From: Biniam Tekle (biniamt@dehai.org)
Date: Wed Jul 22 2009 - 09:51:56 EDT
Ethiopia: The UN's Developmental State Farce
Ayenew Haileselassie
22 July 2009
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opinion
Addis Abeba — After 20 years in power it is still very difficult to say that
Prime Minister Meles Zenawi has yet gained the love and admiration of his
subjects. At best the feelings towards his person and leadership are still
very divided and polar.
He is also far from gaining the approval of any of the groups and
governments that are calling for democracy in Ethiopia. However his stature
as one of Africa's intellectual leaders seems to be growing as his probable
departure from political power draws close. His ego must have been boosted
by recent comments about him being the voice of Africa's concerns. Like wine
his fame is growing better with time, although many would find it hard to
say the same for his country.
Again look back on the self imposing international institutions. The
infamous structural adjustment which the World Bank forced on developing
countries, which have always been short of cash for development, and who
have had no choice but to obey, is now a very old story that it is committed
to economic history writings. But the recent report by the United Nation's
Conference on Trade and Development (The Least Developed Countries Report
2009 - The State and Development Governance) is a comic turnaround where by
this prominent body "endorsed" Ethiopia's kind of economic policy without
giving the government or its leader any credit.
It is not really that they have endorsed a developing country's point of
view, but that their thinking, recommendations and analyses are very much
determined by what happens at the moment. The new report is very much a
product of the outcomes of the current global financial crisis. It is like
all that the brains that want to point us the way we should go have no
access to the tools they have gained through all their knowledge and
experience; they have not garnered enough knowledge to steer us through
crisis moments.
Two economists have probably benefited from the crisis, in terms of getting
a belated recognition: Nouriel Roubini and Nobel laureate Joseph Stiglitz (a
Meles mentor?). These people had warned the world fairly ahead of time of
the disastrous direction the debt-dependent economies were following. Their
predictions came true, and the world is "re-thinking"- a way of saying
"Sorry, we had no idea that we had no idea" without actually saying it.
"Rethinking the role of the state in LDC's- towards development Governance"
reads one of the major chapters. In recent months major rethinking about the
role of the state has been taking place no where but among the governments
of the richest nations. Prime Minister Gordon Brown led the way by boldly
stepping in to financially bail out troubled British companies. In the
United States the very tenets of capitalism were in danger as one company
after another started crying out for the government to step in to rescue
them. It was not a sweet thought for the president to do that. Obama was
repeatedly heard that he had more important issues to manage such as a war
than running a company. As it dawned on him that he had no choice he
forcefully reiterated that his government would divest from the rescued
companies as soon as the storm had passed. Other leaders, including the
French Nikolas Sarkozy, were beginning to call for a better capitalism and
globalization.
In Rethinking the Role of the State in LDC's, it is not very clear who is
doing the rethinking. The producers of the Least Developed Countries report
at the UNCTAD do not admit to any past errors in thinking nor do they
recognize the developmental approach followed by certain countries so far.
They reject "current good governance institutional reform agenda" and "the
old developmental state, including successful Asian cases." What they have
come up with is a "brand new" developmental state which occurred to them
because of the current financial crisis.
UNCTAD's new developmental state "is adapted to the challenges of the 21st
century; creates and renews micro-foundations of democratic practice to
harness local, bottom-up problem solving and opportunity-creating energies;
and embraces a wide range of governance modalities and mechanisms within a
mixed economy model to harness private enterprise, through public action, to
achieve a national development vision." And if you, dear reader, are a prime
minister or president of a developing country, the UNCTAD experts promise to
show you in 37 pages how their idea or model could be "adapted to provide a
viable and useful model for development governance" in your country.
Nouriel Roubini earned laughter from his learned colleagues when he made a
speech warning that the economic boom was going to bust. Stiglitz, who
rejected the fairness of a free market in an environment of unequal
information, who also wants to bring an end to a capitalistic dominance
based on Adam Smith's embryonic work of economics, has, for all his
knowledge, gained little ear from decision makers.
Stiglitz, like John Maynard Keynes, believed in government involvement in
development. Keynes, who emerged from the rubble of the post World War I
economy, advocated increased government spending to boost economies. His
advice was not desired by leaders. The creator of macroeconomics did not
live long enough to see that it had become fashionable to say "I am
Keynesian." The world is full of true voices, not necessarily prophetic,
that are muffled in favour voices that influential people want to hear.
The Ethiopian government has weathered numerous pressures to privatize some
of its big business involvements, such as the Ethiopian Telecommunications
Corporation and its banks; it has resisted stern warnings from the IMF and
the World Bank to reduce government spending on public infrastructure,
mainly roads, but also buildings. The wisdom of the latter advice, meant to
curb sharply rising inflation, is yet to be seen. The government may have
proved to be the wiser to reject an advice that was probably no more than
telling someone to stop exercising so that his muscle cramp will not get
worse. Whenever pressured to change policy, the prime minister, at least
publicly, loves to tell the important donors that they can keep their money
if they wanted.
A certain amount of liberalization would very certainly be welcome. At the
same time one might question the wisdom of privatising a financial giant
such the Commercial Bank of Ethiopia, whose customer satisfaction is
unmatched by any private bank and whose profitability seems to grow by the
year.
A developmental state is different from a capitalist state, because there
will be a significant government presence in it. So a developmental state
like Ethiopia can have its own developmental regulatory mechanisms to manage
a more liberalised economy, thereby fostering its own version of an economic
system that encourages overall development. Ethiopia's leaders are often
unperturbed by claims of growing urban poverty, or, as some put it, rural
growth at the expense of urban livelihoods. They say they have a pro-poor
development policy that is enabling double digit growth over the years.
The problem with such states is that the likelihood of building democratic
values is limited; the way such states are run is in itself a hindrance in
their developmental endeavour. The state presence that is inherent in the
idea of a developmental state is a threat to democracy unless it is
ensconced in democratic values in the first place.
Nevertheless, that does not make the imposition of any policy suggestions
which draw "principally on existing literature" any more palatable. For
some, it seems, economic policy is a remedy based on the symptoms and not
the actual problems.
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