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China/Africa: Development Lessons, 2
AfricaFocus Bulletin
Aug 29, 2011 (110829)
(Reposted from sources cited below)
Editor's Note
"The prospects for economic transformation have never been
better in Africa. The higher growth performance in the last
decade in Africa reflects an underlying trend towards
improved economic governance in Africa and the resolution
of many, if not all, conflicts. ... The new prospects also
reflect the impact on natural resource demand of emerging
economies. These prospects could speed up the resolution of
remaining problems of fragility and conflict as the
incentives to be part of the African growth story and
regional infrastructure programmes become much stronger." -
China-DAC Study Group
While the rising economic involvement of China in Africa
has drawn wide attention in recent years, there has been
significantly less attention to the impact of the Chinese
model in thinking about development strategies in Africa. A
new joint report from the International Poverty Reduction
Center in China (IPRCC) and the Development Assistance
Committee (DAC)of the Organisation for Economic Cooperation
and Development, made up of the developed
countries, is an index of the growing impact of such
reflection.
The report excludes issues on which significant
disagreement would be likely, such as the roles of
democratic institutions and civil society. And it only
touches briefly on "serious economic, social and
environmental costs" in China. But the extent of consensus
emerging from the study process is notable, and a clear
contrast with the free-market "Washington consensus" that
dominated "donor" involvement in Africa in earlier decades.
This AfricaFocus Bulletin contains extensive excerpts from
the second half of the report, which focuses on development
in Africa. Excerpts from the first half of the report,
summarizing the Chinese experience, are available on the
web at http://www.africafocus.org/docs11/ch-af1108a.php
The full report, and additional background on the China-DAC
Study Group, is available on http://www.iprcc.org or
http://www.oecd.org/dac/cdsg
Excerpts from the first half of the report are available on
the web at http://www.africafocus.org/docs11/ch-af1108a.php
The full report, as well as additional background on the
China-DAC Study Group, is available on http://www.iprcc.org
or http://www.oecd.org/dac/cdsg
For a previous AfricaFocus Bulletin on the emerging
consensus about the need for a developmental state, see
http://www.africafocus.org/docs11/eca1103.php
For previous AfricaFocus Bulletins on economic issues, see
http://www.africafocus.org/econexp.php
++++++++++++++++++++++end editor's note+++++++++++++++++
Economic Transformation and Poverty Reduction - How It
Happened in China, Helping It Happen in Africa
The China-DAC Study Group
Development Co-operation Directorate
Organisation for Economic Co-operation and Development 24-
Aug-2011
DCD(2011)4
Full text available as pdf at:
http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DCD(2011)4&docLanguage=En
China-DAC Study Group information is available at:
http://www.iprcc.org or http://www.oecd.org/dac/cdsg
Contact: Michael Laird - Tel: + 33 (0)1 45 24 90 33 - Email:
michael.laird@oecd.org
[continued from
http://www.africafocus.org/docs11/ch-af1108a.php]
Development Strategies and Development Co-operation in
Africa
Economic performance and the state in Africa
Responsible development-oriented states with a national
project for economic transformation are the key to Africa's
progress and the reduction of poverty.
This was the main message that African participants
conveyed throughout the China-DAC Study Group's four
events.
Well-functioning states in Africa are also a common
interest of Africa and its economic partners as more
extensive economic linkages with Africa are created; and
they are a common interest of the international community
as a whole as it works on global public goods agendas,
including peace and security, health, migration and climate
change.
Africa Grows Fast when Policy Syndromes are Avoided
African research on the growth record and prospects
presented at the China-DAC Study Group's events showed that
in the period 1960-2000, four recurring problems had cost
over 2% per annum in lost per capita income growth,
accounting for almost all of Africa's shortfall, relative
to successful developing regions: i) counter-productive
economic incentive structures; ii) "boom and bust" public
finances; iii) elite and ethnically-based income and wealth
capture, sometimes involving large-scale corruption by a
few; and iv) state failure or breakdown. Where these
problems had been avoided or overcome, African country
growth rates were among the highest in the world. The
research showed that constitutions providing for a
constrained executive, particularly with term limits, would
largely work in resolving these problems.
Reference
[see full report]
The basic ambition of the African Union, widely supported
by the international community, including China and
OECD/DAC members, is to ensure that African countries
become responsible development-oriented states, enjoying
peace and stability.
Economic governance and regional integration: The evolving
framework for African development
The strategic importance of economic governance and
regional integration was a major message from African
participants in the China-DAC Study Group's events.
Africa's leaders have been creating the policies and
structures for peace and stability and economic
transformation across the continent. In the last decade,
African countries have made very significant progress in
improving economic policy, at both macroeconomic levels and
at sectoral and microeconomic levels. Progress has also
been made in reducing civil and regional conflicts, but
there are remaining challenges of elite and ethnic capture
of resources, corruption and state breakdown.
For some decades following independence, most African
countries relied on long-term external support for policy
analysis and advice, whether from international
organisations or professional consultants. And the small
population size of many African countries means that the
cost of creating their own policy analysis and research
capacities is high.
Progressively, however, African institutions have created
shared capacities for policy analysis and review, across a
range of fields, including political development, regional
integration, infrastructure, gender issues, agriculture,
science and technology, and information and communications
technologies.
The regional economic communities are working to enlarge
and integrate the economic spaces in Africa. In conjunction
with the African Union and other institutions and
processes, they are developing plans and programmes to join
up the vast continent, so that its human and natural wealth
can be fully but sustainably turned into widespread
prosperity for Africans.
Africa's pathways ahead: Some key orientations
The prospects for economic transformation have never been
better in Africa. The higher growth performance in the last
decade in Africa reflects an underlying trend towards
improved economic governance in Africa and the resolution
of many, if not all, conflicts. The African Union and its
structures and agreed policy frameworks on political and
economic governance, supported by the UN Economic
Commission for Africa (UNECA) and the African Development
Bank (AfDB), have made a large contribution to this.
The new prospects also reflect the impact on natural
resource demand of emerging economies. These prospects
could speed up the resolution of remaining problems of
fragility and conflict as the incentives to be part of the
African growth story and regional infrastructure programmes
become much stronger.
In the light of the discussions at the China-DAC Study
Group's events, some key orientations for African states
and organisations and their development partners to share
include:
- Make a green economic transformation within a generation
to flourishing middle-income modern economies with low
poverty rates, the key framework for thinking about
Africa's future.
- Support the emergence of responsible development-oriented
states and address risks of state capture, conflict and
breakdown, by ensuring, through transparency and national
and international accountability systems, that income and
natural wealth is harnessed for national projects of
economic transformation.
- Exploit the opportunities at hand now for agricultural
modernisation, both small and large scale, to generate a
widespread growth dynamic with supply chains and economic
linkages that integrates the national and regional
economies and joins up with global markets. Small farmers,
men and women, take on the character of entrepreneurs in
this modern sector, generating incomes and helping to
correct high malnutrition rates.
- Support the development of African regional knowledge
platforms and centres of excellence as a means of speeding
up the acquisition of technology in agriculture and in
other areas.
- Think and work in terms of increasing the momentum on
regional integration and the creation of regional and
continental economic dynamics and infrastructure.
- Adopt the dynamic capacity development approach to
enterprise development, starting with current
strengths/advantages, with on-going adaptation and
interaction between the state and enterprises to promote
fast learning and capacity building in both the public and
private sectors.
- Take trade, investment and aid as opportunities to speed
up learning processes, acquire technologies and management
models and skills that can be adapted to the African
context.
- Support the emergence of a creative middle class through
upward mobility and attracting expatriate talent to return
home in the context of the national economic project for
economic transformation, to provide the entrepreneurial
skills and the well-educated human resources needed to
manage a more complex, more organised economy that engages
in regional and global markets.
Dynamics of development co-operation in Africa
The rapidly evolving multidimensional role of China in
African development was widely welcomed at all of the
China-DAC Study Group's events as providing new scope and
new diversity in Africa's external economic relations.
China and OECD/DAC countries all have long traditions of
providing aid and wider economic co-operation to Africa.
Their enterprises, both state and private, play large roles
in African development.
While OECD/DAC countries have accounted for the major share
of trade, investment and aid flows with Africa, the current
dynamics of Chinese trade and investment and aid are making
it a key driver in African development.
The Chinese government's "Going out" policy encourages
Chinese enterprises to invest abroad, partly to help
diversify China's large reserves of foreign exchange. Many
Chinese aid projects are being structured on an enterprise
basis to generate sustainability. And China, along with
OECD and other countries, is investing to expand oil and
mineral resource supplies.
There is major scope for China to increase further the
scale of its trade, investment and aid to Africa. This will
depend on the effectiveness and the sustainability of the
growth trajectories of its African partners. It will also
involve working with the larger agendas for regional
integration and on the successful functioning of the
architecture for peace and stability in Africa.
China's institutions for planning and delivering aid and
other official financial resources have evolved
significantly since the mid-1990s, with the creation of
special financial institutions and the development of coordination
systems among Ministries. The financial
institutions are capable of putting together large packages
of financial support for infrastructure.
The China-DAC Study Group was impressed at the readiness of
the Chinese authorities to be involved in transformative
investment and infrastructure packages. The readiness of
China to be involved in inter-regional infrastructure was
also welcomed and encouraged, building on China's
engagement in the co-operation on African infrastructure.
How Chinese financing terms might affect the competitive
position of African investors and construction companies
was a question raised for consideration. And providing more
opportunities for local companies by relaxing its tied aid
practices would be a significant contribution by China to
helping African enterprise development.
There are questions on sustainability and transparency,
which are important for the full ownership and
accountability of the developing countries concerned. In
order for African countries to be fully in the driver's
seat in their relations with development partners, it will
be important for them to have more complete information
about levels and conditions of assistance and on the
effective terms of various commercial deals that partners
are bringing to the table.
DAC countries are rebuilding their development support for
Africa in the fields of agriculture and infrastructure,
after two decades of decline in these areas. They are also
focusing in the context of the Paris Declaration on Aid
Effectiveness and the Accra Agenda for Action, in
partnership with African countries and other development
partners, on supporting strong developing country
ownership, country public management systems, resultsfocussed
approaches and local accountability. Providing
more predictability in aid flows and working in longer time
frames remain challenges in this context.
Africa's external economic linkages are also being enriched
by the activity of other emerging market economies. A new
set of comparative advantages and complementarities is
emerging in Africa's foreign economic relationships and it
is important that African countries are able to shape these
interactions in terms of their own development frameworks
and determine their own development paths.
Assisting African countries to have independent development
capacities is a basic, shared objective of China and
OECD/DAC countries. Current developments in Chinese and DAC
co-operation policies which promise to improve the
coherence and quality of the support for African
development include:
- The publication by China of two government White Papers.
- The agreement that the African Union will now be a full
member of the FOCAC.
- A public statement by the DAC welcoming the increasing
role of emerging countries as providers of development
assistance.
- The preparations for the Busan High-Level Forum on Aid
Effectiveness.
Transparency and corporate social responsibilities
Enterprises, African and foreign, will have a key role in
shaping the future development path for African countries.
Against this background, corporate social responsibilities
and green growth challenges and opportunities are important
areas for co-operation among all development partners. The
China-DAC Study Group linked into relationships between
Chinese and African employers, enterprises and experts in
the area of labour standards and supply chain management.
An African platform for discussing corporate social
responsibility issues could play a role in this context.
China, OECD and other countries whose enterprises are
active in Africa have a major interest in contributing
actively to the development of African economic governance
arrangements in these areas.
Lessons for Development Co-operation
What China can learn
China has devoted much high-level attention to African
development over the decades, with regular visits by top
leaders and, in the last decade, has created the FOCAC and
associated processes for articulating and implementing its
assistance to Africa. A new China-Africa Research Centre
has been set up. China participates in UN peacekeeping
missions in Africa. It has also created financial
institutions and instruments for official development
financing. The special advantages of Chinese aid in speed
and cost, especially in infrastructure and construction,
and its responsiveness to local requests are appreciated in
Africa. In the last few months, China has published two
significant White Papers:
- On trade and economic co-operation with Africa which
expressed China's desire to work with others to jointly
promote peace, development and progress in Africa.
- On foreign aid, which provided an overview of China's aid
efforts and policies over the past decades and announced a
new interministerial co-ordination system for managing its
foreign aid and plans to increase aid quality and to work
and learn with international development partners in this
respect.
The China-DAC Study Group found that China could contribute
further to African development by:
- Bringing more of its transformational thinking into its
policy dialogue with Africa.
- Helping to show how the learning model of development can
work to build the capacity for diversified participation in
the global economy, including through learning from foreign
aid and investment.
- Supporting African Union structures and policy frameworks
and working more at the regional and subregional levels,
including to develop interregional infrastructure and
knowledge platforms.
- Helping African countries to learn from the ways China
successfully managed aid and foreign investment,
particularly through integration of aid project management
into regular ministry structures.
- Being more transparent in its aid programming and the
terms of its financing, and assisting African countries in
the assessment of financial sustainability issues.
- Helping to implement African and international codes on
corruption, resource revenues and corporate social
responsibility.
- Strengthening knowledge about African conditions among
aid staff working on and in Africa.
- Working on its aid quality agenda and introducing a
systematic approach to its aid management systems,
including planning, monitoring and evaluation systems.
What OECD/DAC members can learn
OECD/DAC members provide a wide range of support to African
countries, including project, sector and budget support.
They have been working with African countries in a variety
of forums to improve aid effectiveness, and the DAC hosts
the Paris Declaration follow-up process, which now has a
developing country co-chair, and a Task Team on South-South
Co-operation. There is now an explicit effort, focused on
developing countries' own concerns, to correct the excess
costs and perverse incentives of an extensive aid system
with multiple delivery channels and conditions and complex
processes. Large declines in aid to agriculture and
infrastructure in the 199Os, as aid levels fell and social
development and governance assistance rose, are now being
reversed as the growth, agriculture and aid-for-trade
agendas receive new attention. Aid to Africa has grown
significantly over recent years, though remaining some
distance from the announced target of doubling aid by 2015.
A number of other important OECD work areas are also
generating co-operation with Africa, notably on taxation
administration and international tax integrity, investment
and public expenditure management. And the OECD helps
support the African Partnership Forum which maintains a
dialogue process associated with the G8. The DAC has
recently issued a statement welcoming the special
contribution of development experience and co-operation
capacities from emerging countries and a new openness to
their participation in DAC activities.
The China-DAC Study Group found that OECD/DAC members could
contribute further to African development by:
- Framing their co-operation in terms of the economic
transformation process, going beyond aid effectiveness to a
wider development effectiveness concept applied to Africa.
- Doing more to help build science and technology
capacities, higher education systems and knowledge
platforms, with the potential for creating regional and
continental networks kept in view, drawing on their
experience in these fields with China and other emerging
countries.
- Supporting African Union structures and policy
frameworks.
- Helping to implement African and international codes on
corruption, resource revenues and corporate social
responsibility.
- Maintaining the recent momentum of support for
agriculture and infrastructure development, working in
relevant forums with emerging countries with special
knowledge and expertise.
- Examining how aid reporting can better capture the
technical co-operation activities of emerging countries in
terms their impact, and not just their monetary cost.
- Reviewing how comparative advantage, cost structures and
complementarities may be shifting among assistance
providers as emerging partners build up their aid
activities.
- Exploring how trade, investment and aid linkages and
financing packages can mobilise additional actors and
capital for economic transformation processes in Africa.
What African countries can learn
African participants in the China-DAC Study Group's events
were determined that their countries should define their
own futures. They stressed that political and economic
fragmentation made regional integration essential. And they
looked to African leaders to take up the task of creating a
responsible development-oriented state able to bring
together ethnically complex societies and ensure peace and
progress in their neighbourhoods. In fact, African
institutions and policy analysis and review processes have
been getting stronger over the last decade. Policy
frameworks and economic management are clearly improving.
Regional economic communities are complex and overlapping
and regional economic linkages are growing only slowly, but
there are new impulses. Agricultural development has become
a high priority with an active, continental agenda.
Communication technologies and business models have been
found that work with great success in Africa. But
competitive elites and ethnicities are still a major
problem in a number of countries. The African Union has the
difficult task of facilitating solutions to such problems.
It has to be recalled, however, that many emerging
economies of today began their success stories from
situations of conflict and turmoil, which transformational
leadership was able to resolve. There are clear examples of
this in Africa which can serve as an inspiration for
sustainable political settlements in the remaining troubled
parts of the continent.
The China-DAC Study Group found that African countries
could contribute further to development at home by:
- Fostering the emergence of a responsible, developmentoriented
state with a political consensus that reaches
across competitive elites and ethnicities.
- Taking the economic transformation paradigm, working
through dynamic capacity processes as the framework for
development strategies, nationally and regionally. Bringing
development partners to think in these terms also, and
presenting strategies and operational programmes and
projects in this context.
- Pushing ahead with the regional integration agenda and
finding creative solutions to the development of interregional
infrastructure.
- Reinforcing the priority for agricultural modernisation
and its role in creating a broadly based growth dynamic,
nationally and regionally.
- Leveraging the communications revolution in Africa to
exploit its potential for leapfrogging in knowledge
acquisition and enterprise creation and global economic
linkages.
- Developing further the policy analysis and review
capacities and processes now in place in Africa for
pragmatic policy making and performance review. Ensuring
that the civil service is performance oriented.
- Creating close interactions between the state and market
enterprises in a forward-looking performance-based mode and
promoting learning and technology acquisition capacities.
- Taking inspiration from successful emerging countries,
including securing the maximum benefit from international
assistance by strengthening ownership, capacity development
and mutual learning.
...
AfricaFocus Bulletin is an independent electronic
publication providing reposted commentary and analysis on
African issues, with a particular focus on U.S. and
international policies. AfricaFocus Bulletin is edited by
William Minter.
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