Tackling Poverty by Ethiopians Or Globalization Wave: a Book Review

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Collected Faculty and Staff Scholarship Faculty and Staff Scholarship

5-2011

Tackling Poverty by Ethiopians or Globalization Wave: A Book Review

Asayehgn Desta School of Business and Leadership, Dominican University of California, [email protected]

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Recommended Citation Desta, Asayehgn, "Tackling Poverty by Ethiopians or Globalization Wave: A Book Review" (2011). Collected Faculty and Staff Scholarship. 16. https://scholar.dominican.edu/all-faculty/16

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TACKLING POVERTY BY ETHIOPIANS OR GLOBALIZATION WAVE: A BOOK REVIEW Desta, Asayehgn, Ph.D. Sarlo Distinguished Professor of Sustainable Development, Dominican University of California ______

According to Singh, Resident developmental state in Ethiopia was not Representative of the International Monetary designed to advance equitable growth and Fund (IMF) in Ethiopia, the IMF has made development throughout the country. It was positive assessments on Ethiopia‟s strong designed to serve the ethnically-based ruling economic growth and has come to class. To reinforce his argument Birara understand that the lifestyle of the people is states that close to 70 percent of the urban getting better as compared to the past dwellers of Ethiopia live in slum-like decades. In his conclusion, Singh asserts that conditions (p.7). there is no difference between the IMF and the Ethiopian Government data, that despite According to Birara, the Foreign Direct the world-wide financial crisis, Ethiopia has Investment which has been recently flowing recorded economic growth over these years. to Ethiopia in the form of farmland grabs Given such economic achievement was designed not to advance Ethiopia‟s therefore, Singh is of the opinion that the development but was tailored to export IMF is ready to back Ethiopia in order to farmland products to foreign countries in sustain the fast and stable development order to accumulate foreign exchange (p.7) registered over the years (Walta Information so that the ethnically-based ruling party Center, 2010). Similarly, Dulane states that (i.e., Tigrai Peoples Liberation Front/ The “Ethiopia is one of the fastest growing non- Ethiopian People‟s Revolutionary oil economies in Africa and the country has Democratic Front, TPLF/EPRDF) could registered an average 11.5 % economic sustain their comfortable life-style. Birara growth for the last six consecutive years.” states that “an ethnically-based and leftist By quoting the Economist’s World single party is unlikely to care for the poor” Economic Forecast for 2010, Dulane (p. 7). underlines that Ethiopia is the fifth fastest growing economy in the world (Japan Given its socioeconomic realities, the SPOTLIGHT, September/October 2010). country is still unable to achieve food self- sufficiency. Birara is of the opinion that In his book entitled “Endemic Poverty there is a growing disillusionment among That Globalization Can’t Tackle But both the Ethiopian elites and the common Ethiopians Can,” Dr. Aklog Birara people with regard to all forms of foreign (hereafter referred to as Birara), a former aid that has been flowing to the country. employee of the World Bank and who used After all, according to Birara, channeling to be an adherent of the “Washington donor monies directly to the government Consensus,” seemed to be impressed by the won‟t improve wellbeing and reduce current economic record registered by poverty. In fact, Birara asserts that except Ethiopia (see p. 452). However, Birara goes for the concerted effort of the Ethiopian one step further to argue that the people, neither FDI, land-lease and sales in the range of 3 to 6 million hectares to

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foreign investors, nor the globalization wave creating social cohesion and of foreign aid will transform Ethiopian integration that are vital in the 21st society from poverty to a sustainable and century. Most of these parties have equitable prosperity (pp. 3-8). Birara argues fallen directly into the trap of the that all Ethiopian opposition political ruling-party …accepting the notion parties, civic and professional associations, that the country is a composite of and intellectuals, who accuse the irreconcilable nationality groups. As TPLF/EPRDF party are in actuality fighting a result they have adopted and one another, forgetting that they themselves practice the “them against us” may be the problem. He then suggests that ideology created for them (p.9). the opposition group need to carry out their solemn role of serving the Ethiopian people To further illustrate his argument that the by challenging the ruling party. According country is one of the least underdeveloped to Birara the ruling classes in Ethiopia are countries, in Chapter I, Biara describes the bloated with egos and show minimum educational system in Ethiopia as totally empathy for others. They trivialize ethnicized and politicized, and references important concepts and preach the rule of and songs were not about Ethiopia but about law, democracy, and freedom, but in their their ethnic-affiliation and identity. Birara actions they reveal that they themselves are argues that Brazil, China, Malaysia, unable to put into practice these concepts (p. Singapore, Thailand, and Mauritius, 8). Emphasizing the main purpose of his achieved development by building social book he stresses that a country‟s building blocks by investing heavily in development needs to be about effective education, health, infrastructure, and by voice and participation in the development promoting policies and programs that and political process. Furthermore, Birara included value-added manufacturing (p. 12). outlines that among other things, Ethiopians In Chapter II, Birara narrates his life story. need to have a supply of clean water, have He states that even though the opportunity electricity on tap, be able to live in a decent for education in Ethiopia was mainly home and have a good job, be able to send tailored to serve the sons and daughters of their children to school, and have accessible the ruling class, some urban dwellers and health care. To reinforce his argument, some lucky people like him have been able Briara depicts Ethiopia as to come to the United States to study. He attained his Ph.D, from one of the most …among the few countries in the prestigious higher educational institutions, world that still serves as an incubator Johns Hopkins University. or laboratory of development for a variety of experts, non- At the beginning of Chapter III, Birara governmental organizations (NGOs), analyzes the various public policy mistakes the United Nations system and made by the ruling party, the EPRDF. In bilateral and multilateral Part One he uses proxy variables. For development institutions. These example, he states that Ethiopia‟s experiments have made minimal landlocked status costs Ethiopian exporters headway in putting the economy on a and importers four to five times more than sustainable and productive path. competitors who have access to their own Political divisions among ethnic- ports. In 2006, shipping a container from the elites prevent the society from Port of Baltimore to a landlocked country

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was about $3,450 higher relative to a base importance of the Port of Assab for price of $4,620 to non-landlocked country. Ethiopia. Non-landlocked countries possess a comparative advantage compared to If we are to make sense of Albert Einstein‟s Ethiopia. To illustrate, he uses the words that Birara has quoted in his book that unforgettable public policy mistake of the “we can‟t solve problems by using the same willful and deliberate turnover of Ethiopia‟s kind of thinking we used when we created access to the port of Assab to the Eritrean them” (p. 68), the EPRDF, could have government. Instead of using proxy effectively negotiated with the Eritrean variables from the United States, Birara Peoples Liberation Front in order for could have had a more convincing argument Ethiopia to have long term commitment if he referred to Begashaw‟s credible article. from Eritrea to have access to the Port of According to Begashaw, compared to Assab. In other words, given the political shipping via the Port of Assab, the costs of upheaval that existed in Ethiopia in 1991, it transportation via ports in Kenya, Sudan, did not make sense for Birara to argue that and Djibouti are prohibitive because of the the “TPLF had a choice. (I don’t know why long distances and poor transportation Birara is using TPLF instead of EPRDF.) It facilities. To make the matter very specific, had the military, political, and economic as estimated by Chowdhury and means, and popular support to reject any Erdenebileg, the real GDP per year of overtures from EPLF or its foreign landlocked countries is about 1 percent less supporters like Egypt and Sudan to than the real GDP of coastal countries undermine the country‟s national interests (2006). and its economic viability” (p. 77). After all, Birara was in a better position to know that because of the political upheavals that Instead of reviving the emotional flames existed in Ethiopia in 1991, the EPRDF had already rekindled by various websites and no capability nor even the support of mass media outlets, it would have made Ethiopians in 1991 to prevent Eritrea from sense for Birara to review the valid having full access to the Port of Assab. In documents written Belai Abay and Zeru short, given the fact that Ethiopians were Kihishen (2000) to expose his readers to the exhausted from the unnecessary war which fact that the Port of Assab was bought in Mengistu and his supporters expanded, the 1869 by the Rubattino Shipping Company EPRDF had no means nor the necessary from the local Sultan on behalf of the Italian support to prolong the war between Ethiopia government. Then in 1882, the Italian and the Eritrean fighters ongoing since government acquired the Port of Assab from 1962. the Rubattino Shipping Company. If the Eritreans claim that the Port of Assab In Part Two of Chapter III, Birara asserts his belonged to them because Eritrea used to be personal view that institutionalization with part of the Italian colony, a moot argument, the implementation of the “legalization and instead of prolonging the fighting between institutionalization of an ethnic-state, ethnic- Ethiopia and Eritrea after 1991, it would politics and ethnic-federalism that was have been better for the EPRDF to engage in created in Ethiopia by the EPDRF in genuine, diplomatic negotiations with Ethiopia is now tearing the Ethiopian society Eritrea for a global partnership. Instead the apart. (This addresses article 39 of its ruling party of Ethiopia minimized the constitution which advocated the right to

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self-determination, including secession.) In convince a number of developing countries his book, Birara talks very highly of to undertake structural adjustment programs Malaysia. But I am surprised he forgot to (SAPs) in order to qualify for access to note that Malaysia has achieved economic financial credit from the IMF and the World growth because following the civil Bank? Why is he now against the flow of disturbance of 1969, Malaysia‟s Coalition foreign direct investment to Ethiopia when Front government became composed of Ethiopia is making its environment Bumiputras (or sons of the soil or Malays), attractive to investors? To put the matter in Chinese Malaysians and Indian Malaysian his words, (see for example, Desta, 1993). Thus, the lesson we can learn from Malaysia is that it Concentration of political power in a is worth researching in detail the single party allows use of composition of political parties based on institutional and coercive ethnicity or national origin before we arrive instruments to make policy decisions at a conclusion as to what may determine and defend interests. Take Gambella economic growth, or might tear the as illustrative. It is among their Ethiopian society apart, as Birara argues. country‟s potentially richest regions. Actually, the data from the IMF clearly Its fertile farmlands are being leased shows that Ethiopia‟s economic growth is and sold to Indian and Saudi relatively better and relatively more stable investors. Close to 600,000 hectares under the current ethno-federalism model of of Gambella farmlands have been administrative organization than it used to leased or sold to these investors. In be under Haile Selassie‟s highly centralized the process, an untold number of and semi-feudal authoritarian regime, or farmers and other households have Mengistu‟s most cruel and bureaucratic been forced to move. Many of those military regime. Birara would agree with me dispossessed will work for the new that Ethiopia would have been in a different investors at wages below poverty stage of development had Mengistu‟s level. By any social or economic regime not purged the most creative and indicator, the region is among the educated Ethiopians and forced others to most neglected and poorest (p. 81). suffer from lingering nightmares of his atrocities. Though it is not worth discussing hearsay, according to Birara the third public policy The IMF and the World Bank in its mistake which the EPRDF chiefs have statement of conditions encourages committed is allowing “ …the country‟s borrowing nations to practice competitive central or national bank and commercial free markets, privatize existing state-owned banks are used to enrich party-owned enterprises, promote free trade, and advocate supported and endowed enterprises and for the creation of a conducive environment individuals, the case of corruption becomes for foreign direct investments. What is not incontestable” (p. 87). In addition, it is sad clear to me is why now, at this juncture, to learn from Birara, who has supervised a Birara is saying that the Washington number of projects for the World Bank, that Consensus is an outdated model. If I am not “…the physical infrastructural and mistaken, was he not a major functionary manufacturing investments and outcome are and at times strongly promoting the relatively higher in Tigray than in any other Washington Consensus model in order to regional states.” It might be very difficult to

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convince Birara but if he undertook a well- contrast to the tenets of democratic designed, objective research, he would find governance, Mohamed, the former Prime out that a large portion of the investments in Minister of Malaysia argues that democratic Addis Ababa, Awasa, Gonder, Behre Dar, values are in essence Western constructs. and Tigray, to mention only a few, are They are purposely geared to impose mostly financed either by humanitarian Western cultural values on non-Western philanthropic organizations, or the countries. According to Mohamed the Diasporas. For Birara‟s information, even components of Western democracy that the Ethiopian nationalist Falashas, who the were forcefully implanted on non-Western dictator Mengistu orchestrated to get hefty nations to make them be dependent on amounts of money from Israeli Western nations‟ value systems include: 1) humanitarians to make them leave their putting the individual at the center of good county of origin are returning and governance; 2) practicing of liberal views of undertaking major investments in Gonder. human rights; 3) establishing multi-party Rather than believing in second-hand systems of government; and 4) using the information, I would encourage Birara to go free market system to encourage to Tigray and objectively document for competition (1994). himself if Tigray is doing better than the rest of the regional states. In addition, some of the leaders of Third World countries are of the opinion that The fourth public policy mistake committed democratic governance is associated with by EPRDF according to Birara is that “it their historical experience of the West, and claims that it has created a solid institutional can be a hindrance to achieving sound, foundation for democracy, the rule of law, healthy economies in non-Western nations, human rights, equality of nationalities, a free unless they are modified to reflect the market economy, respect of civil liberties cultural perspectives of non-Western and human rights, administrative efficiency nations. Based on the notion „development and rapid socioeconomic development… first, democracy later,‟ opponents of these realities do not remotely resemble democratic governance argue that instead of democratic, representative and just hallucinating and imposing lofty and governance. Ethiopia is among the poorest unachievable values of democracy, it would and least developed,” (p.89). (Underlined by be better to give bread to the poor in non- the writer of this article). First, countries, Western countries ( UNDP 2002). Those for example, like India and Mauritius have who are against the spread of a Western democratic types of governments but are not image of democratic government in non- necessarily developed nations. Also, Western countries further argue that the Singapore has emerged as the new Tiger of democratic governance promulgated by Asia but by no stretch of the imagination is Western nations, inflicts suffering rather it democratic. Thus, why is Birara arguing than freedom on those who do not belong to that democracy and development in Ethiopia the ruling majority in a democracy. Given should complement each other? Over the this, they are of the opinion that the years, there are general objections to the vulnerable groups will be better served by advocacy of democratic governance as a the protection that authoritarian governance means of achieving sustainable development can provide, rather than getting hand-outs in non-Western countries. As documented in from a class-based democratic system. (See my article (See Desta, 2010) for instance, in for example, Sen, 2003.) In fact, Habisso

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succinctly argues that imposing democracy genuine foreign investors) are willing to on the poor and ethnically divided form cooperative joint ventures at the local authoritarian states, and insisting they hold level that can create employment and instant elections and democratize rapidly, emancipate workers. Thus harnessing the can trigger some of the world‟s bloodiest energies of local communities and private national struggles (2010, p. 6.) Second, as investors (such as the Ethiopian Diaspora far as I know and from what I have read who are willing to give back to the people in about Ethiopia, until today the Ethiopian their country of origin) to form agro- authorities have never claimed that they business cooperatives would have been the have created solid foundations of democracy cornerstone for revitalizing self-sustaining in Ethiopia. Actually, as I stated in my socioeconomic development in Ethiopia” recent article (Desta, 2010), Ethiopia is in (Desta, 2010, p, 3). transition to democracy. From the section of “Learning from Others” The fifth public policy mistake orchestrated Birara states that firstly, Ethiopia could learn by the executives of the EPRDF ruling-party a lot from the Peoples Republic of China. discussed by Briara “refers to the land leases Yes, having worked and written a book and sales to foreign investors… it is an about investment in China , I definitely admission that the TPLF/EPRDF model of agree with Birara. But, Birara should be Agriculture Development Led aware that in China each state, though not as Industrialization( ADLI) has failed”( p. 92). ethnically-based as Ethiopia, is Actually, in the age of globalization, “…it administratively autonomous. For example, might be absurd to suggest to the Ethiopian when it comes to FDI, each state decides to Government that Ethiopia should isolate accept foreign investment if the investment itself from the rest of the world.” will accelerate industrialization, improve the Nonetheless, Ethiopian policy makers standards of living, create employment, and should cease to see globalization as an end increase the accumulation of foreign itself. The real end is environmentally exchange. In addition, it is worth noting that sustainable economic development of the Chinese Diaspora have shown special Ethiopia. To the extent that multinational love and admiration for their home country. enterprises add value to the achievement of The Diaspora (even the Taiwanese) were the this goal, they could be welcomed. But, the first ones to invest in their original mother Ethiopian government needs to stay on the country when China established the four alert and keep the abuse of foreign Special Economic Zones in Shenzen, Zhulai, investments in check through judicious Shanton and Xiamen in 1980. governmental policies (Desta, 2010, p. 2-3). Secondly, Birara tells his readers that he As claimed by Birara if ADLI is “failing” admires the micro-credit of Bangladesh as a because it is facing unexpected shocks, source of development. However, a detailed “…then the only way the existing backbone study which explored the role of microcredit of Ethiopia‟s economic and social problem for poverty alleviation in Africa (see Desta, can be at the cutting edge and environmental 2010), and another study by Khandker of sustainability can be achieved is if there is a three leading microfinance institutions in modification in revising the ownership and Bangladesh, for the period 1990 -2003 show management of land. The local Ethiopians that: (with the help of the government and

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Microfinance matters a lot for very Birara should have established carefully the poor borrowers and also the local reliability and validity of some of his tables economy. In particular, micro- and sources of information. For example, finance programs matter a lot to the the source of information for Table 2 , pp. poor in raising per capita 292-296 and Table 3, pp. 382 are not given. consumption, mainly on non-food, as Since the sources of the tables are not given, well as household non-land assets. it has been very difficult for me to verify This increases the probability that Birara‟s data. the program participants may be able to lift themselves out of poverty. Concerning the figures about Official …yet the aggregate poverty Development Assistance (ODA) given on p. reduction effects are not substantial 164, it would have been appropriate if enough to make a large dent in Birara had converted the data into Real aggregate poverty at the national ODA by adjusting for inflation. Then, these level. This concern brings to the fore real ODA should have been analyzed in the effectiveness of micro-finance as detail for what purpose they were used by an instrument to solve the problems the Military regime and compare their of poverty in Bangladesh (2003). usages by the current regime. If Birara, as he stated it, thinks that the real ODA assistance To conclude, if we assess Birara‟s book the current regime has received over the based on the hallmarks of scientific research years has 1) not reached the common or the distinguishing characteristics of people, 2) failed to achieve minimal growth, research, let me say that the book in its and 3) made Ethiopia to be dependent on introductory section gives the writer‟s foreign aid, then he should empirically background and the nature of the problem substantiate his argument. Otherwise, I see has been investigating. Therefore, the book no clear evidence how his hypotheses could has a purposive focus and the book was be ascertained except to say some sections presented in a very creative manner. of the book were written purposely to add Particularly, since the title of the book is fire to the already the emotionally charged very close to President Obama‟s slogan anti-EPRDF regime. “Yes, We Can”, it is marketable. In addition, regarding the Official However, the book does not seem to be Development Assistance (ODA) depicted on rigorous. The book lacks a good theoretical p.164, it is possible to say that the tables base and a sound methodological design. don‟t seem to be derived from factual data, Although the book has attempted to but consist of subjective or emotional summarize the current state of knowledge in values. It is further interesting to note why the area of investigation, by design or Birara did not pay much attention to some of default, the book seems to be tailored to the research papers that have been written appeal to a certain segment of the market. by the Ethiopian government, multilateral The writer was inclined to appeal to those organizations, and other neutral researchers. who are politically against the EPRDF Party Also, though Birara now seems to be against in Ethiopia. Since some of the content of the foreign multinational investors, why did he book was reported previously by other forget to mention China‟s investment in writers on a number of politically-sensitive Ethiopia. For example Mersha outlines that websites, as a scholar and academician China produces barley, oilseed, and sesame

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seeds in Ethiopia, and it is likely to bring in globalization wave. Based on Birara‟s call Chinese workers to do the job (2009). If for constructive endeavor, I have no doubt Birara is genuinely interested in the that we can extricate Ethiopia from the unemployment and exploitation of Ethiopian malaise of poverty, revitalize its economic workers, why were not Mersha‟s comments system, and put Ethiopia‟s development introduced in his book? firmly on the global agenda. This will generate new confidence in Ethiopia that it As mentioned before, the first section of the can emancipate from poverty and achieve a book attributes Ethiopia‟s poverty to ethnic- people-oriented type of sustainable federalism type of management style and development. highlights some of the policy mistakes undertaken by the EPRDF. The final section References of the book, on the other hand, seems to be Begashaw, G. “ Port of Assab as a Factor written as an afterthought because all of a for Economic Development and Regional sudden Birara appreciates, as does the IMF, Conflict”. the economic growth of Ethiopia and Birara Abbai, Belay and Zeru Kehishen (July 15, goes one step further to make some 2000). “Meles‟ Assab Policy Threatens constructive suggestions. Given the Ethiopia‟s National Security”. contradiction between the beginning of part Birara, A. (2010). Waves Endemic Poverty of the book and its conclusions, it is rather that Globalization can’t tackle but very difficult for any other objective Ethiopians can. www.sbpbooks.com researcher to replicate the study and arrive at Chowdhury, A.K and Erdenebileg, S. the same conclusions. Also, Briara should (2006). “Geography against development know that policy implications have to : A case for landlocked developing emerge from the data analysis. Though countries. New York: United Nations minor, assuming that the book was Desta, A. (2010). “Industrialization by published by a well-referred publishing Invitation: Will it work in Ethiopia? company, Birara‟s book needs to have an http://farmlandgrap.org/100083. index at the end of the book and all the Retrieved September 18, 2010. tables need to be listed in the table of Desta, A. (1993). International Political contents. Risk Assessment….. Need ham Heights, MA: Ginn Press. Given the positive and negative aspects of Desta, A. ( 2010). Microcredit for Poverty my review of Birara‟s book, I would like to Alleviation and Fostering salute Birara for asking other Ethiopians in Environmentally Sustainable the Diaspora to have a worthwhile Development: A Review of African Case discussion that might benefit our country of Studies, International Journal of origin. After all, most of us were Business Research. Vol. 10, No. 2, disassociated from our beloved country not 2010. by design but by default. Therefore, I hope Desta, A. (March 29, 2010). “Transitional Birara will not take a defensive stand. I Democratic Governance and Economic rather would like to salute him for his noble Development. The Ethiopian call for all Ethiopians to be architects of experience.” http:// their country‟s sustained development rather tigraionline.com/democratic_ than leaving Ethiopia to be a benevolent governance.html guardian of the Western-initiated

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Dulane, A. “Ethiopia: An Appealing Investment Destination in Africa” JAPAN SPOTLIGHT. September/October, 2010. Habisso, T. ( 2010). “ The Challenges of Implanting and Building Multi-Party Democracy in Multi-Ethnic Societies” http://aigaforum.com/article/ retrieved February 13, 2010. Khandker, S.R (April, 2003). Microfinance and Poverty: Evidence from Bangladesh. Grameen Dialogue, no. 54. Mersha, G. (12 August 2009). “Experts worry about negative consequences: International Agricultural Land Deals Award Ethiopian Virgin Lands of Foreign companies” Retrieved December 15, 2009, from www. Ethniomedia.com. Mohamad, M. (1994). Speech by Dr. Mohamad at Rethinking Human Rights, 5 December 1994 . cited in Lee H.P., Constitutional Values in a Turbulent Asia, 14th LAWASIA Biennial Conference, August 16-20, 1995, Beijing at p. 3. Sen, A. (2003). “Why Democracy is not the Same as Westernization: Democracy and Its Local Roots.” The New Republic, October 6, 2003. UNDP, (2002). Human Development Rep;ort 2002: Deepening Democracy in a Fragmented world. New York: Oxford University Press. Walta Information Center, “IMF hails Ethiopia‟s fast economic growth.” http:/www.waltainfo.com/index.php?opin ion =com. Retrieved September 14, 2010.

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