Analysis

On developmental policies

Developmental policies include any measure, policy or programme aimed at improving the growth and competitiveness of large sectors of the economy (manufacturing, agriculture); specific sectors (textiles, automobile industry, software production, etc.); or the growth of certain key activities (research and development, exports, fixed capital formation, human capital formation).

So designing and implementing effective development policy options requires that the obstacles to economic growth and development be identified. The Southern Africa Development Community (Sadc) region has been facing different impediments to its economic development.

Regardless of a country’s size, natural resources or level of development, countries with large population and high birth rates (for example Democratic Republic of Congo) face increasing problems. Increased population can lead to unemployment, demand for human services than can be greater than the capacity of the city or township to provide.

In many Sadc countries the need to satisfy the demand for food has prevented the allocation of resources to economic development. As a result, the inability to industrialise reduces the potential to earn money from exports to pay for the import of foodstuffs. The region remains in the vicious cycle of hunger and this year the region has estimated that 14 million will face starvation.

A requisite for the economic and social development of the region is an adequate system of roads. The region does not have the resources to maintain an adequate road system. The lack of infrastructure (highways, railways, airports, housing, schools, transportation and communication facilities) creates a problem of economic development. Dams, bridges, sewage disposals and other facilities, which are a vital part of a country’s infrastructure, are usually inadequate in most of the Sadc region.

Education facilities are a key component in the infrastructure of a country. Education itself is directly related to the quality of life and constitutes a form of human capital. There is a positive correlation between a lower standard of living and a higher rate of illiteracy. A lack of educational opportunities maintains the distinction between the haves and have-nots in society and perpetuates class differences. A poor education system has reduced the base of educated labour upon which the economic development of Sadc countries depends.

Savings are a necessary requisite for capital formation, for without it investment for capital formation cannot take place. There is an extreme imbalance in the distribution of income, exacerbated in part by the existence of a large component of unskilled labor. The vast majority of workers in the region do not earn enough to save while a minority of households’ elite gets most of the income.

The Sadc region usually depends on the export of agricultural products, fuels, minerals or metals such as oil or copper. Many Sadc countries depend on the export of a single product for the bulk of national income; for example, Malawi relies on tobacco. These countries are subject to a disadvantage in trade with the developed countries and the terms of trade favour the developed countries. The foreign debt exceeds their exports.

Diversification is, therefore a key if these countries are to accelerate their development. There is no single or easy development option that will enable the region to progress towards the developed status. However, there are a number of alternatives that must be considered for economic growth and development to take place. An important first step in the development of Sadc countries should be increased efficiency in agriculture (agricultural development policy).

Increased efficiency and inputs productivity in agriculture can lead to a surplus of output over and beyond what the agricultural sector consumes. This will make labour and raw materials available for the manufacturing sector.

Most development experts acknowledge the drivers for reducing poverty such as increased institutional capacities, pro-poor and pro-growth policies with attention to distribution, national cooperation among non-state actors for national policy, and advocacy at all levels of governance that wins support for pro-poor and pro-growth policies.

For Sadc to achieve an improved well-being of the population, the gross domestic product (GDP) must grow faster than the population rate; otherwise, the increasing population may offset any growth in the GDP and the region may remain at its status quo. Family planning, women literacy and state of mind may help escape the population trap.

One of the most urgent needs is increased capital goods. The needs range from large irrigation dams, electrical generating plants and transportation systems.

Small tools that are relatively inexpensive such as steel ploughs, which can be pulled by horses or oxen, make a sizable difference to many small scale farmers. Having an abundance of labour and investing in simple farm tools that can be combined with that labour can yield larger returns than investing in a few large farm tractors and other complex machines that will be difficult to operate and maintain (for example Botswana).

Sustainable and holistic macroeconomic policies can promote economic development. The problem with fiscal policy is that it is far more adaptable to the developed countries, where income, output, consumer spending, taxation and investment are high enough to be manipulated.

Most Sadc counties rely on consumption taxes and duties as major resources of revenue. The informal economy makes tax avoidance easy and there is little income to tax. A fiscal responsibility is crucial for the development purpose. Economics of stimulus remains a must for government policy at the current level of development in the Sadc region. Policies should lean against the wind of the economy.

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