Beating the Resource-Curse? Lessons from Bolivia, Kazakhstan, Mongolia and Zambia

ieg_admin — Tue, 02 Feb 2016 01:07:24 +0000

Beating the Resource-Curse? Lessons from Bolivia, Kazakhstan, Mongolia and Zambia ieg_admin Mon, 02/01/2016 - 20:07

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You write that: "Some of the most important steps a government can take are focusing on the fundamentals – maintaining macroeconomic stability, investing in infrastructure, improving the business climate, and encouraging private investment." Actually, the fundamentals are personal security, quality of life, education and health care. All other things, including those named above, are merely means to those ends. I know that WB realizes this, but I wish it would make it more explicit in all its writings. That could help WB to avoid much of the criticism it encounters. It would also help its economists to keep perspective and not put Intermediate Outcomes before Impact. Whether "Bolivia’s economy held up well last year" is relevant, but what really matters is how individual Bolivians experienced life last year. How the economy fared merely tells us how economically and fiscally sustainable the status quo is. It doesn't tell us about how the poorest decile got along, whether the education system was adequately funded considering available resources, or whether - arguably most important of all - the economy "held up" by operating in a way that, as an integral part of the wider global economy, is ecologically sustainable in the context of rapidly shrinking Andean glaciers. tillbruckner@gmail.com

Zambia has been independent for over 50 years. However, it seems not to have learnt to manage the adverse effects of the cycle of commodity prices. The economic diversification call goes back to the 1960-70s of the then ruling party, the United National Independence Party (UNIP). During that time most of the member countries of the Organisation for African Unit had a similar stance. There was an anti-colonial stance at the time. It is a call that we hear often when we are going through hard times. I hope this time that there will be more action than talk. Recently the African economies have been linking themselves to China. The challenges being faced by China should have been foreseen and are a wake up call for African governments. There is need not only to diversify but trade more within the African trade blocks. To improve the economic performance of African countries, there is also need to have good leaders (politicians as well as managers of industries), independent civil services and freeing the government institutions from fearing businesses connected to powerful politicians. Without good leaders who will observe principles of good governance, transparency and accountability, African countries would continue being under developed. There have been many civil service reforms across Africa but the service still under perform because of political patronage and appointment of political cadres to important positions. Though there are so called pro-poor development and public policies, the reality is different. The powerful lobby groups can get away, for instance, with corruption and including not paying or under paying taxes. The ordinary citizens cannot easily do that and do not usually get involved in designing policies; e.g. the removal of subsidies of the staple food or the abolishing of Windfall tax. Civil society is also weak and usually though vocal may not influence changes in government policies. It makes sense in time of higher prices of commodities to build reserves. However, the government tends to give concessions to foreign investors in major sectors of the economy in order to attract more foreign direct investment. Revenue Authorities also tend to be poorly managed and unable to manage collect appropriate revenues. There are still challenges of illicit flows of funds from Africa and an unmanageable informal sector and shadow economy. In the end its is the ordinary citizens and workers in the formal employment sector that bear most of the burden of government revenue. The challenge is to enhance fair revenue collection systems and also to build local entrepreneurs who can compete on the global market. The entire education system may also need to be refocused to produce innovative graduates and entrepreneurs. We need to focus on new areas of growing our economy including the emerging information industries. The current growing tertiary education sector seems to be galloping to produce a balloon of frustrated educated cadres; a time bomb. Most of the students tend to chase soft courses; i.e. humanity courses especially in business. There are, however, no corresponding new jobs to absorb the growing number of graduates from these new universities and colleges obtaining such qualifications. Even the employed graduates are getting more frustrated as they are obtaining more degrees and certificate without any corresponding rise in emoluments and career ladders. There are now many employees pursuing part-time studies. However, this does not mean an increase in productivity as a result of continuous education and workshops. A lot of workers are attending a lot of workshops but nothing continues to work or change in their work attitudes. Most of these employees are now professional students and concentrate more on their studies than work. Employers need to start evaluating the cost and impact of continuous education of these employees on productivity. The national debts will also need to be watched carefully and their repayments need to be factored in on any discussion of Zambia's future development. Zambia's new technocrats need to show that they are worth their salt. We now have of highly educated personnel in such institutions as the Ministry of Finance and its supported institutions. Lessons from the current and past economic crises, and the economic restructuring reforms of Zambia and other countries should be used to come up with new development programmes.

kazakhstan

Beating the Resource-Curse? Lessons from Bolivia, Kazakhstan, Mongolia and Zambia

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World Bank Group Engagement in Resource-Rich Developing Countries: The Cases of the Plurinational State of Bolivia, Kazakhstan, Mongolia, and Zambia