Is Ethiopia burying or currying Developmental State?

Is Ethiopia burying or currying Developmental State?

NBE Blog

The fate of a much-praised economic policy in politically overhauled country  – By Andualem Sisay Gessesse – An article published recently by Addis Standard, a local media, titled, Ethiopia’s developmental state dead or alive? prompted me to raise the issue in the middle of a conversation with my colleagues from different disciplines. I meant to find out what exactly do they know and think about the policy and whether they feel it has a future in the now politically overhauled government and country.

“The Ethiopian version of developmental state is very much different from what we have seen in other countries like the Asian Tigers. The government has tried to implement developmental state policy under its biased political landscape which favors certain group of the society because of their ethnicity or political attitude,” says a civil servant working at a federal government agency for many years now.

“Yeah, I don’t think the Asian Tigers divided their people under such bias, and focused only on building those beautiful roads and bridges starving their people. Had that been the case, per capita income of a South Korean today wouldn’t have been over $25,000,” explains the civil servant who later asked not to be identified by name when informed about this article.

“I know that the developmental state theory has no problem by itself. It is a situation where the state plays the major role in the macroeconomy. But when it comes to Ethiopia, it didn’t work because the EPRDF has decided to favor certain groups and its party businesses and punish the other,” he argues. For him indications are now that Ethiopia is likely to abandon developmental state economic model in favour of fully liberalized economy in the coming few years.

A senior journalist from the state broadcaster, Ethiopian Broadcasting Corporation (EBC), then pitches in supporting the above argument. “For me developmental state is a means to suppress the people in general denying democracy and violating human rights under the guise of prioritising economic development. That is what we have witnessed in Ethiopia,” he says. “The regime was hugely investing in hardwares showing to the world how the country is growing while on the other hand begging for food to feed millions”.

From the comments exchanged and the silent agreement by the rest of the colleagues who didn’t express their views during the conversation, it seems the perception about developmental state in Ethiopia among relatively better politically-informed circles is more of negative.

Gedion Jalata, an Ethiopian scholar currently doing his PhD on developmental state at the University of Pretoria, South Africa, suggests findings from his studies support the assertion.

Accordingly, today many Ethiopians don’t have positive attitude towards the developmental state path. This includes those who are better aware of the fact that the model helped lift hundreds of millions of Asians out of poverty in just about four decades. Based on their experience, many associate developmental state as the most repressive development model that cares more about bridges and roads at the cost of basic human rights.

“Developmental state is not necessarily democratic. It can be authoritarian, like South Korea, which was under its president Park Chung-Hee for about three decades,” Gedion told New Business Ethiopia. Even though Gedion found out during his study that many in Ethiopia do not have positive attitude towards developmental states, he still believes it is a critically important path African countries should follow.

“Meanwhile, developmental state is not an option for African countries. It is mandatory,” he says, mentioning Botswana and Mauritius as good examples in Africa for effectively pursuing developmental state.

Almost a decade after coming to power in May 1991 toppling the Dergue regime through armed rebellion, the ruling coalition, the Ethiopian People’s Revolutionary Democratic Front (EPRDF) has declared it follows developmental state as the only path to Ethiopia’s redemption replicating the success of the Asian Tigers. And the chief architect was the late Meles Zenawi, who stated his articulation of developmental state in his unpublished dissertation titled, “Africa Development: Dead Ends and New Beginnings”.

But the experiences of best developmental state examples show that soft skills development is as critical as physical infrastructure development. That is why the best automobiles, electronics and smartphones are being designed and manufactured in those developmental states dubbed Asian Tigers – the likes of South Korea, Singapore and Taiwan.

Literatures show that government intervention in the economy of many developed countries in Europe and the United States was huge at their early stage of development. Before they started preaching liberalism and democracy today to the whole world, these countries have hugely invested in basic infrastructure such as railways, highways education and health facilities. That is why some literatures consider the United States and Europe as among the first in the world to pursue developmental state.

But the most recent success stories that inspired many African countries, including Ethiopia, is the fast-economic development and change in the livelihoods of the Asian Tigers in a short period of time after the second World War.

In another part of the world at recent times, reports show that many African countries’ leaders exercised developmental state as a tool to stay in power longer. The typical example of authoritarian developmental states in Africa are Rwanda and Ethiopia, while ANC of South Africa and Botswana are also mentioned as one party dominated developmental states. In Africa Mauritius is often mentioned as democratic developmental state.

The Asian Tigers, including Japan, Malaysia, China and Indonesia on the other hand genuinely used developmental state to improve the lives of their people, according to scholars in the field. Of course, with minimal corruption, favoritism and authoritarianism in some of these countries.
One of the success factors for a developmental state is to have a visionary leader, who is accountable and transparent with a succession plan and appropriate policies.

A genuine developmental state also needs merit-based bureaucracy linked to the needs of the private sector and the society and free from political intervention and institutions run by professionals not just loyal political appointees.

Instead of creating giant endowment companies on which the Ethiopian government has been busy, a genuine developmental state promotes the private sector and facilitates the emergence of giant private sector players like, Hyundai of Korea and Toyota of Japan.

Experiences of successful developmental states also show that protection of some strategic sectors such as finance, telecom and aviation have also played critical role in facilitating domestic private sector growth and to fund mega state infrastructure projects.

“I think developmental state is important for countries like Ethiopia because the private sector is weak in both capacity and structure. My assumption is the current government will continue to follow that path honestly learning from previous mistakes,” says Melaku Kinfegabriel, Business Consultant at Premier Consulting in Addis Ababa.

Promoters of developmental state suggest that in developing countries like Ethiopia, the private sector will not be interested to provide the basic services and infrastructure to the scattered rural population. They support this argument saying the ultimate objective of the private sector under liberal market is only profit. Hence, it has to be the duty of the government to fill the gap.

“Development is not an option. All governments before EPRDF have also been talking about it. The difference is the EPRDF has put it in clear strategy as developmental state,” says Tsedeke Yihune (Eng.), Founder of Flintstone Homes and a serial investor in entrepreneurial schemes.

“Meanwhile, development needs free market and free politics, which we lack in Ethiopia. What we have been witnessing after the death of Prime Minister Meles Zenawi, is just cornering of the private sector, embezzlement and sabotage in the name of development,” he says.

Despite shortcomings such as bad governance, backsliding of democratization especially after 2005, rampant corruption, nepotism and favoritism, in Ethiopia developmental state model which was officially introduced in 2002, has brought positive results, according to Gedion.

“Most of the development indicators I examined show positive results, despite the fact that Ethiopia has began exercising developmental state coming out of war with Eritrea and is landlocked nation,” he says.

The indicators Gedion looked at include decline in number of people living below poverty line, per capita increment, expansion of education and health facilities, among others, achieved after Ethiopia officially started implementing developmental state policy. In Gedion’s favour, World Bank statistics show that life expectancy in Ethiopia has increased from 53.3 in 2002 to 65.8 in 2017, while per capita income has gone up to $740 from $120 during the same period.

Though many in Ethiopia don’t seem to be comfortable to hear or talk about developmental state, Gedion concludes that the government will not abandon it all of a sudden.

It is at such interesting and crucial juncture in Ethiopia’s almost two-decade developmental state journey that the Center for International Private Enterprise (CIPE) and Forum for Social Studies are gearing to hold an international conference on the topic. With the aim of reflecting on developmental state and lessons from Ethiopia, this day long conference which is expected to be attended by several experts and stakeholders will be held in Addis Ababa on June 11.

At this topical conference next week, which features renowned Francis Fukuyama (Prof.) as a main keynote speaker, Ethiopia’s experience in implementing the developmental state model and the fate of the economic policy Meles laboured so much to promote across Africa, will be debated from various perspectives.

“In my opinion Ethiopian government is still following developmental state path. I don’t think full liberalization of the economy at this stage should be allowed. Addressing their shortcomings boosting domestic capital is very critical for both Ethiopia and Rwanda, which are considered as emerging developmental states in Africa,” Gedion adds.