Japan, the country that built its manufacturing prowess on imitating the best, is offering Asia’s template for economic success to Africa. Ryokichi Hirono, economic adviser to Prime Minister Junichiro Koizumi, says African leaders often ask him how they can emulate the Asian success story.
Chicago University-trained Hirono has visited China more than 50 times since first being invited to Beijing by Zhou en Lai in 1974.
“The cultural revolution was raging outside, with banners denouncing the black cat of capitalism. Inside Zhou and his close circle discussed market economy with me for hours,” said Hirono in an interview with Mail & Guardian.
“China opened up four years later and has never looked back.”
Hirono was a moving spirit behind the formation of the Association of South East Asian Nations and sits on the advisory committee of the Tokyo International Conference on African Development.
He said human capital investment was a key reason Japan and East Asia had led the developing world. “Since the end of the 1940s Asian countries have invested at least 10 to 12% of their budgets on education. Southern Africa lags with 3 to 5% by comparison.
“The Millennium Development Goal is for every child to get primary education by 2015. If they cannot deliver on that, foreign aid to African countries should be stopped because they are not sincere. They have the capacity to spend 10 to 15% of their budgets on education; all they need is the political will.”
Hirono added that African states should also be spending 10% of their budgets on health, to ensure adequate nutrition and protection from diseases like HIV/Aids, malaria and tuberculosis.
His next prescription was a high rate of domestic savings. “In the 1950s, savings in Asia comprised 4 to 5% of GDP. In the 1980s it rose to 30%. It is currently 22 to 25%. By comparison, African countries’ savings averaged 8% of GDP.
“Japanese have $15-trillion in personal savings — more than the United States, France, Germany and Britain combined. Savings are used to finance the Japanese government deficit, currently $7-trillion. The government doesn’t have to increase the money supply or borrow abroad.”
Japanese savers were also financing $50-billion of US deficit spending, he said. “If Japanese stopped buying US treasury bonds, the US would be in serious trouble. Twenty times a year the US issues $15-billion in treasury bonds. One-third are bought by Japanese.”
Hirono added that there was a huge middle class in Asia because of government policies aimed at equalising income distribution. “Japan has the best income distribution in the world — more equal even than Russia and China. We joke that it is the last real socialist country in the world.”
The next factor for success was appropriate monetary and fiscal policies. “From the 1960s to the 1980s Asia followed sound macroeconomic policies, stimulating growth without inflation. Fiscal discipline means not overspending.”
An effective state bureaucracy was also vital, and governments had to root out corruption. “Singapore, where I helped Lee Kwan Yew in 1961, is ruthless. He sacked a Cabinet minister whose wife did not report a small gift from a visiting Japanese delegation to the Finance Ministry. Recipients have to pay the equivalent value to the ministry if they want to keep a gift. Otherwise it is auctioned.
“Japan allows officials to receive gifts to the value of $10. All gifts are posted on the Internet.”
The final ingredient essential to sustained economic growth was political stability. “Nobody invests without stability,” Hirono said. “Asian countries had semi-authoritarian governments that prioritised stability. But authoritarianism disappears as economic development takes place.”
Africa should take a different route. It was vital that African leaders showed their people that growth was for them and not for those in government, he said. “They should avoid Asian-style authoritarianism, using NGOs and the mass media to inform the people and get their cooperation.”
On the other hand, political leaders had to be ready to take hard decisions.
“They cannot become populist or disrupt the economy for selfish group interests. Their decisions must be scientifically based after proper discussion.”