There are many theories on national economic development, but the one I find quite compelling at the moment, based on its explanatory power, is the theory of comparative value, which states that, in the medium term, relative to others, the thriving economy is the one that is most valuable to others or perceived to be valuable, in a manner that also satisfies the ultimate goals of the one offering the value.
The theory further infers that developing countries are on track with development to the extent to which they prioritise the development of competences and institutions required to be of value to others in a manner that satisfies their ultimate goals.
This theory is adapted from the basic divine concept of serving others as oneself. The idea is to see the relationship with others as complimentary, not just competitive, though ultimately complimentary to oneself.
Instruments for exerting this comparative value include:
-Exerted industrial competitiveness (e.g., China’s rising dominance)
-Exerted Military Might (e.g., British Colonial Might)
-Paper Currency Domination
-Exerted Cultural Persuasion (the USA’s fading cultural and ideological influence)
These instruments must be deployed to be relevant; their mere existence without deployment in relation to others is insufficient. Also, they require long-term structures to ensure their current relevance, such as bilateral, regional, and global trade agreements, military pacts, and organised cultural institutions. They can also be deployed together.
Mechanism of operation:
Nations are always in active competition with each other; the flow of trade should ideally ensure mutual prosperity; however, there is often a pervasive tendency in men to consciously or unconsciously perpetuate inequalities. This is primarily because people are organised into clans, villages, and nations; hence, they often have little qualms about “beggaring their neighbours.” The deployments of these instruments (superior competition, military might, currency dominance, and culture) provide a relative advantage to the deployer.
Case study: Colonialism and post-colonial WTO and Bretton Wood Institutions
Colonialism was simply deployed military might by the West that created an illusion of trade between the colonial masters and the colonised people in items required by the colonial master and at the terms determined by the master.
Post-colonial trade institutions essentially removed the trade instruments that post-colonial nations could have deployed to better renegotiate trade relations, and unfortunately, African nations still have not been able to achieve the internal capacities required to achieve such engagements.
The goal here is not to justify the morality of these instruments; rather, it is to foster an understanding of their effects—they created a sense of value, both perceived and real. For example, by creating an unjust trading regime at the barrel of a gun, most of North America and Europe achieved the miracle of the industrial revolution. Understanding this historical effect is critical to understanding the development plans of the future; the perpetrators were convinced they were acting in the best interest of their host nations.
Practical implications for Africa: What is our ultimate goal?
The seeming inability to identify and prioritise what the ultimate goals should be and the manner in which they should be pursued appears to be the most limiting factor to development.
What does Africa need to be valuable to others in a manner that prioritises the ultimate goals of African nations?
The answer to this question is simple, but it is often not prioritised. What Africa needs is the ability to sustainably convert her raw materials into finished goods that the world needs in a manner that ensures decent work and a quality of life for her people.
To achieve this, Africa would need to build human capacity, negotiate to ensure more domestic manufacturing, and create a stable environment to trade with the world. Everything else is secondary.
From this, it becomes clear that development aid, economic policies and prescriptions from development organisations, loans, trade relationships, grants, international diplomacy, and a host of other common prescriptions are not important if they do not achieve this. However, to be able to achieve this, African nations will need to be able to renegotiate their relationship with the world.
Because of the relatively poor competitive status of most African industries, renegotiation will require the implementation of protectionist measures that protect infant industries as they mature. This capacity to negotiate is the challenge, and the biggest obstacle to this is the urgency of the moment; we are often unable to pause, to decouple a little, to step back.
The price of renegotiation with key partners:
This capacity to take a break from the table must be pursued, and it is pricey. At a national level, with rising debt obligations and the need to service these obligations, there is pressure to sustain the status quo and the risk of social upheaval if anything worsens the existing poverty level of the population.
On a personal level, this price can even be higher as the bulk of the educated middle class appear to be primarily focused on survival; hence, though Africa is underspending on education, we are yet to deploy our brightest to our most pressing challenges. Sometimes it is the poor business environment within the nation; sometimes it is that the brightest are afraid.
Strengthening domestic agriculture through a significant agricultural revolution is essential for ensuring food security. When a nation has a reliable food supply, it gains a stronger position for negotiating trade policies, including potentially implementing some industrial protectionist measures. While many developed countries subsidise agriculture, it’s not a universal practice. Credible leadership and cultural shifts are crucial for building a robust agricultural base.
There are enough examples to show that nations can decouple from their trade partners momentarily, provided that they achieve better terms for re-engagement.
The mining industry (e.g., oil and gas, rare earth minerals), mineral processing and refining, light manufacturing, and agricultural processing are some examples of key industries that African nations must deliberately insist on developing domestic capacities, even at the risk of some frosty relationships and significant upheavals. The status quo is apparently non-sustainable.
Okwonna is CEO, Octoville Development Company Limited and can be reached at [email protected]
