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12/02/2013

Comments

Christine Pence

Professor Casey has said many times that those who wish to craft effective development policy must understand poor farmers. Ravallion’s paper echoes this claim. I thought it an interesting point that many countries throw all of their resources into development of the modern sector and largely ignore the agriculture sector that is hurting the most. However, when the majority of the poor are rural subsistence farmers, doing so seems largely ineffective. Having a booming modern sector is only possible if there exists the human capital to support it and the consumer to demand its products and services. However, if the government does not help individuals out of poverty, there is no opportunity for them to contribute to the modern sector and they are unable to act as a consumer. If inequality is concentrated in the rural areas, like it is in China and Sub Saharan Africa, then agriculture growth and rural development are particularly important and resources should be concentrated accordingly

This brings up another important aspect of the problem, that being institutions. We have discussed the fact that institutions are of the utmost importance for development. Good policies are only helpful if effectively implemented and effective implementation rest upon the existence of strong and supportive institutions. China was able to implement the hugely influential Household Responsibility System because the government was strong. This is where I feel Africa is at the greatest disadvantage. The governments in Africa are fraught with corruption and seem to be largely unconcerned with focusing policy reform on poor empowerment and development. For example, Ravallion notes how taxes in Sub-Saharan Africa burden the poor. Even when governments have the right intentions, the country is in such a state of debt and disorganization that their governing is largely inept. Although the people in government are among those who are doing best in Africa, government reform may need to be the central focus for development policy in the immediate future; nothing can come of rural development policy until the institutions exists to ensure that those policies achieve their greatest benefit.

Owenandrea

Although I was wary of some of the generalizations about the African continent, which was at times almost equated to a country, I actually found this paper one of the most interesting we have read this year, and I think it did offer informative insight into China’s development strategies.

First, Ravallion begins by qualifying some of the differences between the continent of Africa and the country of China. He said that the primary differences “between China at the outset of its reform period and the typical African country today [are that] African countries tend to have higher inequality, higher dependency rates, and lower population density.” Because of the high inequality, Ravallion argues that many African countries need to have a higher growth in mean income to have the same amount of poverty reduction as China. Similarly, the high dependency rates may hinder growth and poverty reduction. As for the low population density, less proximity between people may slow technological innovation, make certain infrastructure more expensive per capita, and create less “inter-country conflict” that some say “forge stronger states in the long term.”

Second, Ravallion discusses China’s progress against poverty. He talks about the huoku system that impeded rural migrants from moving to urban areas. Afterwards, he discusses the urbanization processes, FDI, and trade reform that actually did little to reduce poverty. These changes, he says, came after investments in human capital and agriculture—the investments that did the most to reduce poverty.

Third, Ravallion discusses the rising inequality in China that might be problematic for African countries where inequality is already a bit high. However, he says that there is not necessarily a trade-off between equality and growth.

Fourth, Ravallion discusses achieving pro-poor reform in China. In the 1980s, the Household Responsibility System in China redistributed land and required families produce a quota of production to the state, but these families were free to keep and sell everything they made beyond their quota. These procedures gained support because people were upset about the Cultural Revolution and policies of the recently-deceased Mao Zedong. Another important precondition for the success of development policies in China was that this Cultural Revolution had fostered “better communication across social divisions, so that the Chinese leadership could find out what worked on the ground.”

Fifth, the paper draws conclusions about policy lessons from China’s success. The main conclusion is that development can be successful with the right balance of market-favoring policies and strong state institutions. Additionally, macroeconomic stabilization to avoid inflationary shocks was important for reducing poverty in China. Also, “internal market integration” was important. Then, Ravallion writes that asset and infrastructure-access inequalities will impede the ability of reforms promoting growth to have an effect on poverty. As for why China’s progress can be applied at least loosely to some African countries, the paper highlights that because so much of Africa’s population lives in rural areas, agriculture will be important for development. Ravallion then inexplicitly explains the Lewis 2-sector model.

Lastly, the paper discusses the key messages for Africa. Primarily, it says that poverty reduction won’t come without “significant changes in economic policies and greater efficacy of state institutions for implementing those policies.”

I did find the last paragraph curious in that it ended in a brief qualification that seemed to nullify the entire argument. It highlighted the fact that Africa is a continent of 48 distinct countries and governments. Therefore, it says the international community must play an important role in Africa’s development, but there is little explanation for how this can be done. It felt like this qualification made the international role seem like the most important role, but we were left hanging.

Daniel Molon

While this article points out some valuable lessons that Sub-Saharan Africa can learn from China’s development, and while learning from China’s development may be more relevant to African development than the teachings dictated by the West, there are key differences that lead me to believe that the Chinese model for economic growth is not perfectly transportable to Africa and must be revised some.

The first major obstacle is the long-term political turmoil that has plagued Africa. The lack of stability has created a large amount of uncertainty in the economies of these countries, to the point where it foreign investment is greatly diminished. Even though, as this article points out, foreign direct investment is not what stimulated such great levels of growth in China, also as this article explains, the situation of China in the 1980s was much better than in Africa today. China had a much more educated population that was more prepared to make the transition from the agricultural sector to the manufacturing sector, and not only were the people more prepared, but the infrastructure in China allowed for manufacturing to flourish. China was not hindered by international boundaries that limited the regional markets, which Sub-Saharan Africa faces today, being a conglomerate of many relatively small countries. China also achieved a great increase in agricultural productivity, which allowed for people to leave the rural areas and move into urban areas manufacturing.

Before Africa can begin to generate investment in its modern sector or improve the human capital development of its people, it must first provide a stable political structure for these things to thrive in. In its historically politically volatile atmosphere, Africa has failed to sufficiently improve its educational opportunities and to provide legal structures for which markets can properly function, instead of rampant corruption and the exploitation of its resources.

ShelbeeeFlores

This paper is a great summary/compilation of many topics we have covered in class this term. The idea that policy prescriptions cannot be completely and directly transferred from country to country is mentioned throughout the paper, and is ultimately one of the main arguments of the article. While Africa can learn from China’s successes and mistakes, they cannot simply adopt the same policies and hope that it works. Africa is not one country, but rather 48 countries. Another important aspect that may impede development in Africa is its weak institutions (recent and frequent constitutional changes allowing coups, lack of infrastructure, etc.). One argument this paper makes is that Africa needs to do a lot of work internally before focusing on growing/developing and reducing poverty.

To me, the following sentence was one of the most interesting arguments in the paper: “While successful reforms need not conform closely to orthodox “neo-liberal” recommendations, China’s success against poverty illustrates well the generic point that freer markets can serve the interests of poor people.” Earlier this term, we discussed the Washington Consensus and its mixed results in a variety of countries (dependent upon the degree of implementation). While Argentina followed the Washington Consensus to a tee during the 1990s, the resulting economic crisis in 2001 caused Argentina to move toward the left, away from Washington Consensus policies. In other words, the Washington Consensus (in the case of Argentina) hurt the economy and pushed Argentina toward more leftist economic policies (nationalizations, etc.).

Colleen Paxton

As others have previously mentioned, policy cannot be a blanket applied from one place to another. It requires understanding the culture and distinct challenges in each area. But as Ravallion says, this does not mean we can’t look at China as an example for Africa.

China experienced high levels of inequality as development grew, while inequality is preventing Africa from growing and reducing poverty. Ravallion refers to this as a “double handicap”—but with the right policies success could come to Africa. Ravallion points out that African farmers could respond similarly to the Chinese in the case of market incentives, but the combination of strong institutions in necessary. Africa must develop the “capacity” to implement policies, and the fractured divisions within Africa must overcome this in order to develop.

Ravallion also discusses pro-poor growth, or promoting agricultural development. As we have discussed this semester, this kind of growth can lead to benefits overall as the traditional sector increases output and labor can then go to the modern sector. The conditions in Africa are dependent on rain, and there is an amount of human capital needed to develop real results. Extension services could bring success to the agricultural sector in African countries. This kind of growth is hard without the right changes in policies and institutions.

Gyung Jeong

A few decades ago, not many people expected China to become a country with one of the biggest economies in the world. However, as we are all aware, this is no longer the case. Many people expect that China’s economy may soon surpass that of the US or EU in a few years. What does this tell us? This paper by Ravallion provides guidance on how to improve all of our economies, although he specifically only talks about Africa. This paper explicitly discusses the relationship between China and Africa, and how Africa can learn from China’s successes and failures. Obviously, as the author points out, there were some problems caused by China’s way of improving its economy and fighting against poverty. There are also some key differences between China and Africa. However, China’s overwhelming successes prove that it is worthwhile to learn from its story.
One of the most significant lessons we can learn from China is its use of “strong state institutions and governments.” Although it is a dictatorship, strong leadership by the government has led the country to success. Through policy implementations and public investments, the China’s government has obviously been doing something right. Of course the extent of how much control their government has over the people is not ideal, but a stronger government than the one Africa currently has may result in an improved economy. As the author points out, Africa has seen a significant political change in recent times and is still going through political turmoil. With strong governments and policies, this will hopefully be relieved. Naturally, African has to have its own form of reform and strategy to fight against poverty, but the example of China can be a model for them to use and improve.
This paper reminded me of South Korea and its rapid postwar economic growth. As we talked about in the class, just like China, South Korea was one of the poorest countries in the world only a few decades ago. However, it is now one of the top 10~20 economies in the world. After the Korean war, South Korea implemented a strong government (dictatorship) that enforced policies and economic development for the whole country, although the gap between the rich and the poor became bigger. I am not trying to say that strong government is always a good answer/solution for the economy but we can learn from China to improve our economies.

Bayan Misaghi

The Chinese development model has been a regular topic of conversation within our class this term, and for good reason. The Beijing Consensus flies in the face of what many traditional Western economists recommend developing economies adopt (the Washington Consensus). As we discussed in class, China was able to employ many of the theoretical growth models through strict control of its economy including physical capital, human capital, and investment in technology (in direct contrast to the laissez-faire philosophy of the Washington Consensus). Though these growth models previously failed in other regions (specifically, Latin America), China has been successful because the government has been able to artificially imbed the assumptions these models make. Ravallion argues in this paper that like Latin America, Africa cannot simply adopt the model China has so successfully employed. Because of Africa’s heterogeneous political structures, corruption, low population density, high population growth rate, etc. it is fundamentally different from China. In other words, there is no one-size-fit-all solution.

Ravallion also takes a look at some of the growing pains China has also experienced including rising inequality. China’s Gini index has been growing, signaling rising inequality. Since Africa has historically had a great disparity between rich and poor, a Chinese growth model may arguably cause even more inequality. On the other hand, this inequality may only be a short-term price China must pay for growth; after all, there is the possibility of China following a Kuznet’s Curve-esque projectile.

Ravallion also points out that China invested in its human capital and provided incentives for individuals to progress. Investments in health and schooling are poverty mitigating even though they do not necessarily or directly affect an individual’s income. Furthermore, promoting a market economy starting with farmers growing a surplus of crops to keep or sell increases productivity. Ravallion shows how Africa might loosely glean some ideas from China especially in the agricultural context since many of its inhabitants are still farmers.

Jspencer

Since the main points of Ravallion’s article have been well summarized by my peers, I’m going to focus my attention on the importance of education to Africa’s growth and prosperity. As Ravallion points out, some of the largest areas of poverty reduction in China occurred in rural, agriculture-based regions. Others have hit on this already so I won’t belabor the point, but this a lot of this rural development was due to more intensive farming practices that increased output and freed up labor for the modern sector. The argument has already been made that economic growth and poverty reduction must begin with the development of rural and agricultural communities because a disproportionate portion of SSAs live here. From my perspective, it seems that while Ravallion harps on the importance of agriculture, the real end goal of countries in SSA seeking to grow GDP is to have well-established manufacturing industries. One of the China’s vast, and undervalued, resources that was already in place ready to be primed for the manufacturing industry was a large population of poor, yet moderately educated people. This is one area in which I feel most SSA countries are lacking. While we often take literacy for granted in the West, being able to read, write, and to basic math is necessary for most “modern” industries. As we’ve talked about in class, Africa is actually disproportionately expanding its secondary and university-level education while growth of primary education remains relatively low. Considering the vast majority of populations in SSA live in poor rural communities, they neither have the access nor the means to take advantage of these higher education opportunities. Just as Ravallion suggests economic development must start with enrichment of the agricultural sector, I also believe that policy goals should focus on investments in educational expansion/improvement in these same communities.

Vincent Kim

As others have mentioned stability political stability and public safety are pressing issues that need to be addressed in some African countries, not to mention corruption. Ravallion explains how developing countries might benefit from building up the agricultural sector since the populations of many of these countries largely consist of subsistence farmers. I believe that improving agricultural practices by improving technology and giving incentives to produce more food would prevent instability and violence. In many cases, addressing the basic needs of their populations by improving agriculture should take priority over favoring the development of major cities or trying to develop high-end service sectors. Once a substantial amount of basic needs are met, I think institutions will be easier to maintain.

Then, to add to the previous comments about education, I do not believe countries have to build up their educational systems and R&D sectors from scratch. I think information and communication technology (ICT) has progressed enough that countries can readily adopt much of the already proven basic education systems, city planning, methods of creating infrastructure, as well as established best practices in various service industries. In International Development (POL 215) we read “The Elusive Quest for Growth” by Easterly, who discusses this a bit. Furthermore, as countries adopt this knowledge, there are the details of modifying them to accommodate culture and specific society values as well as the issues of knowledge distribution and providing incentives for knowledge creation.

As to whether African countries should learn from China and adopt its policies instead of say, the Washington Consensus, I would agree with those who say there is no straightforward answer. African countries are too diverse politically, socially, etc.—the conditions in each are different so one political economic model will be too general to be useful. Some countries will have to tackle government transparency more than others, while others may have to focus more on ending violent insurgency. Some countries may be in a position to better accommodate more open markets while other countries might need to have more control over their economies to prevent the turbulence of the global market from hindering domestic development policy efforts.

Greta Witter

Ravallion’s piece is a great one to end the course with, as it includes most all of the topics which we have discussed this semester. A thoughtful application of China’s economic development lessons to Africa requires a solid understanding of development economics fundamentals.
Just as many others have mentioned, Ravallion suggests that the importance of agricultural productivity and the key role played by a capable administration are two of the lessons that Africa may take from China’s recent history. The historical and economic analysis behind these two suggestions is solid and comprehensive – Ravallion is careful and considerate in his approach.
To take this piece a step further, it is worth considering (as all development economists and policy makers would) just how these suggestions might be implemented in African nations. The lesson of “productivity growth in smallholder agriculture,” though seemingly simple, actually encompasses much of what we have discussed this semester when we consider policy implications. We should certainly think through the sustainability and environmental implications of agricultural practices, and later of industrialization and urbanization. Especially when promoting small scale agriculture, we must consider the role of women and how they can be most effectively and equitably utilized to promote development. As policy makers, perhaps we would involve Esther Duflo’s scientifically designed research experiments to determine what types of programs and incentives use aid most effectively. In a wider sense, perhaps the most important elements to consider are the cultural, institutional, and social ones. Certainly, these are not constant across continents, nations, cities, or even villages.

Mac Keers

This article is very interesting but its comparison between China and Africa is problematic. As others have mentioned, Africa is basically referred to as a country when that could not be farther from the truth. There are a large number of countries many of which suffer from negative forms of corrupt governments or revolutions. This lack of a unified leadership, which has been part of China’s success, would make it nearly impossible to complete the kind of structured change that has been so key to China’s growth. At the very least, African nations need to achieve stable leadership at an individual level if they hope to eventually mimic the Chinese story of success.

It could be argued that one problem with over-reliance on the Chinese model of growth is actually an over-reliance on strong state institutions. In other words, the institutions had to have such tight control over everything that the system only worked in the context of a government in complete control. The take away is that similar governments should be encouraged in Africa, which in the short run robs people of many of their freedoms. The consequences can be seen in China for farmers who are simply removed from their lands when they get take and are placed into government housing for the rest of their lives. The point is that China’s regimented path to success was reliant on a central institution that was not only verging on all powerful but also strategically focused on growth, and replicating that kind of regime would be difficult to do without constant oversight of a foreign power like the U.S., which the African countries would likely not appreciate.

Cirimu

As mention previously, according to Ravallion the main lessons Africa can learn from China are on the importance of developing economic policies suitable to their sociopolitical and economic context, and of the stability of government institutions. Both of these suggestions have been consistently present in our class conversations and in the literature we have read. I am particularly interested on the institutional aspect and especially on the effects of early institutional establishment during the creation of the state on a country’s current condition. Based on historical accounts, there seems to be a consistent pattern of weak early institutional establishment (influenced by repression, corruption, and subordination) and current economic, social and political challenges for countries such as in Africa and in Latin America. This is somewhat related to the path-dependency theory which suggests that once a country follows an initial path the cost of taking a different path is high. In contrast to developed countries, developing economies have suffered a history of subjection and repression as well as weak institutional processes during state formation. The reversal of these weak institutional establishments, in my opinion, is one of the biggest challenges for Africa and Latin America. Although China has experienced poverty (especially in rural areas), inequality and other economic challenges like Africa, it is not as historically wounded as countries in sub-Saharan Africa. Even if there are similarities between China and Sub-Saharan countries, the fact that they differ in their historical institutional formation, in my opinion, makes less convincing the applicability of Ravallion’s message for Africa based on China’s experience.

Aaron DiGregorio

As we have discussed to great extent throughout this term, policy cannot be applied as a blanket solution for all nations. There are several factors that influence the behavioral aspects of a specific culture which affect the ways in which that culture will act when dealt with adversity. That is not to say, however, that we as policy makers cannot learn from the way that other cultures act in the face of hardship which is why Ravallion argues that we can look at China as an example for Africa, not in terms of how it will be, but simply how it could be.

Ravillion concludes that a balance of market policies and strong national institutions in vital in the development of any given society. Similar to what China once was, much of Africa’s population lives in rural agricultural areas, and in order for further development to occur in Africa, there needs to be an increase in urban areas and a massive population migration to these cities. This transformation is only possible through a combination of a strong market and strong institutions.

Peter Partee

Peter Partee
Econ 280 – Development Economics
Professor Casey

“Are There Lessons for Africa from China’s Success against Poverty?”

The quotation below is an excerpt from the article that I will explicate:

“There is a possible greater risk [of transplanting institutional practices] from the East. It would be naïve to assume that all Africa needs to do is copy China’s specific policies to achieve China’s success. The period since 1980 has seen a sequence of (often radical economic reforms in China, which moved the economy from being highly controlled to more market-oriented. Those reforms naturally reflected (relatively unusual) circumstances in China, and may make little or no sense as a blueprint for policy making anywhere else.”

While the authors state that Chinese policies may not be applicable in Africa for reasons such as that African countries have higher inequality, higher dependency rates, and lower population density, another central aspect is that Modern Day China’s socialist economy comes from a long lineage of state-planned economies that have dominated the nation.

In Politics 105 I learned that in 1912, Chinese revolutionaries who were dissatisfied with the imperial economy overthrew the Qing Dynasty, who had ruled for over two hundred years. Over the course of the next decade, while the Republic of China was officially the state government, communism fought for ultimate support, which it garnered in 1920 when the Chinese Communist Party was founded. Mao Zedong led communist China through a period of what Karl Marx called “permanent revolution” by implementing radical programs such as “The Great Leap Forward” and “The Cultural Revolution.” Throughout Mao’s rule, he fought the growth of bureaucracy, attempted rapid industrialization, and expanded the Chinese population twofold, only to witness millions die from famine.

Under these dire political and economic pretenses, Deng Xiaoping emerged as the leader of China. Deng correctly diagnosed the economic shortcomings of Maoian thought: extensive state intervention and centralization of power strangle economic growth, rapid industrialization is unrealistic, and suppression of the people’s rights leads to inefficiency. Deng Xiaoping endorsed the previously constructed program “The Four Modernizations”, which advocated the development of agriculture, industry, science and technology, and national defense. The success of this overhaul program was largely based on Deng’s willingness to “adopt policies of nonintervention” by allowing “economic developments to unfold without constant interference from the Party or government.” The results of the Deng Xiaoping’s political economy are history, and China’s successfulness during this period is unquestionable.

The terrible results from many of these decades of socialist rule resulted in a quazi-liberalizing of the economy that was ultimately unbelievable lucrative. These circumstances are not necessarily directly applicable to Africa. Social, cultural, and historical contexts are vastly different.

Chase Douglas

I thought it was very interesting that this paper seemed to explain that poverty and inequality were reduced significantly in China when the authorities granted the people more choice and options. For example allowing rural farmers to access more markets led to great inequality reduction and then liberalizing economic policy on the coast also lead to more income in China. It seems as if Africa should be taking away this central message that choice and the ability for its people to have options must be a main focus for successful development.

However, as the paper clearly explains, the scenarios in China and the African continent are very different. Instead of easing regulations on what people can actually do Africa needs to focus on creating the institutions that allow for choice and options. The paper states that African nations need to focus on creating and stengthening stronger poverty alleviating institutions. I would assume rurally these would be organizations that built the needed infrastructure and 'support systems' for adopting new technologies. I thought the concept of not choosing urban development over the rural sector was another interesting aspect of African development. Often developing these sectors doesn't give more option (job wise) for poor uneducated people in the rural sector and can even hurt them if they have to bear the tax burden of this development. While developing the urban sector is a must, it is also important to ensure that those in rural areas have the necessary institutions to utilize these new opportunities

Hampton Ike

This paper like many others we have discussed or read in class attempts to extract policy initiatives from a successful developing country and apply it to a struggling developing nation. We learned about the Washington Consensus early in the class and the Western theory of development that pushed for transparency, free and fair markets, and limited government intervention. However evidence of late seemingly points in the opposite direction. The Latin American countries that adopted these policies excelled for a while before stagnating and declining. However, the High Performance Asian Economies adopted some parts of consensus, but implemented the exact opposite policies in most other cases. China paved its road to economic development through the implementation of historical development model, but growth could not have been achieved if the government had not imposed the assumptions of the models through strict regulation and oversight. The Lewis two sector model appears to fit at least in part with china's development, and the government's regulated opening of rural chinese to free markets allowed the productivity of agriculture to rise substantially. Theoretically the rise in agricultural productivity lead to a mpl in agriculture of 0, whereby farmers could move to the city without harming agriculture at all and only helping the urban sector. Africa as was stated in the article is much different, if not only because of the fact that it is a continent made up of many vastly different countries. I was surprised to read that Africa was actually better off regarding poverty in the 1970's, and then the incredible push China was able to make while Africa stagnated. The chinese push forward did not come without its own downfalls, as the author mentioned, income did rise substantially and the absolute poverty rate dropped significantly, but income inequality also rose steeply. I am interested to witness the future of Africa as China is taking deep monetary and political interests in the continent, which may play out as a mutual benefit or perhaps in a less altruistic manner.

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