The Sunday Mail
“A developmental state is characterised by a government with sufficient organisation and authority to drive forward its economic goals. It is a state, which provides forward-looking guidelines to society through detailed, long-term development objectives and policies. Through its main machinery, the bureaucracy, it aims to effectively and efficiently create a suitable climate for economic growth.
“Moreover, such states take account of and make well-deliberated attempts to mitigate the impact of conflicting and competing socio-economic interests. A true developmental state thus exists when the state has the vision, leadership, and capacity to bring about positive economic changes that benefit all groups of society within a specified timeframe.”
According to John Knight – a researcher at the Oxford University Centre for the Study of African Economies – between 1952 and 1978 the Chinese economy suffered from a relatively slow growth rate coupled with low household incomes per capita.
He states that between 1952 and 1978, the Chinese people “suffered from the traumas of the Great Famine and the Cultural Revolution” and that “China had neither the firmity of purpose nor the policies to be a developmental state under central planning. Politics and not economics was in command”.
Post-1978 Chinese economic policy
However, as of the mid-1970s, the Chinese state shifted its prioritised objectives from political to economic goals for three fundamental reasons:
◆ Firstly, improved living standards of the populace would avert political upheaval and cement support for the Chinese Communist Party (CCP);
◆ Secondly, China felt the pressure of competition from increasingly prosperous Western and some East Asian countries;
◆ Finally, the Chinese Cultural Revolution had distorted the structure of the CCP and had essentially diminished the party’s capacity for central planning because factional conflict had taken its toll on the party.
In light of these factors, the CCP shifted its focus to economic reform.
However, before the CCP outlined its economic strategy, it initially reformed the state and itself by modernising the leadership system, insisting on professionalism and offering incentives for the achievement of state objectives. John Knight observes, “Thus the party and (the) state bureaucrats including managers of State-Owned Enterprises (SOEs) were molded to meet CCP objectives, to which the achievement of rapid economic growth was central. China became a Developmental State.”
Zimbabwe and Zim Asset
The Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) is the policy programme through which the Zimbabwe Government intends to transform the economy by 2018 by focusing on, among other things, infrastructure development, food security, poverty-eradication and job-creation.
If fully implemented, the policy document has the potential to transform Zimbabwe into a developmental state. To date, analysts have failed to observe that similar to China’s party and state reforms in 1978, which curtailed factionalism in the CCP and, consequently enhanced the party and the Chinese state’s capacity for central planning and policy implementation, Zanu-PF has undergone major structural realignment.
The primary objective of this exercise was to curtail factionalism and enhance the party and Government’s ability for central planning and policy implementation. Now that the country is in the post-Congress period, it is appropriate that Zanu-PF focuses on successfully implementing Zim Asset and its developmental goals.
However, what can Zimbabwe learn from China as an investment destination?
Chinese investment environment
Firstly, as a precursor to China’s post-1978 economic boom, the CCP Central Committee decided to “substantially increase the role of market mechanisms in the system; reducing, but not eliminating, government planning and direct control.
“The first reforms consisted of opening trade with the outside world, instituting the household responsibility system in agriculture, by which farmers could sell their surplus crops on the open market, and the establishment of Town Village Enterprises (TVE).”
In Zimbabwean terms, reports that the country’s Ministry of Finance and Economic Development is considering “tweaking” indigenisation laws in order to make them investor-friendly are welcome.
Perhaps Government should play a role in business, but avoid direct control. Finally, China has been an attractive investment destination because of its low labour cost.
In the 1980s, multi-national corporations relocated to China, especially because the labour costs were low and the labour policies were business-friendly. In this light, Zimbabwe should observe that high labour costs and labour law frigidity diminish the country’s potential as an investment destination and, ultimately, the fulfilment of Zim Asset.
◆ Tau Tawengwa is a researcher
