Forcing the butterfly out of a cocoon: institutional formation and change in developing countries

In the first week of June, 2015 I attended a tourism research conference in Dar es Salaam, Tanzania organised by ATLAS Africa. For my presentations titled “Today is party A, tomorrow is party B”: the politics of the tourism-poverty nexus in Ghana I made the argument that the state is critical for tourism development and need to take a central role in using tourism for poverty reduction. I did acknowledge the perceived poor track record of the state in certain areas of national development which makes people wary in entrusting much to the state other than the responsibility of creating a conducive business environment. During an informal discussion at the end of my presentation, a Dutch colleague made the passing comment that “in the Netherlands there is no ministry of tourism but tourism is flourishing” at which there were some light laughter while I could only smile. There was not a chance to respond to him immediately as it was a passing comment and the group was breaking up for coffee break. In my head I thought of the comment as a very simple ahistorical one that overlooks that path that brought the Netherlands to the current point where they don’t have a ministry of tourism but their tourism is flourishing. The larger implication of that simple statement is this “our state no longer involves itself too much in the economy and so should your state”.

Call me idealist but I think the state – especially in developing countries like Ghana need not only create a conducive environment but must take up a direct central role in the efforts at development and poverty reduction. This is ever more important when it comes to the tourism sector where there is a huge investment gap in the necessary infrastructures that can support the development of the sector. In the tourism literature, a variant of my Dutch colleague’s comment is this: ‘tourism development is primarily driven by micro-firm entrepreneurship’. I don’t totally disagree with such comments but in my opinion such statements lack nuance. These comments reflect the current state of many Western countries and so it is not appropriate to apply it wholesale to situations in developing countries. The development stage in Ghana in 2015 is different from the development stage in the Netherlands in 2015 as there are historical contingencies and path dependencies shaping the specificities of each country. Consequently, to argue that Ghana adopts in a wholesale fashion the governance practices currently found in the Netherlands is asking for trouble. If there is not a strong foundation of state investment then withdrawing the state and pushing the private sector into a central role is bound to produce less than optimal outcomes.

Many who advocates for scaling back the state in favour of the private sector fail to grasp the historical specificities that shaped the private sector’s involvement in the Western countries they want developing countries to emulate. The Netherlands doesn’t have a ministry of tourism at this stage of their development specifically because they now have in place the essential infrastructures – roads, transport, security etc. – and institutional rules of the game first put in place by a strong state. This has allowed the state to the state to withdraw and private micro-firms to take over. Historically however, there was a strong state involvement in the Dutch tourism sector from the beginning. In the earlier stages of tourism development you require the state to make those capital investments in infrastructure and institutions that the private sector cannot and do not provide. The strong state involvement in the earlier stages of tourism development is the historical reality of many Western countries including, France, Germany and the UK. In the UK for example, the early stages of tourism development saw state investment in tourism research through PhD and other project funding. Comparatively, Ghana’s tourism sector is in its toddler stages if not infancy and so to argue that strong state involvement is not needed is a bit disingenuous.

Pls bring back the state - red

In the bigger picture I keep wondering why developing countries are not been allowed to have a dominant state/public sector to drive economic development. I admit that the record of state dominance shows mixed outcomes. But why will it not be mixed outcomes when the state’s role is constantly being undermined by both internal and external actors. This however does not deflect from the fact that national leaders tend to be visionless and are constantly undermined by their own political constituents who are concerned with the short term goals of power and re-election. In Ghana we simply lack ‘strong women and men’ to take charge and drive the development of the country given all the strong institutional rules of the game that we already have. We are no longer in need of strong institutions but rather strong leaders because we simply have the institutions but what is lacking is the foresight and action of our leaders. The biggest developmental stride ever made in Ghana was the immediate post-independence period where the state was dominant and our political leaders had a vision. The critical investments in infrastructure that were made during that time continues to be the backbone of our current limp efforts at development.

The history of international political-economy shows that among other things every developed country made great strides when there was a dominant role for a strong state to drive development. I know times have changed and I am not arguing for the excesses of strong state involvement in national development. My argument is that we should not force the butterfly out of its cocoon before the time is right. The state in developing countries have to be allowed to play a central role. However, there must be a transformation in leadership so that there is a shared vision of development for which the state leading us to. The lukewarm withdrawal of the state in favour of the private sector in certain areas of our economy have shown just how much the private sector can be predatory at the expense of the general good. In Ghana think GYEEDA, SADA, SUBAH, World Cup fiasco and all the others. At this stage of our development we need the state to drive change and this must start with a change in leadership mentality. We should not just blindly copy what is currently being done in Western countries. If we want something to copy then we should go back to the history of these countries and assess how crucial the state was for their development. Even now many Western countries are clamouring for a return of a dominant state role as against the exploitation of the private sector to ensure equitable distribution of wealth. We need to fashion out our own idea of development and how to get there based on the specificities of our experiences as a Ghanaian society. The private sector has a role to play but the state need to play a dominant steering role if we are to develop in a fair and just manner.




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