Asia-Africa Development Divergence: A Question of Intent - Softcover

David Henley

Softcover

ISBN 10: 1783602775 ISBN 13: 9781783602773

Publisher: Zed Books, 2015

Synopsis

Why have South-East Asian countries like Malaysia, Indonesia and Vietnam been so successful in reducing levels of absolute poverty, while in African countries like Kenya, Nigeria and Tanzania, despite recent economic growth, most people are still almost as poor as they were half a century ago?

This book presents a simple, radical explanation for the great divergence in development performance between Asia and Africa: the absence in most parts of Africa, and the presence in Asia, of serious developmental intent on the part of national political leaders.

About this title

About the Author

David Henley is professor of Contemporary Indonesia Studies at Leiden University. He obtained his doctorate from the Australian National University and has worked as lecturer at Griffith University, as researcher at the Royal Netherlands Institute of Southeast Asian and Caribbean Studies (KITLV), and as research fellow at the National University of Singapore. His fields of interest are the politics, history and geography of South-East Asia, particularly Indonesia. From 2006 to 2012 he was a coordinator of Tracking Development, an international research project designed to compare Asian and African development trajectories with a view to identifying practical policy lessons for development and development cooperation in Africa.

Excerpt. © Reprinted by permission. All rights reserved.

Asia-Africa Development Divergence

A Question of Intent

By David Henley

Zed Books Ltd

Copyright © 2015 David Henley
All rights reserved.

ISBN: 978-1-78360-277-3

Contents

Figures and tables, 
Acknowledgements, 
1 DIVERGING PATHS, 
2 STUDYING THE DIVERGENCE, 
3 SETTING THE STAGE FOR DEVELOPMENT, 
4 AGRARIAN ROOTS OF DEVELOPMENT SUCCESS, 
5 VARIETIES OF RURAL BIAS, 
6 ELEMENTS OF THE DEVELOPMENTAL MINDSET, 
7 ORIGINS OF THE DIVERGENCE, 
References, 
Index, 

CHAPTER 1

DIVERGING PATHS

Fifty years ago when the colonial empires ended, most of the globe, including the Asian as well as the African tropics, was inhabited by peasantries facing very low living standards. Since then, the tropical world, the South, has diversified into a wide spectrum of development outcomes. On the one hand, there are successful countries with export-oriented manufacturing industries and productive, commercialized agricultural sectors. At the other end of the spectrum are countries where, despite increasing urbanization, subsistence farming still forms the backbone of the economy, and where the only significant export industry is oil or mineral extraction. While the successful developers have experienced vast improvements in living standards, many of the countries left behind are still almost as poor as they were fifty years ago.

The reasons for this great divergence are of obvious importance to everyone concerned with development and development cooperation today. This book sets out to investigate them in the context of the two regions of the world which most clearly exemplify the diverging paths to prosperity and poverty: South-East Asia and sub-Saharan Africa (Figure 1.1). The present chapter introduces some basic data and briefly summarizes my main arguments and conclusions. For more detail on any point, readers are referred to the more complete information and argumentation presented in subsequent chapters.

In South-East Asia the 1960s, 1970s and 1980s all saw sustained and accelerating economic growth. By the 1990s only Burma, among the major countries of the region, was still missing out on what was acclaimed as an Asian development miracle (World Bank 1993). Although the financial crisis of 1997–98 revealed vulnerabilities in South-East Asia's economies, it only very briefly halted their expansion. In Africa, by contrast, such dynamism remained absent. By the early 1990s even those few African countries where security and policy conditions had long been considered promising, such as Kenya and Côte d'Ivoire, were falling into the continental pattern of instability and stagnation. Scholars identified a negative 'African dummy' as a statistical predictor of comparative economic performance (Barro 1991), and counterposed an African 'growth tragedy' to the Asian miracle (Easterly and Levine 1995).

Since the late 1990s there has been sustained growth in national incomes in Africa due to improved macroeconomic policies and liberalization of markets, together with increased world demand for minerals, coffee, cotton and other primary products. But by most accounts, there is little sign yet of this rapid aggregate growth translating into comparably rapid poverty reduction. If poverty is still present among marginal and dispossessed groups in South-East Asia, in Africa it is still the norm. And whereas the bulk of South-East Asian exports now consists of manufactured goods, Africa still manufactures almost nothing which the rest of the world wants to buy. South-East Asia, to complete the irony, has outstripped Africa even in the export of traditional African agricultural products such as palm oil, coffee and cocoa.

Historically, both regions formed part of the world's economic periphery, exporting forest products (spices, ivory) and later commercial tree crops, and importing manufactures. At the local level their economies were subsistence-oriented and their societies organized on a peasant or tribal basis, often without educational or business institutions of indigenous origin. Commerce, in both regions, was associated with trade-specialized ethnic minorities – historically often Islamic, later also Asian (Indian/Chinese) and European. Over large parts of South-East Asia as well as most of Africa, indigenous state formation was limited prior to colonial intervention. In the middle of the twentieth century, both regions were still substantially under European rule. Climate and soil conditions in both regions are generally problematic for arable farming, and people and livestock are subject to similar health problems.

These historical and geographical similarities make the comparison of South-East Asia with sub-Saharan Africa a sharp tool for the analysis of development issues. Insofar as the research on which this book is based has precedents, they have most often involved the comparison of Africa with economically successful Asian countries in general, including Taiwan, South Korea and even Japan (Lawrence and Thirtle 2001; Lindauer and Roemer 1994; Nissanke and Aryeetey 2003a; Stein 1995a). But North-East Asia, by almost any measure, was already much more different from Africa fifty years ago than was South-East Asia: better governed, more educated, more industrialized (Booth 1999, 2007). In analytical terms, selecting South-East Asia as the unit of comparison helps to reduce the number of potential explanations for the observed developmental divergence. By the same token South-East Asia's policy experience, as the World Bank's East Asian Miracle study rightly noted (1993: 7), is more relevant than that of North-East Asia to other developing countries, including those of Africa.

Another good reason for comparing Africa with South-East Asia is that since the 1960s both regions have been characterized by corruption and a notorious lack of 'good governance'. Certain features of African politics which are often said to explain economic stagnation in Africa (Chabal 2009; Chabal and Daloz 1999; Van der Veen 2004; Van de Walle 2001) are also present in economically successful South-East Asia. In both regions, rent-seeking is common in government positions in connection with what has been called 'neo-patrimonialism': a fusion of public and private spheres in which patron–client relations structure political behaviour. Some of the same cultural phenomena currently blamed for development failure in Africa, including a preference for personalistic power relationships, have been equally pervasive aspects of the South-East Asian political scene (Robison and Hadiz 2004;Scott 1972). In South-East Asia, some have even argued, patron–client ties between politicians and businessmen may serve precisely to facilitate economic development (Braadbaart 1996; Khan and Jomo 2000).

Corruption and clientelism, then, cannot in themselves explain African economic retardation. Correlations between indices of 'good governance' and economic growth rates, as Mushtaq Khan (2007: 8–16) has shown, all but disappear once already rich countries are excluded from the database. Among developing countries, those with rapidly growing economies hardly differ from slow growers in terms of corruption and institutional quality (Wedeman 2002).

Some authors have tried to qualify this observation by distinguishing between 'organized' (Asian) and 'disorganized' (African) forms of corruption, the former being centralized and predictable and the latter competitive, unpredictable and incompatible with growth (Lewis 2007; Kelsall 2013; Macintyre 2001). On close inspection, however, this distinction is not entirely convincing either, since some African countries have seen long periods of political stability during which illicit rents have been centrally managed by dictators or tight-knit ruling oligarchies. A particular aim of this book is to take issue with the influential school of thought which ascribes developmental failure in Africa to the ways in which political power is organized on that continent, as opposed to the ways in which it is used (Bates 1981, 1983; Lewis 2007; Ndulu et al. 2008; Van de Walle 2001). I argue that the great developmental divergence of the last fifty years between Africa and South-East Asia has been caused first and foremost by differences in the policy choices of governing elites, and that in both regions, as Bannerjee and Duflo (2011: 271) also conclude in their book Poor Economics, 'it is possible to improve governance and policy without changing the existing social and political structures'.

Accordingly, this will be a book on development in which the voices of the historical actors who have actually made development policy in practice, and of contemporary eyewitnesses to the policy-making process, will take precedence over the voices of academic commentators on development. While theoretical debates are certainly not ignored, politicians and planners whose decisions have influenced the development trajectories of their countries will be quoted as often and extensively as will canonical writers in the field of development studies. In my view it is the first-hand experience of key historical decision-makers which provides the best insights not only into which policies work and do not work, and why, but also into the reasons why particular policies are chosen, or not chosen, in particular times and places.

Scope of the divergence

In 1960, South-East Asians were on average much poorer than Africans; by 1980 they had caught up, and by 2010 they were two and a half times richer. In South-East Asia the whole of the intervening half-century was a period of almost continuous growth, apart from a brief hiatus at the turn of the century caused by the Asian financial crisis. In Africa, per capita income stagnated in the 1970s, declined in the 1980s, grew weakly in the 1990s, and in 2010 was still barely higher than it had been in 1975 (Figure 1.2).

The recent aggregate growth in Africa has caused the 'Afro-pessimism' of the 1990s to be replaced in some circles by a conviction that the Asian tiger economies are now being joined by a fast-developing group of 'African lions' (McKinsey Global Institute 2010; Radelet 2010). But there is a vital difference. Although some researchers believe that recent progress in African poverty reduction has been underestimated (Sala-i-Martin and Pinkovskiy 2010), the consensus is that the aggregate growth in Africa since the 1990s, like that of the 1960s and 1970s, has not translated into commensurate reductions in poverty (OECD 2011: 12, 62–5; UN Economic Commission for Africa 2011: 3).

In South-East Asia, by contrast, spectacular economic growth from the 1960s onward was accompanied by even more spectacular reductions in poverty. In Thailand the proportion of the population living below the national poverty line fell from 57 per cent in 1963 to 24 per cent in 1981 (Rigg 2003: 99); in Malaysia, from 49 per cent in 1970 to 18 per cent in 1984 (Crouch 1996: 189); in Indonesia, from 60 per cent in 1970 to 22 per cent in 1984 (BPS-Statistics Indonesia et al. 2004: 13); and in Vietnam, even more dramatically, from 58 per cent in 1993 to 19 per cent just eleven years later in 2004 (Nguyen et al. 2006: 9). In 2005, according to World Bank and United Nations figures, the proportion of South-East Asia's population living on less than the equivalent of US$1.25 per day was 19 per cent, against 39 per cent in 1990. In sub-Saharan Africa it was 51 per cent, against 58 per cent in 1990 (UN 2011: 6).

The same divergence is evident in other indicators of material well-being. In the 1960s, life expectancy at birth for inhabitants of both regions was still under 50 years (although South-East Asia was aready slightly ahead owing mainly to a somewhat less malign disease environment). In 2010 it was 54 years in Africa, and 70 years in South-East Asia (Figure 1.3).

The absolute decline in African life expectancy between 1987 and 1997 was partly due to Africa's AIDS epidemic, but also reflected generally poor healthcare and nutrition, with levels of infant and child mortality much higher than in South-East Asia. In education, too, Africa, although making more progress than in other fields, still lags well behind South-East Asia, where universal primary education is the norm (UN 2011: 16).

South-East Asia, like Africa, emerged from colonial rule with predominantly rural economies, based on peasant farming and the export of primary agricultural products. Subsequently, oil exports also became important in Malaysia, Indonesia and Vietnam. Unlike exporters of oil and primary commodities in Africa, however, South-East Asian countries have succeeded in diversifying their economies and their exports, notably into manufacturing. In 1970 only 5 per cent of Thai exports by value consisted of manufactures; by 1995 they constituted almost three-quarters, including integrated circuits and office machines as well as clothing, footwear and plastics. In 1980 less than 3 per cent of Indonesian exports consisted of manufactured goods; by 1995, they constituted more than 50 per cent. By the end of the twentieth century Malaysia alone, a country of under 25 million people, was exporting more manufactures each year than the whole of sub-Saharan Africa, with its population of more than 600 million (online World Development Indicators/World DataBank, World Bank).

Origins of the divergence

In the search for the origins of the developmental divergence between Africa and South-East Asia, the methodology of this book is not to compare aggregated statistics for the two regions. Instead the analysis concentrates on three sets of paired nations which, while broadly representative of the general regional contrasts, are also in important respects particularly comparable with each other: Indonesia/Nigeria, Malaysia/Kenya and Vietnam/Tanzania. No claim is made to absolute consistency here: the three pairs do not receive strictly equal attention (Indonesia and Nigeria playing a somewhat privileged role), while evidence from certain countries not included in the pairs, notably Thailand and Rwanda, will also be adduced in passing. Nevertheless, my core method is to compare the divergent development trajectories of the paired countries, looking carefully for clues as to the causes of the divergence.

The comparison of Nigeria and Indonesia is an obvious one that has already attracted considerable scholarly attention (Thorbecke 1998; Bevan et al. 1999; Lewis 2007). Both countries have experienced long periods of military rule, and are similarly ranked in terms of Corruption Perception Index. Both are also large, densely populated and well endowed with natural resources, notably oil. The second pair, Kenya and Malaysia, consists of two countries that have opted rather consistently for a 'capitalist road' to development, relying to a great extent on private ownership of the means of production, and on foreign investment. Tanzania and Vietnam, by contrast, are both countries which for a long time relied on state ownership and direct government intervention, and which have subsequently liberalized their economies.

The pairwise method differs from the dominant approaches to cross-country comparison, which attempt to explain growth differentials either through multiple regression analyses of time series data for many countries (Barro 1991; Easterly and Levine 1995; Johnson et al. 2007; Ndulu et al. 2007), or through explicit model-building and the identification of 'anti-growth syndromes' (Ndulu et al. 2008). While these approaches have produced valuable results, I believe that the one followed here offers sharper insight into the connections between policy choices and economic outcomes. Particularly important is the identification of successful policy choices. There is no shortage of critical works on development and development aid, but to compare disappointments with triumphs can be uniquely constructive and inspirational (Bebbington and McCourt 2007). This does not, of course, imply the possibility of infallible prescriptions. It has been said with some justification that there has been too much planning in development policy, and that attention can more profitably be directed to 'searching' (Easterly 2006). The research reported on in this book has been an exercise in searching. It has also followed Dani Rodrik's (2007) admonition to compare the various policies that have succeeded in particular settings, and to look beyond them in order to extract general principles that can also be applied in other settings.

In my search for these underlying principles, I and my colleagues in the Tracking Development project (outlined in the Acknowledgements at the front of this book) began by putting together comparative narratives of the selected countries and looking for turning points: dates at which two crucial development indicators, per capita GDP and poverty incidence, showed a lasting turn for the better, leading to sustained growth in combination with sustained poverty reduction. Then we attempted in each case to identify the specific circumstances, in particular policy changes, responsible for the turning point. Such positive turning points are found only in South-East Asia, and they function as templates against which to compare and contrast the sub-Saharan cases. In Indonesia, for instance, the year 1967 marked the end of a long period of stagnation in welfare (Van der Eng 2002) and the beginning of a sustained and rapid growth in per capita income which, apart from a sharp but brief decline in 1998 and 1999, would continue uninterrupted for the next four decades. Nigeria, by contrast, saw a brief, largely oil-fuelled burst of GDP growth from 1968 to 1974, followed by decline in the 1980s, stagnation in the 1990s and renewed growth only since 2002 (Figure 1.4).

(Continues...)

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Edition details

• Publisher: Zed Books
• Publication date: 2015
• Language: English
• ISBN 10: 1783602775
• ISBN 13: 9781783602773
• Binding: Paperback
• Edition number: 1
• Number of pages: 264