UGRC239 Lecture 1-6 Social Framework of Economic Development PDF

SOCIAL FRAMEWORK OF ECONOMIC DEVELOPMENT INSTRUCTORS: Dr. Kojo Opoku Aidoo & Dr. Collins Adu-Bempah Brobbey Course Outline 1st week: What is development? How do we define development in the African context. Measuring development using qualitative and/or quantitative indices, limitations or problems of measurements, the accuracy of data. 2nd week: International dimensions of development – modernisation theory, dependency theory, globalisation. 3rd week: National development: Theories about the state and state intervention, urban bias. Course Outline 4th week: Agricultural commercialisation, agribusiness and relationship between state, peasantry and private sectors. 5th week: The importance of Popular participation in both generating appropriate technology and ensuring equity. 6th week: Debates about the criticality of Democracy and Development in African. OBJECTIVES To Examine ; The social dimensions of Economic development, Limitations of the various approaches for measuring Development, Development theories, How Development theories help interpret the reality of development in Africa, How development impact on different social groups, OBJECTIVES To Examine ; The changing framework of development and the discourse about development, The strengths and weaknesses of different Development theories, The nature of participation Top-down vs. Bottom-up Approaches and, Development theories at different scales. SCALE AND SCOPE Global Contradictions between: Developed and Underdeveloped or developing countries Modernisation theory, Dependency theory and World Syatems Theory National contradictions between: Political elites and Rural peasantry, Urban and Rural areas, Commercial farmers and Subsistence farmers. Dichotomy between Popular Participatory and development: Top- down vs. Bottom-up. Men and Women. Lecture 1 What is Development? MISCONCEPTIONS ABOUT DEVELOPMENT INTERACTIVE SECTION Westernization/Modernization/ Americanization/Europeanization. Technological Advancement, Development is progress, Economic growth/GDP/GNP/ANP, Is about per capita income/NNI, Development is a programme, Development is a project, To be developed, countries have to attain certain goals: Millennium Development Goals (MDGs) Sustainable Development Goals (SDGs), Development is a definite state that some countries have attained, but others never will, African culture hinders development. CONCEPTIONS ABOUT DEVELOPMENT INTERACTIVE SECTION Development is Multidimentional, Multifaceted, Econimical Political Sociological Cultural Development is a process, Development is culture specific, Development is Self-empowerment, Development is Participatory. TUTORIAL QUESTIONS With relevant examples, explain the multidimensional approaches of development? Examine the shortcomings or limitations associated with defining development using either; i) Economic growth approach, ii) Gross Domestic Product (GDP) approach, iii) Gross National Product (GNP) approach or, iv) Per Capita Income Approach. Discuss Development in the following context: i) Political Infrastructures ii) Sociological Infrastructures and iii) Economic growth TUTORIAL QUESTIONS Provide reasons to justify which of the following approaches aptly describes development: i) Qualitative perspective ii) Quantitative perspective Comment on the view that no single approach can satisfactorily define development. Distinguish between formal and informal economies. Explain with examples, the challenges associated with measuring National Income within these sectors. Discuss the assertion that development is culture specific. Explain Sustainable Development. Provide ways by which Sustainable Development can be achieved. Which of the following Approaches is appropriate in Measuring Development? 1. Prevalence of Democracy and Freedoms? Good Governance? Programmes and Projects- Millennium Development Goals or SDGs? Qualitative Improvement, of Welfare or Total well-being of the people in a given country? 2. Progress? Provision of social Infrastructures, Roads, Hospitals, Skyscrapers? Technological Advancement? High standard of Living?; Material wellbeing?; 3. Quantitative Growth, Economic growth: Product such as: GDP, GNP or Per Capita Income, or Productive Capacity? 4. Culture Specific? Qualitative Approach/Measures Political and Social infrastructures: Good governance, Welfare or Well-being of the people (better standard of living). Access to basic necessity of life- food, potable water, shelter and clothing better living conditions, safety net, sufficient public goods for the greater number of the people (HDI). Health indices – Average age, child and maternal mortality rates; access to medical services- number of doctors per population (doctor- patient ratio). Access to education- percentage of population educated. Rate of unemployment, prevalence of poverty, malnutrition, sanitation and hygiene. What is Development? Politically, development refers to the sustainable improvement or development resulting from effective institutional arrangements, good governance and allowance of freedoms to the universal adult suffrage. Qualitative Improvement- Welfare or total wellbeing of the people in a given country.... Prevalence of Democracy Measures: Sustainable improvement- wellbeing of the people; promotion of an all inclusive governance or extent to which democracy ensures egalitarianism and socio-political stability (Good governance). Respect for human rights, Allowance of all forms of Freedoms ( speech, association, expressions etc. Minimize state-led development: where state provides conducive environment for private sector growth and to bring about development (Minimal state involvement in development). Market-led development: Ensure effective price regimes and cut down or lower inflation, Reducing crime rate and eliminating dictatorship, oppression and suppression rule, keep down corruption... Problem/Shortcoming/Limitation Over-politicization resulting from crisis in democratic practice, weak/ fragile/hollow states or failed states, democratic developmental states, etc. ( Azarya & Chazan, 2011). Re-traditionalization of African societies (Internationalization) influx or intrusion of foreign, private domination(Dollarization) governance by proxy (Chabal & Daloz, 1999). Development illusion in Africa (Third world countries), due to in- formalization of politics e.g. pervasive neopatrimonialism, Patronage politics, patron-client networks, Nepotism and Cronyism (Chabal & Daloz, 1999)... What is Development? Sociologically, development refers to the provision of social infrastructures including; building roads, hospitals, schools, factories or Technological Advancement (Social infrastructures or infrastructural expansion). Problem/Shortcoming/ Limitation Sociologists argue that there can be growth without development. A mere infrastructural expansion or increase or growth in infrastructures such as roads, hospitals, education may not necessarily lead to development. The productive capacity may increase but could not guarantee sustainable development. As the productive capacity of a country expands its economy may grow but cannot be translated into or transform the lives or wellbeing of the people and hence no development. Expansion of productive capacity can be measured in terms of Gross Domestic Product (GDP) though, such product does not automatically translate into sustainable development. Quantitative Approach/Measure Economic growth: Gross Domestic Product(GDP), Gross National Product (GNP) Increase in Productive Capacity Per Capita Income (PCI). What is Development? Economically, development is a Quantitative or Economic growth: Gross Domestic Product(GDP), Gross National Product (GNP) or Increase in Productive Capacity or Per Capita Income (PCI). Gross Domestic Product(GDP) measures the total goods and services produced in a country divided by the total population in a given year. Gross National Product/ Average National Product (GNP/ANP) measures total goods and services produced by all the nationals both outside and inside of a given country in a particular year divided by the total population which is often expressed in terms of Per Capita Income (PCI) (World Bank) Problem/Shortcoming/ Limitation The question of Accuracy of the measurements of Growth (The Informal vs Formal Economy or Sector) To what extent is the value of such products as firewood, swish houses, thatched roofs, fufu mortars and pestles, mushrooms, herbal medicines, grasscutter included in measurements of Gross National Product (GNP) or Per capita Income (National Income)? Problem/Shortcoming/ Limitation Exclusion of Informal Sector in GNP The informal sector which includes small scale production and family units that are not effectively regulated by the state and not completely integrated with organised sector markets is always excluded from the computation of the GNP or National Income. This is because workers in this sector do not receive social security and pension allowances and do not pay direct taxes and hence are not captured in the computation. Problem/Shortcoming/ Limitation Exclusion of Informal Sector in GNP It includes small-scale traders, agricultural labourers, casual by-day or contract labourers, artisans (mechanics, carpenters, masons, hairdressers, seamstresses, etc.), ‘galamsey’ miners, and shanty town dwellers. They are not fully integrated into tax structures and regulated by state laws. Interestingly, in African states, the informal or unorganized sector is large consisting of agricultural sector and largely accounts for between 50-60% of the population,. The Club du Sahel Report: Exclusion of Rent Revenues from Regional Income Between 1960 and 1990, 66 million new town dwellers came into existence in West Africa. Figures for the rents paid by these urban dwellers or investments in housing are not adequately catered for in statistics. If one divides these new urban dwellers into average sized families and different social groups and estimates the different types of rents these families would pay, it has been estimated that the Gross Regional Product for West Africa should have been between 20-30% higher than official estimates (Snrech 1995). Source: Snrech, S. (1995) Preparing for the Future: A vision of West Africa in the year 2020. Summary Report, Club du Sahel, OECD: Paris. Small Formal Sector and Large Agricultural Sector The modern or formal or organized sector forms about 10% of the population in the contemporary period. It consists of larger scale production using wage labour and it works within the legal and administrative framework and regulations of the state, pays taxes and receives official support from the state (such as bank loans). It includes public sector enterprises, large private businesses and industrial plantations.. Problem/Shortcoming/ Limitation The accuracy of National Income/ Accounts The agricultural sector includes people who make their living from the land, producing food for consumption and export crop for market (Peasantry and large scale farmers). In informal sector where the peasantry is dominant, would it make the measure of GDP or GNP or National accounts really accurate in depicting the state of an economy? How do governments collect statistics on informal sector activities and the productive value of this sector? How do governments collect statistics on informal agricultural production? Problem/Shortcoming/ Limitation Economic Growth/GDP/GNP GNP tells us little about the state of the economy, particularly; How many people are gainfully employed? What is the distribution of income”? Are there many poor people and few rich people? Is income distributed more equitably? Does government invest in social services to build up the capabilities of people? How have governments been investing in people to determine the future of development? Are governments investing in education to build up a skilled population which later results in enhanced growth? Problem/Shortcoming/ Limitation GNP records short term utilization of resources without looking at implications for the future. Rapid deforestation through logging and mining will be reflected as a growth in GNP in short term but not in long term. These activities have hidden costs in environmental hazards. The environmental costs may be higher in the long term than the short term gains, and create problems for future generations which are difficult to solve. This may include loss of topsoil, climatic change, poor farm yields, deforestation, land degradation, pollution, etc. It is possible to have short-term economic growth without development. Problem/Shortcoming or Limitation In agriculture, development can be measured in increasing yields achieved by adopting new technology. But this adoption of technology may create social and environmental problems. While high input agriculture may result in rapid gains of profit, some of the longer term costs of production may be overlooked, such as the cost of water for irrigation, which may in future result in sinking water tables, shortage of water and salinization. The costs of pollution through fertilizers seeping into streams and drinking water and toxic uptake in the soil may also be very high. Problem/Shortcoming/ Limitation Uneven Distribution of Wealth in the World The 85 richest people in the world control as much wealth as the poorest 3.5 billion people. The richest 1 percent in the world control an income of $110 tn. which is half the wealth of the world. In the US the wealthiest 1 percent has captured 95 percent of post- financial crisis growth since 2009 while the bottom 90 percent became poorer. Source: Oxfam Working for the Few: political capture and economic inequality http://www.oxfam.org/sites/www.oxfam.org/files/bp- working-for-few-political-capture-economic-inequality-2014-summ- en.pdf Share of national income going to richest one percent Malthus’ View on Effect of Economic Growth on Population Growth ? Economic growth and population growth are increasing burdens on the natural resources of the world, and without control over these factors environmental deterioration will result in a serious decline of human society and economy. It is necessary to limit economic growth and population growth to achieve a more balanced relationship with nature, which enables production to be sustained at more modest levels, rather than following maximum growth strategies which may result in a catastrophe. However new technologies and science developed, enable forms of environmental management and hence new needs. How do we define needs and capacities to manage the environment.. Whose interests does Development serve? Local or National/International Community? While equity is important in sustainable development there is increasing differentiation in the world and concentration of wealth. Unfortunately, development is assumed to be in the global or national/international interest, the benefits are not distributed evenly. Agricultural development initiatives often favour richer/ large scale farmers and lead to decline of peasant/ small farmers who are likely to lose their land and resources in the name of development. Concessions given out to mining companies in Ghana have led to the displacement of more than 30 communities and the pollution of water bodies for many communities with arsenic. Who defines the interests of the poor and of future generations? (See a case of the Basarwa of Botswana as an illustration). The Basarwa of Botswana The Botswana government have attempted to develop sustainable development by diversifying the economy away from diamonds and livestock, and encouraging new investments from global capitalism, such as tourism. To promote tourism they have created the Central Kalahari Game Reserve. The Basarwa, a hunting and gathering people who live in the area of the Central Kalahari Game Reserve have been ejected from their ancestral homeland. The Basarwa (continued) President Mogae of Botswana, told the international community that in line with the country’s development programme, the government took a deliberate decision to relocate the Basarwa out of the Central Kalahari Game Reserve. This was motivated by a desire to maintain it as a wilderness environment that would be attractive to foreign tourists. In their new environment they will be provided with modern amenities such as schools, roads, and clinics. Mogae maintained that the Basarwa cannot be allowed to “live a primitive life while other Botswana are enjoying the fruits of modernity”. The Basarwa (continued) Molomo (2002) argues that instead of being moved out of the Game Reserve the Basarwa could have been given a stake in the development of ecotoursim. Historically the Basarwa have coexisted with wildlife and the management of wildlife is something they know best. The Basarwa could have been empowered to engage in the development of community based natural resource management. Ecotourism should have recognised the knowledge of indigenous people and should have provided them with the opportunity to manage their engagement with the outside world for their own benefit. People should be motivated to conserve natural resources as they use them. Which other people have lost their land and livelihood in the name of development? Who benefits from Development Frameworks? The West have imposed Conditionalities on African states for development aid from the structural adjustment era in 1980s. Are these Conditionalities in the interest of international corporations or of the African people? Do World Trade regulations support African interests or international corporations? Are intellectual property rights in the interest of Africa or the US? Who defines the Framework of Development? Over 70 years of the launch of development agenda in Africa, a large part of the African world still continues to suffer from poverty, development backwardness and deprivations Estavio (1993:10) writes: “But for two-thirds of the people on earth, [the] positive meaning of the word ‘development’... is a reminder of what they are not. It is a reminder of an undesirable, undignified condition. To escape from it, they need to be enslaved to other’s experiences and dreams” Escobar argues that the concept of development has not provided abundance but massive underdevelopment and impoverishment, exploitation and oppression, debt crisis, famine and violence. Who defines the Framework of Development? The discourse on development has reinvented the Third World and led so many countries within the so-called third world to perceive themselves as underdeveloped and embark upon the task of developing themselves. This involves a series of systematic interventions based on the prescriptions of Western development expertise in which representations of Asia, Africa and Latin America are based on Western conceptions. These representations use Western standards and homogenise Third World cultures in an ahistorical fashion. Development discourses have created an apparatus for producing knowledge about the Third World which is used in the exercise of power over the Third World: Who defines the Framework of Development? Does a new concept of development need to be developed, rooted in the specific African culture and/or conditions of African people’s problems and their aspirations rather than western-centred concepts of what role the West would like to see Africa play in the global economy? Should development be defined in the context of: Westernization/Modernization? Economic growth? Per capita income/GDP A project? A definite state that some countries have attained, but others never will? African cultures that hinder development? Some countries have to attain certain goals Millennium Development Goals (MDGs)? Sustainable Development Goals (SDGS)? And who represents the interests of the African people or who is the gatekeeper? Is Development Culture Specific? Chambers (1986) considers development as concerning with active participation and self-empowerment. He argues that: The environment and development are means not ends in themselves. The environment and development are for people, not people for environment and development. What people pursue through the development process is a better life rather than growth. Development should therefore be rooted in people's aspirations. It should be concerned with creating structures which enable people to identify and develop their own solution to problems. It is about social consciousness, people developing their own capacity and social forums to address matters of concern to themselves and the society at large. Is Development Culture Specific? Similarly, Amartya Sen (1999) sees Development as Freedom. It is a process of expanding the real freedom that people enjoy. Viewing development as such draws attention to the ends to development rather than the means. Poverty is deprivation of basic capabilities. This can result in premature mortality, undernourishment, widespread illiteracy etc. The value of development is in having greater freedom to do things. Individual freedom is essentially a social product, and the two are interconnected: Social arrangements expand individual freedoms individual freedoms are used to make more appropriate and effective social arrangements. Focus of development must be on the expansion of the capabilities of persons to lead the kinds of lives they value. The success of a society must be evaluated by the substantive freedoms that it members enjoy. Is Development Culture Specific? According to Amartya Sen (1999): People should directly be involved to participate in deciding what road should be taken rather than leaving this to the politicians, Technocrats or gatekeepers of tradition or to determine what tradition should be followed; Instrumental freedoms directly enhance the capability of development. Creation of social opportunities through public services such as health, education, a free press, contribute to the reduction of mortality and to economic development; Although social policies are often considered to be luxuries for rich countries, the east Asian economic success was proceeded by massive expansion of education, and later of health care before they broke the restraints of general poverty. Is Development Culture Specific? Amartya Sen (1999) concludes that culturally development is: The expansion of freedoms, Self-empowerment, The product or outcomes of the activities of the people in a given society, Process involving active participation of individuals in deciding and executing activities directly affecting their livelihood, protecting and sustaining the expansion of freedoms and self-empowerment. All activities that ensure sustainability of development of well-being of the people. What is Sustainable Development? World Commission on Environment and Development defines Sustainable development as: “Development which meets the needs of the present without compromising the ability of future generations to meet their own needs." World Commission on Environment and Development maintains that in Sustainable Development: Priority is often given to the needs of the world's poor in sustainable development frameworks. Concepts of environmental protection can also be used to appropriate people of their land or impose particular types of management regimes on them. There is high level of support for conservation of resources or critical measures are taken to prevent resources depletion. References Cour, J-M and Snrech, S. (1998) Preparing for the Future: A vision of West Africa in the year 2020. Summary Report, Club du Sahel, OECD: Paris. Chambers, R. (1986) Sustainable Livelihoods, IDS: University of Sussex Estavio, G. (1993) “Development” in W. Sachs (ed.) The Development Dictionary: A guide to knowledge as power, Zed Books: London. Molomo, M.G. (2008) Sustainable Development, Ecotourism, National Minorities and Land in Botswana in K.S. Amanor and S. Moo (eds.) Land and Sustainable Development in Africa, London: Zed Books. Oxfam Working for the Few: political capture and economic inequality http://www.oxfam.org/sites/www.oxfam.org/files/bp-working-for- few-political-capture-economic-inequality-2014-summ-en.pdf Sen, Amartya (1999) Development as Freedon, Oxford: Oxford University Press. Social Framework of Economic Development Lecture 2 W.W. ROSTOW’S 5 STAGES OF GROWTH NARATIVE; MODERNISATION THEORY, DEPENDENCY THEORY AND WORLD SYSTEMS THEORY Instructors: Dr. Kojo Opoku Aidoo & Dr. Collins Brobbey Adu-Bempah Objectives Critically examine W.W. Rostow’s 5 Stateges of growth, Modernization theory, Dependency theory, World Systems Theory Establish the dichotomy between Modernization theory and Dependency theory and the contradictions Determine which of the theories attempts an apt description of Africa’s underdevelopment predicaments. Distinguish between Modernization, Dependency, W.W. Rostow’s 5 Stateges of growth and World Systems Theory. Tutorial Questions for Reflection What is underdevelopment? How can underdevelopment be explained? Does underdevelopment result from the failure of countries to follow natural economic laws?, or Does it result from the history of the ways in which nations were integrated into the world economy by the Global North? Is the concept of “Development” a “myth” or a“reality”? Compare and contrast Modernization and Dependency Theories. Write brief notes on any three (3) of the following: a) Modernization Theory. b) Dependency Theory. c) W.W. Rostow's Five Stages of Economic Growth. d) The World Systems Theory. Tutorial Questions for Reflection Appraise the critiques of Modernization and Dependency Theories. Using two (2) specific tenets of Modernization theory and Dependency theory respectively, discuss which of these two theories aptly explain the concept of Africa’s under- development. What is Dualism? Show how these terms amplify the understanding of Modernization and Dependency theories’ dichotomy. Distinguish between the terms: “Modern sector” and “Traditional sector” Discuss three (3) inadequacies each of using modernization theory and dependency theory to explain Africa’s underdevelopment. Tutorial Questions for Reflection Are there any traditional societies in Africa or have they all been transformed by the expansion of the world economy? What is meant by dependency theory? What is meant by modernization theory? Compare and contrast theories concerned with vent for surplus and, development with unlimited supply of labour Write Short notes on any two (2) of the following: - Modernization theory - Dependency Theory - Globalization - Democracy and - Neoliberalism Development in the World Economy (Interactive Section) Two Contrasting concepts, development and under-development dominate the conversation of development in the world economy. Development and underdevelopment are mutually linked. Without a developed world there is no under-developed or developing world. Both terms define each other, without the opposite the other cannot exist. How then, can underdevelopment be explained? Does underdevelopment result from the failure of countries to follow natural economic laws?, or Does it result from the history of the ways in which nations were integrated into the world economy by the Global North? Is the concept of “Development” a “myth” or a“reality”? Traditional and Modern Societies (Interactive Section) Development is frequently seen as concerned with the transformation of society from a ‘traditional’ to a ‘modern’ one. The causes of underdevelopment will then depend on how the relationship between these two types of societies and the relationship between developed and underdeveloped countries are constructed. Also how ‘traditional’ or ‘primitive’ and ‘modern’ or ‘modernity’ are linked to underdeveloped and developed worlds respectively. Traditional and Modern Societies (Interactive Section) The blueprint for transforming a developing to developed country lies with the introduction of a set of reforms by the modernizers that make their institutions develop alongside those in the most developed countries Alternatively, underdevelopment can be seen as a result of unfavourable integration into the world market, which causes those countries that became colonies to become subservient to those that colonized them. Traditional and Modern Societies (Interactive Section) Thus colonies’ economies often grow to serve the needs of the colonizer and this results in a distorted economy that does not serve the needs of the colonized. The colonies served to produce raw materials for the industries of the European colonizers. In Africa the main colonizers were the British and French with Portugal, Spain, Belgium and Germany holding limited colonies. We look at two approaches to development: Modernization and Dependency Theories MODERNIZATION THEORY This sees underdevelopment as resulting from the interaction between traditional sectors and modern sectors in developing Countries. The Leading Lights include: Reagan (Reaganomics) Margret Thatcher (Thatcherism) IMF & World Bank Walt Walter Rostow Myint, 1958 Arthur Lewis 1958 Explanations of the Five Stages of Economic Growth as postulated by W,W. Rostow Rostow argues that through increased investment, increased exposure to modernized, Western society, and changes in traditional culture and values, societies will become more highly developed. Rostow's model is a part of what we call the liberal school of economics. It is one of the most significant historical models of economic growth. Basically, this model of stages of economic growth describes how societies become modern, industrial economies over five separate stages. 1The Traditional Stage This stage is characterized by subsistence agriculture or hunting and gathering: almost wholly a “primitive ” or “primary” sector economy. It has limited technology and lack of class or individual economic mobility. This is where society generally begins before progressing towards the next stages of growth. At this stage there are no centralized nations or political systems ( a cephalous or stateless state ( unorganized stage). Explanations of the Five Stages of Economic Growth as postulated by W,W. Rostow 2. The Preconditions for Take-off: This stage is generally described as “prerequisites for rapid economic growth.” It is the intermediary step between a traditional, agrarian society and industrial explosion. This is the stage where the economy undergoes a process of change for building up of conditions for growth and take off. Three important developments occur here: Firstly, there is a shift from an agrarian to an industrial or manufacturing society begins, (albeit slowly). Secondly, trade and other commercial activities of the nation broaden the market's reach not only to neighbouring areas but also to far regions, creating international markets. Lastly, there are surplus of production which should not be wasted on consumption, but should be invested in industrial development, infrastructure and thereby prepare for self-sustained growth of the economy later on. Explanations of the Five Stages of Economic Growth as postulated by W,W. Rostow MODERNIZATION 3. The Take-off Stage This stage is when external demand for raw materials initiates economic change. Here there is development of more productive, commercial agriculture and cash crops largely for export. 4. Drive to Maturity There is widespread and enhanced investment in changes to the physical environment to expand production (i.e. irrigation, canals, ports), increasing spread of technology and advances in existing technologies, changing social structure, with previous social equilibrium now in flux, and individual social mobility begins. 5. High Mass Consumption At this stage we observe development of national identity and shared economic interests. Here we see a move toward full industrialization in certain specific ways, such as technological innovations, urbanization, production of secondary goods such as textiles, and intense growth in specific sectors. MODERNIZATION AND DUALISM MAIN ARGUMENT During the 1950s and 1960s development theory was dominated by the concept of modernization. Central to modernization theory is the concept of dualism. The basis of dualism is that in developing countries there are two economic sectors: A traditional static sector; A dynamic modern sector introduced by colonial penetration. The extent of development results from the interaction between these two sectors and the domination of the traditional sector by the modern sector. MODERNIZATION AND DUALISM Modernization theory views colonialism positively and sees the development of the modern sector as the result of colonial penetration. Examples of modernization theory /approach: Vent for surplus (Myint, 1958 ), Two -fold Debates about colonialism. Colonialism is a blessing in disguise! Economic Development with Unlimited Supplies of Labour- (Arthur Lewis, 1958) Economic dualism- W.W. Rostow Vent for Surplus - Myint THE TRADITIONAL SETTING Myint (1958) argues that before the nineteenth century, the colonial economies (or developing countries) were isolated with sparse population and poor transport facilities. The lack of transport system prevented people from developing a diversified economy. There was a surplus of land which people were unable to use productively and surplus labour. Surplus labour existed because in a subsistence economy with poor transport facilities and little specialization in production the people were unable to develop suitable investment opportunities. With lack of opportunity labour was locked up in a semi-idle form and people maximized on leisure rather than increasing material goods at their disposal. Vent for Surplus - Myint The development of colonialism resulted in the development of transport and communications and the introduction of new consumer goods and markets for new crops. This acted as a stimulus which encouraged the peasants to expand production for the export trade. With availability of land and labour this was easily achieved by bringing new land into cultivation and increasing labour. Vent for Surplus - Myint The export crops were easily developed alongside subsistence crops. Colonial expansion thus enabled surplus labour (underutilized labour) to be channeled into new land for the production of new wealth. Since the domestic market of developing countries was small this expansion of export-oriented production (agricultural commodities for export markets) provide resources for development initiatives remained the only viable development option for the colonial administration to follow. However this process of expansion can only continue as long as there is both surplus land and labour available. Vent for Surplus - Myint Thus colonialism acted as a vent for surplus land and labour, creating modern infrastructure and access to international markets which enabled new wealth to be created in the export agriculture sector. Vent for Surplus Applied to Ghana - Myint In the case of Ghana, colonialism created the conditions which enabled farmers in Ghana to develop cocoa farming. It stimulated trade and provided new consumer goods (such as cloth and provisions) which encouraged people to develop cocoa farming to participate in trade. Profits raised from cocoa were also invested in buildings and transport. By the 1960s, with independence, the proceeds which the government gained from cocoa sales were used to invest in developing manufacturing Dependency Theory The proponents of dependency theory? Dependency theory originates with two papers published in 1949, one by Hans Singer and one by Raúl Prebisch, in which the authors observe that the terms of trade for underdeveloped countries relative to the developed countries had deteriorated over time: the underdeveloped countries were able to purchase fewer and This Theory is a critique of modernization theory and argues that development and underdevelopment are the product of the historical relationship between different societies which have benefited some countries and hindered others The Leading Lights: Celso Furtado, and Anibal Pinto (United Nations Economic Commission for Latin America (ECLAC or, in Spanish, CEPAL); American Marxist, Paul A. Baran, Paul Sweezy, and Former Brazilian President Fernando Henrique Cardoso. To Andre Gunder Frank (1995–2002) dependency theory argues that the people of less-developed countries are not to blame for the failure of their societies to develop. Instead, he suggested that Western nations deliberately failed to develop these countries Samir Amin, Dependency Dependency theory is highly critical of modernization theory and dualism. It argues that the roots of underdevelopment must be traced historically rather than in models of economic theory and presumptions of static social systems. It argues that the dualist division between a traditional and a modern sector is not accurate and that what is taken to be a traditional sector is itself the product of colonialism and the incorporation of developing countries into the world economy. The growth of colonialism, imperialism and colonial trade has entailed the destruction of traditional economies Dependency – Amin and Wallenstein Amin (1972) and Wallenstein (1974) both argue that the historical development of West Africa has involved three stages of incorporation into the world economy. Before 1700, Africa was independent and no more backward than the rest of the world. Complex social formations had emerged in West Africa with states, social differentiation or classes and the disintegration of primitive village economies. Complex trade patterns occurred over West Africa which resulted in the development of long distance regional trade. In trade West Africa was an equal partner with other areas of the world.. Dependency – Amin and Wallenstein Trade with the rest of the world was peripheral to the West African economies and did not determine or transform its mode of development. Society did not depend upon trade with other areas to reproduce its economic and social life. Africa was economically independent Dependency – Amin and Wallenstein In the second phase, after 1700, West Africa became involved in the Atlantic Slave trade. This favoured the development of powerful states near the coast that raided and subjugated neighbouring peoples who were transformed into slaves that were sold. This resulted in the emergence of wealthy slave-raiding states surrounded by subjugated areas that were depleted of labour and wealth. At the global level this resulted in the development of Africa becoming subservient to the development of America. Africa provided labour for the expansion of America and through that for the expansion of the world economy and subtracted labour from its own development. Dependency – Amin and Wallenstein In the third phase, from the nineteenth century, a transformation of the world economy had occurred. This was characterized by the emergence of industrial production in Western Europe, the decline of the slave trade and the growth of demand for raw materials for industry. Africa then became transformed into a producer of export crops for European industry. The period of the slave trade had created links between powerful African states and traders and European factors. These links formed the basis for developing export trade. Dependency – Amin and Wallenstein Colonial authority provided support to existing political groups who were able to organize the appropriation or privatization of land for export crop production and organize labour. Labour was often recruited for the export crop sector from areas which were originally depleted of their wealth through slave raiding and political subjugation. Colonial policy sought to maintain these areas in a state of backwardness to assure that the youth and men of working age were forced to migrate. Taxation was often used to force people to migrate. To meet their tax obligations they had to seek employment in the export crop sector. Dependency – Amin and Wallenstein French colonial policy thus transformed the Mossi area of southern Burkina Faso into a labour reserve for the development of French plantations in southeastern Côte d’Ivoire. Visiting Upper Volta in the 1920s Albert Londres describes Upper Volta as: A reservoir of manpower: 3 million negroes. Everyone comes here to get them as one would go to a well for water. For the building of the Thiès-Kayes and Kayes-Niger railroad the Mossi are tapped. For the railroads of the Ivory Coast, Mossi country is tapped. The [French] woodcutters leave their lagoons [coastal areas] to tap the Mossi (Londres, 1929:129, quoted in Skinner (1965) The Mossi of Upper Volta). Dependency – Amin and Wallenstein The northern area of Ghana became a labour reserve for the cocoa sector and the colonial mines and the chiefs appointed by the colonial government were responsible for raising quotas of recruits to work in the south. Governor Guggisberg stated that “every man of the Northern Territories is worth his weight in gold - for the mines, for private enterprise and for the development of those schemes the completion of which are necessary to secure progress and development”. However this development was not for the North but the south. Dependency – Amin and Wallenstein In 1899 Governor Hodgson stated “I would not at present spend upon the Northern Territories, upon the hinterland of the Colony - a single penny more than is absolutely necessary for their suitable administration and the encouragement of the transit trade”. Governor Guggisberg later stated “I am doubtful if the agricultural poverty of the country [the North] was a reason for the desire to postpone the railway. Rather was it due to the policy which has openly obtained… of starving the northern territories of the means of development” Gold Coast Conference of 30 th November 1919). Dependency – Amin and Wallenstein The colonial economy was characterized by the emergence of two regions: a “rich” micro-region producing export crops for European industry and hiring labour from other regions for this; a labour reserve, which through various colonial policies was transformed into an area of subsistence production and economic hardship, with a large percentage of its labour force migrating to seek work in the export producing area. Dependency – Amin and Wallenstein The export-import trade was heavily controlled by expatriate colonial firms which were supported by the colonial administration. The export crop economy distorted the economies of West Africa and made them subservient and dependent upon the dictates of European industry. Africa was condemned to be “developed” only along the coast. The mass migration from the interior provided cheap labour for creating cheap crops for the export trade and for European industry. It led to the impoverishment of the hinterland. Amin argues that this resulted “in a balkanization in which the export producing areas had no interests in sharing the crumbs of the colonial cake with their labour reserves”, in which the development of the export crop sector led to the impoverishment of the whole regional economy. Dependency – Amin and Wallenstein Far from being traditional, the societies of the hinterland were distorted and functioned to produce for the world market under conditions which impoverished them and prevented their further development. While they retained some external features of being traditional, these were their only means of survival -all societies have to have some culture. Amin concludes that there are no traditional societies in Africa, only dependent peripheral ones. Thus economic dualism is a fallacy. Dependency – Amin and Wallenstein Colonialism did not create opportunity for idle labour in the traditional sector, but led to the transformation of some areas into labour reserves for the main export crop areas to produce cheap commodities for European industry. The potentials of the domestic economy were sacrificed to produce export crops for European needs. World Systms Theory – Wallenstein Core Semi-Periphery Periphery Critiques modernization theorists ignore external sources of change in societies. Critiques The Modernization Theory’s methodology is based upon conformity. The theory assumes it is necessary for all Third World countries to conform to the development strategies employed by the Western societies. Hence Sharmila Joshi (2005) argues that it is “Westernization in disguise: The so-called natural progress closely followed the trajectory of Western Europe. Critiques North America: how they had transformed and ‘developed’ became the blueprint for the rest of the world.” Moreover the theory is structured against indigenous traditional values and institutions, making tradition seem like a calamity that should be deleted from Third World societies. Sharmila Joshi (2005) goes on to explain that the task of the Third World has become “to transform itself from tradition to modernity” Critiques This makes the theory discriminatory in terms of tradition, because it insists that Third World traditions are irrelevant and incapable compared to Western traditions. In addition, the Theory assumes that the current state of Western societies is an ideal to be strived for and desired. However, as is common knowledge, the First World countries in present-day are no manner near perfection; often plagued with recurring economic downfalls and financial crises with existing cases of poverty, high accounts of anti-social behaviour and other social discrepancies. In short, the theory’s approach towards development is flawed because of its Western bias. Critiques Dependency theory, despite its radically different focus on the causes of underdevelopment rests upon historical anticedent. The Dependency Theory however, is opposed to all the assessments and solutions offered by the Modernization Theory. The Dependency Theory argues that the plight of the Third World is as a result of the rapid economic growth and economic development in the First World countries. In essence, the theory puts forward a dynamic of exploitation in which the development in ‘metropolitan’ states undermined development in the ‘satellite’ states (Metropolis vs. Periphery; Urban Bias vs. Rural impoverishment). Critiques This means that the wealthy people become wealthier at the expense of the already impoverished; for instance, embrace a scenario in a home with ten people that are all expected to share all available foodstuff in the household. If the foodstuff is adequate for exactly ten people, the momentary individual possesses enough food to fit two or more people means that another person will go without food and be in a state of hunger or poverty. This is the idea behind the concept of being ‘dependent’, the riches of wealthy countries ‘depend’ upon the poverty of impoverished countries. Critiques The theory attacks the solutions offered by the Modernization Theory as being strategies built to enhance the ‘exploitation’ of the third world. The theory sheds light on the issue of Distorted Development; according to James Midgley (1995) distorted development is “a failure to harmonize economic and social development objectives, and to ensure that the benefits of economic progress reach the population as a whole”. From a global perspective. References Myint, H. (1958) “The ‘Classical Theory’ of International Trade and the Underdeveloped Countries” The Economic Journal, June 1958, pp.317-337: Balme Library. Lewis, Arthur (1958) “Economic Development with Unlimited Supplies of Labour” in A.A. Agarwala and S.P. Singh The Economics of Underdevelopment: Balme Library. Amin, Samir (1972) “Underdevelopment and Dependence in Black Africa: Origins and contemporary forms” Journal of Modern African Studies, vol.10 (4): Africana Bookcases Balme Library. The same article can also be found in D.L. Cohen and J. Daniel, Political Economy of Africa: Selected Readings: Africana Bookcase, Balme Library. References Wallerstein, Immanuel (1974) “Three Stages of African Involvement in the World Economy”, in P.C.W. Gutkind and I. Wallerstein, Political Economy of Contemporary Africa: Africana Bookcases, Balme Library. Rodney, W. (1973). How Europe Underdeveloped Africa. Dar-Es-Salaam: Bogle- L’Overture Publications, London and Tanzanian Publishing House.Joshi, S. (2005). Theories of development: Modernisation vs Dependency. Retrieved fromhttp://infochangeindia.org/defining-development/theories- of-development-modernisation-vs-dependency.htmlMidgley, J. (1995). Social Development: the development perspective in social welfare. London: Sage Publications LECTURE 3 LECTURE 3 THE STATE AND RURAL DEVELOPMENT Social Framework of Economic Development Instructors: Dr. Kojo Opoku Aidoo & Dr Collins Adu-Bempah Brobbey OBJECTIVES To Examine:  The State and its role in development.  Relationship between urban and rural areas(Urban-Rural Dichotomy)  Agricultural policies and Implications for peasant farmers  The relationship between the farmers and the state  The extent to which agricultural policies are influenced by political considerations  Michael Lipton’s theory of “Urban Bias”  Robert Bates’ Theory of Agricultural Markets  Amanor’s argument about “Agribusiness.” TUTORIAL QUESTIONS FOR REFLECTION Identify and explain three state and development agencies’ strategies for helping the smallholder farmers to increase food production in any one African country. Identify and explain how agriculture policies in any one African country have been influenced by government subsidy. Examine the importance of Bates’ Three (3) types of Agriculture market to peasant farmers in any one African country. Examine the characteristics of Bates’s three (3) types of Agricultural markets. TUTORIAL QUESTIONS FOR REFLECTION Examine the significance of Bates’ Three (3) types of Agriculture market to peasant farmers in any one African country. Explain how government’s intervention in the agricultural markets are detrimental to the interest of peasant farmers in any one African country. Provide reasons to show how government’s intervention in the agricultural markets are harmful to the interest of peasant farmers in any one African state. With reference to one African country, examine two (2) strategies adopted by the state and development agencies to incorporate smallholder farmers into Agricultural Market. TUTORIAL QUESTIONS FOR REFLECTION Examine the main argument of Lipton’s Theory of Urban Bias. In three (3) ways, discuss the causes and effects of Urban Bias in any one African state. Explain three (3) ways by which inappropriate agricultural policies have engendered backwardness of the peasants farmers in any one African country. Explain why inappropriate agricultural policies have been considered as “myths” and “conservative” in dealing with the backwardness of peasants farmwers in any one African country. Identify and explain any three industrialization strategies for ovecoming the Urban Bias phenomenon. Critically examine Corbridge’s criticism of Urban Bias. Explain what Agricultural development policy is all about. Explain the correation between state Policies and Prices.. TUTORIAL QUESTIONS FOR REFLECTION Critically examine Amanor’s (2005) Critiques of Bates’ Views on Agriculture Market Policies. Provide specific characteristics of Lipton’s theory of “Urban Bias” in any one African country. Write brief notes on the following: i.Agricultural commodities market ii. Factors for production market iii.Market for consumer goods. Identify and explain Bates’ three types of Agricultural market in Africa. Discuss three (3) ways by which the provision of government subsidy has contributed to shaping agriculture policies in any one African country. Identify and explain how agriculture policies in any one African country have been influenced by government subsidy. Explaining the concept of State Weber’s View: State is organs of government which has:  Monopoly over the exercise of force and power;  Legitimate Institution as perceived by the governed;  Institutional structures established to handle governmental tasks: Exercise of force through e.g. bureaucracy, government ministries, law enforcement agencies, , police, military, tax and revenue, civil society/service, trade unions etc.   Administratively, performs Day-to-day running of state’s affairs.  Legal/ Policies: legislates, Formulates,adjudicates, Implements and evaluates. Explaining the Role of State in development process Hegel’s View:  Cohesion/Integration: Mediates different interest group. Marx’s View:  Exploitative mechanism: Uses coercive institutions to collect taxes, supports the interest of the most powerful groups in society that exert influence over it.  Military/Security/Defense: Exercises control over citizens and against external aggressions or ensure territorial integrity. Garner & Gatell’s Views  Diplomacy: dealing with international actors and/ institutions beyond its boundaries. Ideological: Consensus building/ Conduct elections, population census etc.. Powers that be: power over life and death of all citizens. Establishing State Power and linking it to Urban power In development discourse, State is referred to as: 1. Legitimate Driven Force :  Application of coercive force /instrument to compel obedience.  This means that a citizen does not have a choice between obeying the laws or the rules of state. It is compulsory for every citizen to obey them not only because they are statutory institutions but also severe sanctions are attached to disobeying them. 2. Powerful Change Agent:  Recognition as all powerful, unlimited power  Supremacy over all that exist within state  Demands obedience to foster national integration (cohesion) for promoting development 3. Authority and Control All Human and Natural resources LIPTON 1: State power equals Urban power  Lipton argues that in developing countries urban elites, dominate the state organs. Their power is not only based on economic wealth, but the power to organise, centralise and control the resources within the state.  Urban power in developing countries is out of proportion to the urban share of the population or production.  Urban elites consist of intellectuals, businessmen/women, politicians, bureaucrats, trade-union leaders, professionals, who control the distribution of resources.  In contrast rural people are dispersed, poor, inarticulate and not organised. They are often unable to make demands on government. Lipton 2: Theory of Urban Bias  As a result of urban power there is a large disparity between rural and urban areas.  In developing countries 70 percent of the population work in rural areas, produce 40-45 percent of GNP, but only receive about 20 percent of national investment.  The wealth produced in the rural sector is extracted from the rural areas and invested in urban development.  Urban Bias there resulted from gap or inequalities existing between Urban Rich and Rural poor. Lipton 3 : Gov’t Policies and Causes of Urban Bias  Government policies often undermine agricultural production by making farm produce very cheap and manufactured commodities relatively expensive.  This does not only promote inefficiency but also, serve as a disincentive to investment. While investment ensures urban growth unfortunately, it becomes expensive and does not promote much employment in the rural community.  Rural labour intensive options are therefore not developed. Lipton 3: Rural Inequalities and Causes of Urban Bias  Since the urban areas want to receive surpluses from people in the rural areas with minimal investment, they provide supports to only those people in the rural areas who can most provide surpluses (such as food, savings, export crops for foreign exchange).  Agricultural polices focus on the big farmers.  If they focused on improving the conditions of small farmers a lot of the improvement would go into the farmers' own household –i.e. improved household consumption of food.  Large farmers will transform inputs into more produce for the market. Rural Inequalities and Causes of Urban Bias (Cont’)  This bias focus results in inefficiency because the small farmers who occupy more significant areas of land are deprived of the requisite incentives, cannot produce greater outputs per acre in a year than large farmers.  And hence the rural rich who is less efficient producers, however get more aid from the state and the small farmers with the potential to bring about greater change get less. Lipton 4: Gov’t policies Supporting Large Farmers & Neglecting Small farmers  Forced industrialisation has been based on an alliance between urban elites and large-scale farmers, neglecting the peasant or small farmers.  The aim of this alliance is to extract surplus from agriculture in the form of cheap food, savings and foreign exchange in return for favoured farmers having access to subsidies, inputs and services.  Often these inputs are only appropriate for the large farmers and are not suitable for small farmers. Frequently there are not enough subsidised inputs to go round all farmers and these are serious challenges to the small farmers as they have to buy their inputs on the market at inflated prices. Implications of Gov’t policies- Inefficient Agriculture (Cont’)  This has harmed the rural poor who have been placed in an uncompetitive position as compared to big or large scale farmers with access to land and inputs and in relation to urban dwellers in social infrastructures/resources (i.e. roads, education, training, health facilities).  Over time, this policy of neglecting small scale or peasant farmers and subsidising large-scale agriculture has resulted in declining exports, rising food imports and increasing national debt. It has resulted in the underuse of scarce labour and overuse of scarce and costly capital.  Had these resources been invested in small scale agriculture they would have been used more efficiently. With rising population growth and high costs of creating urban jobs this strategy has proven unsustainable Lipton 5: Tracing Urban bias in Africa  Urban bias is higher in Africa than elsewhere in the globe and this leads to more inefficient agriculture.Agricultural productivity is low.  In Europe the productivity of agricultural work is 75% of urban work,  In Asia and Latin America it is 35%  In Africa 20%.  In the 1980s the non-farm-farm income gap lay at around 6:1 in Africa as compared to 3:1 in Asia and Latin America and 1.5:1 in early European and Japanese development. Lipton 6: Inappropriate policies & Myths about Agriculture  In Africa inappropriate agricultural policies have led to myths about the backwardness and conservatism of peasants, when in fact there is much evidence that they are innovative and rational. This includes the following myths:  Large farmers are more efficient producers when in fact yields and returns to capital are higher than small farms with most crops and no technologies;  It is scientific to apply Western capital-intensive methods to land scarce, maintenance-skill-staff, labour-surplus and rural environments;  Technologies developed on experimental stations near urban cities cannot yield useful results without carrying on experimentation on farmers' fields. Lipton 7 Why does urban bias exist?  The rural areas are poorly organized and unable to articulate their demands in a way which will force urban elites to take note.  The solution to urban bias is to organize rural peoples to see that the main source of exploitation is the rural-urban division and not rural differences.  Other developing countries have attempted to manipulate market forces in order to influence the prices of exports and imports, against the interests of farmers and rural workers.  The resources of the state have been used to build up urban rather than rural infrastructures (water, roads) and social services (health, education).  The small farmers, the vast majority of the population have been marginalized in terms of development How to overcome Urban Bias? How to overcome Urban Bias Lipton 8: Industrialisation strategies  Rural people should unite and develop a rural alliance to demand allocation of resources from urban areas.  Economic development normally involves industrialization.  The route followed by Europe and Japan involved developing agriculture before the rural surplus was transferred from the rural sector to the rest of the economy.  Most developing countries have attempted to modernize their economy by giving priority to industrialization.  Some countries have followed the path of developing large state run farms which would then deliver surpluses to the cities. Corbridge’s criticism of Urban Bias  The theory equates rich with urban and poor with rural, while there are many poor people in rural areas. It makes big farmers to be part of urban structure as a creation of urban bias rather than as a part of inequalities within the rural area.  It presupposes that all rural people are poor while all urban people are rich. This is indeed, a fallacy of generalization, as it is possible to find rich people in rural areas and also poor people in the urban centres.  While small farmers may be interested in higher food prices rural labourers benefit from cheap food.  Large farmers are interested in protecting their favoured status.  There is therefore no clear association between urban and rural class interests and urban bias. Bates 1 : Markets and the State  Bates has attempted to further develop the theory of Urban Bias by focusing on the relationship between state, political interests, and farmer interests rather than dichotomy between rural and urban interests.  In other words, while Lipton believes that the Urban Bias resulted from rural-urban dichotomy, Bates sees it as resulting from relationship between State and Political interests on the one hand, and farmer interest on the other hand. Rural areas exist to satisfy state and political interest.  He carried out his research in the late 1970s and early 1980s before structural adjustment. His work was influential in creating policy changes and the pressures in structural adjustment to remove state interventions in agricultural development policies. Bates 2: What is Agricultural development policy about?  Agricultural development policy is about making suitable incentives available for farmers to guide and reward them to improving their farming.  From this, it follows that problems in agriculture are related to improper incentives which distort operations of the market.  One of these distortions is government policy.  Government policies are influenced by political factors. Therefore it becomes important to examine the political basis for agricultural policies and how policies are developed to appease powerful political interests and to enable political regimes to remain in power. Bates 3: Three (3) Agricultural Markets  Powerful political interests have become entrenched in the state.  Consequently, government interventions in the agricultural markets have become very harmful to the interests of farmers.  In agricultural Sector, Bates identifies three (3) important Markets, namely: 1. The market dealing in Agricultural Commodities (food crops, cash crops for export). 2. The market dealing in Factors of Production, Inputs such as fertilizer. 3. The market dealing in Consumer Goods consumed by rural people e.g. staple food, yam, cassava, rice etc.  Governments intervene in these markets to gain surpluses which they use to build up their support base in the urban areas. Bates 4: Agricultural Commodity Markets  In the agricultural commodities markets governments are interested in keeping the farmgate price of commodities low.  This enables them to realize profit through the control of trade (buying cheap and selling dear) to raise funds for state business and industrial ventures and to finance the large bureaucracy.  It also enables them to provide cheap food for urban workers to prevent urban unrest and cheap inputs for local industries. This creates an urban alliance.  This can be done through marketing boards which pay farmers minimal prices for export crops or through enforcing control prices.  Farmers respond to low prices by retreating from the market, by producing food crops for local markets rather than export crops, and by increasing self-provisioning rather than market production, Bates 5: Markets for Inputs (Factors of Prod.)  In the market for inputs governments subsidize inputs to: i) Increase the profitability of mechanized farming and, ii) Encourage large scale production at the expense of the peasant/ small farmers.  The benefits include to: i) Focus on a few elites farmers who gain large profits, ii) Encourage patronage of the state’s input delivery programmes and, iii) Win influential supporters and allies in rural areas. Market for Inputs (Factors of Prod.)  Governments are interested in winning political support rather than economic efficiency.  By extracting surplus from rural areas governments can continue to maintain and extend the systems of patronage which they have established to maintain their power.  This includes extracting rural surplus to support the bureaucracy and to maintain a state industrial sector, and to appease urban workers who might riot if prices of food were increased. Bates 6: Markets for Consumer Goods  Governments intervene in the Market for Consumer Goods to influence high prices paid for consumer goods manufactured by local industries by introducing high import tariffs.  This promotes the interests of industrialists who are often important allies of the government and makes consumers pay for costs of industrialization, while not assuring high quality commodities.  As a result local industries are not forced to be competitive on the world market. This results in inefficiencies which are paid for by the consumers including the farmers. Bates 7: State Policies and Prices?  Why don't governments encourage efficient market price mechanisms?  Bates argues they get little political advantage from doing this, since if the market works efficiently it becomes invisible.  Political interests dictate that the economy should work as a system of patronage. Bates 8: Unorganized Rural Producers  To strengthen food production governments could raise prices or increase investments in the agricultural sector.  However they do not do this because rural producers are not organized to demand higher prices and these actions would be unpopular among urban workers.  Rather than develop more efficient market policies to promote development, governments prefer development projects since they enable political patronage to be extended.  Through projects resources can be given to loyal supporters while dissenters can be removed from office and from access to resources.  However this often results in inefficiency as poorly trained supporters are rewarded with offices in which they have little capacity (Consequences of patronage politics).  Thus, governments attempts to win political support often distorts economic policies. Bates 9:Markert policies vs. Dev’t. projects.  By returning a portion of what they extract from rural areas, given generously to a few allies, the government can divide rural political interests (divide and rule tactics), with individuals competing to receive patronage rather than asserting the interests of the masses or rural farmers. Note: this brings in mind the questions of ‘who defines development? And whose interest does development serve? Bates 10: Economic Inefficiency  Similarly, governments develop economic inefficiency to cultivate patronage.  By creating a hostile policy environment rather than one which encourages producers to produce.  By enabling individuals to gain favours to promote their economic interests individuals are encouraged to engage in corrupt practices rather than seeking societal objective and collective benefit.  The possibility of being impeded in following their livelihood, or being victimized by unfair laws, prevents individuals from coming together to criticize unjust legislation or seeking to articulate or vocalize their group interests. Implications of Government Interventions for small farmers  While the small farmers are seen by many people as the problem in agriculture,  it is rather government interventions which have been so harmful to the majority of farmers  Government interventions entrenches powerful political groups and interests which create serious obstacles to change and prevent small farmers from revolutionizing or developing their production. Amanor (2005) Critiques Bates’ Views on Agriculture Market Policies  Deregulation does not only open up African markets to industrial commodities but also to food produce.  One of the fastest growing imports in West Africa has been US rice (Although Thai rice is now dominating imports).  This can frequently undercut local food production and displaced local foods on the urban markets.  Sometimes these crops receive forms of subsidies from their governments. Amanor (2005) Critiques Bates’ Views on Agriculture Market Policies 2  US food traders have exerted a major influence on opening up new markets to their produce, arguing that African producers should specialize in crops in which they have a comparative advantage, rather than trying to promote local food security.  They say African producers should specialize in export crops.  Bates fails to examine how the state has also promoted agribusiness and how transnational agribusiness is expanding into development country markets.  Export crops are vulnerable to over-saturated markets, market monopolies, and price volatility in which during crises market prices can be below the cost of production. Amanor Critiques Bates 2: (Cont’)  African countries have limited means of diversifying into new products given restricted market access to Europe and North America through food regulations and standards that are difficult to meet and require large expenditures on research.  Frequently multinational corporations control these markets. Amanor Critiques Bates 3  Private marketing of food crops for the urban areas in Ghana is also subject to monopoly control of traders and market queens in both urban markets and the large rural wholesale markets.  Yam is controlled by market women associations.  In the rural wholesale markets the “market queens” buy from farmers and sell to large urban traders.  This is a buyers market and there are few market traders to farmers. Amanor Critiques Bates 3  In the Kintampo district the market traders do not go out to the villages to buy yams but make the farmers bring their yams to market.  Since yams are a bulky crop this makes the farmers vulnerable and at the height of the yam season the traders can pay low prices to farmers knowing they cannot afford to transport the yam back to their villages. Amanor Critiques Bates 4  While governments may distort markets through political interests, free markets are also subject to power interests and economically powerful traders and transnational traders are often able to exert disproportionate power and control over markets.  These interest groups are also able to influence state organizations to introduce policies in their interests rather than those of the farmers. (e.g export rice traders in Ghana). Sources  Lipton, M. "Why poor people stay poor" in John Harriss, Rural Development, pp.66-88, Photocopy, IAS. Book also in ISSER Library.  Corbridge, S. "Urban bias, rural bias, and industrialization: an appraisal of the work of Michael Lipton and Terry Byres, in John Harriss, Rural Development, pp.94-118. Photocopy, IAS Library.  Bates, R. Markets and the state in tropical Africa extracts, Photocopy, IAS Library  Amanor, K.S. (2005) “Agricultural Markets in West Africa: Frontiers, agribusiness and social differentiation” IDS Bulletin Vol 36(2):58-62. Gugler J. 'Overurbanization reconsidered' Econ. Dev. Cult. Change 31:173-189. (1982)  ^ Bairoch, P. Cities and Economic Development From the Dawn of History to the Present.' (Chicago: Univ. Chicago Press, 1988)  Lipton M. 'Why poor people stay poor: urban bias in world development.'(Cambridge: Harvard UP, 1977)  ^ Markets and States in Tropical Africa (Los Angeles: California UP, 1981)  ^ - recent WTO discussions on agriculture AGRICULTURAL MODERNISATION, FARMER PARTICIPATION, OUTGROWERS AND INDIGENOUS KNOWLEDGE LECTURE 4 Instructors: Dr. Kojo Opoku Aidoo & Dr. Collins Adu-Bempah Brobbey Objectives Examine:  Modernization of Agriculture in Africa.  Development of Food Research System in Africa.  The complexity of:  Experimental Stations for New Varieties;  Cultural Methods to Increase Yields  The use of Specified Fertiliser and Pesticides to Control Disease;  Mechanised Cultivation. Objectives Cont.’ Critically analyse:  Development of Large Mechanised State Farms and Large Private Estates Farms.  Green Revolution and Extension Services.  Theory of Technology Diffusion.  Poor Farmer Uptake of Technology and Peasant Conservatism and Backwardness.  Benefits of New Technology.  Farmer Participatory Research and Challenges.  Contract Farming or Outgrower Scheme.  Agribusiness and its Associated Exploitation or Support. Tutorial Questiond for Reflection Describe four State and Development Agencies’ strategies for increasing smallholder farmers’ food production Provide four reasons to show why there is low uptake of modern technology by peasant farmers in any one African state Identify and explain the State and Development Agencies’ strategies for helping the smallholder farmers to increase food production. Provide three reasons to show how government’s interventions in the agricultural markets are harmful to the interests of peasant farmers in any one African state. With reference to one African country, examine two (2) strategies adopted by the state and development agencies to incorporate smallholder farmers into Agricultural Market. With three examples show how the adaptive strategies of smallholder farmers have helped in sustaining indigenous agriculture practices in Africa. Tutorial Questiond for Reflection State and explain three adaptive strategies used by smallholder farmers in sustaining indigenous agriculture practices in any one African country. What do you understand by indigenous agriculture knowledge? In two (2)ways, indicate how the indigenous agriculture knowledge has been useful to agriculture economy in Ghana.. Identify and explain Three ways by which government subsidy have influenced agriculture policies in any one African country Mention and explain three ways by which the indigenous agricultural knowledge has contributed to agriculture economy in Ghana Identify and explain three adaptive strategies of smallholder farmers in maintaining or sustaining indigenous agriculture practices in Africa Identify and explain three state and development agencies’ strategies for helping the smallholder farmers to increase food production in any one African country. Explain ways by which indigenous agricultural knowledge has contributed to agriculture economy in Ghana.. Agricultural Modernisation  Since 1950s a modern agricultural food research system has been developed in Africa.  This is based on a complex of:  experimental stations that develop new varieties;  Work out cultural methods to increase yields based on a specified rate of fertiliser application and applications of pesticides to control disease;  Mechanised cultivation. . Agricultural Modernisation  These gave impetus to the development of farms on large mechanised state farms and large private estates farms(as outlined by Lipton,1993), and subsequently, disseminated to small farmers through extension services.  And hence the theory of technology diffusion which theorised that peasant farmers were resistant to new technologies. And that poor uptake of technology was as a result of peasant conservatism and backwardness.  Through targeting the wealthier progressive farmers, small farmers would eventually see the benefits of new technology and this would lead to their gradual take up of technology. Thus, technology would diffuse from progressive farmers to laggards. The Green Revolution  The Green Revolution sought to breed new miracle crops in international research centres such as  International Institute forTropical Agriculture (IITA)  International Rice Research institute (IIRI)  International Centre for Improved Maize andWheat (CIMYTT)  These new crops and techniques would raise food production in the world and banish hunger and famines.  While there were successes in South East Asia and Latin America the uptake of new technology was more limited in Africa.  New technologies did not respond well to diverse, risky and rainfed environments that were characteristic of Africa Farmer Uptake of New Technology  In Africa there is generally a low uptake of new agricultural technologies:  In Ghana less than 5 percent of farmers regularly purchase new improved seeds that they cultivate – most prefer to plant their own seeds.  Reasons for preferring local seeds:  They are more hardy and better adapted to the farm environment  They perform better under marginal conditions  They store better and are more resistant to pest attacks  They taste better  They are cheaper to cultivate. This is an important consideration when farmers have lower incomes and limited capital to invest in labour, seeds and inputs. Farmers Adaptive Tradition  While researchers focused on increasing yield with use of inputs on experimental research sites, many small farmers are concerned with diversifying crops to minimise risk, by planting mixtures of crops that favour dry and wet conditions, some of which mature early and late to ensure that they get some yield whatever the weather may be like in a particular year.  One of the earliest areas in which agriculture occurred in West Africa is in the transition zone. Farmers often developed two complexes Yam adapted to wetter conditions and Sorghum and millet to dries conditions.  African farmers have often developed their farming techniques to fit into specific environments. In Africa only about 3% of agriculture is based on irrigation as compared to 40% in Asia. Rainfall is uncertain and erratic  In 1994 the state farms at Ejura were only able to harvest 33% of the maize they planted as a result of rain failures. If all farmers had followed this strategy and only planted maize they would have suffered from hunger. Farmers’ Adaptive Traditions  Selection of different types of environment in which to plant different crops to ensure some crop survives whatever the weather outcome.  In Mali farmers can cultivate up to 30 different types of rice each adapted to different locations and different soil moisture.  In the Upper East Region of Ghana farmers plant up to 5 or 6 different varieties or crops together including several varieties of millet and sorghum, with vegetables and cowpeas.  Some farmers may plant vegetables around wetter valleys and hardy cereals on slopes where there is less moisture, or upland rice on slopes and swamp rice in valleys.  Farmers also time the planting of various crops so that they result in labour demands at different times of the year, ensuring that they have different harvesting and weeding times. Cassava and pepper are often integrated with other crops, in such a way that there is hardly any weeding work on the cassava plot in the second year. Farmers also Experiment  Farmers establish little experimental plots on which they try out new crops, testing how they perform before they will plant them into their field.  Farmers have also selected crop varieties. All the crop varieties which breeders are now improving were developed by farmers and they are aware of methods of keeping breeds true and also of selecting new breed.  In northern Brong Ahafo over 50 different varieties of yam have been selected, preserved and named by farmers, including wild yams which are preserved as a future stock of germplasm.  In Mogbuama in Sierra Leone, Richards (1986) records that farmers can differentiate between 70 rice varieties by name of which 49 varieties were being planted by 98 farmers in question.  A common response to the questions “why do you plant this rice variety was “For experiment”. Small Farmer Contributions to Agricultural Economy  In Ghana 45% of agricultural funding is spent on cocoa, yet cocoa only contributes 13% of AgGDP.  Less than 5% of research time is allocated to plantain, cassava and yams, yet these produce over 50% of AgGDP.  All the known varieties of yams in Ghana are farmers' own varieties. There are no significant scientifically bred yams in Ghana that are widely cultivated.Yams contribute 16% of AgGDP, and is the second most important crop in value to cassava which produces 19% of AgGDP (another farmer crop).  In early 1960s over 90 percent of agricultural budget allocated to state sector. All the state production fronts contributed 1.2% of total cultivated area in Ghana and provided less than 0.5 % of total agricultural output. The vast majority of crops were produced by small farmers. Strategies towards Small Farmers  As a result of importance of smallholders towards food production the state and development agencies have developed strategies to attempt to incorporate the peasantry into modern food production.  These have been based on two approaches: 1) Developing new forms of participatory research to breed crops that meet with approval from small farmers; 2) Tying small farmers into new forms of production through contracts and loans that result in indebtedness. Farmer Participatory Research  This aims to breed new crops that fit into existing farming systems and are tailored to farmers needs through adaptive breeding.  The problem with much agricultural research is that it is based on a one way flow of information from experts to farmers via extension officers.  Sometimes it is believed that extension officers should concentrate on progressive farmers, those who are most willing to take up modern technologies -often the more educated farmers. Once they have demonstrated the superiority of modern technology, it is believed that the laggards will then see the light and adopt the technology.  But this has not been the case. The laggards continue to resist the technology and prefer their own technology. The problem is that the technology does not fit into their needs and on-farm conditions.  Therefore to gain acceptance of new technologies they need to be adapted better to farmers conditions. Farmer Participatory Research 2 Supervised Learning  One solution to the problems of the relevance of agricultural technology for farmers is to develop a new approach based on a partnership with farmers. Instead of trying to encourage farmers to adopt foreign technology the researchers will explore together with farmers their needs, and involve farmers in the creation of new technologies, in participatory research  The researcher identifies problems together with the farmers. Possible solutions are discussed. These are then taken back to the research station where programmes are designed to find promising solutions.  Promising solutions are taken back to farmers for testing and evaluation. Some of these will be rejected and others accepted.  As problems are found with the technology, further research is carried out in consultation with the farmer to continually improve it.  The farmer helps the researcher to find better solutions and a perpetual cycle of technology improvement is created. An example of this is farmer back to farmer model. Farmer back to Farmer Model (based on Rhodes ) Unsupervised farmer learning  Farmer back to farmer model results in the participation of farmers in improving the researchers technology and not the farmers. This is a form of co-option, particularly when the farmers have to buy the technology.  Farmers have their own valid research traditions. Instead of directing them to improve researcher technology researchers can provide them with sophisticated tools to further their own research by building networks of experimenting farmers.  Dr Monty Jones received a World Food Prize for creating the Nerica Rice Variety, a hybrid between African and Asian Rice. However farmers have created similar hybrids in their fields although there have been problems of infertility with these breeds, If researchers can provide farmers with sophisticated technology through which they would be able to screen their genetic materials farmers will be able to produce new crop varieties.  Paul Richards advocates that instead of using participation to improve crops which are then sold or distributed to farmers to displace their existing crops, participatory approaches should attempt to strengthen farmers own research traditions, and provide them with sophisticated tools in which to carry out their research. Encadrement of the Peasantry and Contract Farming  Farmers are often constrained from participating in agricultural modernisation by lack of capital or lack of suitable land.  One method for ensuring that farmers produce crops according to the dictates of agricultural services is to tie them through a contract production. The farmers may be provided with land and inputs and credit to enable them to produce modern crops. However access to these is conditional on them producing to the dictates of the company that provides them with the support. OUTGROWER SCHEMES  An out grower scheme is a project in which farmers have no control over their farming, but are bound by a contract to provide a particular crop for a corporation. They produce crops for a company who provide them with seeds, inputs and technical advice and market the product of the farmers. Encadrement of the Peasantry and Contract Farming  The farmers have to produce according to the instructions of the company, which are laid out in a contract. The farmers are only allowed to sell to the company. They cannot sell their produce on the open market. They have to produce the crop/crops determined by the company.  The advantage of these kind of arrangements is that the corporation often enables farmers to gain access to modern inputs and agricultural extension advice, which they provide to ensure that the farmers produce to their requirements. However, these are not provided for free but as a loan. The costs of the seed and inputs are usually deducted from what the farmers receive by the company. These inputs are usually given as a loan on which the company may charge interest.  Some examples of outgrower schemes that developed in Ghana in the 1970s are:  the Vea and Tono Irrigation projects in the Upper East Region  Ghana Oil Palm Development Company (GOPDC) at Kwae near Kade in the Eastern Region. Vea and Tono Irrigation Projects  The Vea Project was established in 1968 and Tono in 1973. They have been described in detail by Konings (1986).  In both these projects land were appropriated from surrounding communities by the state with promises of bringing modernization, a modern village and improved agriculture to the area. Irrigation facilities were created on the land and that it was reallocated to farmers. Some farmers lost their land.  The land that was given to the local farmers were allocated under an out grower contract scheme run by Ghana Industrial Holding Corporation (GIHOC) and the Irrigation Development Authority (IDA). These provide the farmers with inputs, technical advice, credit and instructions on what to plant.  Farmers on these schemes had to follow these directions and sell their crops to GIHOC or IDA or they could be removed from the project. GIHOC specialized in tomato growing which were used for the Pwalugu canning factory (now closed down). Vea and Tono Irrigation Projects  IDA specialized in rice. The prices farmers had to sell at were well below market prices, and farmers had to buy their food at market prices since the cultivation of food crops on project land was restricted. No provisions were made on the project for farmers to grow their own food, so they had to buy food at market prices or develop other farms outside of the project area.. No provisions were made for livestock which was previously an important activity.  The authorities had strict control over the project and did little to involve the farmers in decision-making. In one instance irrigation water was switched off without informing the farmers, because the project management considered that too many tomatoes were being produced. The skills of the farmers were not being utilized but suppressed to the dictates of the company. During the 1990s the outgrower scheme on these project has collapsed. Ghana Oil palm Development Corporation (GOPDC)  GOPDC is a large-scale oil palm plantation at Kwae in the Eastern Region of Ghana. Outpowers and smallholders are integrated into the project.  Smallholders are presented with land by the project on which they must grow oil palms. Each smallholder receives 8 hectares of land on which 7 hectares must be cultivated under oil palm.  Out growers cultivate the oil palms on their own land.  The smallholders and out growers are provided with seeds, inputs, and credit for hiring labour as loans. The terms of the contract stipulate that the farmers must sell their crop to GOPDC.  The contract is binding until the farmers have paid of the loans they have received and the compound interest on the loans. The loans are deducted from the harvest of fruits. The repayment usually takes over 20 years. Prices paid to farmers for oil palm fruits are dictated by the company and are sometimes below local market prices for oil palm fruits.  Smallholders who fail to comply with the contract can be evicted from the land. Outgrowers who fail to comply with the contract can have their land taken over by the company and managed until the proceeds from the farm pay off the loan and compound interest. Farmers Incorporation into the Market  Through developing outgrower schemes, the state ensures that farmers are incorporated into the market as producers of cheap food commodities, which can be regulated through control over the market. It also makes the farmers dependent upon inputs and technical advice coming from above.  The farmers have very little role to develop their own ideas. The farmers also bear all the risk. If there is a glut of tomatoes, it is the farmers who suffer from rotting tomatoes, which they cannot sell not GIHOC.  Through contract farming small farmers can be controlled and integrated into commercial and input markets.  This control over farmers forms the basis for agribusiness, a system where the main companies involved in agricultural production make their main profits from selling inputs to farmers and through processing their crops. Through contracts with farmers they come to control the agricultural system. Agribusiness in the USA  In the USA contract farming is common and much of agriculture is controlled by companies who produce inputs and process and market food. Lewontin and Levis (1985) argue that in the past farmers used to grow their own seed, raise their own livestock, make hay for the livestock, and spread manure from the livestock to fertilize the land. Now they buy their seed from Pioneer Hybrid Seed Company, their tractors from Ford, their animal feed from Exxon and their fertilizer from Union Carbide.  Lewontin and Levis (1985) comment” "farming has changed from a productive process, which originated most of its inputs and converted them to outputs, to a process that passes materials and energy through from an external supplier to an external buyer". At present only 10% of the value realized in agriculture is actually realized on the farm. About 40% is added in creating inputs and 50% is added in processing, transportation and exchange after the commodities leave the farm. The development of agricultural technology has made on-farm productivity and labour less important in the process of determining agricultural value. Agribusiness in Ghana Although the role of the state has declined in agricultural production the state still promotes agribusiness with private companies. They promise farmers with access to inputs, credit, seeds, and better prices if they follow the prescription of the companies. However, farmers ultimately take the risk and if their crop fails, they also bear the brunt. Agribusiness seeks to integrate farmers into markets by ensuring that they produce standardised crops by providing them with the capacity to provide these but also disciplining them to conform to market demands through the contract. It enables private companies to control the production of standard crops without expropriating land from farmers. Agribusiness is promoted in agricultural sector policy frameworks in Ghana and the government encourages private firms to enter into contractual arrangements with farmers. Exploitation or Support?  While some researchers see contract as an exploitative system that makes farmers dependent upon the producers of inputs and processors of foods who are able to set monopoly prices and burden farmers with debt, others see contract farming as ef

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