Wednesday, July 22, 2009

Why Capitalism Truimphs in Asia and Fails in Africa

President Obama speaking in Ghana on his recently concluded Africa trip re -echoed a question that has puzzled economists and other social scientists. Why has South Korea which had about the same Gross Domestic Product (GDP) as Uganda at independence in 1962 gone on to become a global industrial power house while Uganda wallows at the bottom list of the league of nations ?
In fact Kenya’s GDP was even higher than that of South Korea at independence in 1963 but South Korea’s GDP today stands at--- compared to Kenya’s,,,,
In 1959 Singapore ‘s per capita income was $ 400 compared to today’s $ 22,000.
At the time of African independence many of the countries in Anglophone Africa were regarded as better prospects than the South Korea, Taiwan and Singapore of the 1960s.
Sixty years on, the African countries have not only become poorer than they were in the 1960s’ but trail their East Asian counter parts on just about any major development indicator ever formulated.
Lee Kuan Yew, Singapore’s first Prime minister, writing in his memoirs From Third World to First recounts how, over three decades, Singapore was built virtually from scratch in the 1960s, with no army, parliament and other basics of a state to speak of.
In contrast, at the time, Uganda was a functional state with most of the apparatus of statecraft.
Lee Kuan Yew through astute leadership and indomitable will went on to build a state that today boasts a per capital income that rivals several members of the current European Union. This he did through encouraging entrepreneurship and economic freedom
In Malaysia, Prime Minister Mahathir Mohamad between 1988 and 1997 transformed Malaysia into a manufacturing, financial and telecommunications hub. Malaysia started producing cheap appliances for western markets and providing home to the plants of major Japanese giants such as Sony and Panasonic owing to relatively cheap Malaysian labour.
China as recently as 1972 was a struggling state reeling from the disastrous ‘cultural revolution’ of Chairman Mao Tse Tung who pursued a radically communist agenda imprisoning and purging his party of any real or imagined ‘capitalists’ that bred untold poverty and dysfunction in a sleeping giant. Subsequent Chinese leader, Deng Xiaoping, strategically realizing that communism would not transform China made a u- turn and started China on the road to export-led industrialization dubbing it’ capitalism with communist characteristics’.
China, among other strategies, adopted a policy of population control and invested heavily in education especially in maths and science. It’s no wonder that Chinese and Indian students dominate natural science doctoral programmes in the United States.
Crucially, Asia ‘s example suggests that the state can be a major player and driver of growth and in Singapore, Taiwan and China, the state took the centre stage in driving national growth. It may not be widely known that the Chinese firms constructing stadiums and high rises from Luanda to Kinshasa are actually Chinese state-owned companies.
Tragically, in the place of the transformative leaders Asia has had, in Africa we have had ‘big men’. Although Asia’s success stories also suggest that a ‘benevolent’ dictatorship especially geared towards economic transformation is not entirely unwelcome considering that Lee Kuan Yew of Singapore, Deng Xiaoping of China, Mahathir Mohamad of Malaysia ,Suharto of Indonesia were not the most illustrious students of democracy but provided the leadership that turned the tide in their respective countries. Apologists for President Paul Kagame of Rwanda tend to take this posture.
It has also been suggested that Asian cultural values such as Confucianism, honour and a hard work ethic are conducive for productivity and spur economic growth. David Landes’ in his insightful ’The Wealth and Poverty of Nations’ Underscores the relationship between culture and economic advancement
While Europeans love their holidays and shut down on Sundays, Asians have no such proclivities.
The Chinese have won many civil works contracts in Uganda and the rest of Africa partly because of cost economics. Chinese engineers are said to be cheaper than their Ugandan counterparts, for instance, and they deliver that building when they say they will.
Next time we shall see how Africa took a wrong turn and why Asia continued on the path to the Promised Land.

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