Abstract
Dear Readers,
Welcome to the September 2015 issue of the Global Journal of Emerging Market Economies. In this issue, we focus on: the concept of “scaling up” development impact with reference to the Country Program Strategies of the African Development Bank (AfDB); the drivers and challenges of real sector growth in Zambia; and lessons for the knowledge-based economic growth in the context of Kazakhstan’s vision of entering the ranks of the world’s top 30 developed economies by 2050. Each article makes a compelling case for action by policymakers in emerging market economies.
In “Scaling Up in the Country Program Strategies of International Aid Agencies: An Assessment of the African Development Bank’s Strategies,” Johannes Linn discusses the concept of scaling up of the development impact of the interventions of development institutions beyond the one-off impact of specific projects and programs. He uses the findings of an assessment of a selection of the AfDB’s country partnership strategies, which put forward a strategy for the Bank’s activities within that country for the next three to five years.
Linn introduces a framework for scaling-up, including a definition and concepts such as scaling-up “pathways” and “spaces”. Linn’s article then brings to the table a question that has not been previously addressed, which is whether and to what extent AfDB’s country assistance strategies systematically consider how individual aid-financed interventions, programs or projects support the long-term achievement of a country’s development goals at a meaningful scale, that is, a scale that provides a significant response to the development problem identified. Linn argues that to do this, country strategies would need not only to identify long-term development goals in particular areas in which the aid agency is involved, but also demonstrate how the intervention(s) planned are expected to help achieve these goals. He argues that this requires that the strategy articulates a scaling-up pathway (or a “theory of change”), which articulates how the particular intervention serves as a step toward the achievement of the long-term goal. His groundbreaking article addresses this question as it pertains to the AfDB’s Country Strategy Papers.
Linn finds that while AfDB’s strategies do not systematically focus on scaling-up, they nevertheless include key elements of a scaling-up approach. He concludes with a set of recommendations for AfDB, which would be broadly applicable also to other development finance institutions.
In “The Dynamics of the Real Sector Growth in Zambia: Key Macroeconomic Drivers and Challenges,” Themba Cherwa and Professor Odhiambo examine the main macroeconomic drivers of economic growth in Zambia from 1960 to 2013 by assessing the growth episodes that occurred during periods of high and low economic growth. They find that the accumulation of capital stock, human capital development, international trade, the real exchange rate, and inflation are the main macroeconomic drivers of economic growth in Zambia. The authors find that the performance of these macroeconomic drivers has also been influenced by the major policy reforms that the Zambian authorities have instituted, specifically, moving from a command economy driven by nationalist ideologies to a free market economy with controls.
Cherwa and Odhiambo also address three major challenges that may affect the future economic growth prospects in Zambia: dependence on mineral growth; low human capital development and income distribution; and the deteriorating balance-of-payments position during lean periods. They argue that mineral dependency is hard to sustain during periods of economic recession; they emphasize the importance of education including for the diffusion of knowledge and technology and, importantly, to overcome income disparities sustainably; and also point to the risks of resorting to increased foreign borrowing as against pursuing structural changes and economic diversification.
Finally, in his article “Knowledge-Based Economic Growth in Kazakhstan, “Shahid Yusuf addresses Kazakhstan’s challenge as it pursues a transformation that will make it an affluent knowledge economy with a diversified industrial, service, and export base by the middle of the century and, thus, enter the ranks of the top 30 developed countries by 2050. Readers may wish to refer also to the article on Kazakhstan 2050: Exploring an Ambitious Vision (September 2014) and Inclusive Economic Growth (in Kazakhstan) (January 2015). The objective of Yusuf’s article is to understand the relevant international experience of the making of a knowledge-based economy and to inform this with views on trends that could expedite or impede the process through the middle of the century.
Yusuf notes that forward-looking resource-rich nations plan ahead and lay the foundations of an economy that can sustain and build upon the temporary prosperity bestowed by mineral wealth. This is because if a country wants to grow rapidly on a sustained long-term basis, its growth will have to be driven by productivity gains in the sectors other than the resource extracting ones. He argues that the currently advanced economies owe their relative affluence to the fruits of industrialization and a deepening services sector, the steady upgrading of technology in all activities, and incremental innovation that has contributed to rising productivity. Yusuf concludes with a list of eight strategic guidelines and actions for the modern knowledge economy. We encourage our readers to share their views on these and related topics relevant to emerging market economies.