Democrat Union of Africa

1. Introduction.

1.1. The Globalization Process is driven by the revolution in Infonnation and Communication Technology fueled by computing capacity and software is reducing the world into a global village. It has brought about the death of distance; happenings in far away corners of the earth and beyond are instantaneously brought to us in our living rooms. Our culture is assaulted daily by lifestyles that seem to capture the attention of and slavery imitation by the youth. Billions of global capital is moved around the world at the click of a mouse seeking investment destinations to create wealth or to cause financial crisis. Transnational corporations have made the world their factory place thanks to containerization revolution producing parts in different parts of the world and assembling the products in other parts for distribution in a global market. Successful entrepreneurs and workers need to have Web based skills, have satellite based internet access and reliable link and connectivity to play the global markets. 1.2. This is the world of globalization that we live in. Our nation states are no longer adequate in protecting us from global pandemics. As the world shrinks so we have to learn to focus on our common humanity and try to develop the resources of the earth for our common use and the progress of all humanity. Africa cannot get of the train of globalization. We can harness the benefits of globalization for our development:

2. What do we mean by success?

2.1. By success we understand a nation's standing in the international ladder of improved standard of living and social progress.

It is not only growth in output for generating the resource wherewithal for improving living standards of the people that interests us. We are concerned with is shared growth where the process of production includes strategies for minimizing the exclusion of the disadvantaged, and provides institutional arrangements and strategies for inculcating a sense of inclusion and participation in the development process. And where social progress of the nation is not viewed exclusively from the economic prism but from a broader social perspective where feeling of personal safety and sense of belonging are just as important as increasing cash income. It is only when the average citizen feels a part of the process of development that long-term sustainable growth can be assured.

2.2. In Africa where we have a multiplicity of ethnic communities forming our nation states, ensuring a sense of belonging and social cohesion through participation of a broad mass of the people in the growth process is essential to creating a process where economic success reinforces our embryonic and fragile democracies to yield sustainable development for improving living standards of the average citizen.

3. Historical Experience in Transforming Living Standards.

3.1. Modern economic growth that started the transformation of living standards and altered society beyond imagination. The transformation was facilitated through the harnessing of the fruits of science and technology for improving the general wellbeing of individuals and our living environment. The process is broadly dated to have taken off in the late 18th Century with the Industrial Revolution in the United Kingdom. It was powered by technological innovation including the invention of the stearn engine, the mastering and harnessing of coal energy. The process was accompanied by rising agricultural productivity that facilitated the transformation of agriculture and freed labour for other non-farm activities.

3.2. The spread of modern economic growth has radiated from its cradle to the rest of the world over the past 23 decades with different level of intensity and success. The process of diffusion of technology and the application of innovative ideas for improving the day-to-day preoccupation of the economic and social agents of nations has never ceased though the method and agents of the diffusion change from time to time.

3.3. We believe that in spite of the fact that each country is unique and that its geography, history, and cultural circumstances are rarely duplicated elsewhere, we can always glean lessons of the major factors that have driven nations to growth and the type of policy landscapes that have facilitated national efforts to escape the poverty trap.

3.4. The issue is complex. There are no magic wands and no primers. As Diamond warns us in his book [Jarred Diamond; Guns, Germs and Steel, A Short History of Everybody for the Last 13,000 Years, Vintage Publications 1998:111] "We tend to seek easy single factor explanations for success. For most important things, though, success actually requires avoiding many separate possible causes of failure."

3.5. Historically, starting from the United Kingdom and the radiation of modern economic growth in outwards waves to Europe and the settler communities of North America, Australia and New Zealand as the first wave, the driving force was technological change and innovations derived from scientific achievements and their application. Aid probably played no part in the first wave. Development was largely a replication in the new world of what had happened and was happening in the motherland. The people were the same and they sailed away with the management skills, the cultural practices, the planting materials and the commercial and trade networks. Trade played a major part in the development of these satellite nations.

3.6. The second wave was to the continent of Europe where trade played a major role. The radiation of the industrial revolution to Europe flourished initially along the coastal nations that also benefited from the ocean-bound trade with the Americas and Asia. The third wave of industrialization, put at around the Post Second World War, has been dominated by Asia. Japan had industrialized in the last quarter of the 19th Century through imitation and adaptation from Europe. It became a growth diffusing center for the Asian countries. The success of some these countries in climbing the development ladder in the last three decades has been attributed to the state of efforts at modernizing their agriculture. Jeffry Sachs suggests that, "The most important determinant (in the countries that achieved growth between 1980 and 2000), it seems, is food productivity.

Countries that started with high cereal yields per hectare, and that used high levels of fertilizer input per hectare, are the poor countries that tended to experience economic growth." [Sachs 2005:69]

3.7. The comparison is interesting. While East Asia in 1980 recorded cereal yield per hectare of 2,016 kilos, the sub-Sahara Africa equivalent was 927 kilos. The share of cropland that was under irrigation stood at 4% in sub-Sahara Africa as compared with 37% for East Asia. The crop area planted with modem seed varieties stood at 43% for East Asia as against 4% for SSA. Adult literacy rate was 70% in East Asia against 38% for SSA. Total fertility rate was already at 3.1 as compared with 6.6 in SSA. The sound footing of South East Asian agriculture is credited to have provided the platform for its take-off unto accelerated and sustainable growth. It must be pointed out here that the East Asia agricultural transformation benefited from international assistance in research and the dissemination of improved varieties that spearheaded the "Green Revolution" of the 1960s that aimed at curbing the recurrent cycle of famine in those parts of the world. Such systematic support to find appropriate planting materials adapted to the harsh sub-Saharan Africa environment and for transforming agriculture has been lacking in Africa. Countries such as Thailand also benefited from the development of their road infrastructure with assistance from the Americans.

3.8. And trade has played a significant role in these countries success in getting out of the poverty trap. And not the African type of trade concentrated on commodities; manufactured exports. And they had access to the richest market in the world, that of the USA.

3.9. It is probably not by accident that the successful industrialization efforts of the newly industrializing nations of East Asia over the past four decades seem to have centered on the sea coasts where access to ports and cheap transportation as a result of the revolution in containerization has facilitated the integration of these economies into the global trade and supply-chain network; Shanghai and the southern coastal rim of China, Penang Island of Malaysia, Singapore, Taiwan, Honk Kong and Mauritius. These, not unlike Ghana and most African nations are all coastally located. But unlike them we lack adequate infrastructure for international trade access and the appropriate type of output to trade.

4. What is the alchemy that transforms national economies?

4.1. Obviously it is neither aid nor trade that helps put nations on the first rung of the sustainable development ladder and hoist them up and up with resulting improvements in living standards for the average citizen.

4.2. The mystery that William Easterly was trying to unravel is the alchemy that transformed China into the manufacturing factory of the world? What caused the transformation of a sleepy rice farming village into the Socks city of the world processing 9 billion socks a year about one third of world output? What caused China's industrial output to jump from $59 billion in 1978 to $844 billion in 2003 and export earnings to increase from $44 billion in 1982 to $428 billion in 2003?

4.3. Was the right type of education relevant? In both China and India the level of literacy has proven strategic. China's great leap to becoming the world's second largest economy and its manufacturing power house is not unrelated to her commitment in the past to mass literacy. This no doubt facilitates the transformation of rural dwellers into factory hands and to their quick absorption of other nation­ building skills. India, on the other hand, concentrated on higher education. Her successful command position in the lCT, software -development, back office out­ sourcing, and her strength in the outsourcing of global research is indicative of how having relevant educated workforce and suitable institutions can facilitate a nation's integration into the global production processes.

4.4. As Jarred stated earlier the trick is to avoid many causes of failure and ignite a process "that catalyses itself in a positive feedback cycle, growing faster and faster once it has started." [Diamond, page 111].

4.5. An important element of the success of these countries is that they managed to put together an environment that attracted foreign direct investors who brought along with them, their capital, technology, and access to the rich US and European markets. The opportunities of outsourcing of manufacturing activities of the transnational corporations made it possible for these successful nations to become part of the global supply chain. These global networking provided opportunities for the workers of these nations to absorb skills and technological insights that have put the nations up the learning curve and the skills and the lessons thus learnt tend to radiate to other aspects of the host nation's other domestic economic activities. And a major driving force for their success has been the strategic role played by focused and visionary leadership.

5. Is Western Aid the Problem for Africa's Failure?

5.1. It cannot be said that "Western" Aid or any aid can by itself be a reason for people getting themselves more deeply enmeshed into the poverty trap. Aid whether western, eastern or south-to-south can only be a necessary but insufficient resource base for development.

5.2. Even William Easterly the most recent critic of western aid in his book, The White Man's Burden. Why the West's efforts to Aid the Rest Have done So Much Ill and so little Good. had to admit that there are circumstances under which some type of aid can be of help. He states (page 382) that "Only the self-reliant efforts of poor people and poor societies themselves can end poverty, borrowing ideas and institutions from the west when it suits them to do so." 5.3. The experience of successful development suggests that each nation has to look at its human and natural resources scan the global and its domestic markets and decides what opportunities it can seize upon to exploit its market advantages to improve the living standards of its people. So the solutions have to be largely home brewed and guided.

5.3. The experience of successful development suggests that each nation has to look at its human and natural resources scan the global and its domestic markets and decides what opportunities it can seize upon to exploit its market advantages to improve the living standards of its people. So the solutions have to be largely home brewed and guided.

5.4. Aid can be likened to morphine. When sick and in pain, a bit of morphine can make the pain bearable and be a springboard to recovery and to health functioning self. The risk of addiction is always present. And it may then sink one into deeper and deeper trouble of addiction and begin to drive one's whole being and life.

6. What types of Aid have we had in Africa?

6.1 We in Africa have been through several types of aid:

a) IMF type stabilization arrangement with conditionalities for establishing macro-economic stability. Bad? On needs low inflation environment for growth. It is a necessary but insufficient condition for igniting development.

b) Debt relief and debt cancellation; helps lighten or remove debt burden. It is only temporarily. If one fails to diversify one's exports and take advantage to contract only self liquidating debts, one may come back to square one as some of us have done over the past five decades several times. Debt relief under the HIPC facility that requires the resources to be generated and used for specified social objectives and programmes may vitiate priorities. But ingenuity and innovativeness may direct such funds into supporting participation of the poor in productive activities to generate shared growth.

c) Project and programme loans whose disbursements depend upon conditionalities; when some 60% of public expenditures are dependent upon aid inflows then delays may cause tension. But conditionalities are things we

agree upon with development partners upfront and are deemed to be desired objectives! d) Aid that promoted twining arrangements that facilitates mutual learning and institution building is growth promoting.

e) Aid for procurement of military and security equipment and for building prisons in the name of public order by non democratic governments for use to oppress the people such as happened in the cold war era is obviously bad aid.

f) Aid that ends up in reverse flows into the bank accounts of corrupt leaders is obviously bad aid as it is non-productive.

 

6.2. Fortunately the international environment is definitely hostile to the two type of bad aid. What the international community must guide against is to ensure that the fight against "terrorism" does not create "bad" aid for non-democratic and non­ transparent governments.

6.3. International development aid will be a major driving force in the development and growth of Africa. The recent focus of attention to the development needs of Africa spearheaded by the government of the United Kingdom assures us of resources. We need to become the driven force for determining the type of aid we need. [the story of Kathleen Martin of DFID. "we want Ghana to be in the driving seat 1 "]

7. The Conundrum of Aid. (Santrofi Anoma...).

7.1. Aid inflows for any African economy constitutes both an opportunity and a major challenge;

- Its management and administration overburdens our scarce national administration capacity. Their local management draws from same limited pool of national pool of skills - Has potential for distorting national development policies and development direction.

- Conditionalities some times provide simplistic and simple-minded solutions for complex issues.

7.2. There is a need to strategize on methods for selecting from a menu of available aid sources that supplement national needs while allowing donors to indulge their aid fads and their need to minimize development aid fatigue among their constituencies.

7 .3. We need to create policy room and reduce the administrative burden of aid management if aid is to be a major driver for growth in Ghana in particular and Africa in general.

8. Conclusion

8.1. External assistance can help fill a gap while we grow the skills set required for development, help fill our resource gap while we try to increase our savings rate form around 15% to over 30% that was attained by the South East Asian countries at their time of take-off unto accelerated growth. We need resources to help build our economic and social infrastructure to attract direct foreign investment and stimulate domestic investment.

8.2. What we should always bear in mind is that the burden and the glory of developing Africa rests primarily and largely on our shoulders as Africans. Others can only supplement our efforts.

I thank you for your patience.

Kwame Pianim

kwame-p@newworldgh.com