Lessons for Sub-Saharan Africa: Using the Development Model from East Asia in Nigeria, 1965–2015

Abstract

AbstractEast Asia has received much attention due to the extraordinary economic transition which led much of the region to a more balanced growth despite the 1997 Asian financial crisis. In search of a common development model for sub-Saharan Africa, an extensive examination of the economic growth from East Asia is compared from 1965 to 2015. Focusing mainly on economic growth features and differences in selected East Asian and sub-Saharan African countries, a comparative analysis investigates the patterns of development and identifies major economic indicators. A review of East Asia’s transition looks at the historical and socioeconomic evolution of key sectors that contribute to different development model strategies in the region. This chapter centers on questions that try to identify positive indicators as well as reasons to how East Asia developed, the rapidity of the development, and if there is a unified development model. Post-Second World War research catalogs how East Asian countries mobilized towards industrialization by engaging their populations using effective public policies. Comparatively, sub-Saharan African countries, dating back to the same period, were considered among those with growth potential. Since then, they face underutilization of economic growth, inappropriate fiscal reform, and low human capital investment—attributing to the poor economic performance and growth seen over the review period. A secondary examination explores the case of South Korea and Nigeria as representative countries of the two subregions. These countries help to identify critical economic growth deviation and suggest possible growth enhancement policies for sub-Saharan Africa. By examining economic growth divergence, lessons are drawn out and development strategies highlighted. Key facets of South Korea’s development model are described including the increase in labor force, investment in capital, export led growth, technological advancement, and top-down reform policies. Nigeria’s economic performance factors point to a lack of development of the financial markets with limited size and stability, poor productivity of human resources in every sector of the economy, and ineffective institutional order correlating with high corruption and a shadow economy of 50% of gross domestic product. Recommendations center on developing other sectors of the economy and increasing domestic demand to serve as a security measure. This can aid in protecting the economy from potential global market shocks, e.g., the COVID-19 crisis, strengthen budgetary control to improve fiscal solvency, and maintain a low external debt profile to reduce government expenditure on debt servicing. To this end, the restructuring and optimization of trade through the reduction of imports, and exports expansion for more efficient trade balance could aid economic diversification and stabilize financial and healthy fiscal policies—reinforcing sub-Saharan Africa’s economic future and stressing country-specific development as a way forward.KeywordsEconomic indicatorsFiscal policiesSocioeconomicsEconomic developmentEconomic transitionComparative analysisSouth Korea