Developing countries must promote infant industries protection

Dr Ha-Joon Chang, a renowned economist and the Director of the Centre of Development Studies, University of Cambridge, has urged developing countries to promote the protection of their infant industries.

He explained that almost all rich countries used tariff protection and subsidies to develop their industries; hence, developing countries could use same methods to grow theirs.

The infant industry argument is an economic rationale for trade protectionism.

The core of the argument is that nascent industries often do not have the economies of scale that their older competitors from other countries may have, and thus need to be protected until they can attain similar economies of scale.

Dr Chang said the rich countries, which used trade protectionism to grow their industries, were now encouraging developing countries to pursue Free Trade, likening it to using a ladder to climb to the top and kicking the ladder away so that others could not get to the top.

He said developing countries needed to have infant industries protection in order to have successful export performance.

Dr Chang made this remarks at media briefing in Accra, as part of his official visit to Ghana.

Dr Chang, who is also the author of several bestselling economics books and Reader in the Political Economy of Development at the University of Cambridge, is in Ghana at the instance of the Institute of Economic Affairs to address a Policy Forum on the theme: "Destiny or Policy? - Development Prospects for Ghana".

The Policy Forum would focus on examining policies that determine a country’s development prospects.

Dr Chang said for developing countries to accelerate their socio-economic development, there was the need for attitudinal change such as time keeping as that attitude was hampering the socio-economic development of many developing countries.

He said one of the reasons for cultural changes was economic development.

Dr Chang, who is a Korean, cited that 25 years ago they used to have the "Korean time", which means one would be late up to one and half hours for an appointment; however, as the nation developed, the expression "Korean time" no longer existed.

He said as Ghana kept developing, a time would come when there would be nothing like "Ghanaian time".

On the issue of landlocked countries and development, Dr Chang said being a landlocked country was no excuse for underdevelopment.

He cited that it was after Ethiopia became a landlocked country at the end of their civil war leading to Eritrea's independence, that it witnessed an accelerated economic development.

Dr Chang said two of the richest economies in Europe, namely Switzerland and Austria were landlocked countries; "the reason being that some countries used the right policies and others haven't," he added.

Dr Chang said if Ghana had a strong agriculture sector, it could provide markets for local industries.

He said Ghana and many other African countries witnessed accelerated economic growths and development in the 1960s during the era of import substitutions than during the days of the Structural Adjustments Programmes; declaring that "I am not suggesting that you go back to the days of Nkrumah".

"My view is that economic experiments are very dangerous and costly. You've been on subject of experiment by the World Bank with Structural Adjustments Programmes, so why not go back to history, learn lessons from other countries. Of cost you have to modify this to suit your conditions. But I think looking at history, and contemporaries experience of other countries, I think can save you a lot of aggravation," he said.

"If you want to generate growth through agriculture processing, there is the example of Chile to look at. If you want to develop the shipping industry, go to China and Korea," he added.

He said for far too long, developing countries had been brainwashed to think that there was only one way of doing this; stating that "however, there isn't one way of doing it".