Yonas Biru, PhD*

In a Bloomberg Opinion Piece titled “Ethiopia Already Is the ‘China of Africa,’” Professor Tyler Cowen, the author of over 20 critically acclaimed economic books, argued Ethiopia is destined to take off if proper policies are put in place.

He took note that “China and Ethiopia feel secure about their pasts and have a definite vision for their futures.” Comparing Ethiopia with Iran and China, he went on to state: “Like many Iranians, Ethiopians think of themselves as a civilization and not just a country. And, as in China, they hold an ideological belief that their country is destined to be great again.”

The problem is that Ethiopia’s ethos of being destined for greatness and the trajectory of its economic destiny are diverging not converging. This is because the spirit of the nation’s greatness is emasculated by the drag of its culture. Its conservative politicians and intellectuals see it fit to inoculate its traditions from cultural renewal that economic progress requires. For them cultural preservation takes precedence over economic progression. These are culturally mummified intellectuals sleepwalking in the 21st century.

There are no two ways about it. Economic progress goes hand in hand with cultural transformation. When modern banks and insurances flourish in Ethiopia, እቁብ and እድር will gradually give way to new traditions. As access to modern medicine increases, the nation’s dependence on traditional therapies and spiritual healing such as ጸበል will decline.

In the meantime, with growing globalization, Ethiopia’s culture will seep into other cultures. What is often called Western culture is nothing but a fusion of trifecta of cultures from “Zen Buddhism to Ethiopian cuisine,” as Francis Fukuyama rightly noted. Kitfo is increasingly encroaching on the sensibilities of Western taste buds as teff is fast becoming the superfood choice of fitness enthusiasts around the world. Yirgacheffe coffee has become the brand that most Western coffee connoisseurs swear by. This is cultural globalization at work.

Culture becomes a problem only when those who are obsessed by who they have been stand in the way of who they can become. This is not to say they need to give up who they have been for who they can become. For Ethiopia, what is important is using its past glory as an inspiration and

adopting to the social and cultural norms of the 21st century. There is no economic progress without it.

Where Potential Meets Practice & Dreams Create Realities, and Where They Do Not

Ethiopia, Iran, China, and Japan are birthplaces of old civilizations. Traditionally, they saw themselves not as nation-states, or even as empires, but as civilizations and cultures. Historically, they treated the international community with suspicion mixed with a toxic cocktail of unregulated arrogance and ignorance. Two of the most significant negative consequences of such a belief system and culture is becoming isolated and reclusive, and poor international relations.

To their benefit, Japan and China ultimately found it possible to reform their mindset to learn from, and catch up with, the West. Before their transformative reforms, both Japan and China achieved significant progress but could not push their nations over the post-agrarian and pre-industrial hump. Forced by circumstances, they realized it was in their best interest to adopt Western technological innovations, advanced mode of production, and institutional culture.

The Japanese government characterized its transformative reform as the harmonization of “Japanese spirit and Western techniques." The Chinese baptized their adopted capitalist system as “Capitalism with Chinese Characteristics.” Semantics aside, capitalism with Chinese characteristics is capitalism at its core, with a colorful dragon used as a decorative façade. As Karl Marx has rightly noted, a society’s culture is embedded in its economic mode of production.

In contrast, Ethiopia’s, and Iran’s tendencies to see foreigners either as political adversaries or vampires of culture have prohibited them from capitalizing on global opportunities. According to the World Bank, in 1960, Iran’s GDP per capita was more than twice of that of China. In 2020, it was a quarter of it. Compared to Japan, Iran’s GDP per capita in 1960 was 60 percent less. In 2020, it was 93 percent less. The World Bank does not have data for Ethiopia prior to 1982. In 2020, the GDP per capita figures for Ethiopia and Iran, respectively, were $936 and $2,757. The corresponding figures for China and Japan, respectively, were $10,409 and $39,918.

The Japanese Experience

During the Tokugawa Shogunate era (1603 to 1867), Japan was ruled under a traditional feudal system. The term shogunate (derived from Shogun) means a hereditary military dictatorship regime.

Traditionally, the shogun answered to the emperor, but the Tokugawa Shogunate reduced the emperor to a symbolic figure, with all levers of government authority usurped from it.

A signature policy of Tokugawa was preserving the Japanese culture and creating an internally self-sufficient economy. To preserve Neo-Confucianism as Japan’s cultural identity and official guiding philosophy of its government, Tokugawa institutionalized an isolationist policy, cutting off the Japanese society from Western influence. As part of this edict, the government banned Christianity. Furthermore, it forbade trade with Western nations and prohibited private travels to Europe, America and/or Australia.

Though the Tokugawa era led to 250 years of continued peace and notable economic progress, Japan fell behind in technological development, putting its budding industrial sector and military establishment at a significant disadvantage. In the mid 19th century, external threats from the US and Europe and internal conflicts between political power centers weakened the Tokugawa government. In 1868, a coup d’état abruptly brought the regime to an end. The leaders of the coup were mostly young samurai from within the feudal class.

The coup makers dismantled the feudal system, abolished all feudal class privileges, and throned Emperor Meiji as the head of imperial Japan. But required him to govern the nation under the advisement of elder statesmen (genro) who held the actual power to run the state.

The Meiji government ushered in a drastic departure from the Tokugawa era in fundamental ways.

Japan adopted a parliamentary system under a constitution that emulated the then Western powers.

It warmly embraced Western culture and influence both symbolically and substantively.

Symbolically, high-level Japanese officials were required to abandon silk kimono and began to wear Western-style suits and dresses. Men had to cut off their topknots to sport European hairstyle. The Emperor led by example, wearing a French-style military uniform and European haircut when he presented the Meiji Constitution (Japan’s first Constitution) to the Japanese people.

In a 1999 article, Professor Shunsuke Sumikawa notes “After one or two decades ofintensive westernization, a revival of conservative and nationalistic feelings took place: principles of Confucianism and Shinto including the worship of the emperor were increasingly emphasized and indoctrinated at the educational institutions.”

On the substantive side, the Meiji creed of “Civilization and Enlightenment” characterized Japan’s aspirations to be a part of the Western civilization and European enlightenment. Large Japanese delegations were sent to the US and Europe for as long as 18-month to observe and study the public and private institutions and the cultural tenets of Western nations. Upon his return from such a trip, Japan's modern enlightenment thinker Yukichi Fukuzawa advocated “the Japanese nation should break with its Asian neighbors and join the ranks of European countries.” The phrase Japan “left Asia and entered Europe” became part of the restoration’s lexicon.

In summary, the Meiji restoration period “created a British-style navy, French-style bureaucracy and established a Prussian-style constitution.” During this period, Japan witnessed a time not only of scientific, political, and economic innovation, but also of cultural rejuvenation.

Japan motivated many countries to use its restoration blueprint as an inspiration, if not as a template to draw insights and lessons. As Professor Abu Girma rightly noted, “ሳይሰምር ቀረ እንጂ ጃፓናይዘር የሚባል ንቅናቄ ኢትዮጵያ የጃፓንን ፈር ለመከተል ትችል ዘንድ ደፋ ቀና ተብሎ ነበር።” This was a movement that peaked in late 1920s and early 1930s.

Deng Xiaoping, who is widely praised as the architect of modern China, is another leader who “marveled at the sophistication and modernity Japan had achieved” in a short order. Within months after he came to power, he undertook two educational pilgrimages to Japan, first in October 1978 and again in February 1979 to see the miracle of capitalism in action.

The Case of China

Mao Zedong was China’s supreme communist leader until his death in 1976. His two defining policies were “The Great Leap Forward” (1958-1962) and “Cultural Revolution” (1966-1976). The Great Leap Forward aimed at making China self-sufficient in its endeavor to transform itself from a predominantly agrarian economy to an industrial powerhouse. The policy involved collectivizing the agricultural sector and extracting rent from it to finance the industrial sector.

The policy met a remarkable success in its initial phase but in the end run out of steam and ended up with a disaster of epic proportions. The peasantry was subjected to starvation. As noted in South China Morning Post, “at least 45 million people died unnecessary deaths.”

Before China fully recovered, Mao launched a two-pronged Cultural Revolution (1966-1976). On the first front, those who were seen traditionalist and followers of an organized religion were subjected

to the same level of purging and prosecution. At its core, the Cultural Revolution was anti-Confucianism, targeting China’s 2,500 years old religious guiding principle. Mao considered Confucianism the root cause of China’s backwardness.

On the second front, the revolution was aimed at freeing China from “capitalist-roaders” and rooting out the “West’s bourgeois culture” from the Chinese society. Those who were suspected of harboring pro West sentiments were purged and sent to labor camps. The policy went as far as sanctioning listening to Beethoven and reading William Shakespeare as a political crime. Once again, China went through a tumultuous and catastrophic period. As many as three million people perished because of the Cultural Revolution.

In total, an estimated 48 million people died under the Great Leap Forward and Cultural Revolution experiments, accounting for over 5 percent of China’s population at the time.

Mao’s death on September 9, 1976, opened an opportunity to end his era with mixed results. On the one hand, it demolished China’s backward traditions and laid a foundation for industrialization. On the other hand, it left a decimated agricultural sector and proved Mao’s self-sufficiency was insufficient to build an industrialized nation.

His successor, Deng Xiaoping acknowledged that at the root of China’s failure "was not merely a loss of faith in communism but a loss of faith in Chinese culture and tradition as well."

Under Deng’s leadership, China ushered in a two-pronged economic development strategy: "Reform and Opening-up." Both components were bold in their call for a paradigm shift. The reform component required bidding farewell to the Mao-era mindset of internal self-reliance and the communal system. The opening-up component promoted joining the global economic system.

Deng was aware that the global economic order was the exclusive domain of capitalism. His visits to Japan, Singapore and other capitalist nations including the US helped him to see the economic miracle of capitalism. Deng made a strategic choice, stating: "As we look back, we find that all of those countries that were with the United States have been rich, whereas all of those against the United States have remained poor. We shall be with the United States."

Since 1978, China has been sending tens of thousands of students and communist party cadres to Singapore and other capitalist countries. Like Japan, the primary objectives were to expose them to

the success of capitalist nations, acquire knowledge in business and technology, and break free from old mindsets that hinder industrialization.

Deng fully embraced the capitalist system with all its vices, including income inequality. In the post reform era, China’s income inequality rapidly worsened, as measured by the Gini Coefficient Index. The index ranges from 0 (perfect equality) to 1 (maximal inequality). The rule of thumb is that a Gini index of 0.5 or higher signifies sever inequality.

At some point, Chin’s index was as high as 0.55. Recent World Bank data shows it dropped to 0.39, in 2017. It was still worse than the corresponding indexes for European countries: Italy (0.36), United Kingdom (0.35), France (0.32), Germany (0.31), Denmark (0.29), Netherlands (0.28), and Norway (0.27). The US was the only developed country with slightly higher Gini index (0.41) than China.

In a 1992 article titled "Domestic Factors of Chinese Foreign Policy: From Vertical to Horizontal Authoritarianism," Quansheng Zhao took note of an important development in China’s foreign policy formation process. In a significant departure from Mao’s one-man authoritative rule, Deng relied on deliberative processes. China’s “epistemic community" – a network of local and diaspora professionals helped shape the government’s policy debate.

For all practical purposes, China became an integral part of the global economy. Its trade and investment reforms led to a surge in foreign direct investment (FDI). See graph below.

Table 1: China’s GDP Per Capita in 2015 Constant US Dollars (1960-2020)

GDP Per Capita in 2015 Constant US Dollars

The graph shows three tipping points. First was in 1980. This was a watershed point that began four years after Mao’s death that marked the end of his ideology of self-sufficiency-driven industrialization and the adoption of West-inspired and flavored development model.

The second tipping point was 1990. This was when China’s trade and investment reforms started to pay off in terms of attracting FDI. Incentives embedded in trade and market-access reforms led to rapid productivity gains and set off an explosive economic transformation.

The third tipping point in 2004 came after the official announcement of China’s “go global” strategy in 2000 and subsequent measures to support it. The initiative provided a “prelude to all-around integration into the global economy.” This allowed China to keep pace with fast evolving global economic order and align with technological trends and innovations in institutional and multinational corporate cultures. Over a span of 40 years, China’s GDP grew at an average of nearly 10 percent a year, lifting more than 800 million Chinese out of poverty.

Currently, China is an upper-middle-income country in terms of GDP per capita. It aims to become “a medium-level developed country by 2035”. The current premier of China, Xi Jinping, aims to to make China “a global superpower by 2050”.

In the meantime, having defeated structural poverty and built a strong economy, China has started to crack down on Western cultural influence to revive its traditional culture. Its critics are calling it “a Great Leap Backward” and “Cultural Revolution 2.0.”

What Went Wrong with Iran?

Iran is the fifth resource rich country in the world, following Russia, the US, Saudi, and Canada. China is sixth. It is blessed not only with oil and gas, but also gold, silver, copper, crude iron phosphate, and uranium that is widely used to fuel nuclear power plants for nuclear fission. Its most valuable natural resource, however, is its intellectual knowledge base.

Despite its enormous natural resources and intellectual pedigree, Iran’s GDP per capita is only 24 percent of that of Malaysia, 29 percent of Turkey, 63 percent of Jordan, 64 percent of Indonesia, 70 percent of Tunisia, and 71 percent of Egypt. The question is why? Many people think it is because of Western economic sanction related to its nuclear program. Though the US led sanctions, particularly those after 2010, are contributing factors, Iran’s economic woes precede and supersede these sanctions.

Iran is a country of contradictions. Despite international economic sanctions, its technological progress is remarkable. In terms of producing peer reviewed scientific publications it is the fastest in the world, from 2008 to 2018. In terms of volume of production, it is amongst the top 15 nations. The top 5, in the order of their ranking, are China, the US, India, Germany, and Japan.

Iran’s impressive growth in science is attributable partly to its collaboration with China. But the most important factor is its Constitution that gives priority to science and modern weaponry to protect the Islamic Revolution from the West. Chapter 1, Article 1 of the Constitution dictates “The form of government of Iran is that of an Islamic Republic.” Article 2 affirms an obligation to “ensure the uninterrupted process of the revolution of Islam,” and Iran’s “national independence” by securing resources to advance science.

Iran’s problem is with its economy. One of my constitutional economics professors used to say, “Show me your constitution and I will tell you about your prospect for development.” In as much as Iran’s Constitution is the source of the nation’s development in science, it is the culprit for its economic despairs.

The preamble of the Constitution targets the US (whom it calls leader of the “White Revolution” and “world imperialism”) as the enemy of the Islamic Revolution. It rejects the West’s economic principles, stating it promotes “centralization and the accumulation of wealth and the search for profit” as a “materialistic school of thought” that leads to “destruction, corruption and decay.”

Article 43 of the Constitution lays out the nation’s economic principles in “the provision of basic necessities for all citizens: housing, food, clothing, hygiene, medical treatment, education, and the necessary facilities for the establishment of a family.” To achieve these goals, Article 44 stipulates Iran’s economic policy is a command economy. This involved nationalizing private corporations.

In 1978, China rejected Marxist economic principles and embraced the capitalist ideology. Iran, on the other hand, moved in the opposite direction. Its objective to create an independent and self-sufficient economy coupled with its anti-capitalist policy made it difficult to integrate itself with the global economic order.

Let us take a bird’s eye view of Iran’s economic history. Between 1960 and 1976, Iran witnessed considerable economic progress under Emperor Mohammad Reza Shah. According to the World Bank, in 1960, Iran’s GDP percapita was $2,293. By 1976, it was $7,647. The economy started to drop dramatically in 1976 as the Revolution led by an exiled Islamic clergy, Ayatollah Khomeini,

started to get traction. In January 1979, Khomeini took the reign of power. In 2020, its GDP per capita was down to $5,333, about 30 percent below the 1976 level. All GDP per capita figures are adjusted for inflation.

What caused its economic decline? Up on taking power, the Islamic government declared the new regime will be governed by Sharia. Any opposition to it would mean a "a revolt against God, and revolt against God is Blasphemy". Traditionally, punishment for blasphemy is death. This triggered capital flight estimated to reach $40 billion and led to a mass exodus of intellectuals, entrepreneurs, technocrats, experienced diplomats and thought leaders. Khomeini’s reaction was: “They are pro-Western civilization, let them go.
https://zehabesha.com/cultural-enigma-in-development-dynamics-ethiopia-iran-vs-china-japan/