Lessons for Egypt from East Asia

Mustafa Kamel El-Sayed
Sunday 13 Sep 2015

Senior officials in Egypt have hard-set beliefs to explain developments around the world. No matter what core changes occur, their analytical formula remains the same and thus they do not reach new conclusions and repeat the same policies or revert to policies that were appropriate in the old days. 

For example, the USSR vanishes and is replaced by Russia, which is not governed by the Communist Party, is not fighting colonialism, and is in economic dire straits -- but we still deal with Russia as if it will shower us with modern weaponry, a nuclear plant, unmatched industrial technology, and deal with us on generous terms, which was the case with the USSR in the 1950s and 1960s.

Meanwhile, East Asia is a rising economy and social and political scholars are busy investigating the reasons behind its success. But instead of trying to learn from these countries, we condense our development crisis in lack of investments, as if that is not related in any way to us not giving priority to more economically viable projects, lack of coordination among officials about development decisions, and deteriorating human capital.

At a time when their own economies are also going through recession, our expectations are limited to them pouring large investments into our economy which suffers from low development rates – or deformed development even when it improves.

We lack the wisdom of the Chinese proverb: if you want to help a hungry man, don’t give him a fish. Teach him how to catch fish. Our officials go to China and its neighbours to ask for fish in the form of investments and products. We don’t want to learn how to fish.

What we have to learn from these countries and other first and second generation of Asian Tigers, is the reasons behind their successful development.

This is specifically what our officials do not pay attention to when they visit these countries. I will mention four reasons for the success of these countries: focus on education; strict application of planning to push balanced economic growth; high rates of domestic savings and investments; and ending migration to big cities.

Education

The leap in education in East Asian countries is a well-known story worldwide.

Secondary schools in Singapore and South Korea are the best in the world, and are certainly better than their peers in the US. Their advantage is the curricula for natural sciences, especially physics, and mathematics, as well as general knowledge.

Shanghai in China and Singapore are the top two in mathematics and sciences in the world, but China drops to third place in reading, where South Korea leads the world. The US places 31st in mathematics, 24th in sciences and 21st in reading. Egypt did not make the 50-country list compiled by the Organisation for Economic Cooperation and Development (OECD).

Two universities in Singapore rank in the top fifty around the world -- in 22nd and 39th place. China ranks 28th and 46th thanks to two universities in Hong Kong, and 47th with the University of Tsinghua. Peking University and Fudan university rank 57 and 71 respectively, and one university in South Korea comes in 31st place.

Although China is the largest country in the world in terms of population, Chinese universities do not suffer overcrowding of students because each university decides how many new students it will accept depending on capacity, and no one forces universities to exceed this figure.

Focusing on human capital is the secret to successful development in these countries, especially ones that are poor on natural resources such as Singapore and South Korea. The leaders of these countries realised their progress depends on making the best use of their human resources by educating and training them well.

Education here, however, has declined miserably. Mathematics and physics have hit rock bottom among Arab countries and the Middle East. We are behind Tunisia, Lebanon, Turkey and even Syria before its collapse into civil war. 

It is notable that President Abdel-Fattah El-Sisi did not take any education ministers (general, technical or higher) on his recent Asia tour, which confirms that understanding education is a key factor in the progress of these countries was not of importance during this trip.

Planning

The economies in these countries are open market economies, but this does not mean that they abandoned planning.

Strategic development in China relies on five-year plans, and China has already implemented 12 of them. Its transformation into a major world power is thanks to a development strategy that began in the 1970s with the aim of modernising four major sectors: agriculture, industry, science and technology, and the defence industry.

The world saw during the military parade in Beijing the progress and success of China in the last three sectors. This success was not the result of genius ideas by the Chinese president or the Korean.

It is all about knowledgeable, realistic and adaptable planning, and diligently moving from one phase to the next in industry and in the spirit of teamwork that these countries are famous for.

The plan is obligatory for all state institutions; the president, government and all institutions do not deviate from it. Of course, the method of planning is not centralised and strict in all sectors, but indicative planning uses market tools and incentives to attract private and foreign companies to follow the guidelines of the plan that the state has in place.

I was fortunate to visit some of these institutions in South Korea. Once again, notice that Minister of Planning Ashraf El-Arabi was not on the trip with President El-Sisi. Learning from planning methods in these countries and its role in their economic success was not an item on the agenda of the trip.

Domestic savings and investment

Southeast Asian countries have very high and impressive domestic savings and investment rates, between 33-52 percent of GDP.

In Egypt, recently, the figure retreated from 18 percent in 2010 to 13 percent in 2013.

Accordingly, in the first stages of development these countries were able to largely rely on domestic resources, despite discrepancies among these countries. For example, in the 1970s there was little foreign capital in China, and South Korea benefited from economic and military assistance from the US.

What enabled these countries to continue development was not primarily foreign investments, but how well they employed their domestic resources.

Foreign companies responded to open-door policies in these countries as a result of the success of domestic private companies, which later became global companies because of their highly skilled workforce.

This is also why these countries were able to quickly overcome the 1997 economic crisis in Southeast Asia, when some foreign investors even fled. Singapore and China were able to avoid the crisis altogether.

While the Minister of Investment went on the trip with the president, reports on the trip were primarily focused on attracting possible investor from Singapore, China and Indonesia to come to Egypt. Increasing savings levels in Egypt may be the responsibility of the government overall, but the minister directly in charge is the Minister of Finance, but he wasn’t on the trip either.

Confronting migration from rural to urban areas

Finally, most Southeast Asian countries have large populations, but by adopting balanced development policies that do not neglect agriculture or rural living conditions they largely succeeded in reducing, and sometimes ending, migration from rural areas to the cities.

Thus, populations in capitals did not explode, and even when that happened, no one thought of fleeing their historic capital and building another capital called the administrative or new capital, or any such thing.

Instead, they focused on improving conditions in these historic cities: Beijing, Seoul and Jakarta remain the capitals of China, South Korea and Indonesia, respectively. And we don’t hear anything about looking for alternative capitals. The rulers of China still live in the city, like their predecessors before them.

I am very dismayed that the proposal for a new administrative city in Egypt remains of interest to the president, and his aides are exploring how to attract Chinese companies to help build it.

Thus, we see that we have not really learnt anything from the phenomenal example of East Asian countries which transformed themselves into pioneers.

As I said in the beginning: our officials want the fish but do not want us to learn how to catch fish.

The writer is a professor of political science at Cairo University.

 

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