This archive report was first published on 2 July 2019.
Published on July 2, 2019, by Kennedy Chesoli, a New York-based development economist and global policy expert.
China's remarkable economic transformation has left many economists bewildered. The country's ability to defy conventional wisdom on the role of the state in economic growth is a testament to its innovative approach.
Unlike the dominant school of thought, which favors Adam Smith's 'invisible hand' in allocating resources, China steered its economy towards specific targets, such as creating institutions considered the bedrock of a stable economy.
It was only after these institutions had acquired sufficient competencies that China began to slowly let go of its grip on economic levers.
However, China's approach was not entirely new. Many developed economies have followed a similar path, prioritizing the creation of institutions and infrastructure to drive economic growth.
African governments are mistaken in hoping to replicate China's success by solely focusing on infrastructure development. Instead, they can learn from China's experience and adapt successful models to their own context.
One such model is China's Township and Village Enterprises (TVEs), which played a crucial role in the country's industrial and economic transformation in the 1970s.
Established and funded largely by local communities, TVEs implemented small projects and were granted de facto monopoly status and protection against unfair business practices.
As a result, TVEs experienced rapid growth, with an annual growth rate of about 25 percent from the mid-1980s to the mid-1990s.
By the 1990s, TVEs accounted for a quarter of China's GDP, two-thirds of the total rural output, and more than a third of export earnings.
Our own TVEs could be positioned as the primary agencies for the implementation of county projects, advancing rural development and employment, ending crony capitalism, and fostering an institutional approach to sustainable development.
