20 August 2017

Ethiopia: Democratic Developmental State for Sustainable Development

The establishment of Democratic Developmental State of Ethiopia happened to be an answer to a failed ideology of neo liberalism which is vigorously promoted by western countries and their extensions, international organizations, to instill in African countries.

Democratic Developmental state of Ethiopia is a result of a long journey in searching alternative path of growth which suits the countries immediate and strategic interests. After the collapse of socialist camp in late nineties and failure of socialist planned economy paradigm, neo liberalism was seen as a victorious ideology and a remedy to African problem.

Though the structural adjustment program SAP which developing nation has been subjected to follow by global financial institutions and their donor western countries has failed to bring expected development and success.

Let's consider what Developmental State is from different materials on the issue. In a general term, it refers to a state which makes its primary goal to enhance economical growth and transformation. To achieve these goals developmental state, differing to neo liberal paradigm, intervenes and plays a leading role in leading the direction and pace of economic development.

Furthermore, developmental state is explained as neither socialist nor free-market but something of unusual combination which is characterized by the "Plan-rational capitalist developmental state" with its intervention and rapid economic growth. Development is a process of discovery and since every country has uniquely different circumstances, there is no one-size-fit-all model of developmental state and policy to all countries.

However there are general characterizations of developmental state which are basic to all and in all circumstances. First of all developmental state actively intervenes in the economic process to facilitate growth and transformation.

Secondly intervention of developmental state is oriented toward less public ownership and usage of set of economical leverage of incentives. These instrumental leverages include such as subsidies, tax breaks, tax credits, import-export control and promotions, targeted financial and credit policies etc.

Another common feature is that the existence of professional and effective bureaucratic apparatus which is exclusively adhered to developmental state ideas and goals.

Likewise, it encourages and primarily relies on private sector investment not on public funds. Extensive dialog and cooperative engagements with private sector are prerequisite for developmental state. Lastly but not least, developmental state requires a developmental paradigm by which underpinning a social support for its vision of development.

As Mkandawire notes, "...in that it conceives its mission as that of ensuing economic development" Even though the notion of developmental state at present time is mostly associated with East Asian countries such as Japan, Taiwan, Malaysia, South Korea etc, in seventeenth and eighteenth centuries European countries used to have the same approach toward government role in which government plays an active role in speeding growth and transformation of economy.

Economic policies which are based on the premises of neo liberalism ideology such as limited government, market fundamentalism, monetarism, and individualism failed short to reflect and resonate with social structure and economic reality of developing countries. As a result, the developmental state growth paradigm which has been proven to be effective in East Asian countries has become a promising alternative to African countries including Ethiopia to enhance development and transformation.

The architect of Ethiopian Democratic Developmental state, late Prime Minister Meles Zenawi, has been a passionate advocator and campaigner for democratic developmental state model of development for the whole African countries.

As scholar he has contributed an important theoretical works and analysis on the impediment and adverse impact of neo liberalism on developing economy and made a founded case for the implementation of democratic developmental state in the continent. Not surprisingly UN Economic Commission for Africa has taken his recommendation as a frame work.

The late PM Meles, argues that even if a developmental state was to be exclusively concerned about accelerating growth, it would have to construct the high social capital that is crucial for its endeavors. He added more that it would have to stamp out patronage and rent-seeking. These are the very same things that create the basis for democratic politics that is comparatively free from patronage. A victorious developmental state would thus be very well placed to be both developmental and democratic, he summarized.

Similarly, he noted that there is a catch, however. When a developmental state is established it is unlikely to find a situation where rent-seeking has been stamped out, social capital accumulated etc. If that were the case the country would have been engaged in accelerated growth even before the establishment of a developmental state.

In addition, he stressed that it is hence the developmental state that will have to prepare the ground and accelerate development at the same time. Originally, he continued, consequently the jeopardy of democratic politics becoming riddled with patronage and rent-seeking will be there. A more slight argument has so been, "How can the developmental state clean-up the mess of patronage and rent-seeking in the initial states of its establishment by anything other than undemocratic means?" he asked.

He furthered, a related issue has been the need for continuity of policy. "Developmental policy is unlikely to transform a poor country into a developed one within the time frame of the typical election cycle."

He described more, there has to be stability of policy if there is to be continued and accelerated economic growth. "In a democratic polity uncertainly about the continuity of policy is unavoidable. More damagingly for development, politicians will be unable to think beyond the next election etc." It is argued so that the developmental state will have to be undemocratic in order to stay in power long enough to carry out successful development.

Neither of these two related concerns could be dismissed off-hand, he continued. That is perhaps one of the reasons why democratic developmental states have been an even rarer species than developmental states in general. But those states which have played a developmental function and have done so in a democratic fashion, such as the social-democratic coalitions in some Scandinavian countries and the center-right coalition in Post Second World War Japan, the so called dominant partly democracies can point to one way out, he noted.

Studies have shown that stable long-term coalitions which stay in power for a long period but do so by democratic means can provide the needed continuity and stability of policy, he detailed. The typical examples in these regard have been coalitions based on the labor movement and the middle classes in some Scandinavian countries, and coalitions between rural population and the right in Japan. The ruling coalitions in these countries have had regular, free, open and fair elections, and the basic political and human rights have been respected.

PM Meles further argued, a critical issue is therefore can such a stable, democratic and at the same time developmental coalition be established in a developing country. One group that cannot be part of the coalition is the private sector. One of the defining characteristics of a developmental state is that it must be independent from the private sector.

He continued, it must have the ability and will to reward and penalize the private sector actors depending on whether their activities are developmental or rent seeking. It cannot do so if the private sector is in the coalition. Obviously it does not mean that the coalition will have to be hostile to the private sector.

In the end, what the developmental state does will strengthen the value creating part of the private sector more than any other alternative. It only has to be independent from the private sector while at the same time doing things that will punish the rent-seeking part and reward the value creating part of it, he furthered.

"Any democratic state, developmental or otherwise, in a developing country will have to be agrarian at least in its initial phases. The other alternative is to wait until a substantial business and middle class has been created i.e. until much of the work of accelerated growth has been carried out." PM Meles said. The problem, however, is that without a developmental state, most if not all of these countries will be stuck in the poverty trap and the substantial business and middle class will not be shaped.

In addition, PM Meles argued, "Technically policy stability and continuity could be achieved even when parties regularly replace each other in governing the country. But this can be so only where such a solid consensus among politicians and the population on fundamental policy has been achieved and where politics is confined to dealing with trivialities and personalities. Such a situation is very unlikely to emerge in a developing country." Politics based on personalities can easily degenerate to patronage politics, he said.

The PM supplemented, the most likely scenario for a state that is both democratic and developmental to emerge is in the form of a dominant party or dominant coalition democracy. Most of what a developmental state has to do in order to be a developmental state are also the things that need to be done for a stable democracy to emerge in a poor developing country.

The critical additional step required is to establish a solid developmental coalition to govern the country democratically, he added. The basis for doing that is those steps that a developmental state will have to take any way. There is therefore no reason why a developmental state should necessarily become undemocratic. There is every reason to suggest that if a developmental state were to also be democratic the "hegemonic" nature of its development project would be achieved faster and held more deeply because it would emerge from free debate and dialogue. A democratic developmental state is thus likely to be even more effective as a developmental state than an undemocratic one.

Therefore, a stable democracy can emerge in a poor country and what the requirements are for such a policy to appear. They largely coincide with the requirements for the emergence of a developmental state. Where the circumstances for the appearance of a developmental state do not exist, the circumstances for the emergence of a stable democracy in a poor country do not exist. One can therefore conclude that the prospects of a stable democracy in a poor country are intimately related to the establishment of a developmental state and achieving accelerated development. In poor developing countries, a developmental state, accelerated development and stable democracies appear to be parts of the same package.

Moreover, PM Meles, suggested that the only exception one can make is that accelerated development and developmental state can occur in a non-democratic polity. But that would not change the basic conclusion; where the circumstances for a developmental state do not exist the chances for a stable democracy to emerge are indeed very remote, he elaborated. Where they exist while there is no guarantee for democracy, there is a reasonable chance for a developmental and democratic state to emerge. In the end, therefore, the chances of a stable democracy in a poor country are related intimately to the emergence of a developmental state and accelerated development associated with it.

Under astute leadership of PM Meles Zenawi Ethiopian ruling party (EPRDF) has adopted developmental state model of growth. The development strategy has been aimed to bring a structural change and transformation of the economy through rapid industrialization and modernization of agriculture. Under the slogan "we will make poverty history" the government, as a leading actor and moderator of the economic process, has been able to mobilize a wide section of society and resources to reach this goal. Since 2003 the country has achieved a steady double digit annual growth rate and recently the government adopted 'Growth and Transformation plan' in which it declares its goal"... to reach the level of a middle-income economy as of 2020-2023"

Therefore, democratic developmental state is the right alternative for the sustainable development of Ethiopia as it combines the characteristic features of developmental state and democracy. In different words, by overcoming the challenges of developmental state through democratic approach the stretched near future general development would be achieved in democratic developmental approach.

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