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Sunday, 25 March 2018

New Outlook for the National Economy (2)

It was stated in the first part of this article that the national economic and fiscal policies

were based on a crude form of the Neoliberalism that is based basically on the Washington Consensus. It may be essential for the debate to give a brief on this concept.  The, Washington Consensus
The Washington Consensus is a set of 10 economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.–based institutions such as the International Monetary Fund (IMF), World Bank, and the US Treasury Department
The concept and name of the Washington Consensus were first presented in 1989 by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C Williamson used the term to summarize commonly shared themes among policy advisers of  Washington-based institutions at the time, such as the International Monetary Fund, World Bank, and U.S. Treasury Department, which were believed to be necessary for the recovery of countries in Latin America from the economic and financial crises of the 1980s.
The consensus as originally stated by Williamson included ten broad sets of relatively specific policy recommendations: 1-Fiscal policy discipline with avoidance of large fiscal deficits relative to GDP; 2- Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment; 4- Tax reform, broadening the tax base and adopting moderate marginal tax rates; 5-Interest rates that are market determined and positive (but moderate) in real terms; Competitive exchange rates; 6-Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); 7-Any trade protection to be provided by low and relatively uniform tariffs; 8-Liberalization of inward foreign direct investment; Privatization of state enterprises; 9-Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and Prudential oversight of financial institutions; 10- Legal security for property rights.
We will refrain at this stage from writing about the valid documented augments against the Washington Consensus and Neoliberalism and leave that to a later stage in which will show how it contradict with the principles of social justice.
Same time say that , Fairness demand the need to point that some countries have achieved a dramatic economic transformation and rapid development by adapting in a prudent and selective manner some of the Washington Consensus and Chinese is one of the best models in this[F1] respect.
In the important book, A Brief History of Neoliberalism” by the Chinese Model by prominent scholar David Harvey   and which was published by the UK Oxford University, he devoted a whole chapter to Chine labeling it; Neoliberalism with Chinese Characteristic. It is very informative and will enrich our discussion in the issue to quote some parts from this valuable Chapter.
He wrote that; in December 1978, faced with the dual difficulties of political uncertainty in the wake of Mao’s death in 1976 and several years of economic stagnation, the Chinese leadership under Deng Xiaoping announced a programme of economic reform. We may never know for sure whether Deng was all along a secret ‘capitalist roader’ (as Mao had claimed during the Cultural Revolution) or whether the reforms were simply a desperate move to ensure China’s economic security and bolster its prestige in the face of the rising tide of capitalist development in the rest of East and South-East Asia. The reforms just happened to coincide –– and it is very hard to consider this as anything other than a conjuncture accident of world-historical significance –– with the turn to neoliberal solutions in Britain and the United States. The outcome in China has been the construction of a particular kind of market economy that increasingly incorporates neoliberal elements interdigitated with authoritarian centralized control. Elsewhere, as in Chile, South Korea, Taiwan, and Singapore, the compatibility between authoritarianism and the capitalist market had already been clearly established.
Then added:  While egalitarianism as a long-term goal for China was not abandoned, Deng argued that individual and local initiative had to be unleashed in order to increase productivity and spark economic growth. The corollary, that certain levels of inequality would inevitably arise, was well understood as something that would need to be tolerated. Under the slogan of xiaokang–– the concept of an ideal society that provides well for all its citizens –– Deng focused on ‘four modernizations’: in agriculture, industry, education, and science and defence. The reforms strove to bring market forces to bear internally within the Chinese economy. The idea was to stimulate competition between state-owned firms and thereby spark, it was hoped, innovation and growth. Market pricing was introduced, but this was probably far less significant than the rapid devolution of political-economic power to the regions and to the localities. This last move proved particularly astute. Confrontation with traditional power centers in Beijing was avoided and local initiatives could pioneer the way to a new social order. Innovations that failed could simply be ignored. To supplement this effort, China was also opened up, albeit under strict state supervision, to foreign trade and foreign investment, thus ending China’s isolation from the world market. Experimentation was initially limited, mainly to Guangdong province close to Hong Kong, conveniently remote from Beijing. One aim of this opening to the outside was to procure technology transfers (hence the emphasis on joint ventures between foreign capital and Chinese partners). The other was to gain enough foreign reserves to buy in the necessary means to support a stronger internal dynamic of economic growth.
These reforms would not have assumed the significance we now accord to them, nor would China’s extraordinary subsequent economic evolution have taken the path and registered the achievements it did, had there not been significant and seemingly unrelated parallel shifts in the advanced capitalist world with respect to how the world market worked. The gathering strength of neoliberal policies on international trade during the 1980s opened up the whole world to transformative market and financial forces. In so doing it opened up a space for China’s tumultuous entry and incorporation into the world market in ways that would not have been possible under the Bretton Woods system. The spectacular emergence of China as a global economic power after 1980 was in part an unintended consequence of the neoliberal turn in the advanced capitalist world.
We are not in full agreement with all of the above arguments but will leave that to a later stage and turn attention now to our national context. 
If we study carefully the above, TEN basic policy prescription of the Washington Consensuses and compare them with the selective manner in which some   were implemented and other core ones ignored, since the 1990s in Sudan, then it became clear that what was implemented was a cocktail of conflicting selective policies that had nothing to do even with the declared adherence to the Neoliberalism and the Washington Consensus doctrine.
This resulted in economic crises one following the other, Why?. Because the realities of the Sudanese economy was sacrificed on the altar of private narrow interest.
In addition to some major reservation on the Washington Consensuses doctrine, mainly opening the gate wide for the private sector, reduction of taxes and social support for the poor. And accordingly, this will lead to growth and the revitlization of the national economy. But international experience have proved that this model cannot operate in countries were the private sector lack the financial and manpower resources.
Second, the doctoring focus on economic growth regardless of the injustice in the distribution of the returns of this growth. 
But , Let us have a quick look at these realties on the ground.

Agricultural Sector

The modern Sudanese economy that came into existence in the first quarter of the Twentieth Century has targeted irrigated agriculture as the leading sector with the reaction of the Gezira Scheme and planting Cotton as the primary cash crop for export. The participation of agriculture in the GDO (Gross Domestic Product) have witnessed many lactations during the last decades due to many factors including inadequate funding, draughts cycles, and the absence of a value-chain structure on which policies are formulated and production relations established.
Despite that the agricultural sector participation in the GDP (Gross Domestic Product) have fluctuated it have never been less than 25 percent at any given time but same time have not received the due financial funding it deserve. The Bank of Sudan reports affirm that agricultural funding in the period 1995-2004 was in average 21. 9 percent but declined to 9.6 percent from the total banking funding in the period 2005-2008.
Industrial Sector
The Sudanese industrial started in the 194os with food-stuff and cement factories and later with the large participation of the public and private sector developed rapidly. The private sector had a very prominent presence in particular in the weaving and textile industries.
But the industrial sector participation in the GDP have witnessed sharp rises and declines; from 8.6 percent in 1973-74 and  after twenty five years declined to 6 percent in 1998 and then again rising to 9.4 percent in 2004.
The industrial sector have faced many challenges major of them the nationalization and confiscations during the May Regime and as well the unfavorable government policies and high fees and tariffs that came with the Washington Consensus doctoring polices.
One model case in this respect is the closure of the Sharif Group (Fatah Al Rahman Al Bashir) weaving and textile factories in Wad Medani and Port Sudan leaving 10 thousand workers, technicians and engineers jobless.
This dreadful fate of the weaving and textile industries in Khartoum North, Port Sudan and Wad Medani was also the fate of the Editable Oil industries in Al Obied, Al Rahad and Khartoum North. Now, Sudan imports the Edible Oil that it used to manufacture in 1970s.