Lessons of third-world growth, bankruptcy
AFRICA has gone to the rest of the world seeking help for a fresh start. So far it has received only the instruction book, not any extra equipment or money. But in the process of putting together their petition to other nations, African leaders have drawn up useful blueprints for themselves: what to do in future emergencies; how to unshackle the private sector; how to cut waste and overambition in government projects.Skip to next paragraph
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The unprecedented UN special assembly on remedies for Africa's three D's -- drought, debt, and development problems -- has probably had two effects:
1. It almost surely has shamed the industrial world into shifting the next fiscal year's economic aid priorities at least marginally in the direction of African nations.
2. It has reinforced the trend, already under way in parts of Africa, to encourage more private-sector enterprise and investment. Last year even Tanzania's longtime socialist planners announced a shift to a free-market farming system.
But the usual distinction must be made between words and deeds. Planners, north and south, can't ignore the fact that after a quarter century the bold Alliance for Progress, by which the United States and Latin America were to join in eliminating poverty and spurring development on their side of the South Atlantic, has resulted in very little alliance and not much progress.
Two decades ago Aurelio Peccei, CEO of Olivetti and driving force in the Club of Rome's studies of world resources and development, wrote a book about how to move Africa, Asia, and Latin America into the modern industrial/agricultural world.
Mr. Peccei's proposals were too visionary. But they are instructive. He foresaw East and West having to reach an accommodation in the cold war before the Northern industrial world could concentrate fully on the Southern world. And he believed that the second industrial revolution -- involving full-scale computerization and automation of industry, agriculture, and trade -- would drive East and West together. He reasoned military competition between the superpower blocs could turn more naturally to economic competition. The two sides would vie to trade with, and develop -- rather than militarize -- the third world.
Peccei believed the Northern world should concentrate on helping the three third-world continents to reach the economic takeoff stage, one at a time. His formula: Latin America first, Asia second, Africa third.
Most African leaders would complain that that is just what has happened (except that large parts of Asia are taking off before much of Latin America).
Peccei's forecasts about the unifying demands of computer and communications technology on the East-West struggle seem at best premature. They will likely be put to the test during the rest of the century as Gorbachev's Soviet Union pushes a tardy computerization program.
It may be more important to discover why some countries in the third world have been brought to the brink of bankruptcy by debt, while others have been growing so fast that similar levels of debt are no burden. Having made that analysis, can leaders and planners transfer the lessons? Or are they nontransferrable?
Some 15 to 20 African nations are deeply in debt and hard pressed to produce enough even to pay interest. Peru, Bolivia, Mexico, and the Philippines find themselves in varying degrees of the same trouble. Argentina has boldly climbed out of the morass by applying wage/price controls but may be slipping back. As Prof. Jeffrey Sachs, a Harvard economist and adviser to several Latin American nations, observes, South Korea is expanding out of its debt with a GNP growth rate of 7 to 8 percent this year, while Mexico is slipping back with a negative growth rate, minus 5 percent.
Of the two nations touted as breadbaskets of Africa, one (Zimbabwe) is showing signs of success, while the other (Sudan) has not fulfilled its promise.
Experts can offer explanations. Korea had no oil expectations (like Mexico) and did have work ethic in spades. Zimbabwe has been less affected by drought than Sudan (also hit by resumed civil war). But it's hard to account for the fact that each of three Asian Pacific countries individually exports more than all of South America put together.
And remember that only a short while ago specialists said that the work ethic could not take root in divided Korea or war-ready Taiwan, or tiny Hong Kong and Singapore, or satisfied Thailand.
There is probably no general, sweeping Peccei-style formula that will rescue all late bloomers or rebloomers. But three elements seem to be needed. One is willingness to swallow national pride and ideological slogans and welcome outside private investment. A second is encouragement of national drive to export and trade, with all the stimulus to work ethic that goes with it. The third is for Northern nations and big banks to provide some kind of moratorium on interest payments for those nations which are really bankrupt or on the brink of bankruptcy. The price might be no new loans until they are able to resume interest payment.
The UN assembly on Africa shows the Africans themselves looking in several right directions. But the big chunks of capital they ask for are not likely to arrive. In that case, the wooing of private investment and further bargaining on debt are in order -- for dire cases on both sides of the South Atlantic.
Earl W. Foell is editor in chief of The Christian Science Monitor.