From time to time, I get telephone calls from people who start by complimenting me with the words ‘you as an economist what do you suggest we should do to make the economy grow?’.
This is not an easy question to answer because economic development and growth do not come about through the knowledge and wisdom of economists alone, scientists, managers, agents of law and order, engineers do have a role to play. What matters above everything else is political leadership that provides the environment where economic development and growth can take place. The term economic development and growth are sometimes used interchangeably, but they do not mean quite the same thing. Economic development has more to do with the transformation of society from tradition to modernity. Thus instead of people cultivating crops merely for home consumption, they export for extra cash, where they were using foot paths to move from one place to another they now use roads, vehicles and so on. Economic development is an aspect of getting civilised, becoming part of the modern world. We use the term economic development exclusively for less developed and poor countries whose natural resources remain largely unexploited.
Economic growth is used in respect of both developed and developing countries to refer to what changes take place to the gross domestic product (GDP). During a particular year, have we harvested more tobacco, sugar, reared more cattle or have our factories produced more tonnes of a certain manufactures? How much more income have we earned from our exports?
As to what we should do to move forward, it would be better to begin by making decisions about economic systems. It can be said, of course, at the beginning of our independence our first president Dr Kamuzu Banda opted for market economics or capitalism rather than socialism let alone communism. But there is not such a thing as pure capitalism or socialism. Within each system there are variations. It is these variations or sub-systems that we will discuss in this article.
Basically any developing country is agricultural, most people dwell in the land. Are we going to concentrate on enhancing agricultural production and give less weight to secondary and tertiary sectors? A definitive answer must be given on this.
Suppose we decide to concentrate on agriculture, will land be worked by millions of peasants, ill-equipped with physical capital and scientific agricultural knowledge? Recently, there has been much condemnation of peasant smallholders. It is said they have failed to give the country food security. Some economists and policymakers advocate commercial farming. This is to be achieved by taking land away from smallholders giving it to capitalists who can make use of such modern equipments as tractors and can apply modern methods of farming.
If this suggestion is going to be implemented, we will be transforming peasants who own pieces of land to proletariats who own nothing, but their muscles. The main challenge of the peasant is nature such as droughts or floods which frustrate adequate yields.
Famine is a recurrent enemy of the smallholder. But the peasant is dwelling in his rent-free shelter on his land. The peasant is not easily recruited by revolutionaries because he has something to lose if the revolt fails.
The proletariat lives in town either on the street or shanty huts in a township. He is subjected to economic cycles of employment and unemployment. He faces starvation when he loses his job and is likely to be recruited by gangs of robbers. Anti-government insurrections usually start in towns enlisting the unemployed proletariats.
The productivity of the smallholders can be improved through cooperative societies or government schemes. The coop would possess modern implements and cultivate the peasants’ fields. The yields would be sold to the coop for delivery to Admarc, out of the proceeds the coops would make a deduction as payment for the services rendered and hand over the rest to the peasant. In this way higher yields could be realised from the land without grabbing the poor person’s land.
Balanced growth: A the beginning of development economics in the early 1950s, some economists like Ragnar Nurkes became leading exponents of what is termed balanced growth. They argued that isolated expansion of output by one or two industries was bound to fail because there would an increase in purchasing power.