Local government, economic growth and human development: Chinese lessons for Kenya and Uganda?

Lead Research Organisation: University of Nottingham
Department Name: Nottingham University Business School

Abstract

Many African states are weak and unstable, prone to military coups or civil unrest. Poor governance and a lack of the civil society necessary to underpin reform are often cited as key reasons why investors are reluctant to engage with Africa and why livelihoods are diminished. The socio-political system in China is also woefully lacking by the standards of liberal democracy, but nonetheless has proved capable of sustained economic reform and remarkable success in development.
During the process of a nation's development, local governments can be important actors in adopting and implementing policies which would assist national economic growth and promote local benefits. For much of China's economic reform period, local governments played a key part in driving GDP growth although there are now doubts about whether this role is sustainable. In Africa, decentralization is a common element of reform but often the focus is on fostering political settlements and improved service delivery, rather than promoting economic reform. This project will consider whether China's experiences provide insights into how local government in Africa may successfully contribute to development, although differences in political structures mean that not all lessons may be transferable. The project will conduct rigorous analysis, based on evidence from original data collection using tailor-made surveys, to explore the impacts of local governance on the economic and human development of China and two selected African countries, Kenya and Uganda.
The research covers four interlinked topic areas. First, it starts with research on a stratified random sample of local governments in the three countries, identifying and comparing their policy environments, structures, inter-government relationships, and key officials' self-motivation for pro-poor growth, and evaluating their performance and policy outcomes. Second, it extends from the analysis of local governments to investigate their impacts on local economic growth and on production of tradable goods, whether in agriculture or manufacturing. Third, the project explores the effectiveness and efficiency of local government in providing health and education services. Fourth, it will consider the impact of local government on poverty reduction.
The project addresses questions which would have impact on policy-making in international development. Differences in the roles of local government between and within countries will be identified, with comparisons being made to explain the challenges facing local governments in the three selected countries. Any lessons, positive or negative, from China's development process will be identified and consideration given to how these might be adapted or avoided in order to enable local governments in Kenya, Uganda and other low income African states to be proactive in economic development.
Intellectually, the project will address some of the big questions and puzzles in development economics: why did China benefit from export oriented industrial growth but not Africa? How has China achieved economic liberalisation and growth without political liberalisation and while still denying the formation of a civil society? Could Africa adopt economic elements from this development model while having a fundamentally different political-social structure? While the industrialised world suffers economic stagnation, can Africa's recent renaissance continue and possibly become the world's next growth miracle? By shifting dogma and policy, could Africa accelerate its growth? When tackling such questions, could we turn to the 'Chinese model' for possible solutions?
The research team comprises well-regarded development economists from Kenya, Uganda, China and the UK. The findings of this project will be likely generate high impacts through the team's networks of international policy makers in the World Bank, DfID, UNDP and the governments of Kenya, Uganda and China.

Planned Impact

The direct and immediate beneficiaries of this proposal would be the national and international organisations concerned with development policies in China and Africa. Among international development agencies, the proposed research is targeted at the World Bank, UNDP, ILO, Africa Development Bank, Britain's Department for International Development and the European Union.
The project has formed its team with a record of policy impact. Team members are all publishing academic papers with high policy impacts; and most regularly serve as consultants for the international policy makers listed above. Justin Lin, the former World Bank Vice President, will play the key role in disseminating the project findings among such organisations. Xiaobo Zhang has worked for decades in the International Food Policy Research Institute (IFPRI), in the USA, a key research institute for international development; he will bring in renowned development economists to join the dissemination events organised by the project. Song, Appleton, Mwabu and Kasirye have good contacts with ministries, NGOs, and other stakeholders in China, Kenya and Uganda. They have the standing to attract national policymakers to attend the dissemination events and to engage with project policy briefs.
Users from China will benefit from this project. For example, China Enterprise Association (CEA), which advises large Chinese State firms on investment and corporate social responsibility programmes in Africa, would be actively involved. The China Development Bank is the major vehicle for the Chinese government to invest in Africa. Its former Chairman of the Board, Mr Yuan Chen, would be involved in dialogue with the team. Key members of the two organisations will be invited to attend project events.
The project would engage users in Africa through the team's wide range of networks in the region. Germano Mwabu is a leading member of the African Economic Research Consortium and Ibrahim Kasiyre is Head of the Micro Department of the Economic Policy Research Centre, the main economic policy think tank in Uganda. NGOs and practitioners actively working on improvement of health, education and women's rights in Africa would be invited to participate in project activities and engage with the research findings produced.
The business communities globally could benefit from the project. Improved understanding of Africa would help them to increase business performance and competitiveness when doing business in the region.
Last and, most important, people in low income African countries would benefit from the project's research targets and outputs. The overarching goal of this project is to increase the general level of welfare in Africa by improving policy making and implementation in the sub-continent, especially at the local government level. The project would seek, and test, which governance models would accelerate economic growth, reduce poverty and enhance human development. If the project does uncover lessons from China for Africa, this could be transformative - facilitating manufacturing, agricultural innovation and FDI. The project's focus on effective public service delivery could improve the quality of life for Africans, with improved education and health care.
The project would create a web-site, issue regular policy briefs, encourage its team members to attend international workshops and conferences, and mostly importantly to discuss its research findings with policy makers. In the first year of the project, stakeholder workshops would be run in both Africa and China. Two international conferences for disseminating the project findings will be organised. In 2017 (third year of the project), a high-level conference will be held either in Kenya or Uganda to convene findings with invitees from the World Bank, IFPRI and government officials from China and African countries. Towards the end of the project (2018), a final conference will be organised in China
 
Description China has an authoritarian centrally controlled governance system, sometimes referred to as a 'socialist market system'. Its centralised governance can mobilise the most valuable resources via its state sector to manipulate the less developed market system. It could, on the one hand, encourage the private sector to develop, and on the other hand, constrain the resource allocation to the promotion of private enterprises to obtain capital and free entry into the sectors that are still monopolised by the state firms. This has become more obvious since the current leadership took place in 2012.
The corruption campaign that has been launched under the leadership has disposed many government officials who have been accused for their corrupted records, jailed or removed from the official positions. This has been found to result in inactive local governance due to reduced motivation to promote GDP growth, and the lack of incentives to attract foreign direction investment, or even domestic investments to boost local development.
One of the issues aimed by this project is to explore how the local government would have impacts on human capital (education, child-care, healthcare), labour market (employment), and poverty alleviation in China and whether Chinese model would provide any lessens, positive or negative to Kenya, Uganda or similar low-income countries in Sub-Saharan African countries.
The governance of Uganda has some similarities to that of China. Despise the fact that private sector composes a large part of Ugandan economy, its government controls economic policies and through which, using regulation to control the country's economic development. The different level of economic development between China and Uganda has disguised the similar nature of their governance which was shared between the two countries.
Chinese governance shows its effectiveness of control by its seemingly consultative manner to its local government branches and in the same time, mobilising the financial control through the banking sector and favouring the state firms. Without a fully developed financial market, China's large number of private firms, especially those medium and small firms, cannot be fully funded for further growth, or some which would have to declare bankruptcy.
The medium and small sized firms in China is an overlooked economic portion that should be supported by the local governments and has the potential power to support China's local development. Yet, this has not been found as the case from our research of the project.
We find that individual households in China greatly rely on their own income to pay for education early-childhood development and healthcare. Their employment has been put into the informal sector rather than formal jobs which are linked with the regulated safety nets. Poverty alleviation, as the central government initiative to reduce the country's absolute poverty, has become a political campaign. From our finding, the poor, absolute or relative, are still suffering from the lack of access to the sustainable livelihoods, especially when a household would have to support its member in full-time education, or someone who is seriously ill.
The growth story in China has passed its glorious peak, dropping from two digit annual growth rate to the current low in 6%. Less spectacularly, Uganda enjoyed strong growth during the first 25 years of President Museveni's rule, but since 2011, growth has struggled to be sustained at a "normal" rate of 2% per capita. Based on the very low starting stage of taking off, Uganda is still facing the lack of investment to boost its economic sectors such as in manufacture, construction and social sectors. We find that the lack of investment in Uganda has made it heavily reliant on investment from China. Infrastructure in Uganda has been invested by Chinese state owned firms, with the possible debts to be paid in the future. There is a lack of teachers, doctors and jobs for the youth in Uganda. Although the rise of income for the trained medical professionals is regulated by the government, the brain drained problems still sustain. We find that many medical doctors trained in Uganda will find work in other parts of the world including in Kenya, and other African states which would provide them with higher salaries. Lack of medical resources is another issue that hospital facility including medicines and hospital beds provides no support to Ugandan people. We find in-patients are dwelling outdoor near the hospitals or clinics for treatment.
Governance in Kenya is regarded a system of laissez faire, or democratic with low-efficiently managed bureaucracy. Although it seems a lack of effectiveness and efficiency in its governance, the system has generated a higher level of market competition. The market conditions are set fairer to all the entries in principle although arguable. Due to such a market entrance condition, China's investors to Kenya are diverse - from different players in both state and private sectors. Agriculture, food processing, social sectors including healthcare and education have all attracted investors from China and other countries. Privately provided education and healthcare institutions are found in supporting the large cohort of the country's middle class and, steady development in manufacturing, agricultural and service sectors provide opportunities for low-skilled workers in Kenya.
Kenya has a higher level of economic development than Uganda, benefiting from its past capital accumulation. The proportion of private sector in Kenya is high and the jobs provided by it are more sustainable. This has enhanced Kenya's general livelihoods, service sector and the labour market. The overall governance of Kenya might not be efficient but the lack of intervention to its economic sectoral development has indeed allowed a protection of all players competing on fairer ground.
In summary, the most significant achievement of this project is our investigation into the relationship between central and local governments in the three selected countries, and how it impacts on the local economic growth and social development.
We find that, authoritarian governments only would work effectively by mobilising the resources to deal with emergency or crisis temporarily but would have negative effects on a fully developed market system. Without the latter, low-skilled workers would be pushed into the low-income jobs due to the lack of opportunities, or even unemployment, or a lack of security to obtain sustainable livelihoods (China's rural-urban migrants and Uganda's large number of unemployed youth).
A balance between effective government intervention and market efficiency is the underlying lesson to be learnt by all three selected countries. Kenya should improve its governance effectiveness by improved implementation of its regulations and policies to attract further investment and better finance public goods. The fundamental issue with Ugandan governance is the lacking diversity in the foreign direct investment attracted: more is needed from sources other than China. Although there are some 'special economic zones' located in Uganda with a reduction of taxation on foreign capital, they are mainly targeted at Chinese investment. China's socialist market system has met its bottle-neck, further reforms should be implemented in order to gradually reduce the monopoly power of the state sector and enhance its private businesses.
Social developments in terms of education, healthcare and job availability of the three selected countries, are various due to their economic capacity as well as their different mechanisms to provisions. The commonality among them is that no solid welfare provision has been established to support the poor and the vulnerable.
Exploitation Route In the project dissemination taking place in Uganda September 2019, government officials from 9 low-income countries including Ethiopia, Rwanda, Kenya and Uganda attended. The focus of Chinese growth story has been acknowledged but its low share of government spending on pro-poor social development is also understood. China's current belt and road initiative strengthens its ties with African countries, becoming a topical issue on which further research will be developed. Our findings will be used to assist the policy-makers of these countries in the area of making growth pro-poor.

Our research on healthcare reform in China (with the drafted paper titled 'Primary healthcare provision in China: lessons learnt from the UK') has attracted the attention of China's National Health Commission. We are in the middle of negotiations to set up an executive PhD programme to train the Commission's mid-range administrators in health economics and healthcare management.
Sectors Communities and Social Services/Policy,Education,Financial Services, and Management Consultancy,Healthcare,Government, Democracy and Justice

 
Description The project has identified the indicators that a developing government should adopt in alleviating poverty not just being measured by household income, but also in childcare, education, and healthcare. Professor Simon Appleton, CoI of the project, provided his expertise and used the project finding to assist the Uganda Government to revise the country's poverty line. This job was jointly commissioned by the World Bank and the Uganda Government in 2018-19.
First Year Of Impact 2018
Sector Agriculture, Food and Drink,Education,Financial Services, and Management Consultancy,Healthcare,Government, Democracy and Justice,Manufacturing, including Industrial Biotechology
Impact Types Societal,Economic,Policy & public services

 
Description Collaboration with policy makers in China, Uganda and Kenya
Geographic Reach Multiple continents/international 
Policy Influence Type Implementation circular/rapid advice/letter to e.g. Ministry of Health
Impact We are in the middle of negotiation to establish a field experimental research centre at one of Chinese universities to conduct RCD / policy interventions; this should start with the project finding and covering the regions of China, and possibly in Kenya and Uganda. The project CoIs from Uganda and Kenya will visit China within the next few months.
 
Description Policy Conference in Uganda (Project Dissemination)
Geographic Reach Africa 
Policy Influence Type Contribution to a national consultation/review
Impact In the project dissemination taking place in Uganda September 2019, government officials from 9 low-income countries including Ethiopia, Rwanda, Kenya and Uganda attended. The focus of Chinese growth story has been acknowledged but its low share of government spending on pro-poor social development is also understood. China's current belt and road initiative strengthens its ties with African countries, becoming a topical issue on which further research will be developed. Our findings will be used to assist the policy-makers of these countries in the area of making growth pro-poor.
 
Description Uganda Official Poverty Line Measurement
Geographic Reach Africa 
Policy Influence Type Contribution to a national consultation/review
Impact Project CoI Professor Simon Appleton was invited by the World Bank to assist Ministry of Finance of Uganda to revise and measure the country's poverty line in 2018. Professor Appleton has been an authority of conducting poverty measurement for the developing countries. His work is highly recognised by Uganda Government. With the revised poverty line, Uganda's policy of poverty alleviation should be adjusted accordingly.
 
Description Income Distribution, Public Finance and Global Governance (MoE 111 Programme of HE Sector Capacity Building and International Collaboration)
Amount ¥4,500,000 (CNY)
Organisation Ministry of Education of the People's Republic of China 
Sector Public
Country China
Start 04/2020 
End 03/2025
 
Description Field Expereimental Research Centre at Zhongnan University of Economics and Law, China 
Organisation Zhongnan University of Economics and Law
Country China 
Sector Academic/University 
PI Contribution The PI Professor Song has been appointed as the Director of Field Experimental Research Centre (FERC) by Zhongnan University of Economics and Law (ZUEL), China. Since her appointment on 7th April 2018, a week-long training programme was organised by the PI and her key team members of the project. The training focused on Randomised Controlled Trial methods and Behaviours Economics in July 2018, Wuhan, China. Over 100 young scholars from most prestigious Chinese universities, from Europe, US and Australia, took part in the training course. A visiting professor of ZUEL was invited by the PI to spend 12 months (Nov 2017- Oct 2018) to collaborate with the Nottingham team for data analysis and paper-writing. In return, ZUEL has appointed a full-time research fellow for FERC since 1st April 2019 for three years. ZUEL has become an important collaborator of the project. As the result, three staff members of ZUEL are invited to join in the recent grant application on "Early Child Education in China, India and Sub-Saharan Africa". This application is led by the PI of the project; and has been submitted to the ESRC in response to the call of UKRI's Global Challenge Research Fund. More research collaborations will take place in the forthcoming years including the grant capture and fieldwork activities.
Collaborator Contribution The partner (ZUEL) has provided the PI with 500,000 RMB Yuan to support the 2018 July RCT methods training; and1.05 m RMB Yuan for the appointment of the full-time research fellow for three years. In addition the project has benefited from ZUEL's administrative and financial supports including travel, hotel accommodation and office space.
Impact Joint data collection of Chinese household surveys (2018) on the issues of Income distribution (2018-2019) Summer School training programme on RCT methods and experimental research (July 2018) Joint research application to UK's ESRC and China's Educational Elite Programme (namely 111 Project) 2019-2020
Start Year 2017
 
Description Kenyatta University - a potential collaborator 
Organisation Kenyatta University
Country Kenya 
Sector Academic/University 
PI Contribution Our fieldwork in Kenya in Feb 2019 was benefited from School of Economics, Kenyatta University for its administrative support and the use of office space. This is very hard to be measured by monetary value. In return, we recruit the school's academic staff members and some post-graduates to participate in our research and, there was one introductory workshop was organised between the two teams. Both sides feel that there should be future research collaboration.
Collaborator Contribution It is agreed that one or two professors will be invited to attend the project dissemination events in China and Uganda in 2019.
Impact The potential output would be the future project collaboration and capacity-building in teaching cutting-edge economics provided by Nottingham Team to students at Kenyatta.
Start Year 2019
 
Description Research Centre for Income Distribution and Public Finance, Zhongnan University of Economics and Law 
Organisation Zhongnan University of Economics and Law
Country China 
Sector Academic/University 
PI Contribution The Research Centre for Income Distribution and Public Finance at Zhongnan University of Economics and Law is funded through the joint project with which the University of Nottingham (Business School, School of Economics and 10 other international universities) as the international team leader. We won the competition and have received the size of funding, from the Ministry of Education of PR China, of 5 million RMB Yuan plus the similar size of funding matched by Zhong University of Economics and Law. Among the international team members, we have core members including Professor Stefan Dercon, University of oxford,; Professor John Hoddinott, Cornel University; Professor Albert Park, Hong Kong University of Sciences and Technology (currently seconded as the Chief Economics of Asian Development Bank).
Collaborator Contribution The Research Centre for Income Distribution and Public Finance has financially supported a joint experimental research to investigate the relationship between social cohesion, income inequality and donation. The experiment has been designed and pilot-trialled; a full scale of lab experiments is planned to take place in summer 2022 (if it is not affected by another Covid breakout in Wuhan and Ningbo). CeDEx (the Centre for Decision Research and Experimental Economics) at University of Nottingham China has played the core collaborative role in conducting the research.
Impact Experiment data of 1000 subjects will be collected and some research papers will be produced in due course.
Start Year 2020
 
Description Zhongnan University of Economics and Law, PR China 
Organisation Zhongnan University of Economics and Law
Country China 
Sector Academic/University 
PI Contribution We have been invited by the Ministry of Education PR China to jointly apply for a multi-million research programme setting up the Key Laboratory combining research projects between natural and social sciences. The host of the UK side, is China Research Group (Nottingham University Business School), directed by Professor Lina Song, also the PI of this project. The participants of the team are from Faculty of Medicine, Computer Sciences, Schools of Economics and the Business School. The topics proposed cover Block-Chain Financial and Trading Analysis to enhance the employment skills of low-income population; to adopt machine learning methods to identify the inclusive financial policies; and to apply Randomised Control Trial as the field experimental methods to examine how earlier childhood cognition can be improved.
Collaborator Contribution Zhong University of Economics and Law has played the major role in the bidding - it set up a team to compile all the required documents and has submitted the proposal before the deadline (29th Feb 2023).
Impact Not yet.
Start Year 2023
 
Description International Forum (China Research Group, UoN and Zhongnan University of Economics and Law 2021 -2025) 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Study participants or study members
Results and Impact In addition to run seminars and workshops, we have organised online training sessions for the early career researchers from the partner university and have planned to organise an international conference jointly with the international partners in June-July 2022. . We also hope to generate rigorous evidence to assist policy-making on income distribution and public financial decision-making
Year(s) Of Engagement Activity 2021,2022
 
Description Sino-UK Health Forum May 2019 (Project dissemination) 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact The PI has secured £34,000 to cover the total cost of the forum, and co-organise the conference with the Director of Center for Health Economics, Nottingham University School of Economics, Ningbo, China. Over 100 registered participants plus students, pharmaceutical industrial agents, local policy-makers and hospital professionals attended the two-day events. Central policy-makers from National Health Commission was invited to present key-note speeches on China's on-going Medical and Healthcare Reforms, and a Round-table policy implementation dialogue between central and local policy-makers, industrial users and academic researchers. Most important, the project CoI, Dr Ibrahim Kasirye, Deputy Director and Research Director of Uganda's think-tank, Economic Policy Research Centre, presented a key-note speech, comparing the healthcare systems between Kenya, Uganda and China. This has largely raised the project profile and increased interest in healthcare policies comparisons between China and Sub-Saharan Africa. CoIs from Kenya and UK also attended the Forum, the interactions among the conference participants from different parts of the world, and the visits to local hospitals has extended the African CoIs understanding of China's healthcare reform, and some answers to what lessens to be learnt.
Year(s) Of Engagement Activity 2019
 
Description Visit of China National Health Commission June 2018 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact As part of the findings are drawn from our investigation into healthcare system and medical insurance of the countries concerned and we worked closely with China's National Health Commission in the past year, a delegation from China's National Health Commission was invited to visit Nottingham to attend a forum organised by the project PI. This event involves colleagues from the Schools of Medicine, Business and Economics of the University of Nottingham. The visit has intrigued the project's next dissemination activity. The PI, Professor Lina Song, is currently co-organising an international conference - Sino-UK Health Forum which will be held in Ningbo, China 10th and 11th May 2019. Chinese health policy makers will attend the forum, and CoIs from Uganda and Kenya will also attend.
Year(s) Of Engagement Activity 2019
 
Description dissemination of the project finding within a conference 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact An international conference organised by the PI on 6-7 Sept 2017 titled " China at the Crossroads: Economic Challenges and Opportunities" at the University of Nottingham. The invited speakers are all International renowned scholars including Professor Justin Yifu Lin ( Project CoI, fromPeking University), Professor Weiying Zhang (Peking University), Professor Scott Rozelle (Stanford University), Processor Yaohui Zhao (Peking University, China Health and Retirement Longitudinal Study Data Lead), Professor Li Shi (Beijing Normal University, Chinese Household Income Project Data Lead), Professor Xin Meng (National University of Australia, RuMic Data Lead) and Professor Bob Gregory (National University of Australia). The Chinese Ambassador to the UK, Dr Liu Xiaoming addressed to the conference. Two papers produced by this project were presented at the conference.
Year(s) Of Engagement Activity 2017
URL https://www.nottingham.ac.uk/business/businesscentres/crg/index.aspx