia and South Africa. Significance of the study Given the significance of Ethiopia and South Africa as developmental exemplars and as pivotal economic, political, and strategic actors in Africa, it would be noteworthy to compare their respective experiences on the implementation of the developmental state paradigm as it is currently being promoted and considered as the proper model to achieve development pursuit of the two nations. Doing so, without doubt, provides important insights into the dynamics of development in the two countries and potential lessons which could help to further capitalize on existing initiatives. Methodology This study would exclusively relay on secondary sources for its data requirement while thorough review of existing literature and descriptive methods are used as method of analysis. Limitation and scope of the study The focus of this study is confined to the experience of Ethiopia and South Africa because of the limited time available and the capacity of the study team. Due to same reason we could not take the different development models and more countries to compare one another and show why they failed and/or succeeded. The findings of the study are not also backed by rigorous econometric or similar analysis, which can be considered as major limitation. The study team believes the findings could have been more comprehensive and reliable had they been based on a panel data of different variables. Organization of the study Being a brief term paper, this study is not organized in chapters rather we just have 4 major titles as parts. The first part is introductory, where statement of the problem, objective, significance, methodology, and limitation of the study are discussed. The second part is short profile the two countries, Ethiopia and South Africa. The third part tries to summarize the arguments on developmental state paradigm and its replicability in Africa. The fourth and most important part covers the comparative perspective of developmental state paradigm in Ethiopia and South Africa. The last part winds up the discussion by conclusion. Brief profile of Ethiopia and South Africa Ethiopia Ethiopia is a country located in the HYPERLINK http//en.wikipedia.org/wiki/Horn_of_Africa o Horn of Africa Horn of Africa. It is bordered by HYPERLINK http//en.wikipedia.org/wiki/Eritrea o Eritrea Eritrea to the north, HYPERLINK http//en.wikipedia.org/wiki/Djibouti o Djibouti Djibouti and HYPERLINK http//en.wikipedia.org/wiki/Somalia o Somalia Somalia to the east, HYPERLINK http//en.wikipedia.org/wiki/Sudan o Sudan Sudan and HYPERLINK http//en.wikipedia.org/wiki/South_Sudan o South Sudan South Sudan to the west, and HYPERLINK http//en.wikipedia.org/wiki/Kenya o Kenya Kenya to the South. With over 93,000,000 inhabitants, it is the most populous HYPERLINK http//en.wikipedia.org/wiki/Landlocked_country o Landlocked country landlocked country in the world and the second-most populated nation on the African continent. It occupies a total area of 1,100,000 square kilometers and its capital and largest city is HYPERLINK http//en.wikipedia.org/wiki/Addis_Ababa o Addis Ababa Addis Ababa. According to the Annual Report of the National Bank of Ethiopia (2011), the country continued to maintain the double digit growth rate which averaged 11.4 over the last eight years. In the fiscal year 2010/11, real GDP growth was 11.4 moderately higher than the previous years growth of 10.4 percent. Accordingly, Ethiopias real per capita GDP rose to USD 392 from USD 377 a year earlier. South Africa South Africa is situated in the Southern region of Africa The country shares common boundaries with Namibia, Botswana, Zimbabwe, Mozambique and Swaziland, while the Mountain Kingdom of Lesotho is landlocked by South African territory in the south-east. Diversity is a key feature of South Africa, where 11 languages are recognized as official, where community leaders include rabbis and chieftains, rugby players and returned exiles, where traditional healers ply their trade around the corner from stockbrokers and where housing ranges from mud huts to palatial homes with swimming pools. Since the end of Apartheid in 1990 The ANC scored its fourth election victory in April 2009. South Africas Economy is One of continents biggest economies. Poverty widespread, high crime rate associated with high unemployment. Economy moved into recession in May 2009. The Developmental State Paradigm and Its Replicability in Africa In the literature, the developmental state has two components one ideological, one structural. It is this ideology-structure nexus that distinguishes developmental states from other forms of states. In terms of ideology, such a state is essentially one whose ideological underpinning is developmentalist in that it conceives its mission as that of ensuring economic development, usually interpreted to mean high rates of accumulation and industrialization. Such a state establishes as its principle of legitimacy its ability to promote sustained development, understanding by development the steady high rates of economic growth and structural change in the productive system, both domestically and in its relationship to the international economy (Castells, 1992 55). The state-structure side of the definition of the developmental state emphasizes capacity to implement economic policies sagaciously and effectively. Such a capacity is determined by various other factors such as institutional, technical, administrative and political. As formulated, the definition of the developmental state runs the risk of being tautological since evidence that the state is developmental is often drawn deductively from the performance of the economy. This produces a definition of a state as developmental if the economy is developing, and equates economic success to state strength while measuring the latter by the presumed outcomes of its policies. Not only has the spectacular success of the East Asian Four Tigers led to a re-reading of the role of the state in the development process, but it has also raised the question of repricability of their policies and experiences in other developing countries. Peter Lewis (1996), discussing the repricability of the Asian model, states While some aspects of this model could reasonably be achieved in African countries, the extensive coordinated economic interventions of the East Asian states are well beyond the administrative faculties of most African governments. Similar sentiments are explicitly expressed by Ingham Bufon (1993), 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. On the other end, prominent figures and promoters of the model like the late Prime Minster Meles Zanawi of Ethiopia and scholars like J. Stiglitz (2004), argue development is a political process first and economic and social process later. It is the creation of a political set-up that is conducive to accelerated development that sets the ball of development rolling. Hence, the adaption of the developmental state model is beyond an option to Africa and hence Ethiopia, it is a must for development (Zenawi, 2006). The core idea in their argument is that it is only when there is a state that has the characteristics of a developmental state can one meaningfully discuss the elimination of rent-seeking behavior, which is the major reason for market failure in developing economies. Contrary to the above, the neo-liberal paradigm, on the other hand, states that socially wasteful rent-seeking is the result of government activity and of the size of government activism. It does not distinguish between different types of state activism. This leads it to conclude that most, if not all, government intervention in the economy is detrimental to growth and hence suggest that the night watchman state is the best state from the point of view of accelerated growth. From the above two arguments, we have learnt that the issue of government intervention is the first central contentious point in selecting the appropriate political-economy paradigm. The other critical argument revolves around democracy. Those who argue developmental state paradigm cannot be an alternative to Africa criticize it for being simply be developmental in a sense that the economy grows without necessarily being democratic. But countries like Ethiopia, and particularly its late prime minster, counter argue the country is following democratic developmental state model rather than mere developmentalism. Asnake (2011) argues despite EPRDF is claiming that it is following a democratic developmental path, the political space in the country has been narrowing down. Surprisingly, the popularization of developmentalism somehow coincided with the passing of a set of laws which put limitations on civil society organizations, and the media. We believe that in the absence of a democratic space which among other things allows debates and exchanges on the making and implementation of public policies sustaining high level of development would be undoubtedly difficult. Hence, widening the political space is enormously important to bring sustainable development. Comparative Perspective of Developmental State Paradigm in Ethiopia and South Africa The comparative perspective of Ethiopia and South African as developmental state can best be illustrated taking some key aspects of the paradigm under consideration. Accordingly we have tried to dwell on just the major ones for the sake of conciseness and better understanding. Economic Growth Since 1994 Africa in general has shown sustained positive economic performance and the average percapita income grew continuous that never witnessed before (World Bank 2003). Particularly, countries like Botswana, Ethiopia, Equatorial Guinea, Angola, Mauritius, Seychelles, South Africa have able to achieve continuous economic growth since 2000s (UNDP 2013 World Bank 2013). Hence, all these countries have some common features if one tries to examine the identity of those states that changed the gloomy picture of Africa in the last decade of this century namely, high annual economic growth well above the average expected growth rate set by the Millennium Development Goals. Table 1- Trends in Annual Growth rates of Ethiopia and South Africa CountryYearAverage2003200420052006200720082009201020112012Ethiopia-2.213.611.810.811.510.88.89.97.38.59.08 South Africa2.94.65.35.65.53.6-1.53.13.52.53.5 Source World Bank Data Book. Accessed on 03 October 2013. The economic growth in the two countries is compounded by High per-capita income growth, diminishing absolute poverty head count, improved life expectancy, and narrow base income inequality (World Bank 2013 UNDP 2013). Land Ownership Since land is the single most important asset of African society, the issue is not yet fundamentally resolved in almost all countries, particularly, in our country of interest, South Africa (Fairwether 2006 Moyo 2010). This is the opposite scenario of East Asian Tigers which initially abolished landlordism and redistribute the land to the rural mass and eventually embarked upon successive development campaign. In current African reality, its only in Ethiopia that the issue of Land- Lordism and tenancy had been virtually abolished some forty years ago through social revolution that took place in 1974. Income Distribution The other critical parameter to compare the two developmental states is the issue of income distribution. In most cases, few sections of the society are substantially controlling the largest part of the national cake. Such highly skewed income inequality is clearly evident in South Africa where the percentage change of Gini Index score between 2000 and 2012 is 63.1 (UNDP 2013). In Ethiopia, contrary to South Africa, there is almost absolute equal distribution of the national wealth between all income groups as compared to all developmental states in Africa, and South Africa in particular (Ibid). Hence, the ideal form of developmental state which is explained by growth with equity is most likely resembles to the nature of emerging Ethiopia than other developmental states in Africa like South Africa. Extreme Poverty Since 1990s, the extreme poverty level has shown significant positive changes in almost all countries of Africa. The developmental states of Africa, particularly and in many instances countries like Ethiopia, and South Africa have reduced the level of poverty by half and more like their Asian and Latin American counterparts which pursue similar development ideology. In fact, with the exception of Ethiopia and China, there is vivid asymmetrical relationship between the level of poverty and income distribution among African developmental states and beyond (UNDP 2013 World Bank 2013). Table 2 Percentage Change of State of Income Inequality and Poverty Level between 1990s to 2012 in Ethiopia and South Africa Country HDI RankGini Index ChangePoverty level (PPP 1.25/day at 2005 international price).1990s2000sEthiopia17329.860.5(1995)30.7South Africa12163.124.3(1993)13.8Sources .Annual Report of United Nations Development Programme.2013. From the table above, even if we can vividly see Ethiopia is doing better in terms reducing income inequality than South Africa, its Human Development Index is by far lower than South Africa. Democratization Democratic Developmental State Among African economic Lion countries (Ethiopia, Botswana, Mauritius, Equatorial Guinea, Gabon, South Africa , Ghana, Tanzania, Seychelles), only in South Africa, Botswana , Mauritius, Ghana, Tanzania and Ethiopia that the economic growth is simultaneously supported by the implementation of democratization principles (APRM 2011 Crawford and Hartman 2008 UNDP 2013 World Bank 2013). However, some African developmental state schools argue that only Botswana and Mauritius that should be termed as democratic developmental state (Edingheji 2010 Mkandawire 2010). On contrary, we are in different position regarding Botswana and Mauritius as the only ideal representatives of democratic developmental state in Africa. Corruption Another key aspect for comparing how effective the developmental state and its leadership is the commitment and effectiveness in curtailing corruption. On this regard, South Africa, though not free by its virtue, is doing better than its Ethiopian counterpart. The recent available data on corruption supports our assertions (Transparency 2013). Table 3. Comparison of Corruption Index of Ethiopia and South Africa CountryRankCPI ScoreFrom AfricaFrom the WorldEthiopia 19 113 33 South Africa 8 69 43 Source Adopted from Transparency International Corruption Perception Index.2012.p.5. The table clearly shows that the country with high CPI essentially represents better performance. Conclusion Within less than two decades, Ethiopia became one of the few fast growing country of the world (World Bank 2013). Ethiopias growth success is peculiar to other emerging African lions in many respects. Firstly, it is the only African country with non-extracting economy that achieved such remarkable growth. Yet, African fast growing economies success is attributed to tourism, natural gas, petroleum or other mineral extractions. Secondly, it is the only African developmental state that equally stand among the top ranks of high-income groups of the world since there is nearly absolute income equality among its citizens(UNDP 2013 World Bank 2013). Thirdly, it is still the only African state that reduced the extreme poverty level of its citizens dramatically by half(except China and Indonesia ). Fourthly, feudalism, a bulwark for industrialization, had been abolished some 40 years ago and an enabling precondition for tapping the rural extra labor for industrial sector is potentially enormous. Finally, and most importantly, the existence of developmental-oriented leadership guided by realistic vision and long term development strategy are features that define the emerging democratic developmental state in Ethiopia. In the case of South Africa, despite the governments clear willingness to bring about development and eradicate inequality and poverty, these economic policies have not produced such results. There were positive results such as economic growth, a decrease in the fiscal deficit and inflation levels and additional social grant. The issue is that, these policies have not found solutions to South Africas biggest problems poverty and unemployment. The case for a democratic developmental state in Ethiopia and South Africa, it comes with conditions. Most of the literatures seem to be in agreement that the two countries have a lot of work to do before a democratic developmental state can be achieved. Certain services need to become a priority such as ensuring that the people of the two countries have a higher living standard, maintenance of democracy and finally a working relationship has to exist between the state, the media, civil society, and the private sector. It has to become a national building project with all nationals of the respective countries contributing to it, the overall political economy of the countries has to grow and transform. But undeniably they are on the right track. References Castells, Monure. Four Asian Tigers with a Dragon Head A Comparative Analysis of the State, Economy and Society in the Asian Pacific Rim. Asian Development Press. Sage Publications. July 1992. Bolesta, Andray. China as a Developmental State. Montenegrin Journal of Economics, No.5. December 2007. Edigheji, O. Constructing A Democratic Developmental State in South Africa. Potential and Challenges. Cape Town. HSRC Press, 2010.. Ingham, Brad. The Meaning of Development. Interactions between New and Old Ideas in World Development Vol. 21, No. 11, University of Sanford. 1993. National Bank of Ethiopia, Annual Report. September 2011. Peter Lewis. Political Transition and the Dilemma of Civil Society in Africa. Africa Dilemmas of Development and Change volume 25 No 1, 1996. Roscoe, J.T. Fundamental Research Statistics for the Behavioral Sciences, 2nd edition. New York Holt Rinehart Winston, 1975. Stiglitz, Joseph. Rethinking the East Asian Miracle. Initiative for Policy Dialogue. Barcelona May 2004. United Nations Development Program. Human Development Report 2013 The Rise of The South Human Progress in A Diverse World. New York. UNDP, 2013. World Bank Data Book. Accessed on 03 October 2013. Zenawi, Meles. African Development Dead Ends and New Beginnings, extracts from a preliminary draft of a monograph, (2006). HYPERLINK http//www.gsb.columbia.edu/ipd/pub/Meles-Extracts2-AfTF2.pdfhttp//www.gsb.columbia.edu/ipd/pub/Meles-Extracts2-AfTF2.pdf. PAGE MERGEFORMAT 12 PAGE MERGEFORMAT 1 Y, dXiJ(x( I_TS 1EZBmU/xYy5g/GMGeD3Vqq8K)fw9 xrxwrTZaGy8IjbRcXI u3KGnD1NIBs
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