If Keynes was African, ...

This post might be (it very much is!) a very subjective and somewhat narrow minded view on the notion of development and may come back to haunt me in my future search for a job.

Anyone familiar with the Keynesian/neoclassical agenda will know its central theme of: ECONOMIC GROWTH OR BURST!!! In that, all economies must strive to attain economic growth (usually no matter what it takes). Thus the measure of economy’s success is in the numbers, its GDP growth rate, its GDP per capita and anything GDP. This has definitely reflected in the way developing countries draw their policies and where the government puts their money. In my president’s recent state of the nation address, his central emphasis was on the fact that the Ghana had achieved an unprecedented- in the nation’s history- growth rate of 14%. But I ask,

1.       Where is this growth coming from?

2.       Who is benefitting?

3.       Is this sustainable?

The way I see it…

Of course the answer to the first question is most likely OIL! and other natural resources. I don’t know the answer to the second one but im sure lots of Ghanaians will attest to the fact that times have been very difficult these past couple of years. And for the last question… I seriously doubt that.

This notion of economic growth reflecting a country’s success I think is not very applicable in the developing country context especially for African countries. There needs to be a different set of variables or indicators in measuring the development of a country that takes into consideration these 3 questions above especially the last one. Developing countries need frameworks for development especially suited for them to capture their priorities. What’s the point of a 14% economic growth if this growth is from the export of natural resources and most of the monetary gains go out to these foreign oil companies? * What’s the point of a 14% growth without strong governance and institutions to see to the redistribution of these gains from growth? What’s the point of being classed a middle income country if your social development indicators are appalling?

I just think developing countries need to reflect their own commitment to developing their citizens not keep waiting for the ‘invisible hand’ to trickle down whatever comes from economic growth.

p.s - my view on these oil revenue extracting foreign companies is simple. It is our oil, our land, our country. They either deal by our terms or let the oil stay in the ground. Afterall, if these companies are taking most of the gains then with or without it we still end up poor.

AU- To be or Not to be

 

I just finished reading an article titled ‘the drivers of regional integration for Africa’s Development’. This article generally argues for the need for physical, economic and political integration of Africa as a whole. The arguments for such an integration is the presented unified front thus better bargaining power in the world market as well as increasing the market base for inter-regional trade. In order to achieve this, the report emphasises on the harmonisation of everything from taxation policies to water basin regulation.

Let’s now turn to what interested me the most in this report. This paper was written before the current European Union (EU) crisis and makes several references to the EU as a model for the African Union – calling for a direct emulation of the steps taking in achieving the success of the EU.

My question then is now in the light of the current EU crisis and the possible break down of the EU, should we still seek integration as an African Community?

Even if we do agree to forward such an agenda, should the EU be a role model or should we look elsewhere?

The way I see it…

 Recent years has brought to light the heavy disadvantages of regional integration most especially the economic rigidities it brings forth. A continental economic community will mean harmonising economic policies. This, as we have seen in the case of Greece and the EU, can leave very little space for the domestic manoeuvring of policies for each country. Economics as we know it is very dynamic and thus it is necessary for a country to be able to twist and turn policies in response to the needs of the country. This is the ‘one size does not fit all’ argument.

 What then is a country to do than to ‘keep up appearances’ in order to please the Powers that Be only to cry Bail out!

Speaking of bail outs, for a successful AU, Africa would need its own Germany with a large enough economic success including a huge balance of payment surplus to finance such bail outs. Is it going to be South Africa - arguably the most developed African nation, Botswana – the African Miracle , Ghana – the projected fastest growing economy in 2012 or Nigeria – with its powerhouse of billionaires ???

Another issue that comes to mind is the sustainability of such integration. For a continent that relies on external funding and aid for provision of its most basic needs, I ask… is the AU only going to be just a ‘bigger African country’? With most of its budget financed by foreign powers. If so, then would it truly be sovereign or operate under the agreed ‘terms and conditions’. If it is only going to operate under terms and conditions, I would say, Why bother? We are only going to make it easier to be manipulated by our financiers as they will now be able to ‘kill all birds with one stone’.

As to the question of whether the EU should be emulated, my answer… I DON’T KNOW! :). What I do know is that we as Africans should find out what went wrong in the first place, how did the EU get themselves in this situation, What can we do to avoid this and we should pay close attention to how they deal with this current crisis because well ‘it is only a fool that does not learn from others mistakes’