We
were taught in economics that countries should specialize on one product in
which they have a comparative advantage – or are most cost effective – and
trade surplus to get what they do not produce. That way specialization and
exchange would make everyone better off.
Colonial
administrations in Africa implemented this philosophy with vigor ending
time-tested and sustainable traditional systems of mixed cropping and rotations
which not only ensured crops ripening at different times and guaranteeing food
security but also protecting the environment and fertilizing soils.
Countries
specializing in a single or few commodities became common:
Comparative
advantage ruled out manufacturing in
When
the National Resistance Movement (NRM) government came to power in 1986, it
correctly decided to end the colonial economic system of specialization in raw
materials and embark on a structural transformation and metamorphosis of
economy and to balance production for domestic and external consumption. Export
earnings would be used to import technology with which to modernize
middle class economy and society using a mixed economy model.
At
the start of the 1990s, the government changed course – presumably under
pressure from the donors – and focused on export-led economic growth according
to
agricultural comparative advantage. The export of traditional commodities of
cotton, coffee, tea and tobacco would be stepped up and complemented with
non-traditional exports mostly of foodstuffs traditionally grown or harvested
for domestic consumption such as nutritious beans and fish.
On
January 26, 1990 the President announced that the second phase of the
revolution would witness a shift in economic policy orientation from short-term
rehabilitation to long-term economic restructuring measures and a strategy of
diversified and export-led growth to accumulate foreign exchange badly needed
to acquire foreign technology for Uganda’s development into an integrated,
self-sustaining and independent national economy in a secure economic
environment. Diversification has included brain drain – recently christened
brain gain to silence dissent – to increase remittances.
Arguments
in support of priority for export-led growth were based largely on the
achievements of the Asian Tigers –
led by
Some
commentators including the author warned that putting all eggs in one basket
carried potential risks should something go wrong with a globalized economy as
happened to the first globalization between 1870 and 1914 whose collapse was
accompanied by a depression in the 1930s. Globalization came to an end and
protectionism became the order of the day through high tariffs and other
measures that impeded trade.
However,
those who disagreed reasoned that this time the world had become flat and
globalization was here to stay. Pessimists were accused of sabotaging national
efforts, were either marginalized or dealt with in other ways that eliminated
their voices.
What
we are seeing now confirms what the so-called pessimists had feared all along.
The free flow of goods and services including foreign investments is under
increasing pressure from the developed countries. The economic crisis and
finger pointing dominated the recently concluded Devos annual meeting rather
than the usual spirit of consensus.
What
the world is witnessing is mercantilism whereby companies or institutions are
leaving a foreign base to come back to their home base and consumers are being
encouraged to buy home produced goods or provided services leading to
de-globalization.
The
impact of the unfolding de-globalization on economies such as those in
devastating although the region was not the epicenter of the crisis.
to the global economy growing on the back of exports which has now made the
region very vulnerable.
Uganda
should draw a lesson from the Asian experience and begin to balance domestic
and export-led growth, meaning that Uganda should shift in the direction of
manufacturing using national raw materials, producing more food for domestic
consumption, adjusting the education and training strategy to meet skilled labor
demands and attracting back highly educated and experienced Ugandans living
abroad including retired personnel wherever they are.