News / Africa

Poor Countries Denied Chance to Succeed?

Jobless Africa
Jobless Africa

Multimedia

Audio
Joe DeCapua
A Harvard professor said developing countries were forced down an economic path in the 20th Century that lacked innovation, entrepreneurship and technology. As a result, he said, they had stunted development, while many other nations prospered.
 
Professor Calestous Juma tells the story of dueling economic theories. One based on new ideas and risk taking, and the other on pessimism and ignorance. It’s a story of the haves and have nots. Juma is professor of the Practice of International Development and Faculty Chair of the Innovation for Economic Development Executive Program.
“In 1911, an Austrian economist by the name of Joseph Schumpeter published a book called The Theory of Economic Development, which proposed that economies grow over time through innovation. Through new combinations that involved the application of new technologies. And this book became really a standard on how to think about economic transformation through the use of technology and entrepreneurship,” he said.
 
Juma said Schumpeter took a different view on what was needed for robust economic growth.
 
“It was new because up to that point people believed that economies grew because of extraction of natural resources – not because of application of technologies. It was also new because he proposed that the use of new technologies resulted in revolutionary changes in economic systems.”
 
Schumpeter, he said, based his theory on what he saw happening in developed nations.
 
“He made the observation by looking at the impact of railroads in Europe and America. So, rich nations were already doing it, but it had not been explained in a clear and explicit way, which had to do with this idea of introducing new combinations in the economy, which [are] technological combinations -- but also the recognition that these new technological transformations were being driven by entrepreneurs. So entrepreneurship became a very central part of his thinking.”
 
Professor Juma said new industries develop through – what’s called – creative destruction.
 
“His idea was that when you introduce, say, railroads in a community, which didn’t have railroads before, so they’re using stage coaches, railroads will destroy stage coaches. That industry will disappear, but it will create a new industry, which is a faster industry with a greater opportunity for economic expansion. If you think of it in modern times, if we introduce downloading of music, it destroys CDs. So, it’s destructive to the CDs, but it creates new industries, which is downloading of music,” he said.
 
Such developments are common today. But many economists in the 20th Century thought the developing world was not ready for Schumpeter’s ideas.
 
Juma said, “So the critics said emerging economies don’t have new technologies. Secondly, he said, the agent of change is [the] entrepreneur. Then they argued that the entrepreneur is not the biggest player in poor economies you need big government. You need bureaucracies. And thirdly, he put a lot of emphasis on industrial production. His critics said what the poor want is not production. They want consumption. So we give them some products that have been developed elsewhere. But it doesn’t make sense to enable them to produce themselves.”
 
Juma does not think racism was behind their beliefs, but rather pessimism about developing countries.
 
“Because they looked at them and said – they’re so poor, we cannot possibly give them the latest technologies because they are not even able to absorb them. So let’s find them older technologies. So, I don’t think it was racism. I think it was a mindset that was more colored by pessimism and less by an appreciation that even poor countries are able to solve their own problems when given a chance,” he said.
 
Instead, they were given – so-called -- appropriate technologies. Juma said instead of a modern water supply with sewers, they were told to dig wells. Instead of building modern electric grids, they were given fuel efficient stoves.
 
During the HIV/AIDS epidemic, many doubted African nations had the capability to distribute and administer antiretroviral drugs. And as a result, they said the drugs could not be effective. African nations proved them wrong.
 
“Again that was another example of pessimism. Of saying there’s really very little you can do for these countries because they don’t have the infrastructure. The same infrastructure they had been denied from building in the first place,” said Juma.
 
In the 20th Century, many had thought Ghana had the potential to become an economic powerhouse – that it would become what South Korea is today.
 
Juma said, “It’s very interesting you bring up the case of Ghana because Ghana at independence got a foreign economic advisor – a Nobel Laureate in economics – Arthur Lewis. He was one of the critics of Schumpeter, who did not believe that a country like Ghana was capable of transforming itself technologically, whereas South Korea was able to do that. At that time, there wasn’t a big difference between South Korea and Ghana.”
 
Juma recommends giving priority to innovation, technical and engineering fields, transformative infrastructure and entrepreneurship.
 
The Harvard professor is working on a new book containing his ideas. It has the tentative title of How Economies Succeed: Innovation and the Wealth of Nations. It’s due out in 2015.

You May Like

Nearly 900 Dead, Missing in 2014 Air Disasters

Southeast Asia took a particularly heavy hit; 3 major events involved weather, two planes were shot down in eastern Ukraine, and one crash was attributed to mechanical problems More

Video Islamic State Emergence Transformed Syria, Iraq in 2014

'It was very clear that there were problems building up in Iraq at the end of 2013 but everybody was distracted by Syria,' says one expert, explaining group's rapid rise More

Rights Group: IS Executed Nearly 2,000 in Syria in 6 Months

Islamist group also killed 120 of its own members, most foreign fighters trying to return home, in past two months, according to Syrian Observatory for Human Rights More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Russians Head Into Holiday Facing Economic Malaisei
X
Daniel Schearf
December 25, 2014 4:34 PM
Russian preparations for the New Year holiday are clouded by economic recession and a tumbling currency, the ruble. Nonetheless, people in the Russian capital appear to be in a festive mood. VOA's Daniel Schearf reports from Moscow.
Video

Video Russians Head Into Holiday Facing Economic Malaise

Russian preparations for the New Year holiday are clouded by economic recession and a tumbling currency, the ruble. Nonetheless, people in the Russian capital appear to be in a festive mood. VOA's Daniel Schearf reports from Moscow.
Video

Video Mombasa in Holiday Tourism Slump Due to Security Fears

Kenya's usually popular beachside tourist destination of Mombasa is seeing a much slower holiday season this year due to fears of insecurity as the country has suffered from a string of terror attacks linked to Somali militants. Mohammed Yusuf reports for VOA on how businessmen and tourists feel about the situation.
Video

Video For Somalis, 2014 Marked by Political Instability Within Government

While Somalia has long been torn apart by warfare and violence, this year one of the country's biggest challenges has come from within the government, as political infighting curtails the country's progress, threatens security gains and disappoints the international community. VOA's Gabe Joselow report.
Video

Video 2014 Saw Intensification of Boko Haram Insurgency

The year 2014 saw Nigerian militant sect Boko Haram intensify its five-year insurgency and target civilians in large numbers as it seized territory in the northeast. The kidnapping of nearly 300 schoolgirls in Chibok in April sparked global outrage, but failed to become the turning point against the sect that Nigeria’s president said it would be. The picture at year's end is one of devastation and uncertainty. VOA’s Anne Look reports.
Video

Video Estimates Rising of Foreign Fighters in Iraq, Syria

Foreign fighters are making more of a mark on the battles raging across Syria and Iraq than initially thought. VOA's Jeff Seldin has more.
Video

Video US Political Shift Could Affect Iran Nuclear Talks

Secretary of State John Kerry’s efforts to resolve Iran’s nuclear crisis are continuing into 2015 after Iran and six world powers failed to agree by a November deadline. U.S. domestic politics, however, could complicate efforts to reach a deal in the new year. VOA State Department correspondent Pam Dockins has the story.
Video

Video NYSE: The Icon of Capitalism

From its humble beginnings in 1792 to its status as an economic bellweather for the world, the New York Stock Exchange is an integral part of the story of America. VOA’s Bernard Shusman reports from Wall Street.
Video

Video Syrian Refugees in Lebanon Fight to Survive Water Crisis

In a region choking from dwindling water supplies, Lebanon has long been regarded as one of the few places where there is enough. But in recent years, half the people in the country have faced severe shortages. And the more than 1 million Syrian refugees in Lebanon are hit the worst by the water crisis, making the country's most vulnerable people increasingly impoverished and sick. Heather Murdock reports for VOA in the Bekaa Valley in Lebanon.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid