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Lessons we can learn from the Asian tigers for the Big Four agenda

COMMENTARY
By Benard Ayieko | March 1st 2018
President Uhuru's big four agenda focuses on manufacturing, health care, housing and food security as his legacy projects [File, Standard]

Asian tigers are the highly developed economies of Hong Kong, Singapore, South Korea and Taiwan. The meteoric rise of these economies has led to overarching comparisons, contrasts and calls for African countries to learn from the Asian tigers’ experience to achieve meaningful and sustainable growth and development.

The choice of the “Big Four” areas of manufacturing, health care, housing and food security by President as his legacy projects is viewed by many as a strategy to propel the nation to a double digit growth envisaged in the Vision 2030.

Endemic problems

The success of the “Big Four” plan will have a greater impact on the livelihoods of the majority poor help in solving the endemic problems of poverty, ignorance and disease.

The plan is expected to increase low-cost houses by over 500,000 units, offer affordable health care, ensure food security and expand the manufacturing sector.

It’s well documented that the rise of Asian tigers hinged greatly on programmes in manufacturing, health, agriculture, infrastructure, energy and housing sectors. As we embark on implementing the “Big Four” plan, one would ask; what lessons can we learn from the Asian tigers?

First, on manufacturing, Asian tigers formulated flexible laws on labour, taxation and environment whose major effect was to expand industrial operations and increase output from companies.

This led to an increase in goods for both local and foreign markets. Those with smaller domestic markets like Taiwan moved swiftly to seek free market access for their manufactured products abroad.

Their strategy

They adopted an outward-oriented strategy and export promotion policies that went beyond their relatively smaller domestic market size at the time.

With increased industrial output being exported, these countries were able to boost their foreign exchange and reduce balance of payments deficits.

That is why today, Samsung – a South Korean company – is one of the largest consumer electronics producer in the world.

Second, on housing, government intervention in Singapore achieved its objective of providing low-cost houses to the majority Singaporeans.

Government intervention took a two-pronged approach involving both construction and provision of finished units to suppliers of land.

On the contrary, in South Korea, the government intervened by providing subsidised mortgage loans to low income groups while in Taiwan, subsidized low-interest mortgage loans were provided through a centralised government-run housing fund which was loaded to the home purchasers at occupation.

The Singaporean model was more successful and impactful.

Third, on food security, the success of agriculture which guarantees access to sufficient, safe, nutritious food to maintain a healthy and active life was premised on land reforms, agricultural extension services, good infrastructure and heavy investments in rural areas. South Korea and Taiwan invested heavily in land reforms.

To ensure that more land is put into cultivation, these countries invested substantially in irrigation and other ancillary rural infrastructure. They also adopted high yielding seeds, crops and use of fertilizer and modern agricultural equipment and machinery. South Korea adopted sound fiscal policy that ensured low levels of taxation of the agricultural sector.

Fourth, on health care, these economies offer useful lessons to developing countries since they were able to guarantee their citizens access to key promotive, preventive, curative and rehabilitative health care services at an affordable cost. Hong Kong adopted a tax-financed system while South Korea, Taiwan and Singapore took the privately financed system.

Regardless of the financing system that the government adopts, there is need to ensure that excessive health expenditures are controlled within the desired fiscal policy.

Even though there is a great cultural and environmental difference between Kenya and the Asian tigers which makes each region have unique preconditions for development, there is compelling evidence that we can achieve higher outcomes on the “Big Four” agenda based on the lessons learnt from these miraculous economies.

Mr Ayieko is an economist and commentator on trade and investment.

[email protected] Twitter: BenShawAyieko

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