Can the Asian Miracle Happen in Africa?

[Kichuguu]

From Japan to Djibouti

[h=1]Can the Asian Miracle Happen in Africa?[/h]
By Bill Gates
on December 8, 2014

I read Joe Studwell’s How Asia Works because it claimed to answer two of the greatest questions in development economics: How did countries like Japan, Taiwan, South Korea, and China achieve sustained, high growth and turn into development success stories? And why have so few other countries managed to do so? Clear answers could benefit billions of people living in countries that are poor today but have the essential ingredients to develop thriving economies.
I’m pleased to report that Studwell, a smart business journalist, delivers clear answers—not the hedged “on the one hand, on the other hand” answers that led an exasperated Harry Truman to ask for a “one-armed economist.” I found the book to be quite compelling. Studwell explains economic history in a concise and understandable way. I asked the whole Agriculture team at our foundation to read it because of its especially good insights into the critical role of household farming for economic development.
So what are Studwell’s answers to the multi-trillion-dollar question of why some Asian countries developed rapidly and others (Philippines, Indonesia, Thailand) did not? He offers a simple, three-part formula:

1. Create conditions for small farmers to thrive.
2. Use the proceeds from agricultural surpluses to build a manufacturing base that is tooled from the start to produce exports.
3. Nurture both these sectors (small farming and export-oriented manufacturing) with financial institutions closely controlled by the government.

Here’s the formula in slightly greater depth:
Agriculture: Studwell’s book does a better job than anything else I’ve read of articulating the key role of agriculture in development. He explains that the one thing that all poor countries have in abundance is farm labor—typically three quarters of their population. Unfortunately, most poor countries have feudal land policies that favor wealthy landowners, with masses of poor farmers working for them. Studwell argues that these policies not only produce huge inequities; they also guarantee lousy crop yields. Conversely, he says, when you give farmers ownership of modest plots and allow them to profit from the fruits of their labor, farm yields are much higher per hectare. And rising yields help countries generate the surpluses and savings they need to power up their manufacturing engine.

Manufacturing: Studwell argues that once countries are producing steady agricultural surpluses, they should start moving to the manufacturing phase of development. He makes a strong historical case that the successful countries do not simply rely on the invisible hand of market forces; they supplement market forces with the heavy hand of state-driven industrial policy. These countries engage in a combination of protectionism (coddling infant industries to give them time to become globally competitive) and then culling losers (cutting off resources to firms that don’t succeed in export markets).

Finances: Studwell shows that rapidly developing countries usually give lip service to free-market principles while actually keeping their financial institutions “on a short leash.” In other words, they enact policies to protect themselves against the shocks and whiplash of global-capital flows, and they make sure their financial institutions serve the country’s long-term development ends rather than the short-term interests of financiers.

I came away from the book with many take-home messages that apply to our foundation’s work. I’ll highlight two.
First, I appreciated Studwell’s thinking about agriculture economics. Drawing on data on crop yields and overall agricultural output, he argues that rapid agricultural development requires redistributing land more equitably among the farming population. To date, I haven’t focused as much on the land ownership piece as I have on the role of better seeds, fertilizers, and farming practices. This book made me to want to learn more about the land ownership picture in countries where our foundation funds work.
Second, Studwell provoked me to think hard about whether his three-part formula is as applicable to Africa as it is to Asia. Certainly, the agricultural piece applies well—and has many economic and health benefits. The big question for me is: Can African countries become successful export-oriented manufacturing hubs? I do see this potential in countries like Ethiopia and Djibouti. They already have a strong connection with China and ambitious, long-term economic plans. Unfortunately, many other countries on the continent don’t have those same success factors, especially landlocked ones with very poor infrastructure. Helping farmers in those countries grow more food and earn more money would be a big help on its own.
How Asia Works is not a gripping page-turner aimed at general audiences, but it’s a good read for anyone who wants to understand what actually determines whether a developing economy will succeed. Studwell’s formula is refreshingly clear—even if it’s very difficult to execute.




Tulipokuwa na viongozi wenye muono huo, watu waliwaita madikteta. Leo hii tuna viongozi wa "wawekezaji" ambao hata hawajui misingi hiyo mitatu. Juzi juzi rais wetu amesema kuwa matatizo yetu yalitokana na sera za Nyerere ambazo zilikuwa zinalenga hayo hayo mambo matatu hapo juu; je yeye atakuwa anatuongoza wapi iwapo hayaoni hayo mambo matatu hapo juu?

 

[Mzuvendi]

Kichuguu:

You are being disingenuous here. Aren't you? Certainly, wawekezaji haven't helped small farmers. However, that doesn't imply that Nyerere did better than his successors. As a matter of fact, the entire implementation of Nyerere's three-part formula destroyed the livelihood of the people the formula wanted to empower. His implementation forced people to forgo their properties. It reduced the production of crops. The financial mechanisms he set up to buy, sell, and finance farming activities were inefficient and ridden with corruptions.

If we are looking for something to spur economic growth in rural areas, Nyerere and his policies are bad example.

 

[Mwelewa]

If I were President I wouldn't hesitate to apply the formula. The same formula applied successfully in Asia why not in Africa?.

I am interested by the idea small farm holders should get assistance from the government. The government should prepare conducive environments to support small farm holders. And nurture them grow into successfully business.

Also I support the idea the proceeds from Agriculture invested in small industries to produce export. South Korea has middle income population. Its economy is largely supported by light industries which produce things such as electronic accessories.

Big challenge is leadership. Leaders luck the will to fight grand corruption. As we witnessed in Escrow account saga. The offenders are known but the government won't take action against them.

Also I would like to say something about Nyerere policy on agriculture.

What I think is that, it's not wise to put blame on Nyerere. Our country has educated people lets focus how we can use these people for better future of the country.

Ethiopia is rising. Its economy is expanding I am sure there something we should learn from them also.

 

[Mzuvendi]

If I were President I wouldn't hesitate to apply the formula. The same formula applied successfully in Asia why not in Africa?.

I am interested by the idea small farm holders should get assistance from the government. The government should prepare conducive environments to support small farm holders. And nurture them grow into successfully business.


Also I support the idea the proceeds from Agriculture invested in small industries to produce export. South Korea has middle income population. Its economy is largely supported by light industries which produce things such as electronic accessories.


Big challenge is leadership. Leaders luck the will to fight grand corruption. As we witnessed in Escrow account saga. The offenders are known but the government won't take action against them.


Also I would like to say something about Nyerere policy on agriculture.

What I think is that, it's not wise to put blame on Nyerere. Our country has educated people lets focus how we can use these people for better future of the country.

Ethiopia is rising. Its economy is expanding I am sure there something we should learn from them also.

I beg to differ with you. There is a range of factors that have enabled Asian countries to excel in amazing speed than African countries. The formula explained above is small part of part of it. So if you want to help Tanzania, you might as well consider other factors and how they relate to the economy development and well-being of the nation.

Take for example the standard of education in Asian countries. From primary school to university level, Asian countries have tried to give their best. As a matter of fact some Asian countries have beaten the west at their own game in terms of producing educated and talented individuals. You can't find this effort of dispensing quality education at every level in African countries. So as a president you might try to apply the formula, but if your people don't have the capability to execute your plan efficiently, your initiatives will likely fail even if you have the best intention to help your people.

Furthermore, Asian traditions have helped the growth of their economies. Take for example entrepreneurship. Chinese, Koreans, and Taiwanese entrepreneurs are all over the world trying better themselves and their countries. In some business school of thoughts, they identify entrepreneurship as the only ingredient of development. So when you examine the economies of Asian countries, you should take into equation the intensity of entrepreneurship in those countries as well. This is because entrepreneurs are willing to take calculated risks in order to maintain and advance their businesses and interests.

Another tradition that has served well Asians is the culture of financial saving. This culture has helped them to raise capital for various business ventures within their communities and countries. On contrary, the culture of materialism and consumption is prevalent within African elite. In Africa, everybody wants to have money so he can possess a bigger house than his neighbor or coworker. You can't help a country with this type of mentality.

There are other factors and traditions that have helped Asian countries and I am not saying that Africans aren't capable of emulating their Asian counterpart. They can, but my point is African countries are ignoring the fundamentals of economies in favor of short cuts. The three-part formula is a short cut and without fundamentals, it won't work.

Take for instance Tanzania. Since independence, the country has spent a lot of money in dubious projects, and dubious contracts in the name of helping small farmers. If this money had been spent only in providing Tanzania students at every level decent education, the country could have been far away.

 

[Elizabeth Dominic]

Mipango inaonekana mizuri kwa kusoma na kujaribu kuangalia solution mahali pasipohusika haswa. Hakuna miracles as such, hawa watu walikaa wakasoma mifumo yao kwa undani hadi wakaja na hizo formulas. Hawakuota tu, walikuwa equipped kiakili. Wapi tunapokosea Waafrika ni kudhani vitu vinatokea by chance wapi Waasia watengeneze formulas zao nasi tuje tuzikopi na just by application it can work. Mfano mzuri ni Lowasa na zile mvua alizotaka kuleta na wengineo ambao kila kukicha wanaenda kushangaa innovation za wengine na endless efforts za kukopi na kupaste.
Uwezo wetu kiakili bado ni mdogo mno, once we recognize that and accept it maybe we can start to work toward that "miracle" otherwise it's a good read kwa imaginary developed Africa

 

[Mwelewa]

Mkuu Mzuvendi

You have said Asia has best education system - which is true. So don't you think its wise a country invest in agriculture where majority are employed by the sector? The logic is when the farmers earn good money they will send children in best schools and hence quality education.

The education system need money to make it quality and efficient. Unfortunately we don't have the money. Where we get the money?

The answer is that help the small farmer to strive in agriculture. And once they get money will attract the rich to build schools and and parent will choose which is best in the list.

So you can see the money its not the problem. Once you help small farmers soon small and medium scale industries will flourish.

Let have faith in our people and encourage them about development. We don't need to tell them development is very very complicated. Because many times we manifest this attitude when we speak with fellow citizens.

 

[Mzuvendi]

Mkuu Mvuvendi

You have said Asia has best education system - which is true. So don't you think its wise a country invest in agriculture where majority are employed by the sector? The logic is when the farmers earn good money they will send children in best schools and hence quality education.

The education system need money to make it quality and efficient. Unfortunately we don't have the money. Where we get the money?

The answer is that help the small farmer to strive in agriculture. And once they get money will attract the rich to build schools and and parent will choose which is best in the list.

So you can see the money its not the problem. Once you help small farmers soon small and medium scale industries will flourish.

Let have faith in our people and encourage them about development. We don't need to tell them development is very very complicated. Because many times we manifest this attitude when we speak with fellow citizens.

Mwelewa:

Education and agriculture are intertwined and more importantly are part of the entire economy of the country. Therefore, we can’t reduce them to the infamous chicken and egg argument, which should come first, agriculture or education. I believe with good plans and commitment, education, agriculture, and other sectors of the economy can grow concurrently or within overlapped intervals.

Ideally, when other variables of the economy stay the same, you could say that if farmers earn good money, they could use it to educate their children in decent schools. The truth of the matter is the economy doesn’t work that way in the sense that Tanzanian farmers don’t operate in isolation. They are part of the global economy. For example, a coffee grower in Tanzania is connected to coffee drinker on the streets of London or New York. If a good number of drinkers reduce their coffee intake for economic reasons, their action will impact Tanzanian coffee growers negatively and eventually they will fail to pay their loans or send their children to best schools. So we shouldn't look at agriculture as a panacea.

I am not saying that Tanzanians shouldn’t invest in agriculture. They should, but they should also note that agriculture alone isn’t the driver of economic prosperity. For, the sector is capital and labor intensive and without the contribution of other sectors, the impact of agriculture to the overall economy of the nation will be reduced to almost negligible.

Now with regard to the cost of education, certainly the country doesn’t have money to educate space scientists. However, the country has resources to eliminate ignorance. What’s missing is the commitment to tackle the problem at its core and this is what separate the Asian countries from Tanzania. For example, all Asian Tigers dispense decent education at every levels in their own languages. For 50 years, we haven’t achieved that feat at primary school level. So it isn’t the lack of financial resources, but rather the commitment.

 

[Mzuvendi]

Mipango inaonekana mizuri kwa kusoma na kujaribu kuangalia solution mahali pasipohusika haswa. Hakuna miracles as such, hawa watu walikaa wakasoma mifumo yao kwa undani hadi wakaja na hizo formulas. Hawakuota tu, walikuwa equipped kiakili. Wapi tunapokosea Waafrika ni kudhani vitu vinatokea by chance wapi Waasia formulas zao nasi tuje tuzikopi na just by application it can work. Mfano mzuri ni Lowasa na zile mvua alizotaka kuleta na wengineo ambao kila kukicha wanaenda kushangaa innovation za wengine na endless efforts za kukopi na kupaste.
Uwezo wetu kiakili bado ni mdogo mno, once we recognize that and accept it maybe we can start to work toward that "miracle" otherwise it's a good read kwa imaginary developed Africa

Some of these copy and paste endeavors are very expensive and they usually hurt people they suppose to help. Take for example za Lowasa. The cost of visiting Asian countries to learn the process was higher than what the country got in return. This is just a simple example and if somebody decides to go deep, the individual would uncover a list of wasteful spending which has hurt the country in many ways.

So as the nation tries to navigate its way from the abyss of economic backwardness, at every level of society people should try to be financially savvy, whether that be in spending public or private money. Asians are financially savvy. If we really want to emulate from them, why don't we copy this habit which costs nothing?

 

[Mwelewa]

Mzuvendi

You can't ignore agriculture. Its the back borne of the economy. If you abandon agriculture the country will go nowhere. How can you ignore the sector which employs majority of the people?

Well, education is very important. I can't argue against education. Its important our people embrace education. But its more advantage to invest in agriculture than in education because of the status quo. I am sure you understand comparative advantage rule. Its cheaper to invest where we can do our best. And agriculture sector is the right choice.

I would like to stare this with you, I live in northern Tanzania, folks here are employed in agriculture sector. Just like majority of Tanzanians who support their extended families through agriculture activities. Few years ago famers in different places were taught modern agriculture practices and did encourage them to apply the knowledge. Years letter these poor famers were able to send children in best schools.

If no one helped the famers it would be difficult for them to send children in best school. I don't try to tell you every one is well off its only small number of farmers who were able to send children in best schools. Some individuals were reluctant to embrace the opportunity and listen to experts. They were pessimists they thoughts its wastage of time to invest in agriculture. They never thought of long run returns only short run returns.

 

[TUJITEGEMEE]

I think some of us we looking of investing on agriculture aims to produce raw products for abroad processors and final products users. I am presuming that; because ,it seems some of us, we are worried with stability of financial capability of the consumers in London and New York.

We have to look investing in agriculture sector in broad terms where investing in processing raw produces to best quality final products is done in Africa; diversifying the market while ensuring local market is served by ourselves to mention a few. If we will be able to produce the quality products at low cost with diversified markets of our products, we stand a better chance to control the market. By controlling the market, Africans will be able to generate more sources of income and invest in other sector and improve their living standards. But this can be unleashed when we will have proper planning, substantial investments, and adequate management of those investment in the sector. By implementing those, no wonder we will be approach to fill our continent with miracle which happened in Asia.

 

[Mzuvendi]

Mzuvendi

You can't ignore agriculture. Its the back borne of the economy. If you abandon agriculture the country will go nowhere. How can you ignore the sector which employs majority of the people?

Well, education is very important. I can't argue against education. Its important our people embrace education. But its more advantage to invest in agriculture than in education because of the status quo. I am sure you understand comparative advantage rule. Its cheaper to invest where we can do our best. And agriculture sector is the right choice.

I would like to stare this with you, I live in northern Tanzania, folks here are employed in agriculture sector. Just like majority of Tanzanians who support their extended families through agriculture activities. Few years ago famers in different places were taught modern agriculture practices and did encourage them to apply the knowledge. Years letter these poor famers were able to send children in best schools.

If no one helped the famers it would be difficult for them to send children in best school. I don't try to tell you every one is well off its only small number of farmers who were able to send children in best schools. Some individuals were reluctant to embrace the opportunity and listen to experts. They were pessimists they thoughts its wastage of time to invest in agriculture. They never thought of long run returns only short run returns.

During the first 30 years of Tanzanian independence, agriculture was the backbone of the country economy. Surprisingly, in terms of financial standing, the country came out poorer than what the British left. So if agriculture is that good, we shouldn’t have this thread. This is because Nyerere tried almost everything that are enumerated in the introduction of this thread and elsewhere, but he came out very short.

Agriculture is an important sector of the economy. However, in modern days it depends on other sectors for it to thrive. It depends on education, finance, public services, transportation,.. just to mention a few. So my point is investing in agriculture shouldn’t come at the expense of other sectors. Let me give you an example, in 60s Kenya started to invest heavily in tourism while Tanzania dived deeper into agriculture. 40 years later we have two different economies. One sustains itself whereas the other relies heavily on international handouts.

I am not belittling agriculture. But just because to it employees majority of the people informally it doesn’t mean it’s the backbone of the economy.

Let me ask you a question. Did the modern farming techniques you mentioned in your post fall from outer space? I guess they came through informal and informal education. So as you can see, if you don’t invest in other sectors such as education, you will have a workforce comprised of unproductive farmers.

Agriculture has emotion appeal. For it employees a lot of people. So to be politically and democratically correct, we tend to think it’s the only way to help the poor.

 

[Mzuvendi]

I think some of us we looking of investing on agriculture aims to produce raw products for abroad processors and final products users. I am presuming that; because ,it seems some of us, we are worried with stability of financial capability of the consumers in London and New York.

We have to look investing in agriculture sector in broad terms where investing in processing raw produces to best quality final products is done in Africa; diversifying the market while ensuring local market is served by ourselves to mention a few. If we will be able to produce the quality products at low cost with diversified markets of our products, we stand a better chance to control the market. By controlling the market, Africans will be able to generate more sources of income and invest in other sector and improve their living standards. But this can be unleashed when we will have proper planning, substantial investments, and adequate management of those investment in the sector. By implementing those, no wonder we will be approach to fill our continent with miracle which happened in Asia.

We don’t live in an isolated world. So to think that African farmers will be able to form insulated and viable business societies immuned from outside influence is counterproductive. African farmers, in particular Tanzanians, have to treat their trade as business entities.

If you are a businessman, your goal is to make profit and it doesn’t matter the final form of the product you sell. You can sell raw materials, if that’s what your customers want. You can sell the by product or the final product.

Modern buyers are looking not only for functionality of the product, but also value and experience. If I am a New Yorker who enjoys to make his coffee from scratch, I won't buy instant coffee from Tanzania when I can easily find coffee beans from Rwanda?

 

[Mwelewa]

Mzuvendi

I think its not correct to say the three part formula won't work in Tz because Nyerere tried it and failed miserably, so there is no meaning to apply three part formula because of past experience. I believe Tanzania of today is different from time of Nyerere office. Now country has many educated individuals its a different story from those days.

In a place I live, in northern Tz, famers benefit from agriculture. And I can see bright future as government work diligently with private sector. I know several CBO's and NGOs work with farmers in rural areas. They helped so much. Families in rural areas are encouraged to form groups and teach them modern practices of agriculture. And I can assure you one thing about the implementation of projects,. Its not complicated as you narrated in your post. I believe development is CHOICE. You set plans and go after them.

Also you don't need to worry too much about "New York". We can start our journey through utilization of opportunity readily available in local markets. Then we expand internationally.

The government, on the other hand, must continue to reinforce protectionism policy. It is health for the economy. Additionally i believe every country has right to protect its economy form harm of foreign industries.

We allow in only products not produced by local firms. And this must be done sometimes letter when we have built strong base for manufacturing industry.

Any country must have priorities. Choices are many we need to make list of preference. And my opinion agriculture sector is the right choice.

 

[Mzuvendi]

Mzuvendi

I think its not correct to say the three part formula won't work in Tz because Nyerere tried it and failed miserably, so there is no meaning to apply three part formula because of past experience. I believe Tanzania of today is different from time of Nyerere office. Now country has many educated individuals its a different story from those days.

In a place I live, in northern Tz, famers benefit from agriculture. And I can see bright future as government work diligently with private sector. I know several CBO's and NGOs work with farmers in rural areas. They helped so much. Families in rural areas are encouraged to form groups and teach them modern practices of agriculture. And I can assure you one thing about the implementation of projects,. Its not complicated as you narrated in your post. I believe development is CHOICE. You set plans and go after them.

Also you don't need to worry too much about "New York". We can start our journey through utilization of opportunity readily available in local markets. Then we expand internationally.

The government, on the other hand, must continue to reinforce protectionism policy. It is health for the economy. Additionally i believe every country has right to protect its economy form harm of foreign industries.

We allow in only products not produced by local firms. And this must be done sometimes letter when we have built strong base for manufacturing industry.

Any country must have priorities. Choices are many we need to make list of preference. And my opinion agriculture sector is the right choice.

Helping poor farmers in Tanzania isn’t science and to be honest there isn’t one formula that solves all of the problems. So when we engage in a discourse that tries to address the efficacy of one approach or formula, as you prefer, dissent of opinions should be welcomed. Days are gone when one brings a novel approach and rest of us has to follow.

Now with regard to three part formula, actually this isn’t a new idea. Something closer to it was tried in the past, almost universally around the third world rim in 60s, 70s, 80s, and 90s. However, its implementation in Tanzania didn’t respond well. Take for example the CRDB bank. Even though the institution is a commercial bank and serves different clients today, originally it was formed to provide financial services that cater farmers’ needs. It didn’t work well and the reason for that had nothing to do with lack of educated individuals to run the bank, but rather their commitments.

Tanzanians are eager to copy new things from others. If there had been an Olympic medal for that, we would have won at least one by now. However, what separates us from other imitators is our lack of commitment.

Furthermore, the three part formula doesn’t work in isolation. Other social and economic factors have to be in place for the formula to work. Take for example your farmers in northern Tanzania. In the country, they are legendary farmers because the climate, good soil, and the market of their agriculture products have always given them the upper hand. As a matter of fact, if you are a farmer in northern Tanzania, the only thing you need is a piece of good land and hard work to make difference. So the fulfillment of the three part formula in northern Tanzania is a bonus but not a requirement for economic prosperity.

With regard to trade protectionism, honestly I don’t see any value of it in Tanzania. It will hurt exactly the same people it tries to protect. For example, Nyerere tried it in the past and there were shortage of almost everything. Even primitive items such as kitchen salts were in short supply. So don’t try to go back there.

Furthermore, hardship isn’t the mother of invention or innovation, but market is. So instead of starving the nation with ideas and products from outside, let Tanzanians compete in the marketplace.

 

[Wacha1]

During the first 30 years of Tanzanian independence, agriculture was the backbone of the country economy. Surprisingly, in terms of financial standing, the country came out poorer than what the British left. So if agriculture is that good, we shouldn’t have this thread. This is because Nyerere tried almost everything that are enumerated in the introduction of this thread and elsewhere, but he came out very short.

Agriculture is an important sector of the economy. However, in modern days it depends on other sectors for it to thrive. It depends on education, finance, public services, transportation,.. just to mention a few. So my point is investing in agriculture shouldn’t come at the expense of other sectors. Let me give you an example, in 60s Kenya started to invest heavily in tourism while Tanzania dived deeper into agriculture. 40 years later we have two different economies. One sustains itself whereas the other relies heavily on international handouts.

I am not belittling agriculture. But just because to it employees majority of the people informally it doesn’t mean it’s the backbone of the economy.

Let me ask you a question. Did the modern farming techniques you mentioned in your post fall from outer space? I guess they came through informal and informal education. So as you can see, if you don’t invest in other sectors such as education, you will have a workforce comprised of unproductive farmers.

Agriculture has emotion appeal. For it employees a lot of people. So to be politically and democratically correct, we tend to think it’s the only way to help the poor.

Where I bold, can you give us the stats?

 

[Mzuvendi]

Where I bold, can you give us the stats?

Why don't you google?

 

[Wacha1]

Why don't you google?

Why should I google when you bring false information. It's not available thats why I asked you for the stats.

 

[Mzuvendi]

Why should I google when you bring false information. It's not available thats why I asked you for the stats.

Could you please read this?

http://www.oecd.org/countries/tanzania/2674918.pdf

 

[Wacha1]

Could you please read this?

http://www.oecd.org/countries/tanzania/2674918.pdf

Just stop you blatant propaganda and bring proof that ''Tanzania was poorer than what the British left''.

 

[Mzuvendi]

Just stop you blatant propaganda and bring proof that ''Tanzania was poorer than what the British left''.

I said financially Tanzania was poorer and that's a fact. Between 1979 and 1990, the government of Tanzania couldn't have run the country without the help of donor country.

Please read the document .