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11.01.2019 Feature Article

The World is not waiting for Ghana in the race for global economic and technological dominance

The economic and technological competition currently going in the world is like football  game, the best prepared team wins. Credit to Getty Images
JAN 11, 2019 FEATURE ARTICLE
The economic and technological competition currently going in the world is like football game, the best prepared team wins. Credit to Getty Images

There is serious competition going on among all the nations in the world. Countries all over the world are trying to remain ahead of one another economically and technologically. China for example wants to catch up with America and overtake her in several fields including economic, scientific, technological, and military. Chinese tech giants (including Huawei, Tencent, Weibo, Alibaba and Lenovo) are in serious competition with their American counterparts (Apple, Google, Facebook, Amazon, Intel, Microsoft and Hewlett Packard) for global dominance.

South Korea wants to catch up with Japan and to overtake her in semiconductor technology. Semiconductors by the way are the building blocks of the global technology industries. They are increasingly used in automobile, electronics, aeronautics, satellite, robotics and a whole range of civilian and military systems. This is why the South Koreans have invested heavily in semiconductor capabilities.

Japan continues to aim at dominating the global steel, shipbuilding, motorcars, petrochemicals as well as the electrical, electronics, cameras, and computer industries. The Japanese are determined to let their automobile and electronic companies dominate the global car and electronic market. (In fact, that is what Toyota, Nissan, Mitsubishi, Honda, Toshiba, Hitachi, Fujitsu, Mitsubishi Electric, Panasonic, NEC, Sony, Sharp, Canon, Sanyo, Nikon, Olympus, Epson, Pioneer, Daikin, JVC, Konica, Kodak, and Philips and others are doing).

Germany doesn't want only to be the dominant economic power in Europe but also in the world. The Germans aim is that their car and other companies including BMW, Mercedes, Audi, VW, Siemens, Bosch, BASF, will continue to be the products of choice in the world. America, China, Britain, France, Italy, and Russia have the same ambitions. Turkey, Brazil, India, Thailand, Saudi Arabia, and Malaysia are all upping their game in the global race to succeed. The ten ASEAN countries and North East Asia as economic regions want to overtake the European Union as the most powerful and dynamic economic regions in the world.

Governments in these countries are organising their private sector to become the manufacturing centres of globally important industrial and consumer products. They are also initiating and coordinating the establishment of new industries and reviving old ones. They are creating national industrial champions that are dominating the world to bring prosperity to their home citizens. They are achieving this by supporting their manufacturing industries financially and technically to succeed locally and abroad. They are reforming their institutions, enacting laws that speed up the establishment of businesses, protect property rights, and honour contracts. And they are using tariffs to protect their infant industries so they can mature to compete in the world.

To dominate the global economy, they are also establishing new technology-driven and cutting-edge research centres, and are making their universities powerhouse of intellectual and scientific excellence. They are investing in human capital, training and equipping the next generation of experts well versed in science, technology, engineering and mathematics and who will dictate the future direction of the global economy. China for instance has identified 155 universities that they want to turn into leading research centres to challenge the dominance of American and British universities and are channeling huge financial resources into them. As a result, China's Tsinghua University is on track to become the world's leading university in the production of knowledge in science, technology, engineering and maths (STEM). For years the STEM areas have been dominated by the US-based Massachusetts Institute of Technology (MIT) but the trend is changing.

Not only that, these countries are building the physical infrastructure needed to position their countries and give their companies the upper hand in the fierce geoeconomic battle currently being fought on every corner of the planet. This is the reason behind China's Belt and Road Initiative which aims to mobilise one trillion dollars to finance ports, harbours, railways, roads, energy, and telecommunication infrastructure around the world.

In short, they are not only investing in the technology of the future but also investing in the industries of the future: satellites, semiconductors, biotechnology, nanotechnology, artificial intelligence and robotics. The governments in these serious countries know and understand deeply what is at stake in the global economic environment. They know that if they don't think strategically to develop their industries, innovate, and build globally important technologies they will remain dangerously at the mercy of others. Simply put it is a race in which only the fittest will survive, a race that will produce independent and dependent countries.

Ghana
Sadly Ghanaians don't see their governments (past and present) doing anything to prepare Ghana for the challenge ahead. Both the NDC and NPP are locked up in perpetual petty politics that keeps Ghana in a state of perpetual underdevelopment. While some few individuals mostly politicians and their close associates are doing pretty well financially and materially, for the rest of the population their lot has been extreme deprivation. This is so because of the poor understanding the elite in NDC and NPP have on how to develop a country, as well as the lack of agenda setting journalism on the part of Ghanaian journalists.

In 2016, data compiled by UNESCO (United Nations Education, Science and Cultural Organisation) titled "How Much Does Your Country Invest in Research and Development (R&D)" found that Ghana invested a total of $277 million in R&D amounting to a mere 0.4 percent of Ghana's Gross Domestic Product (GDP). The bulk of the funds ($266m) came from the government. Businesses or the private sector committed a paltry $421,000 to R&D while universities provided $10.5 million. The private non-profit sector in Ghana invested $16,000 in R&D. In that same year, South Korea invested $73.2 billion in R&D representing 4.3 percent of the country's GDP. Businesses in Korea invested the chunk of the money (more than $57 billion or 78.2%), the government invested $8.2 billion, universities committed $6.6 billion, and the private non-profit sector invested $1.12 billion in R&D (UNESCO, 2016).

In August 2018, a report by the International Organisation for Migration (IOM) observed that there were at least a total of 669,176 migrants from across Africa and the Middle East who were trapped in Libya and who were being subjected to all kinds of abuse including slavery, murder, torture, rape and other sexual violence. The report noted that of the 669,176 migrants, 630,907 or 94% were from Africa. Of the 630,907 from Africa, at least 438,294 or 65% were nationals from Sub-Sahara Africa (SSA) while the remaining 192,613 representing 29% were from North Africa.

The report further pointed out that of the 438,294 from SSA at least 43,829 or 10 percent were Ghanaians. Ghanaians were the fourth largest group of the SSA nationals being held in Libya. Niger (29%), Chad (21%), Nigeria (15%), Ghana (10%), Mali (8%). Ghana’s immediate neighbours Ivory Coast and Burkina Faso had 1% each. In West Africa, Ghanaians constituted the third largest group behind Niger, and Nigeria (IOM, 2018). The question is why are so many Ghanaians in Libya? The simple answer is lack of economic and employment opportunities in Ghana. The follow up question is why aren't economic and employment opportunities in Ghana? The simple answer is the failure of Ghana's economic and industrial policy since the overthrow of Nkrumah and particularly since the 1990s.

When you listen to or read public statements of leading political figures in the country, it becomes obvious that they haven't recognised the serious changes taking place within the global economic, political, scientific and technological environment. Such pronouncements are sterile, are without substance and devoid of seriousness.

Apart from winning elections, the politicians in both parties appear to have nothing else to offer Ghanaians. They don't offer solutions to pressing problems facing Ghana. Their brand of politics engender them to talk for talking sake without professing solutions to Ghana's many problems. The NDC claims to be a social democratic party, but it is neither social nor democratic when it comes to formulating and implementing policies to transform Ghana socially and economically. All because the NDC lacks strategic thinkers, visionary leaders, a well defined vision and principles and do not understand why political parties exist.

That doesn't mean the NPP is any better. In theory the NPP can lead Ghana to the promise land. When they were in power (2001-2008) they implemented a wide-range of social and economic policies (e.g. national health insurance) that benefited majority of Ghanaians. They could have done better but the politicians in NPP are blinded by their strict commitment to laissez-faire economic ideology and unrestricted trade policies that affect Ghanaian manufacturers. Their strict adherence to the Anglo-Saxon economic model precludes them to look at other economic models (e.g. German capitalism, Nordic capitalism, Asia capitalism and Asia model of development) by which to develop Ghana. NPP politicians talk about 'property owning democracy' which is really a good concept except that they have no blue print to actualise it. They also talk about 'Ghana Beyond Aid' which is laudable, except that it is more of a slogan than actual practical commitment to mobilising internal resources for national development. They fitish about the private sector but do little to support Ghanaian businesses to grow, mature and compete globally.

The politicians in both parties think politics is about using national resources and political office to better their personal circumstances which is why they race to create, loot and share state resources at the expense of national development. Simply put the politicians are not interested in building and nurturing strong national economic institutions.

By their policies, it is obvious that both the NDC and the NPP pathetically and tragically want Ghana to go through the four stages of economic development as proposed by W. W. Rostow in the 1960s forgetting that several countries have developed without having to go through the four stages of development. Both the NDC and the NPP don't seem to recognise the competition that is going on among the nations in the world. They don't recognise the monumental challenges facing Ghana. They are acting like the five foolish virgins in the Bible who went to meet their lord without much preparations.

In his recent visit to Japan, President Akuffo Addo appeared to have been fascinated by the things he saw in Japan: the 320km per hour super fast bullet trains, the beautiful palaces, and globally dominant automobile and computing firms such as Nissan, Mitsubishi, Honda, Toshiba, NEC. He has vowed to learn from the Japanese. In the 19th Century, the Japanese were equally fascinated by things they saw when they visited the United States, first in 1860 and again between 1871 and 1873. In the United States, the Japanese saw railroads, steamship, gaslights, flush toilets, and weapons and vowed to learn and catch up with the Americans. They accomplished the catch up in less than 50 years (1868-1912) under the reign of Emperor Meiji. Since then Japan has surged ahead of all Asia, and is the third most powerful country in the world behind the US and China.

However, the Japanese did not become what they are today by magic or chance. It is the collective efforts of all Japanese but critically the government, the bureaucrats, politicians, private sector. The Japanese didn't rhetorically make speeches about their experience in the United States but practically put their experience into action. Kishore Mahbubani, a Singaporean scholar explains why Japan became the first Asian country to develop:

"Japan surged ahead of the rest of Asia because it understood the message of Western success almost a hundred and fifty years earlier. In the 1860s, a group of Meiji reformers--who were determined to save Japan from Western colonisation or domination that had engulfed most of Asia--sailed to all the leading Western societies to discover the best practices of the West. The Japanese learned well: they found--as the four tigers [Hong Kong, Singapore, South Korea and Taiwan] found a century later, and China and India have realised during the past two decades--that there were at least seven pillars of Western wisdom that could have an almost miraculous effect on their societies...By starting to implement these seven pillars, Asian societies have taken off. If the rest of the world implemented them, the whole world might well join the Asian trajectory" (Mahbubani, 2008, p. 52).

The Japanese were very pragmatic, strategic and unideological in learning the best of European and American practices. "...the Japanese were completely pragmatic. They approached the challenge of modernising Japan with no ideological perceptions or blinkers. They were willing to consider Western best practices from any country and were prepared to mix and match policies in an eclectic fashion. Iwakura Tomomi, one of the Meiji reformers, took fifty-four protégés with him during his two-year tour. They patterned their education system after the French centralised system but used American curriculum development; they stressed universal primary education followed by expanding secondary education. They adopted the German system of civil service recruitment through examinations...The reformers also learned Western agricultural techniques to boost the Japanese economy" (Mahbubani, 2008, p. 74). "By studying Western techniques, importing Western experts, and introducing new strains through experimental stations, Japanese agriculture made great and continuing advances, so much so that today the number of farmers in Japan is smaller than in the early Meiji period".

The structure of Ghana's economy remains as it has been for decades with manufacturing playing very little role despite its ability to transform the country. The trade liberalisation policies of the NDC and NPP have reduced Ghana to a country of import of finished goods and the export of raw materials. The trade liberalisation policies of both parties with its focus on import of finished goods has undoubtedly made some individual importers rich but it has also destroyed the manufacturing power of Ghana and hence the wealth, power and prestige that come with a country's ability to make things. (By the way countries are not respected when they only export raw materials. Rather a country is respected when it is able to manufacture and sell manufactured products. This is the truth and explains why Japan, South Korea, Germany and China are respected). The trade liberalisation policies of both parties have made Ghanaian manufacturing companies unable to compete with their more powerful competitors in Europe, North America and Asia. It has worsened the unemployment situation in Ghana forcing the youth to risk their lives in Libya on their way to seek greener pastures in Europe.

Kwesi Botchwey was the Minister of Finance during Ghana's trade liberalisation period. When the garment, leather, metal, pharmaceutical and poultry industries were collapsing as a result of liberalisation policies, the workers and owners of the companies appealed to him to curtail the policies but he rejected their appeal outright saying "It is not prudent to protect any firm solely because it is Ghanaian-owned". He said if he didn’t allow foreign companies to compete with Ghana’s infant companies the infant industries would never grow. “Some infant industries will never grow to maturity. They’ll always remain babies with big teeth" (cited in Kpor, 1989, p. 63).

The consequence of the trade policies was dramatic. As Darko Kwabena Opoku of Oberlin College USA observed, trade liberalisation including the complete or partial removal of tariffs has caused the deindustrialisation of Ghana. “By 1992, 1,200 local industries  mostly garment, leather, metal and pharmaceutical had collapsed. Between 1995 and 1999, an average of over 470 firms collapsed each year. Repeated devaluations, the scarcity of credit and high interest rates caused further complications for manufacturers because, as the cost of production rose, local goods became increasingly uncompetitive against imports" (Opoku, 2010, p. 163).

When the NPP took over from the NDC in 2001, the manufacturing and other industries thought that the government was going to intervene to give them respite. This intervention became necessary due to the fact that the unrestricted imports had devastated several industries. For instance chicken imports had increased from about 5,000 metric tons in 1998 to 30,000 metric tons in 2001. This prompted Parliament to approve a doubling of the 20% import tariff on poultry as well as an increase in tariffs on rice from 20 to 25%. Ghana's international lenders such as the IMF and the World Bank were not happy and mounted a sustained pressure on the NPP government to rescind its decision. The government caved in to the demands of the foreign creditors. Justifying its decision, Ghana’s then Minister of Private Sector Development and President Special Initiative argued that they could not protect Ghanaian businesses from excessive foreign competition because of HIPC: "Our highly indebted poor country situation would not allow us to (subsidise or institute any form of protection)’ (cited in Opoku, 2010, p.163).

What is true from the NDC and NPP trade liberalisation policies is that both parties have been prepared to sacrifice the well-being of Ghana's capitalists, Ghana's economy and the welfare of Ghanaians to win praises from foreign lenders whose interests are completely aligned with their citizens in Europe and North America. As Thandika Mkandawire has noted, African "leaders are more attentive to the apprehensions and applause of international organisations than to their domestic constituencies including domestic capital. Whilst they vigorously woo foreign capital with juicy packages (including tax exemptions), they take a jaundiced view of domestic capitalists whom they scold for failing to set up modern competitive businesses” (Mkandawire, 2001, p. 296). The situation in Ghana mirrors this. Even as Ghanaian presidents from Rawlings to Akuffo Addo make trips abroad canvassing and trumpeting investment opportunities in Ghana and granting various concessions, local capitalists and businesses have been left high and dry leading to their collapse and hence the poor quality of life Ghanaians live.

By Lord A. Adusei
January 11, 2019
Reference
International Organisation for Migration (2018) Libya’s Migration Report Round 21 July-August https://migration.iom.int/system/tdf/reports/DTM%20Libya%20Round%2021%20Migrant%20Report%20%28July-August%202018%29.pdf?file=1&type=node&id=4309

Kpor, C. (1989) ‘Free market policy questioned’ West Africa , 24 April 637

Mahbubani, K. (2009) 'The New Asian Hemisphere: The Irresistible Shift of Global Power to the East' New York, Public Affairs, pp. 314

Mkandawire, T. (2001) 'Thinking about developmental states in Africa' Cambridge Journal of Economics, 25(3): 289–313

Opoku, K. D. (2010) 'From a "success" story to a highly indebted poor country: Ghana and neoliberal reforms' Journal of Contemporary African Studies, Vol 28, No. 2, pp. 155-175

UNESCO (2016) 'How Much Does Your Country Invest in Research and Development (R&D)' http://uis.unesco.org/apps/visualisations/research-and-development-spending/

Lord Aikins Adusei
Lord Aikins Adusei, © 2019

The author has 133 publications published on Modern Ghana. Column Page: LordAikinsAdusei

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