There are two popular words in economics: growth and development. The truth seems to be that most countries have grown but not developed.
The size of the economy, gross domestic product (GDP) keeps growing but not the standards of living.
One reason is that growth is shared by more people and it’s not noticeable. Developing countries are famous for fast population growth. If we created more wealth, faster than population growth, standards of living would go up and there would be development. That faster growth, studies have shown, comes from increased productivity, doing more with less. How much can an acre produce in a year? How much can a worker produce in a year?
Adoption of technology driven by innovation and change in culture can drive innovation. Think of the car or the M-Pesa and, more recently, online learning. Think of a simple innovation, online groups. How much would it cost to host all the group members for a physical meeting?
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Unfortunately, we rarely take time to appreciate innovations, they become part of our lives, we become too used. When mobile phones were new, we picked every phone call. Today? We used to reply emails on the spot. Today?
Culture is more powerful in stifling adoption of innovation and technology than we think. Some of us went abroad, studied and returned. But with time we regressed to the mean, behaving like anyone else courtesy of culture. Why else are the results of benchmarking tours abroad so invisible?
Others observe that with time, highly educated and uneducated behave the same; culture equalises them. When I visit pubs, mostly to interact with ordinary Kenyans, my title is irreverent until the table is full (“chafua meza”). Suddenly everyone notices there is a ‘big’ man around.
Ever wondered why corruption is a millstone around the nation, more than 60 years after uhuru and 130 years since Kenya became a protectorate? Let’s not forgot that beyond corruption—making money without any production—inequality makes economic growth invisible. It’s the tragedy of our time that we celebrate making money without work or service. Many dream of reaching that position!
Development is relative and has an emotional, or philosophical component. That is why visitors are genuinely surprised by our level of happiness despite our low levels of income. Maybe with time we realise life is not that complicated, beyond the basics. And we all fall asleep the same way, breathe the same air and exit the planet the same way.
Why then are citizens of developed countries not necessarily happier than those of the developing countries? Just as being richer and affluent does not necessarily make you happier.
Back to innovation and technology. One of the paradoxes of our time is how we got more technology but less leisure time and more stress. Without search for water, firewood, food and other basics, should we not be having more leisure time? Where does time go?
The problem is productivity. We want to be more productive, leverage on technology. In the past we chatted with other citizens in matatus, hospital queues. Today we are glued to our phones, and hopefully doing productive things. We are engrossed in productivity because of the firm belief that we shall get more money, improve our living standards and hopefully be happier.
If economic growth and development are such desirable national and personal objectives, why are they so elusive?
Harness resources
Growth and development come through institutions that have evolved over time such as governments, churches, families, and schools. They harness resources for the greater good. They provide goods and services than can’t be provided by individuals, called public goods. The institutions are supplemented by the private sector and individuals who fill the gaps left by the public sector, but for the profit.
The public and private sector are tied by the individual, who provides labour and entrepreneurship. The individual, you and me, is often the weakest link in growth and development. There are great efforts to make individuals behave the same way through families, religion, schooling, laws, regulations and even punishment.
Dictatorships use threats to force the individual to comply. In democracies or its variances, the individual has some liberty in deciding what to do at personal and institutional levels. Democracies have generally done a better job in growth and development, till China’s rapid economic growth became an outlier. My visit to Beijing and Shanghai gave an impression that while China is communist politically, economically it shades of democracy.
Want growth and development? Focus on the individual and the institutions. How can they work together symbiotically? What incentives do you offer them? We have tested different systems and models to deliver economic growth and development. We are yet to get a prefect model. It remains work in progress and in need of innovations.
What is the AI or M-Pesa moment in governance, in catalysing economic growth? What is the silver bullet in fighting poverty?
Follow The Standard
channel
on WhatsApp
There are two popular words in economics: growth and development. The truth seems to be that most countries have grown but not developed.
The size of the economy, gross domestic product (GDP) keeps growing but not the standards of living.
One reason is that growth is shared by more people and it’s not noticeable. Developing countries are famous for fast population growth. If we created more wealth, faster than population growth, standards of living would go up and there would be development. That faster growth, studies have shown, comes from increased productivity, doing more with less. How much can an acre produce in a year? How much can a worker produce in a year?
Adoption of technology driven by innovation and change in culture can drive innovation. Think of the car or the M-Pesa and, more recently, online learning. Think of a simple innovation, online groups. How much would it cost to host all the group members for a physical meeting?
Follow The Standard
channel
on WhatsApp
Unfortunately, we rarely take time to appreciate innovations, they become part of our lives, we become too used. When mobile phones were new, we picked every phone call. Today? We used to reply emails on the spot. Today?
Culture is more powerful in stifling adoption of innovation and technology than we think. Some of us went abroad, studied and returned. But with time we regressed to the mean, behaving like anyone else courtesy of culture. Why else are the results of benchmarking tours abroad so invisible?
Others observe that with time, highly educated and uneducated behave the same; culture equalises them. When I visit pubs, mostly to interact with ordinary Kenyans, my title is irreverent until the table is full (“chafua meza”). Suddenly everyone notices there is a ‘big’ man around.
Ever wondered why corruption is a millstone around the nation, more than 60 years after uhuru and 130 years since Kenya became a protectorate? Let’s not forgot that beyond corruption—making money without any production—inequality makes economic growth invisible. It’s the tragedy of our time that we celebrate making money without work or service. Many dream of reaching that position!
Development is relative and has an emotional, or philosophical component. That is why visitors are genuinely surprised by our level of happiness despite our low levels of income. Maybe with time we realise life is not that complicated, beyond the basics. And we all fall asleep the same way, breathe the same air and exit the planet the same way.
Why then are citizens of developed countries not necessarily happier than those of the developing countries? Just as being richer and affluent does not necessarily make you happier.
Back to innovation and technology. One of the paradoxes of our time is how we got more technology but less leisure time and more stress. Without search for water, firewood, food and other basics, should we not be having more leisure time? Where does time go?
The problem is productivity. We want to be more productive, leverage on technology. In the past we chatted with other citizens in matatus, hospital queues. Today we are glued to our phones, and hopefully doing productive things. We are engrossed in productivity because of the firm belief that we shall get more money, improve our living standards and hopefully be happier.
If economic growth and development are such desirable national and personal objectives, why are they so elusive?
Harness resources
Growth and development come through institutions that have evolved over time such as governments, churches, families, and schools. They harness resources for the greater good. They provide goods and services than can’t be provided by individuals, called public goods. The institutions are supplemented by the private sector and individuals who fill the gaps left by the public sector, but for the profit.
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The public and private sector are tied by the individual, who provides labour and entrepreneurship. The individual, you and me, is often the weakest link in growth and development. There are great efforts to make individuals behave the same way through families, religion, schooling, laws, regulations and even punishment.
Dictatorships use threats to force the individual to comply. In democracies or its variances, the individual has some liberty in deciding what to do at personal and institutional levels. Democracies have generally done a better job in growth and development, till China’s rapid economic growth became an outlier. My visit to Beijing and Shanghai gave an impression that while China is communist politically, economically it shades of democracy.
Want growth and development? Focus on the individual and the institutions. How can they work together symbiotically? What incentives do you offer them? We have tested different systems and models to deliver economic growth and development. We are yet to get a prefect model. It remains work in progress and in need of innovations.
What is the AI or M-Pesa moment in governance, in catalysing economic growth? What is the silver bullet in fighting poverty?
Follow The Standard
channel
on WhatsApp
By XN Iraki