By – Geletaw Zeleke
To help boost the economies of low income countries a development strategy named unbalanced growth theory was introduced by development theorists. With the use of this strategy select economic zones grow at rapid rates, while other economic zones experience stagnation or reduced growth as a result. The objective of this strategy is to concentrate wealth in special economic zones to make it easier to build momentum for breakthroughs in the overall development.
According to development theorist Professor Albert O. Hirschman it is vital to create deliberate imbalances in the economy of countries to accelerate development. This is especially true for those countries who may not have enough initial resources to create the “big push” needed on their own. The idea is that acceleration of growth will arise where there is unbalance. The ultimate goal of unbalanced growth strategy, importantly, is not to realize unbalanced development but to realize balanced development.
In fact this approach has worked as an economic model for some countries. For example, South Korea experienced this type of growth. In the 1970s, lacking resources to develop their country rapidly they selected areas to invest their wealth in, in order to boost their overall economy. As they planned they could develop specific economic zones and after that those areas would replicate themselves and be recreated in other industries. Within a few years Korea was able to develop their country and today is a country that has achieved fair economic distribution.
In Ethiopia it appears the government and its fans are unofficially claiming that Ethiopia is experiencing unbalanced growth and because of its nature majority of the peope can not presently feel the effects of development. This translates to mean that it is not the right time to realize redistribution in the case of Ethiopia because concentrated wealth is not ripe enough for the overall development but for the “future” it will change citizen life.
I think they believe all huge economic disparities are the results of the nature of the growth strategy that they are employing.
We have no problem with the science of unbalanced growth theory as far as it is implemented carefully. In my opinion the strategy of unbalanced growth can be useful for many low income countries but it can not work in the case of Ethiopia because of the following arguments.
1) The political Setup
At the very beginning, to chose unbalanced growth strategy, their should be a conducive political environment and setup. In a country whose politics are shaped by tribes and where Ethnic Federalism is practiced there is not enough confidence in the circle of concentrated wealth. The nature of Ethiopian politics pushes citizens to identify themselves in terms of their cultural group and this tendency is also seen in the individuals who own and manage the concentrated wealth who also identify themselves in terms of their cultural groups.
Weak nationalism and bias to the tribe prohibit unbalanced growth strategy from succeeding. The nature of identity politics damages the psychological attachments of the people. It is difficult to concentrate wealth in the hands of small groups since nationalism is weaker. In a country that promotes identity politics this type of growth strategy can not be effective.
2) Very Low Certainty About Redistribution
As we have said above the goal of unbalanced growth theory is to speed up development not to create economic classes. Ethiopian people do not have faith that wealth can be redistributed fairly after it has been ripened by unbalanced growth. Since the trust of people is very low they are not certain that concentrated wealth will be redistributed or given to develop the country. In a nation who politicizes geography and culture there is no guarantee for the people who work hard to concentrate wealth in specific economic zones.
3) Corruption Culture
Taking a look at the Transparency International yearly reports a surprising fact is that since the Ethiopian Ethics and Anti-corruption Commission was established the Transparency International CPI (Corruption Perception Index) score is decreasing. In 2002 the CPI score was 3.5 after years it has decreased to 2.7 in 2010. Ethiopia also placed 60th in 2000 and after a decade it is placed 116th in the index. This shows that corruption is growing.
The irony is that GDP is growing and strangely corruption is growing simultaneously. This might indicate the type of corruption is more likely not of a competitive type but rather of a monopolistic type of corruption.
The problem is the risk is very high to implement unbalanced growth in this kind of country.
4) The Theory Needs Independent Institutions
A guarantee for the choice of using the unbalanced growth development strategy is the existence of independent institutions. An independent banking system, independent court and the like are responsible for risk takers.
According to the World Prosperity Index Ethiopians have very low trust in these institutions.
“A lack of democratic ability and confidence blights the Ethiopian political system […] the judiciary lacks independence[…]there appears to be little respect for the rule of law and the country is notable for its poor regulatory environment for business, placing 101st in the index on this variable. Levels of confidence in the military and judiciaries are both very low. Ethiopians have few political rights, but 16% reported having voiced an opinion to a public official recently. Unsurprisingly, only 19% of the population believe that the electoral process is honest.”
(2010; World Prosperity Index)
In such a country as Ethiopia, that lacks independent institutions, it is impossible to actualize unbalanced growth strategy.
4) Article 39 vs. Unbalanced Growth
Ethiopia is most likely the only country which declares secession in its Constitution. This article is a potential problem to implement the unbalanced growth. There is no guarantee for the people that wealth will be returned for redistribution because this article practically declares it while creating psychological fragmentation among cultural groups at the same time.
5) Potential for Conflict
If there are no independent institutions and if culture and geography are politicized then concentrated wealth can not be a development accelerator as it ought to be, rather, it becomes a potential for conflict among groups.
Let’s take a look at the EFFORT (Endowment Fund For Rehabilitation Tigray). This organization is the wealthiest organization in Ethiopia. The wealth of the country is concentrated here. The problem is that the people believe that the wealth belongs to all Ethiopians but the TPLF official Mr. Sibehat Nega the former EFRT chairman declared that the organization belongs to the Tigray tribe but it is “serving” the whole people. This attitude creates a psychological gap and as a result people develop mistrust. This huge proportion of the country’s wealth could be a stimulant of politics. Since the leaders of this organizations are all from one tribe and these individuals are very high rank government officials it is difficult to trust in. The people have a well founded fear that this money can not be put to developmental activity rather it confined to a profit oriented monopolized organization. The group does not worry about development and service rather it is embezzlement in order to maintain the economic upper hand.
To sum up unbalanced growth strategy in the current general condition of Ethiopia is not only disadvantageous but also it is a harmful strategy.
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