The People's Republic of China and the Federal Republic of Nigeria signed an oil agreement worth at least $23 Billion. The shift in oil policy in the West African state has created friction with Western-based oil firms that have dominated since 1956., a photo by Pan-African News Wire File Photos on Flickr.
Washington vs Chinese model
Wednesday, 04 July 2012 11:41
Sanusi Lamido Sanusi
The need for radical re-thinking on development strategy is imperative for African countries to be relevant in the global economy.
This is further reinforced by the stark reality of extreme poverty in Africa. Over the years, the share of Africa in global trade remained insignificant despite the implementation of the policies that were recommended by international financial and development institutions, such as the International Monetary Fund and the World Bank. The dismal performance of African economies calls to question, the effectiveness of the economic ideologies being prescribed by international institutions, and points to the need for a paradigm shift in order to achieve sustainable development.
Over the last quarter of a century, Africa has been at the receiving end of liberal orthodoxy from these institutions that have persistently advocated, among other things, privatisation of state-owned enterprises, free trade, intellectual property rights protection and deregulation of foreign direct investment as requirements for developing countries to grow and develop. This policy prescription was what John Williamson coined the “Washington Consensus.”
This neo-liberal ideology is reflected in the policies of the Bretton Woods Institutions: the IMF, the World Bank and the World Trade Organisation. Specifically, both the IMF and the World Bank condition their offer of assistance to developing countries on the strict adherence to the Washington Consensus policies. The Consensus had continued to be under severe criticism because the performances of countries that adopted its doctrine, especially in Sub-Saharan Africa, Latin America and the former
Soviet bloc showed that it had failed to deliver sustained growth as promised by its promoters.
The remarkable economic growth of China in the past 30 years, with the country having declined to adopt the original and extended framework of the Washington Consensus, has raised further doubt on the unassailability of its capabilities. The significant economic miracle of China which has been described as the “Beijing Consensus” by Joshua Cooper Ramo, represents a symbol of China’s success and a challenge to the Washington consensus normative power.
The Beijing consensus is enshrined in three principles of innovation, Chaos management promotion and theory of self-determination.
These tenets are embedded in the policies of China that features incremental reform, innovation and experimentation, export-led growth, state capitalism and authoritarianism.
Though the Beijing consensus had recorded remarkable success, it has, however, been argued, that it might not be sustainable in the long-run because it maintains large state-owned sectors and authoritarianism, which runs contrary to people’s aspirations, as the series of revolutions in the North African countries have shown (Williamson, 2012).
In addition, a historical review of how the advanced countries developed shows that they did not adopt policies that they are recommending for the developing countries.
As pointed out by Ha-Joon Chang (2003), some of the policies that the Bretton Wood institutions kick against today, were the very policies they adopted for their development. For example, the WTO currently opposes the use of export subsidy and protection of infant industry, whereas the United Kingdom and the United States embraced these policies in their early stages of development.
There is therefore, the need for pragmatic policies and institutions that best suit the developmental stages and realities of developing countries in order to achieve sustainable and fast growth, and for the benefits of developed countries in the long-run (Ha-Joon, 2003).
Against the apparent failure of the Washington Consensus as applied in developing countries, and the possibility of the un-sustainability of the Beijing Consensus in the long-run, there must be a paradigm shift in Africa’s development strategy for sustainable economic development. The new approach should identify development paths that focus on a pragmatic commitment to progressive change as a possible alternative to the current development strategy.
The question remains whether Africa can leverage on its potentials of huge natural resources, regional market size and human resources to formulate a radical development strategy that fit its realities and cultures without adopting the tenets of the Washington and the Beijing consensus.
Sanusi Lamido Sanusi, CON is Governor, Central Bank of Nigeria. This was part of his presentation at the Eirenicon Africa Public Lecture Series held at The Royal School of Medicine, 1 Wimpole Street, London, United Kingdom. Courtesy: Central Bank of Nigeria.
This article is reproduced from the African Executive.