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Developing countries must invest in education - WB Chief
Economist
Accra, Aug. 30, Ghanadot/GNA – World Bank Chief Economist
Justin Lin Yifu on Friday said developing countries must
invest heavily in the education of their citizenry and
upgrade their industrial structures for sustainable growth.
He said developing countries could achieve sustained growth
if the governments of those countries had the right strategy
and played the right role for development.
In a lecture on the theme: “Inclusive Growth and the Role of
Knowledge-Lessons from China and Asia,” delivered at the
University of Ghana, Legon, the Chief Economist, harped on
the need for developing countries to specialize and exploit
their comparative advantage to development industries for
their economies to have competitive advantage.
The lecture, organized by the Economics Department and the
Institute of Statistical, Social and Economic Research of
the University, attributed the economic successes in Asian
countries of Japan, Korea, Taiwan, Hong Kong and Singapore,
to the reliance of their comparative advantages in each
stage of their development.
The lecture formed part of “The Development Dialogue
Series”, sponsored by the Ghana office of the World Bank, in
collaboration with leading Ghanaian think-tanks to promote
vibrant discourse on development policy choices.
Prof Lin, who is also the Founding Director of the China
Centre for Economic Research at Peking University,
identified abundant low cost factors of production, large
domestic market, an industrial cluster and competitive
market as determinants of competitive advantage.
“It is helpful to have large domestic market. However, if an
economy's industries are consistent with its comparative
advantage, their products can have global markets.
Therefore, large domestic market is not a necessary
condition”, he said.
Prof Lin said after World War II, most developing economies
in Latin America, South Asia and Africa attempted to go
against their comparative advantage to develop
capital-intensive, advanced industries, with rather
viability problems and distortions.
Some Governments therefore adopted protectionist measures
with consequent rent seeking, crony capitalism, low
efficiency and poor development performance.
He propounded a “comparative advantage following” (CAF)
strategy, which he said attempts to facilitate firms to
follow the economy’s endowments so that the economy could
achieve competitive advantage.
“The Government in a developing country that follows the CAF
strategy may play a more active role than that of a minimal
state,” Prof Lin said, adding that when the government
pursues a CAF strategy, the endowment structure will upgrade
very fast and a certain industrial policy is desirable for
facilitating the country’s industrial upgrading.
Dr K. Y Amoako, President of the African Centre for Economic
Transformation, who chaired the session, said application of
knowledge in entrepreneurship, research and development were
key sources of industrial growth and development.
He said a revolution in the application of science and
technology innovations had transformed the East Asian
economies within the last 15 years, with two thirds of the
accumulation knowledge, and one third being only the
application of physical capital.
Prof Kwesi Yankah, Pro Vice Chancellor of the University
announced that the University would outline a programme for
the study of higher level science in all courses apart from
the main science programme.
GNA
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