Bates analysis
The agitation for independence among African countries peaked at the beginning of the 1960s. As most of them gained independence, its populations were optimistic that self-rule would lead to various benefits, socially, economically, and politically. Nonetheless, an analysis of the continent’s post-colonial era by Bates reveals that that optimism was misplaced. Bates asserts that a combination of weak economic policies and political disorder are the primary reasons that led to the failure of African countries to realize the expected gains of independence. In this paper, an evaluation of the political structures and economic policies that led to the underdevelopment of Africa, as explained by Bates, will occur.
The onset of the political structure in Africa was fairly progressive. However, by the 1970s, the political order in the continent had given way to conflicts. Bates maintains that by this time, the lack of political order had led to many states, including Nigeria, Sudan, and Uganda had degenerated into violence (3). Bates implies that this situation arose because of the discovery of resources in significant parts of the continent. The developments meant that the political class also became property owners, a factor that highlights conflicts of interest. Additionally, it also led to political cronyism; hence, a breakdown in the rule of law and order. To avoid being dislodged from power — which means the continued accumulation of wealth from the resources — Bates holds that the reigning leaders in the affected African states became “specialists in violence” (16).
Accordingly, this situation led to a further breakdown of political disorder. By 1970, the political instability had led to the continent shifting away from the democratic rule of law to autocracy. For instance, Bates observes that by 1970, most of the countries lacked opposition because it was mostly illegal to challenge the ruling party (33). The disorder also caused occurrences such as political repression. Consequently, this eventuality created a poor environment for economic growth in the continent. This factor has contributed to its continued underdevelopment relative to the rest of the globe.
Apart from political disorder, Bates also argues that ineffective economic policies also contributed to the continent’s underdevelopment. The policies were based on the misguided belief that the state can substitute market mechanisms for economic growth (POL120_Class_Notes_Jan 22 n.p). Bates argues that the underlying justifications for this approach to economic growth are two-fold.
Firstly, it arose from state planning officials in Europe. Notably, despite most of the African countries having attained self-rule, many of the political and economic elite continued maintaining relationships with their previous colonial rulers. For these two groups of individuals, their interests converged. For the European bureaucrats, such a situation favored them because it meant they could continue exploiting Africa’s resources at a relatively low cost. For the indigenous elite, the eventuality meant that they could continue with their corrupt accumulation of wealth with the support of their more powerful colonial masters.
Secondly, the blueprint for such an economic trajectory arose from the socialist regimes (POL120_Class_Notes_Jan 22 n.p). Under the communist approach, all economic, political, and social planning originates from the state. At the time, such a model was thought to be effective, especially considering that most of the indigenous people were illiterate and only a few were engaged in meaningful economic activity — because of colonial patronization, most of them engaged only subsistence farming. Therefore, the government perceived state-led economic planning as the most appropriate means of obtaining rapid economic growth and development.
One of the primary ways in which the governments sought to force economic growth is through exports and industrialization. Exports were viewed as a vital source of foreign currency, especially considering that the continent integration into the global economy was relatively low at the time. The main exports were primary goods such as tea, coffee, and raw minerals because of the low level of industrialization. Therefore, to increase foreign currency sourced from international trade, African governments had to maximize their export volumes. To achieve this outcome, Bates holds that the leadership in those countries formulated restrictive economic policies and established state-marketing boards.
Bates refers to the restrictive economic guidelines as the “anti-growth syndrome” (55). The policies led to a closed-economy structure and the distortion of main prices in the macroeconomy. Additionally, it also caused the overregulation of industries. For instance, Bates propounds that most governments restricted imports (POL120_Class_Notes_Jan 22 n.p). The rationale for such a move was to encourage the establishment of local industries to hasten the process of the continent’s industrialization. Therefore, for foreign companies to access the African market, they had to set up plants in Africa (Bates 56). To offer incentives, governments created development banks which would lend monies to such firms at below-market rates, to import machinery. Bates argues that the act of subsidizing the importation created inefficiency in the following way. Since the establishment of the industries in African was relatively cheap — because of government subsidies and restrictive markets — several foreign companies established such subsidiaries; hence, production in the continent because capital intensive. To optimize their capital resources, the firms had to increase production; yet, the local market was still underdeveloped. However, because of government protectionism, the corporations managed to make profits as they could charge the local populace high prices.
Such a situation created an externality because the indigenous people were paying when compared to their counterparts in the western world. This occurrence showcases inefficiency. Secondly, the focus on capital intensive production implied that the promised high rates of employment among the indigenous population did not materialize. Consequently, the low employment rates are another factor that signifies the underdevelopment of the continent. Secondly, the restrictive market practices practiced by the government imply that the local people did not enjoy the benefits of globalization.
The second approach to state-led economic growth was the formation of state-marketing boards. The boards served as the primary mechanism through which government ministries could augment minerals and agricultural produce for onward export (POL120_Class_Notes_Jan 22 n.p). Ideally, such an approach would be useful as it would help the exporting country to benefit from the economies of scale because of the large quantities of produce involved. Such an outcome would imply that both the government and its citizenry would benefit in terms of an increase in the stock of foreign currency and incomes, respectively. Nevertheless, Bates proclaims that the policies adopted by the African governments were not geared towards mutually benefitting both the state and its people. Instead, the focus was on increased public revenues as opposed to private incomes (13). Consequently, the initial surge in exports only benefitted the government coffers and not the persons involved directly in the production of the export commodities.
The state’s focus on maximizing public revenues in the form of taxation and profits from the state marketing boards had the effect of creating disorder in the market. Bates claims that the boards engaged in rent-seeking activities. Accordingly, they would purchase the commodities, especially from farmers, at exceptionally low prices. The agencies would then proceed to sell the items in the international market based on their actual prices. Therefore, the state marketing boards made an extremely high mark up that was used to complement the state’s income from taxes.
The exploitative behavior of the state marketing boards had adverse effects on the export-led growth in the long run. Bates argues that the government officials assumed that the farmers were unaware of the unethical behavior of the boards — farmers were the majority of the producers of primary commodities. Nonetheless, the farmers reacted by reducing their production of the export commodities. Instead, they shifted their focus towards subsistence farming (POL120_Class_Notes_Jan 22 n.p). Bates suggests that while this was an expected reaction to the market manipulation of the state marketing boards, its long-run effect is that it contributed to the underdevelopment of the continent.
The second implication of the agencies’ behavior was that it led to a reduction of the volumes of commodities available for exports. Therefore, the once-reliable source of foreign currency was no longer supportive of state-led economic growth. Consequently, the African governments could not achieve their objectives; hence, its poor growth trajectory.
Bates also adds that other than the “anti-growth syndrome” — economic policies that restrict growth — events in the global economy also contributed to the downfall of the continent’s optimism. In the 1970s, the world experienced an exponential increase in oil prices. The unprecedented prices created economic shocks, even in developed economies. Accordingly, it led to higher costs of production in the industrial economy whose impact was a reduction in the demand for labor and a subsequent decline in incomes (Bates 24). This situation had a ripple effect on African countries because low growth rates in the western countries created a low demand for the continent’s export. Subsequently, government revenues fell sharply; thus, the continent continued experiencing a scarcity in growth and development. This outcome remains persistent.
As a reaction to the fall in public revenues, the governments had to change their approaches to economic growth. Bates holds that one of the changes entailed the restructuring of governments to make them lean and more effective (Bates 25). Even then, Bates argues that such steps were barely enough to undo the damage that the combination of weak economic policies, high global prices for oil, and political disorder had done for Africa’s growth and development. Accordingly, the governments had to adopt liberalization of its economies. Further, the opening of their markets was a condition from the industrialized nations if the countries wished to access foreign aid. Given that the traditional sources of public revenue and foreign currency had dwindled following the economic shocks, it was difficult for the governments to reject the conditions as they had no leverage.
However, access to international aid only provided a short reprieve for the continent. While many governments plugged their financial deficits using foreign aid, it led to an over-reliance on loans and grants as the primary means of funding government programs. Bates then adds that the situation led to the entrapment of the continent’s states to debt because of the ever-rising costs of debt servicing (100). This eventuality is also a factor in the region’s underdevelopment.
The state-led growth also caused significant changes in the region’s labor structure. It is imperative to note that the government was not only a regulator in many of the African countries; it was also one of the largest investors. Consequently, many of the individuals in formal employment were in the public sector (Bates 104). Therefore, with the decline in public revenues, the government laid off many of these employees. The effect of this situation was that most of the persons in the continent’s labor became either unemployed or informal employment — a condition that persists to date. Additionally, the welfare of the public declined significantly. The reduction in public finances meant that critical workers like teachers, nurses, and doctors were either poorly remunerated or experienced major salary delays. This occurrence served as a disincentive, a factor that led to externalities such as brain drains, and more importantly, poor delivery of services to the citizenry. Unfortunately, the region has been unable to overcome these challenges, a situation that has made it difficult for its populations to enjoy the benefits of decolonization.
In conclusion, the post-colonial era presented African states with a significant opportunity to grow economically and match the welfare of its people with those of the developed economies. Nevertheless, Bates’ analysis indicates that a combination of factors made the achievement of this objective difficult. These factors include political disorder and poor economic policies. In particular, Bates argues that the attempt to substitute market mechanisms with the state, as the primary driver for economic growth, was the main reason for the continent’s continued underdevelopment.
Works Cited
Bates, Robert. H. When things fell apart. Cambridge, England: Cambridge University Press. 2015.
POL120_Class_Notes_Jan 22. January 22, 2020.