Political economy of policy making in Africa

It argues that a modern version of administered trade emerged in 20th century Africa, as well as in Russia, China, and other previously hierarchical and only partially monetized societies. Accelerating monetization of economies is forcing a paradigm shift, which imposes a new way of thinking about economies. In the meantime, African leaders still operate in cultures in which most people view economic management quite differently than do market economists. The goals of market-oriented economic management might be summarized in four points: (1) make GDP grow; (2) keep inflation low; (3) maintain a favorable current account balance; and (4) keep unemployment low. In contrast, African economic management aims to: (1) achieve growth in the loyal community of followers; (2) ensure that all members work and produce sufficient food; (3) produce a surplus that is funneled to the top of the hierarchy through gifts and taxes/tribute (labor, minerals and cash crops); (4) trade the communal surplus for luxuries; (5) exchange gifts and hospitality among peers; and (6) offer generous rewards and hospitality to followers. The disparity in economic goals helps to explain why certain reforms have been widely resisted, notably those that involve loss of jobs, privatization of parastatals, or liberalization of food exports. Decisionmaking in African custom also follows a different order than that taken by international financial institutions (IFIs) in negotiating structural adjustment. To the IFIs fell the unenviable task of jogging many African governments out of autarchic economic policies and a downward spiral of deficit spending, debt escalation, and economic stagnation. Creating ex post facto "ownership" of imposed policies, however, has proved very difficult. For decisionmaking to be considered legitimate in Africa, debate is supposed to precede the announcement of a decision. Acquiescence and at least superficial social harmony is expected to follow it. The USAID Equity and Growth through Economic Research EAGER)/Trade project attempts a new approach that brings African policymakers, African economists and U.S. economists together to research policy options before policies are announced. Research projects are demand-driven, with policymakers rather than researchers in the driver"s seat. Policymakers capable of implementing the options to be researched sit on national Advisory Committee"s supervising the research, and organizing national round-tables on the topic during the research process. This applied approach is designed to simulate the decisionmaking steps considered legitimate by African custom and to allow policy to emerge as the result of a wider consensus. This should facilitate the needed paradigm shift and resolve many of the problems of implementation. (Author abstract)