November 10, 2006

A Note on the World Bank’s New Growth Strategies
for Sub-Saharan Africa
Shigeru IshikawaI.

Introduction

I have just glanced through the World Bank’s new paper on African growth. My comments are,therefore, necessarily preliminary. Yet, the paper is clearly “new” and “important.” I would
like to make two points relating closely to this serious impression.
The first point includes some questions: how to consider the apparently growth-centeredanalysis and argument of the paper in connection with the background tendencies of theinternational aid community in the recent decade? These tendencies, whose combined nature
is not yet entirely clear, seem to be symbolized by the following three kinds of literature:(1) Many study reports observe the “failure of all previous instruments and processes toachieve significant breakthroughs in the fields of poverty reduction in the poorest
countries, especially in Africa.” (This is cited from David Booth, ed. (2003), Fighting
Poverty in Africa: Are PRSPs making a difference?, ODI, p.6) There are even pessimistic
arguments on the possible failures of achievement of MDGs in the 2015.
(2) Independent self-evaluation organizations of both the World Bank and the IMF publishedin 2004 and 2005 critical comments on the lack of the roadmap for sustainable PRSPs.
Particularly, the IMF’s IEO pointed the unclear analysis about the growth-poverty-macroeconomic policy linkages. (I have discussed this issue in Ishikawa (2006b).)(3) The World Bank’s WDR 2006 proposed the concept of “equity and development” as thesynthesis of the four major strands of thinking and action used by the Bank in the pastannual WDR: (i) market mechanism, (ii) human development, (iii) institutional
development, and (iv) empowerment of the poor—the synthesis which is necessary to use
all of these strands in the present context. The last item was the central concept of thewell-known WDR 2000/01 providing the theoretical support to the PRSP regime. In thissense, the Bank located the poverty reduction goal in a relative position. However, theBank has not yet indicated how to operationalize this synthesis concept. (Also discussedin Ishikawa (2006b).)
The second point relates to a seemingly similar attempt by the British government, DFID, tobroaden the narrow and inflexible approach to development studies with the almost single
focus on poverty reduction. The British government seems to have played a leading role in theinternational aid community since toward the end of the 1990s in initiating and promoting thePRSP regime. This is most probably due to the fact that it faithfully followed the foreign aid
philosophy presented in its 1997 White Paper on International Development.
However, the “Drivers of Change” (DOC) approach, which is the research project started
earlier with the department-wide basis to strengthen MDGs achievement, has changed theresearch hypothesis already during 2003 in the above-mentioned direction, according to therecently available information. The new hypothesis emphasizes the importance to inquire the1‘drivers of change’ from the analysis of all the society’s change process leaving aside theprevious sole concern on the pro-poor change for the consideration after the completion ofmain analysis. Preliminary results of the research indicated the central role of political factorsthat exerted impact on the development process. The similarities and differences in new
directions and their findings of the most recent research projects by the World Bank andBritish DFID, respectively, are my serious concern.
In the following, I will concentrate on the issues on these differences. The issues on the firstpoint are in passing touched upon.

II.

The World Bank’s new growth strategy

In Figure 1, selected findings of the World Bank’s new study on growth strategy for Africa areshown, arranged in a simple framework of analysis. I apologize for taking the liberty of doing
so and especially for the possible misinterpretation of these findings or possible misuses
thereof. But, the framework of analysis itself is one consisting of the data (and their overtimechanges) and the interaction through parameters of economic variables, the framework used in
Walrasian general equilibrium theory, in particular for its dynamic state aspect. I have used toemploy it as it is quite useful to apply the study on the development dynamics of thedeveloping economies.
Mainly on the basis of observing this Figure, three essential features of the new growthstrategy for Africa are noted.
(1) The growth-centered approach is clear-cut from the fact that the terminology “poverty” or“poverty reduction” does not appear in the framework, except in the sector ofdevelopment performance: it emerges only as the consequence of sustained growth
realized. Side by side, any previously heated discussions about the issues like pro-poor
growth versus broad-based growth or of the choice of more labor-intensive technologies
seem disappeared. More importantly, the question arises as to: whether, how and why thisgrowth-centered approach differs from the approach of the PRSP regime with regard to its
intended mechanism for growth with poverty reduction. Figure 2 reproduced from a tablein Ishikawa (2002), which summarizes what I considered to be such a mechanism.
(2) A related feature is the fact that this strategy covers not only the low-income countries, butalso middle-income countries in Africa; hence the development performances resulted in amore diverse state than in the case low-income countries only are covered.
(3) As shown in the small, isolated sector in Figure 1, the studies by Ndulu and O’Connel
indicate an alternative framework with the explanatory factors of policies much different
from the main one. These factors are, on the other hand, very similar to thosehypothesized in British studies. But, they are not incorporated systematically into thediscussion of the main framework. This aspect is again taken up in the next section.

III.

DFID’s “Drivers of Change” approach

Let me first discuss on the African studies of the Overseas Development Institute (ODI), theinstitute which is one of the major participants of the “Drivers of Change” (DOC) project andis responsible for Ghana part. Their earlier studies were conducted in the form of the research2

for the case country comparison, aiming at strong support for DFID’s pro-PRSP strategy.
Their central feature was and is even at present the incorporation of the findings of thepolitical scientists’ studies on African polity and politics to consider that the main culprit ofeconomic crisis in Africa has been the neo-patrimonialism of their political regime. As policy
prescription, their previous studies required, first of all, the political leader’s commitment tothe poverty reduction (hence repeating addresses on it). (ODI (2001), PRSP
Institutionalization Study). This might help the neo-patrimonial regime losing its legitimacy
among the people, thus promoting political liberalization and democratic reform. Moreover,they required the reforms of public expenditure management thus attacking the mainstay of
neo-patrimonialism (M. Foster, et al. (2002), PRS and Public Management Reform Study).
While this targeting at neo-patrimonialism in African studies continues to be main feature, theDOC approach seems to have recently changed the basic hypothesis of their African study.
First, Oxford Policy Management (OPM) was entrusted by DFID to conduct the Nigerianstudy in the DOC project, but later on to generalize its findings to formulate the generalframework for the entire DOC study. In a discussion note by Alex Duncan, principal
economist of OPM, he noted that DOC studies so far used formulations that draw on DFID’s
Target Strategy Paper: Lifting one billion out of poverty, etc. But on the basis of a series ofcountry level initiatives, OPM has come to present a draft framework of analysis on DOC. Its
main feature is to capture the economy-wide interaction and their changes among structuralfeatures (natural and human resources, economic and social structures, and othernon-institutional factors), institutions (the framework of rules structuring the behaviors ofagents) and agents (individuals and organizations pursuing particular interest). Regarding
poverty issues, they are only studied afterwards as implications from these studies. Theframework is necessarily the basic one with the specific contents necessarily varying among
the countries (Alex Duncan (2003)). With regard to the Nigerian DOC study, specific contents
are noted as the structure-like institutions manifested in the weakness in social contract(among the state, civil society and service sector), the way in which oil revenue is managed,and the lack of development in the non-oil sector. Similar characteristics as ethnic and othercleavages and traditional patronage system are also listed, resulting altogether inself-perpetuating dominance of political elite (Chris Heymans and Chris Pycroft (2003)).
While all of these factors belong to the data and well discussed, the framework lacks theinteraction of variables (namely mechanism in our framework).
In contrast, the ODI studies of DOC in Ghana seems unique clarifying importantinter-relationship between data and variables: namely how Ghanaian neo-patrimonialism
impacts the public finance management and private sector development (David Booth, et. al.
(2005); Tony Killick (2004, 2005); Robin Luckham ( 2005); Richard Crook (2005)).
In Figure 3, I have drawn Ghanaian economy’s development process according to its
Development Model. This model is essentially a composite of the Hla Myint’s Vent forSurplus Model, which applies to all the period after the end of the slave trade age, and thedevelopment model conceivable from the ODI’s analysis particularly, Tony Killick’s analysisof the impact of neo-patrimonialism upon the post-independence Ghanaian economy.

IV.

Preliminary conclusions

In this hastily prepared comment, I have made two points. Of course, the second point is my3

principal concern. Two approaches are alternatives of each other. I myself have no immediateanswer which alternative to choose, except for only feeling the necessity of both sides’ mutual
learning. Also, the new stage symbolized by launching of both the World Bank’s new African
growth strategy and DFID’s Drivers of Change approach is very welcome, as the previous
practice of urging poverty reduction, even supported by numerical targets, but withoutaccompanying presentation of landmarks or development models indicating how to achievesustainable growth and sustainable poverty reduction, is unsafe and unproductive.
[END]

References
1. Richard Crook, (2005), The role of traditional institutions in political change anddevelopment, CDD/ODI Policy Brief No.4, November.
2. David Booth, et. al., (2003), Fighting poverty in Africa: Are PRSPs making a difference?,
ODI.
3. David Booth, et. al., (2005), What are the drivers of change in Ghana?
CDD/ODI, Policy Brief No.1, November.
4. Alex Duncan, et. al., (2003), Drivers of change: Reflections on experience to date,Discussion Note, Oxford Policy Management, June.
5. Mick Forster, et. al., (2002), How, when and why does poverty get budget priority?
Poverty reduction strategy and public expenditure reform in five African Countries, ODI,May.
6. Chris Heymen and Christopher Pycroft, (2003), Drivers of change in Nigeria—A
preliminary overview, July.
7. Shigeru Ishikawa, (2006), The “poverty trap” and public expenditure management - In
pursuit of a new development model - Enlarged edition, August.
8. Shigeru Ishikawa, (2002), Growth promotion versus poverty reduction—World Bank
rethinking of aid policy and implications for developing countries, GRIPS Development
Forum Discussion Paper No.3, August.
9. Tony Killick, (2004), What drives change in Ghana?—A political economy view ofeconomic prospects, mimeo, July.
10. Tony Kellick, (2005), The politics of Ghana’s budgetary system, CDD/ODI Policy Brief
No.2, November.
11. World Bank, (2006), Facing the challenges of African growth, Opportunities, Constrains,and strategic directions, November.

4Figure 1. Selected findings of the World Bank’s study on growth strategy for Africa
arranged in a simple framework

Initial conditions (data)

Opportunities andconstrains
Geographical factors
Tropical climate anddiseases
Natural resources –“curse” or “potential”
Demographic factors
Risk and uncertainties

Mechanism for growth(economic variables)
Key functions to be fulfilledover time:
Accumulation of capital:
both physical and humanDevelopment
performance
Sustained
growth↓Poverty
reduction

Efficiency in allocation ofresources
Technological progress
Sharing of the benefits ofgrowth

Macroeconomic instability
Political uncertainty andconflicts
Weak institutions
Patronage and clientalism
Huge scope of government
Underdeveloped financial
sectorStrategies (policies)
Improving governanceand resolving conflicts
Increasing competitions
and developingeconomies
Investing in people

An alternative arrangement of growth process(ex-post) on the country case studies used in(Ndulu & O’Connell 2006)
Political elite’sbelief
Interest towhom they
respondMechanisms
by which
politicalcompetition
was initiatedNote. All data are taken from theWorld Bank (2006). These arearranged by Ishikawa.

5Policies

Mechanism

ShocksObserved growthoutcomesPoverty, Wealth and the Development Process: Evolution of World Bank Concepts

A: Causes of Poverty

B: Development (Poverty Reduction) Process

C: WealthReproduced from Ishikawa(2002)

1. Through Broad-Based Economic Growth
1. Lack of Income andConsumption
2. Macro-Economic Instability
3. Inadequate Structural Policy
4. Environmental Deterioration
5. Inadequate Health, Education
and Nutrition

Physical Capital and Investment
in Infrastructure(50s; 60s)

Macro-Economic Stability(80s)

GrowthStructural Transformation
Environmental Policy (70s; 90s)
Basic Social Services

6. Lack of Opportunity
7. Voicelessness
8. Powerlessness
9. Vulnerability to RisksPovertyReduction

2. Addition of Social and Political Processes
a. Opportunity (2000-01)
Macro-Economic
Stability

Macro
GrowthSectoral Reform
Good GovernanceMicroGrowth

Human Assets
PhysicalAssets
FinancialAssets
Social Assets

b. Empowerment (2000-01)
c. Security (2000-01)
Note: The causes of poverty in column A are listed in the same order as they were historically adopted in the World Bank’s policy framework. Items 6 to 9
emerged after “the review,” while items 1 to 5 existed even before “the review” and are remain current. The development process before “the review” isshown in panel 1 of B, and panel 2 shows new processes introduced after “the review.” However, B1 (growth) is not only a condition for B2a (opportunity),
but also a prerequisite for the whole non-economic process of B2 (WDR 2000/01, p.37). The figures given in brackets in column B refer to the decade whenrespective policies were adopted by the World Bank.

6Figure 2. Mechanism of growth with Poverty reduction
PRSP regime- Ishikawa’s summary

Table 7:

Figure 3. Process of development of the Ghana economy according to its DevelopmentModel

Initial conditions (data)
Populations and resources
Traditionally a scarcelabor-abundant land country, fit
to developing it asexport-primary agricultural
economy based on peasant
production. Food as joint
products. Recently land
becoming scarce. Ethnic
situation.
Capital stock and its quality
Technology
Task and preference
People become responsive to“novel” goods. From subsistence
to commercialized family.
Institutions and organizations
Political regime: From original
patrimonialism (traditional
kingdoms and chiefdoms still
remain as part of dual state; otherpart, formal state originates fromWest African learned society
created by “creole” traders andnationalist leaders. They became
neo-patrimonial presidents after
Acheampong period; 72-78) to
neo-patrimonialism (particularly
under the Western donors
pressure for economic andpolitical reform formodernization)

Mechanism for development(Interaction of variables)

Growthperformance

Mechanism to which HlaMyint’s Vent for Surplus
model is applicable

In the period
1983-2001, 5%
annual growthachieved, but it isinsufficient torecover thedecreased per
capita GDP causedby negative growthin 1975-83.
The level of percapita GDP atpresent is barely
equal to that of1960.

Under the demand pressure
coming from emerging West
capitalism, surplus land is
opened for exportable primary
goods production until theland frontier disappears.
Succeeding industrialization
as supplement to Myint’s
model
Export substitution of primary
products: import-substitution
growth on the invited FDIbasis.
Role of government to bepart of mechanism
Public finance under thegrip of patrimonial rulers
It is converted to their privatefamily finance.
Low savings and high ODA
dependency resulting in hugedebt burden.
Infant industrialists tend to
become crony capitalists, as
their growth is very difficult
outside the patronage of
patrimonial rulers.

Policies and strategies(yet to be filled)

Note. Drawn by Ishikawa, based partly on the findings of
ODI’s work in Ghanaٛ7