Changes in African Countries’ Structures in Achieving Economic Development

2538 words (10 pages) Essay in Economics

23/09/19 Economics Reference this

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What have the experiences of Africa since the 1960s taught us about the efforts of achieving economic development? Provide a critical comparative analysis of at least two countries by tracing change and continuity in economic and political structures from the 1960s till post 2000.

 

Introduction

If economic development is defined as the process by which low-income national economies are transformed into modern industrial economies, then Africa’s experiences have taught us that this process is not universal, standardised, or neatly theorised under typical Western ideologies of development. Post-independence, Africa was thrust into the global capitalist economy and expected to comply to western standards of development – giving rise to countless contradictions. Africa’s experience can’t be generalised through space or time, but in many cases the experience of African economies has been contradictory to orthodox of development. In contrast to strong capitalist economies with established state legitimacy, the African experience has been one where the presupposed mechanisms for achieving economic development often exist in competition rather than in cooperation. The strong colonial legacy has given way to an unconventional relationship between the efforts of economic development, a functional electoral democracy, the capitalist class and the capacity of the state. With reference to the experiences of Zimbabwe and Uganda, I will show how this relationship manifests and diverges from orthodox theories of development. By tracing the transformation in the political and economic structures of these countries since independence, I will demonstrate how the African experience has not been universal and how it often defies both structuralist and liberalist ideals.

Postcolonial Africa: Structuralism and State-led Development

Postcolonial African governments adopted a structuralist approach in their efforts to achieve economic development. As African economies gained independence, the state’s role was considered integral to achieving development by neo-liberals and Marxists alike (Brett 2008). State-led development was undertaken as it was not only compatible with the diminutive development efforts of colonial officials and didn’t require large restructuring of the economic system (Cooper 2002); but also aligned with populist political aims of nationalist leaders and seemed achievable through increased government revenue from the rise in global demand for commodity exports (Berry 1993). However, efforts were undermined, as African states were weak, and leaders were aware they couldn’t afford to broaden the social base of state power (Ake 1981).

  The geographic situation compounded social, economic and political failures, constraining development (Brett 2008; Mkandawire et.al 1999). An abundance of scarcely-populated land, poorly performing infrastructure and weak communication linkages posed challenges to administering authority over large territories, making political centralisation difficult to achieve and sustain (Herbst 2001). The institutional inertia of indirect rule increased competition and conflict over government control, posing long-term challenges to state legitimacy (Mamdani 1996; Mkandawire 2014). The neo-patrimonial policies employed used state resources to pursue the political aims of power maximisation (Englebert 2000). Consequently, the capacity of the state was weakened, and developmental policies were avoided (Boone 1994; Berry 1993).

 State-led development saw some short-run success, but eroding political and administrative capacity, authoritarian regimes, civil conflict, corruption and uncontrollable external factors made the growth unsustainable. Many African economies experienced growth and improvements in social indicators on the back of foreign investment. However, the domestic capitalist class remained limited and magnitudes of capital flight made long term investment unsustainable, fuelling a foreign exchange crisis (Mkandawire et.al 1999). World Bank approved policies of import substitution aided growth, but there was little diversification in exports and no improvement in the agricultural sector, enforcing a dependency on global markets, compounding the unmaintainable nature of growth (Mkandawire 1999).

Whilst orthodox theory suggests long term economic development requires state building, in Africa, state building processes suppressed democratic participation and economic development. Consolidating political power was necessary for the state’s interventionist policies but came at the expense of democracy (Berry 1993). The lack of state legitimacy further weakened capacity (Englebert 2008). The demanding conditions for state legitimacy have only recently been met in developed countries, where strong capitalist economies emerged before the introduction of competitive democracy (Brett 2008). Structuralist theory makes heavy demands on state capacity and political integrity. Interventionist regimes have proved successful in Europe, but in Africa, direct control over resource allocation often led to gross inefficiency and widespread corruption (Brett 2008).

 Post-colonial Zimbabwe and Uganda give insight into the inconsistencies within the African experience. In Uganda, structuralism proved incredibly unsuccessful. Obote inherited a disarticulated, premature, ethnically fragmented economy. The insecure regime used patronage and extractive rents to buy political support. Ineffective policies and limited political accountability undermined state capacity and led to a withdrawal of donor support (Brett 2008). Democracy was unrecognizable: Obote used the army to maintain power until Idi Amin formed a military coup to dethrone him in 1971. Eventually, political and economic collapse led to civil war. Zimbabwe’s independence came in 1980, allowing the inheritance of a more sophisticated structuralist economy. The economy grew on the continued use of structuralist policies. Mugabe used violence to create a somewhat successful and democratic one-party state. Unlike Uganda, The ZANU-PF regime did not need to engage in destabilising economic transfers and political manipulation to retain power. However, the rigidities generated by the structuralist regime and pressures of the foreign exchange shortage forced a shift to liberalisation that was soon to destabilise this seemingly successful strategy (Brett 2008).

African Liberalisation: The Era of Adjustment

By the 1980s, the stagnant performance of African economies left them subject to pressures for political and economic reform from global markets, external conditions and international financial institutions (IFIs). Africa’s foreign exchange crisis, stringent US monetary policy fuelled by the Mexican debt crisis, a global rise in oil prices, and the Sahelian droughts presented insurmountable challenges for African governments. The ‘African crisis’ was associated with and exacerbated by intense conflict over political control and resource allocation, and a shift to military or authoritarian rule (Brett 2008). Governments were forced to turn to IFIs for help, but this came with rigorous policy conditionality that weakened government authority and generated a shift from structuralist to neoliberal regimes. IFIs attributed the crises to the interventionist nature of the postcolonial state and ‘inappropriate state dominated policies’ (World Bank 1981). The Berg Report led to the virtual universalisation of market-based reforms through Structural Adjustment Programs (SAPs).

The procyclical policy packages aimed to promote growth and restore macroeconomic stability but produced very uneven, largely disappointing, results (van de Walle 2001). Between 1980-98, median per capita income growth in Africa was 0.0%, compared to 2.5% in 1960-79 (Easterly 2001). African economies saw falls in investment rates and food production whilst the debt burden increased. The weakened state authority was met with worsened public service provision, salary reductions, and the removal of many subsidies (Cooper 2002). By 1990, it was evident that SAPs had failed, so IFIs added a political liberalisation conditionality which led to an extensive restoration of democratic institutions that were supposed to manage the crisis by improving accountability, reducing corruption and encourage civil sector reform (Brett 2008). However, deep-rooted corruption and the fiscal crisis made the provision of wages and services near impossible, as the political conditionality further reduced administrative capacity. States failed to provide public services for their people, which led to an even greater reliance on patron-client relationships (Cooper 2002). The state’s deficiencies undermined most attempts to build successful liberal democratic capitalist institutions (Brett 2008). The conditionality intended to bring effective democracy to Africa, but in many cases, regimes either remained authoritarian, rigging their way to political success; or effective democracies became ‘choiceless’ and thus, ineffective as they succumbed to the pressures of globalisation and aid conditionality (Mkandawire 1999). Neo liberal theory failed to recognise that weak states governed by clientalistic political regimes could not handle the transition to capitalist democratic society.

Whilst liberalisation was considered the beginning of Zimbabwe’s economic demise, it proved relatively successful in Uganda. The new NRM regime inherited a bankrupt state and was forced to liberalise and democratise by donors. Slowly it removed constraints on investment, monopolies, marketing boards, and reduced fiscal deficits. Opening the market facilitated a rapid return to growth but did little to rebuild state capacity (Brett 2008). In Zimbabwe, voluntary liberalisation reduced employment, worsened public services, alienated key groups and unified the opposition. Mugabe consolidated political support by using extractive state controls and populist anti-colonial policies (Raftopolous 2004). However, this only worsened the foreign exchange crisis, led to hyper-inflation and destroyed state capacity (Muzondidya 2010). The regime shifted back to extractive structuralist policies which led to donor sanctions only worsening economic performance.

Africa Rising? Diverging Success

Africa only regained its pre-crisis levels of per capita income in 2008 (World Bank 2010), but since, has seen considerable growth, though individual country performance has continued to diverge both in terms of economic success and democratic consolidation. African countries are generally more democratic today than they were in the 1980s (Lynch and Crawford 2011) and there is a general positive correlation between economic performance, political reform and market-based approaches (Bates et.al 2014; Jerven 2010). Rwanda is one of few consolidated autocracies in Africa but has experienced relatively high levels of economic success compared to many democracies in Africa (Hayman 2011). Africa’s relative success is largely due to China’s accomplishments. China’s increased demand for commodities have fuelled exports and a huge influx of Chinese FDI helped sustain growth over the last 15 years. In addition, the IMF marginalised African countries and failed to completely integrate them into the world economy, unintentionally protecting them from global financial crisis.

 Despite the general improvement in economic performance, there many weak states that lack legitimacy where the ruling elites find it less destabilizing to adopt neo-patrimonial strategies of power with their attendant propensity for corruption, clientelism and nepotism (Englebert 2000). Primitive accumulation and patrimonial politics continue to dominate the developmental processes in much of Africa and produce an alternative relationship between the capitalist class and the state than that specified in the orthodox model (Brett 2008). Many of these states have seen reduced donor support making liberalisation difficult. The economic and political costs of liberalisation could have been reduced with greater to donor support, but failure to do so has had some distressing consequences (Botchwey et.al 1998). It is arguable that IFIs considered Africa’s economic success unimportant, given the relatively small amount of money that was loaned, and the incredible generalisation of SAPs imposed. Africa is finally recovering but many economies lack the necessary infrastructure to do so effectively – a ramification of the weak adjustment policies. Africa’s varied success leads us to question the simplistic equation of accountable governance, democracy and development that has dominated donor thinking (Kohli 2004).

 The experiences of Uganda and Zimbabwe demonstrate the weakness of the ‘monoeconomic’ strategies inflicted by the IFIs. Uganda is regarded as one of the success stories of structural adjustment. Along period of neoliberal reforms produced two decades of steady growth. Growth has begun to slow at the expense of patronage politics used to consolidate NRM’s position (Singh 2017). Long term democratic prospects continue to be eroded. 2004 saw changes to the constitution and the two-term limit on presidency was removed. Uganda’s success seems unsustainable as it begins to mirror characteristics of its 1960 postcolonial government (Brett 2008). Zimbabwe’s liberalisation efforts chronically failed, producing a shift back to structuralism which included monopolising market boards, appropriating forex and allocating land to finance the state (Harold-Barry 2004). The country has been devastated from the political irresponsibility of the effectively autarkic regime. Output fell by 70% from 1982-2008, where inflation hit 79.6bn % (World Bank). 95% of the economy has been informalized and the current riots (2019) suggest there has been no improvement in the political or economic situation.

Conclusion

The African development experience has been full of contradictions and inconsistencies, both within the continent and with the global economy. The period of state-led development necessitated state-building at the expense of democratic politics. Liberalization weakened state authority and state building, undermining development efforts. The recent African experience has been varied and demonstrates the weaknesses of orthodox theories in explaining Africa’s development efforts. Zimbabwe and Uganda exemplify the diverse range of experiences within Africa, but more importantly, these cases show how economies forced to develop under liberal capitalist democratic ideals can have incoherent political and economic institutions breeding an alternative relationship between state building, the capitalist class, democracy and economic development.

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