Economics: Development and the role of Future Somali State

[Coloow]

Addunyo

 

Kudos=praise/fame given for achievment(in this case your bullseye analysis on the somali maligma).

 

Somalia and many third world countries have the unfortunate task of imitating exogenous modes of governance/economic system/etc while abandoning their own.

 

I am not that hopefull that I will live to see a vibrant somalia. I lost hope when I saw somalis who left somalis b4 the civil war- and ppl who grew up outside somalia having the same kind of mindset as the patients of war,hatred and tribalism. It seems that ( I am generalising) that there are no good somalis standing.

 

Work, respect for rule of law/traditions and all other positive things are alien to the way somalis think. We are so much sold to the scientific socialism-ala somali way and expect to be spoon fed.

 

Our academics, clergy and virtually everyone have a short term perspective on every kind of development.

 

The future state of somalia- and its economic development (the thrust of this thread by Jaalle Isseh) rests on us (the living) but everywhere I turn, every somali I meet is a victim of "show me easy money". Soon we shall be a nation of "mashaqeystayaal" "arm chair politicians" etc.

 

The economic development of future state of somalia should based on our historical traditions that have been abandoned; the right to property; mechanisms to offset abuses; hard work etc

 

 

I have to rush because I have a flight to catch...

 

 

p.s There was a fantastic thread by Isseh with the title of "lets abandon pastoralism and embrace farming" have a look at that thread

[Paragon]

What role will the state play?

 

Well my friends (Odey, Aduunyo, Adam and Toure ), lately, whenever I start to think about our country’s current statelessness and its future economics, the troubling questions that have plagued my mind were these: what happens to the structure and performance of our economy in post-statelessness syndrome? Whatever authority that fills the vacuum, how befitting would it be to achieve political stability that paves the way for economic prosperity? But I am yet to come up with good answers to this question.

 

Having noted that, however, I have no shortage of optimism, in anticipating that an acceptable and effective state of some sort will rise from the ashes. That is, once the country has been liberated from occupation. I know my projection might seem to aim too far into the future, when thinking about what the role of the state should be, when in fact, judging from how things are, we have so many proverbial rivers to cross. But, it is not too bad to look into the future positively, and plan for it. Thus, it is with interest in planning for a better future economy that I have development indulgence for this particular topic.

 

To start with the basics first; for a state to play a crucial and supportive role in the successful growth and the development of an economy; it must at best be able to guarantee five, or give or two four or three, nominally accepted pre-requites. These five pre-requisites entail that in a given development project, the state must ensure there is in place:

1.Political and economic stability and security;

2.Clear unambiguous regulations;

3.Reasonable tax rates that are equitably enforced;

4.Access to finance and infrastructure; and

5.An appropriately skilled workforce.

But let me digress for a bit, if I may, and deposit herein some pointers that I think we would have to discuss on a later date. That is, after we have gone past the question relating to the role of the future state in the economy. In our current situation, we can only hope that after the above pre-requisites are effectively met, we would somehow have to focus our attention to maintaining a self-sustaining structural economic regime, which is both practical and based on currently existing economic sectors that can support its long-term endurance.

 

Obviously, at that future stage, what would be most salient would not to leave the market economy to what Adam Smith called ‘its invisible hand’, but to device directive economic measures (policies) that enables a future state to cater for its growth, by allocating the necessary funds for enhanced growth performance. In that context, therefore, were I to be there alive, I would have suggested three ways in which funds could be generated without harming the economy itself. I would have suggested there to be three types of funds:

 

(A) Remittances Percentage Accruement Funds, which would be funds accumulated, through policy formulation, making remittances from abroad taxable by varying percentages in accordance with the varying cash received by recipients in home soil. This policy formulation should calculate the amount of remittance dollars, against the considered needs of the receiver by setting up tax regime categories. For example, if a family of nine were receiving, say, two hundred remittance dollars a month, the percentage rate of their payable tax would then be , say, 1 percent per hundred dollars, as opposed to a family of three members that receives two hundred dollars, whose payable tax percentage would be, say, 3 percent per hundred dollars.

 

I know it would be difficult to impose taxation regimes on our citizens, keeping in mind their almost natural distrust of states and their taxation policies, but I believe, so long as the funds accrued are seen clearly to be making a great deal of difference - to the welfare and material quality of the citizens’ lives - that eventually state tax regimes could be made successfully operational. Now, having collected these monies, again, I would have suggested that they are used for essential projects such as:

 

1. Basic Infrastructure Development Scheme

2. Vital Know-how and Skill Transfer Scheme

3. National Labour force Training Scheme

 

(B) Livestock Trade Percentage Accruement Funds, which would be funds generated from the imposition of circumstance-oriented (for example, determining the size and profit of livestock exports), percentage-focused tax regimes on the export of livestock, which is clearly the biggest sector of our economy. Again, I would have suggested, whence funds are tax funds were procured, that these monies should be allocated to projects such as:

 

1.Pastoralist Welfare Development Scheme

2.Efficient Animal Husbandry Exports Scheme

3.Water Supply and Drought Monitoring Scheme

 

© Agricultural Trade Percentage Accruement Funds, which would generally be funds similarly collected by using the above-mentioned percentage-focused tax regimes, for the purpose of projects such as:

 

1.Food and Nutrition Sustainability Scheme

2.Soil Fertility and Ecological Protection Scheme

3.Agricultural systems education scheme

 

The above are what I would call a ‘skeleton’ proposition that would require a great deal of fleshing up. I believe we would need to think of similar ideas for post-stateless Somali economy, so that we can get a sort of understanding of lies ahead. I am so sure that any good statesman that finds him/herself at the helm of Somalia in the future would have a lot to grabble with. So far prospective leaders and concerned countrymen and women are rightly immersed in getting past this stage of statelessness. However, some day, hopefully not so far into the future, the leadership of future Somalia would have to face the daunting task of restructuring and stabilizing the current run-away economic reality in our country.

 

Brothers, I haven’t yet found enough time to look at your contributions on a point by point basis so as to reply to them, however, I am optimistic that I will do so soon Insha-Allah. All I can say to you now is that I have read your posts and have really appreciated what you had to say on the state of things. Thank you.

[stoit]

odey

 

saxiib thank you and safar salaama.

 

I posted a short comment on that very interesting topic and meant to post a more detailed one insha ALLAH but going into it revealed to me that that i needed alot more data than i had.

 

I also got carried away and thought that i could even do better by producing three dimentional images of realistic projections of what can be achieved but it all got too large and data is not very easy to come by especially to me (am not computer literate as most of these youngsters than can digup all sorts of imformation)

 

Anyway i thought if i could get my hands on data about the landscape ,rainfal parterns ,tupes of soil and types of crops that can be grown in the different parts of somalia and groundwater supplies and so forth ,that i could actually produce a likely scenario in a 3d short film (i believe there are softwares that can do that and i am still looking into it, there are good videos on youtube as well that show how GIS planning workd ) that will lead to efficient use of our resourses.

 

In short it will probably take me a very long time but i think i'll try .

[Chimera]

High quality post brother Isseh!

[NASSIR]

Isseh, I like the Remittance part of taxation and most of your economic policy formulation. You know private sector is highly credited as being instrumental in local levels of development in many parts of Somalia, but it is well known that they can't regulate or correct market failures such as the control of the money supply, property rights, building infrastructure, whereas regulatory devises of a strong government can do these but also carries with it the risk of government failure like corruption, strict regulation, and excessive bureaucracy.

 

I believe we can strengthen our steadily growing private sector by ensuring minimal government interferance, for instance, India has this economic system where it empowers her private sector and greatly subsidizes its operation , and this helps the country's overall GDP. By contrast, China's economy is dominated by FDI mostly owned by European and American corporations. It is highly possible that India will soon surpases China's growth.

[Coloow]

I like what I am reading but this sounds an enigma given the problems of somalia and somalis.

 

Caamir, eebowgeey; The chinese economy has surpassed that of India. India has alot of catching up to do even though it was a capitalist based economy. What is driving the chinese economy is as you rightly said FDI- but also investments in infrastructure and the multiplier effects of government spending, FDI etc.

 

Every year according to estimates there are about 4 million chinese who graduate (about 2m from engineering universities).

 

The Indian economy has some institutional problems. It will never experience growth as China is doing. It is based on ICT (software)- and that is like laying all your eggs in one basket.

 

As to somalis and economic development what we need is institutional building. In general (and that is perhaps true for every society) there is a reluctance on the part of somalis to pay taxes (I undertsnd those who live under dictatorship in Somalia) but there is no justification for somali businesses in Canada, UK and Europe.

 

We need to change our mindset from being paid by the government- somalis are generally fond of earning easy money- mostly through corruptive practices.

 

One of the major source of income for somalis in west nations is NGOs (call it Jaaliyad if u wish)- and that says alot.

 

My humble opinion is that we need to go back to our roots (camel herding, farming and leave doing businesses to "our minorities). We should never strive to have a government. Experiences has shown that a government is an evil thing.

[Yaabka-Yaabkiis]

^^^^What?

 

" The Indian economy has some institutional problems. It will never experience growth as China is doing. It is based on ICT (software)- and that is like laying all your eggs in one basket"

 

As americans good at Service industry as well as technology industry, Arabs for crude oil, Malaysian for Palm oil, INDIA IS GOOD AT SOFTWARE INDUSTRY, i don't see any problem for a country to have one leading competative edge..China is good at attracting FDI as well as they are followers-they simply imitate any product and come up with new one, what i see between india and china is that chine is more strategist then india; they are also entrepreneurs. I dont think they have institutional problems-they are aslo competing in other industries,

 

In the case of somalia, i don't know what to say; all i can say is if we get peace; there will be high chance of rapid ecenomic development as somalis are born entrepreneurs.

 

Yaabka-Yaabkiis.

[Coloow]

Yaabka,

 

The Indians have had more than 50 years to get their economy right- and it is only with the IT boom that it is doing well. By any measurement, Indian is still a poor country (read uneven) although there has been substantial growth in the last 7-10 years. This growth was also seen in almost every country on earth ( African nations, like Uganda, Kenya and north Africa have had a GDP growth rate that exceeds that of india!!!).

 

There are indeed several institutional defiencies including the social cohesion, class etc. There are still some restrictions on FDI; a huge government, poverty etc

 

An economy solely based on riping ICT soft ware is bound to crush. This is not a tradeble product that is value added!!!!!

 

On the contrary the chinese economy is based on many spheres. It is a natural resourse based economy, consumerism and very hetrogenous.

 

 

ICT soft ware based economy should serve other sectors.

[Yaabka-Yaabkiis]

Oday,

 

ICT is lucrative industry, i dont know why u consider it as value added?

 

isn't india good at other industries: Texttile, they are have alot world-wide exports--agree one with ya 'social cohesion' they should overcome that..

"On the contrary the chinese economy is based on many spheres. It is a natural resourse based economy, consumerism and very hetrogenous"

They entrepreneurs, and they once utilized the opportunity of FDI.

What i am talking about is; they are not different in terms of institutional building( they are places in chine where poverty is more severe then in Africa.)

[Coloow]

Yaabka,

The chinese economy was a closed one less than 10 years ago. The Indian economy was always entrepreneurial. Almost every stylised facts show that the chinese economy is what is driving global demand. The Indian economy is not growing at the same rate.

 

ICT based economy is a knowledge economy that benefits a few. In addition ICT soft ware is nothing if does not suppport other industries.

 

You have perhaps Silicon valley in mind when you are claiming ICT soft ware is a lever of development. The reason why ICT applications have favoured the Californian economy (by the way ICT is not where most ppl are employed) is because of customers in other sectors (for instance the defence industry).

 

Indeed India has other industries. As other sectors, this industry is protected. It is still difficult to invest in India.

 

I have recently been to china (and I have also visited India)and there are striking differences. Chinese entrepreneurs are in every part of the economy. Universities are filled to teeth.

 

Chinese exports are flooding the globe. The chinese companies compete globally. They have R&D facilities in every part of the world. The chinese have the ability to ensure the crash of the US economy if they wanted.

 

What about global competitiveness of India. Indeed in ICT software they are doing well but that alone will ensure prosperity.

 

 

A few weeks ago, the economist addressed this issue!!!

[Yaabka-Yaabkiis]

Bro Oday,

 

 

the indiaN economy is not entrepreneurial economy nor chinese one.

 

When we talk about economy there are three level of economies: Base-economy(Africa, Arab countries economy are more based on Base-economy as well as some asia countries), knowledge-economy( developt asians such Singapore, .. chine and india not in large-part but they are practicing) , and now creativity-economy which usa, japan and some western countries are practicing nowdays( offcourse one would need to google them to understand what differentiates one country to another)

 

Lets differenciate what makes chine more developt then india.

 

In my opinion chine's competative edge is more based FDI, cheap product, cheap technology WITH no quality; that what make them to have surplus exports; but think if all those foriegn multinationals move to african countries that given cheap labor of africa come up with cheap product, cheap technology with quality that competes agains china(remember, china are not fast-to-market-entrepreneurs, they followers), what will happen to chine though they are not good at in any particular area? that is if america want to crash china economy, did you say "The chinese have the ability to ensure the crash of the US economy if they wanted." How sxb?

 

 

India is good at ICT which is more broader then Software only but currently lets say India is good at Softwares(knowldge economy) what if they stop their Brain Drains, compete in other industriesas as well as chine 'IMITATE' , attract FDI more they do now--do you not think India will bypass China?

 

I am talking the idea of: To be good at one area and boost/compete in others which china lacks is initiatives of healthy-economic-development, i don't see chine's future-well-being-economic development if USA take steps against chine's surplus exports....

[Paragon]

Good going guys, a great read. Insha-Allah will join in later.

[Coloow]

Yaabka,

Bro, Richard Florida has written on the subject of the creative economy where he argues that Tolerance, Technology and Talent have characterised the economies of those countries that have fared well. Guess what? According to him the USA is losing its position. This stance has been condemned!! Í will inform you when an article submitted in this regard is published.

 

The so called knowledge economy thesis is also under scrutiny. It assumes that knowledge is a lever of competition. Wasn't it so always? argues the critics!

 

I am not quite sure of what you mean base economy. Do you mean natural resource based economy??? If this what you mean, then you may have read about the resource curse paradigm (ISSEH is good at this). The problem with the economies of African economies (generalising) has been argued to be based on resource exploitation; where there are no value chains. Australian economy is also the same.

 

As a consequence of the chinese economic boom, the so called resource curse (ala Sachs and Warner, Auty) etc appear not to hold!!

 

I think we need to define what we mean by entrepreneurial; I often opt to define it using Joseph Schumpeter (when he argued that capitalism will fail if it does not renew itself), Those who bring innovations, new combinations; incremental to the market place;

On the other hand, many assume that entrepreneurialism is about small business formation.

 

India has been a capitalist society where the incentive to innovate were high. There was no government restrictions on ownership, Chinese economy was a communist one.

 

The irony is that the once closed economy of China is what is driving the global economy!

 

The notion that china makes inferior products; competes in the lower end is a fallacy. In fact chinese firms are more innovative than many other firms around the globe.

 

if you think that ICT soft ware is high tech while every other is low-tech then we have a problem.

 

To sum, the chinese economy is defying every word in economic textbooks. It wouldn't surprise me if chines becomes the lingua franca of the world.

 

Ps. A few years back there was this american who wrote a book entitled something like "The myth of the chinese growth". Today this book has become the laughing stock of the academic community.

[Chimera]

Interesting article (especially the part about the 'SoSh')

[Yaabka-Yaabkiis]

The notion that china makes inferior products; competes in the lower end is a fallacy. In fact chinese firms are more innovative than many other firms around the globe

I did not say chinese Firms are not annovotive firms , they are followers, do IMITATE.

 

does China not compete in the lower end products?

I think we need to define what we mean by entrepreneurial; I often opt to define it using Joseph Schumpeter (when he argued that capitalism will fail if it does not renew itself), Those who bring innovations, new combinations; incremental to the market place;

On the other hand, many assume that entrepreneurialism is about small business formation

Bro, In my life i did not head "entrepreneurialism is about small business formation" entrepreneurialism is what makes one country to be ahead of another, did you not ever hear 'America was built by Entreprenuers'? simply it is what Joseph Schumpeter said.

 

if you think that ICT soft ware is high tech while every other is low-tech then we have a problem.

Not ICT software, ICT is not limited to softwares section bro, it is a broader industry.(Information communication technology).

 

Lastly, Are you saying a country should have competative edge/advantage in every industry in order to have economy boom? i assume that is what our argues all about?

 

P S, are you economist by academy, i mean those idealistic guys living in assumptions .