How to achieve economic freedom in developing countries

Full text of lecture delivered by Chief Obafemi Awolowo at the First Lecture in the UNIVERSITY OF LAGOS ANNUAL LECTURE SERIES on Friday, 15th March, 1968.

CONTINUED FROM LAST WEEK

The outstanding physical features of an underdeveloped country must, therefore, be stated. The most prominent feature is extreme poverty. In an underdeveloped country, both the natural and human resources are partly unutilised, partly underutilised, and partly misutilised. This non-utilisation, underutilisation and misutilisation of resources are wholly due to lack of adequate capital and technique, and to ignorance and poor health, leading to general inertia and want of the requisite enthusiasm on the part of the country’s labour force.

Such of the country’s natural and human resources as are partially utilised and developed are mainly foreign-trade orientated. This orientation is promoted and encouraged by foreign enterprises for their own benefits, and it automatically generates a system of dual economy in the underdeveloped country. A lot of unhealthy economic consequences follow. The resources which are devoted to the production of export crops are comparatively better developed than those which are devoted to the production of domestic goods. The indigenous enterprisers who are engaged in foreign trade are usually better off, economically and materially, than those of their fellow citizens who are engaged in domestic economic activities. This difference, in material rewards; induces the economically active sections of the community to ignore the cultivation of crops for domestic consumption in favour of export crops. The country itself becomes dependent on foreign trade for its economic sustenance. In order to pay comfortably for the primary produce imported by them, the foreign entrepreneurs deliberately stimulate in the more prosperous sections of the underdeveloped country an inordinate propensity to import. The resultant effects of this unwholesome foreign-trade orientation, in the underdeveloped country, are unfavourable terms of trade, unstable export markets, and a persistent adverse balance of payments.

It is common knowledge that any form of economic activity or development demands, in addition to natural and human resources, the existence of adequate capital as well as technological and managerial competence. All these, as we have hinted, are very insufficient in an underdeveloped country. Adequate capital is lacking because savings per capita are low, and savings per capita are low because technological and managerial knowledge is either nil or hopelessly deficient, and because the masses of the people are ignorant, and unhealthy, and hence economically unenthusiastic and undisciplined. In order to make up for these basic deficiencies, an underdeveloped country always strives to excel itself in creating a congenial and over-generous atmosphere for attracting foreign capital as well as technological and managerial personnel. In this process, it makes itself more economically subservient to foreign interests.

Furthermore, the gap between the rich and the poor is wider in an underdeveloped than in a developed country. The reason for this is not far to seek. The rich, in an underdeveloped country, are invariably the professionals, and those engaged in foreign-trade-oriented activities—exporting agricultural products and importing finished articles—whilst the poor are those engaged in peasant and subsistence farming, and in unskilled employment.

If we apply the mathematical yardstick which we previously mentioned, to all the countries of the world, we will see that underdeveloped countries are to be found in Africa, Asia and Latin America, and that they all have one thing in common: the badge or stigma of antecedent colonial status.

There is one other feature which is common to all underdeveloped countries. As a result of the conquest of space and time, brought about by highly developed systems of communications and information media, all underdeveloped countries, without exception, are exposed to the demonstration effects of the consumption patterns of the developed countries. For psychological reasons, the underdeveloped countries unreflecting imitate these consumption patterns – placing premium on ostentations, status symbols and the like – with disastrous distortions to their economies, and disturbing and unsettling effects on their social structure and political progress, generally.

In view of all that has been said thus far on the point, AN UNDERDEVELOPED COUNTRY can be defined as ONE WHOSE NATURAL AND HUMAN RESOURCES ARE PARTLY UNUTILISED, PARTLY UNDERUTILISED, AND PARTLY MISUTILISED, AND IN WHICH THERE IS A GROSS DEFICIENCY IN THE QUALITY OF THE THREE PRODUCTIVE AGENTS OF LABOUR, CAPITAL AND ORGANISATION.

Two implied but important assumptions need to be explained.

Firstly, it has been assumed that every underdeveloped country has enough of natural and human resources for its purposes. It is true that some countries are richer in these things than others. But it is also true that, granting a rational exploitation, mobilisation and deployment of these resources, each country has enough of them to make it carry on a happy and economically free existence. Instances are not wanting.

Israel has shown that any kind of land or natural resources can be made productive, as long as the other productive agents, are sufficiently qualitative and optimally quantitative. What the Israeli experience has proved beyond any dispute is this: the only difference between a country which is rich and the one which is poor in natural resources, is that the same dose of the other productive agents will produce better results when applied to the one than when applied to the other.

CONTINUES NEXT WEEK

READ ALSO: Tinubu defends economic reforms