1. The document discusses the concept of developmental states and their applicability in Africa. It analyzes the experiences of developmental states in Asia and their differences compared to African states. 2. It examines Ethiopia's potential to establish a developmental state through policy and institutional reforms. Key recommendations include enhancing the state's role in economic transformation through disciplined planning, building democratic developmental states, and ensuring state interventions avoid rent-seeking. 3. The author argues that for Ethiopia to nurture a developmental state, it needs political will and capacity for policies derived through consultation, a competent bureaucracy based on merit, and a developmentalist coalition between leadership, private sector, and civil society.

1. Managing Developmental States:Policy and Institutional Reforms in AfricaAn Ethiopian case BT Costantinos, PhD School of Graduate Studies, Department of Public Management and Policy, College of Management, Information and Economic Sciences, Addis Ababa University National Conference on Management for Effectiveness, Efficiency and Ethics Ethiopian Management Institute June 30-July 1, 2011 2011

2. Contents Introduction Research questions The Developmental State: Definition: tautology, redundancy or pleonasm Ideological forces behind developmentalist dirigisme Rise and fall of developmental states: The Japanese Miracle and the East Asian Tigers African Developmental States: Analytical disconnects , good practices - wrong lessons, government and market failure, neo-patrimonialism and rent seeking A Global Order emerging: Self-fulfilling predicaments, rolling back the state New public management NPM, The Washington Consensus, The New Structural Economics, Trade and Investment Policy Priorities Can Ethiopia nurture a developmental state Conclusion and recommendations

3. PART I Africa’s Experiments, Prescriptions and Global Good Practices

4. Research Questions How can a developmental state emerge? What are its characteristics and functions? Is the model recommended for all African countries? Did the concept evolve into solid development theory so far? Who determines public interests? How are they articulated and aggregated? How do we ensure it can effectively guide economic transformation and development? How can we ensure that it is accountable and that it acts in the interest of its citizens?

7. Problem Statement One remarkable feature of the discourse on the state and development in Africa is the disjuncture between an analytical tradition that insists on the impossibility of DSs in Africa and a prescriptive literature that presupposes their existence The African state is today the most demonised social institution, vilified for its weaknesses, its over-extension, its interference with the smooth functioning of the markets, its repressive character, its dependence on foreign powers, its simultaneous ubiquity & its absence, etc. The state, once the cornerstone of development, is now the millstone around otherwise efficient markets. Early criticism of the state in Africa came from the neo-Marxists Petty bourgeois state, the neo-colonial state and the dependent state. the state become dysfunctional in terms of the larger societal issues, but also a real nuisance in la vie quotidienne of its citizens, as evidenced by the withdrawal from state-dominated economic and social spaces

8. Africa’s track record 1960–1972, 26 countries had growth in excess of 2%, 13 countries achieved 3.5%. 16 countries had <2 %. 10 countries negative growth During 1973–2000, economic growth faltered. 13 countries saw growth in excess of 2%. Negative growth almost doubled to 18 nations. 22 countries recorded growth rates of less than 2%, and 16 less than 1 %. 2000–2007, 25 countries grew in excess of 2%, 14 countries recorded negative growth rates; 14 countries recorded positive growth rates of less than 2 %, and six of them less than 1 % 1960–2007, 16 African countries had growth rates in excess of 2 %; 11 countries recorded negative growth rates; and 26 countries recorded positive growth rates of less than 2 %, and 12 of them less than 1% Among the major features of the African growth processes, especially those of sub-Saharan Africa, is their relatively high volatility

9. Democracy, governance and development AU commitment to strengthening governance for development through many instruments Policy orientation is situated within a wider commitment to sustainable development, rooted in democratic governance: fundamental to development.

10. The Africa experiment – so far Planning development processes: “encouraging signs” Development frameworks: developing countries need development “frameworks” rather than narrow “models”: Development strategies “Comprehensive Development Framework”; “framework for rethinking development” or “new structural economic framework” interdependence of social, structural, human, governance, environmental, economic and financial… 1999 WB and IMF :Poverty Reduction Strategy Papers Specific, measurable and inclusive strategies: “shared growth in Africa” Development plans: UN Millennium Summit: MDGs on global partnership for development. Each goal has quantitative indicators to gauge progress. NEPAD is another of such kind

12. The state played multiple roles as investor, banker, trader and primary employer, rather than carefully nurturing a local entrepreneurial class;

13. Low savings and investment rates, flawed industrialization strategies, poor performance of the agricultural sector, low investment in research and technology;

15. Amarket friendly environment and appropriate macroeconomic policy frameworks

16. Strong institutions: efficient resource allocation and infrastructure, and an efficient school system

17. profitable investments: credit/ interest rate policy

18. State policy interventions: subsidized credits, public investments in research and technology, and development of export-marketing institutions.

20. PART TWO

21. The Developmental State A DS is defined as “a state that puts development as the top priority and is able to design effective instruments to promote such a goal”. The instruments should include forging of new formal institutions, the weaving of formal and informal networks of collaboration amongst citizens and officials and the utilization of new opportunities for trade and profitable production” A DS is thus understood as: an interventionist state, which can identify priorities, set targets, develop strategies, coordination among various sectors and stakeholders, and establish systems for achieving short & long-term goals. A DS can establish clear economic and social objectives, and influence the direction and pace of development.

22. Concepts and Features of DSs… Ideology “ Software” and agency “Hardware” : a developmentalist ideology; the requisite institutions, norms and standards and meritocratic civil service Vision setting, leadership, capacity and ideology Leadership can articulate DS ideology and vision Building an elite coalition for support Building technical capacity and popular support Strong sense of nationalism and commitment It is about building constituency and halting a rent seeking epidemic Relative state autonomy in formulating and implementing policy National Development Planning

24. The sectoral pattern of labour employment

25. Sustained increase in real per capita incomes

26. Transforming agrarian to industrial economies remains a major development challenge.

28. Unchecked intervention, which is beyond the level needed to correct market failure that risks efficient resource allocation, The entire state apparatus may be captured by elites or powerful special interest groups so that the course no longer reflects those goals derived from democratically organized public deliberations. At a lower level, weak integrity and professionalism may lead to rent seeking, breeding waste and inefficiency. Inappropriate behavior of regulatory agencies: corrupt regulators may be caught by those which are meant to be regulated, Both public and private producers may also find it more profitable to invest resources in rent seeking rather than actual production, Similarly, consumers who receive subsidies may also resell their allocations for gain The potential pitfalls of state intervention

29. Policy Recommendations Enhancing the state’s role in transformation: The role of the state in achieving rapid and sustained economic growth and development combined with deep structural transformation must be channeled through a disciplined planning approach… Building African DSs: The above role is best performed by states that are both developmental and democratic: A good constitution, the rule of law, independent judiciary, representative political institutions, effective regulatory institutions and property rights enforcement, A competent and professional bureaucracy whose recruitment and advancement are based strictly on merit, An agency charged with the responsibility of overall development planning and implementation A developmentalist coalition among committed political leadership, the bureaucracy, private sector and civil society .

30. Policy Recommendations Ensuring the effectiveness of African DSs Avoiding the pitfalls of state intervention: carrot and stick approach to rent distribution Enhancing stakeholder participation Establish democratic deliberative institutions. Empower these institutions to promote stakeholder ownership of development, enhanced citizen oversight over government activities... Use the market to motivating economic agents,

31. Policy Recommendations Establish and empower regulatory agencies to set and enforce product quality standards for all producers, Establish competition policy and enforce competition law against anti-competitive behavior by public and private producers. Empower the bureaucracy to transparently determine the extent and allocation of rents, and the terms and conditions for their allocation and elimination, Ensure that the bureaucracy has both the autonomy and capacity to respond quickly to changing local and global situations Forge close, interactive and synergic relations between the bureaucracy and the private sector

32. Mainstreaming Policy , Strategy, Structure and Process in Developmental States Situation Analysis Evaluation Response Analysis The elite Coalition Monitoring, Strategic Information Management Policy & Institutional arrangements Sustained Implementation of Activities National and regional operational Plans Divestiture of state enterprises and decentralised management of businesses and public works Entry points: national and regional frameworks, advocacy, partnership and internal and external domains

33. Acknowledgements: The 2011 PhD candidates, Dept. of Public Management and Policy , AAU and The John Hopkins University MARCH Research Team Abeba Beyene PhD GSR/6318/03; Alazar Amare, PhD GSR; 6313/03 AyenachewAseffa PhD GSR/6319/03; Berhanu Temesgen PhD GSR/6316/03; BikilaHurissa PhD GSR/6314/03; GirmawAssemie PhD GSR/6320/03; NegaWubie PhD GSR/6312/03; SewagegneDelele PhD GSR/6321/03; Tamrat Getachew PhD GSR/6317/03; YetnayetAyele PhD GSR/6315/03 Thank You BT Costantinos, PhD School of Graduate Studies, Department of Management and Public Policy, College of Management, Information and Economic Sciences, Addis Ababa University