Ngozi Okonjo-Iweala, former minister of finance, says growth and development cannot be achieved when a country has distortions in its foreign exchange rates.
Speaking at the launch of ‘Beating the Odds: Jumpstarting Developing Countries’, a book written by Justin Yifu Lin and Celestin Monga in Ahmedabad, India, Okonjo-Iweala said there is no one way to growth and development, but some basic principles must be in place.
“You can have development that takes specific country and context specific situations in hand and begin from there,” she said.
“So, the proposals for industrial parks, industrial zones or what you want to call them as a way of kicking off development in a country fits within this context.
“For me, I think we should just absorb the lesson that there is no one correct answer to economic growth and development. There is no one path.
“There are some specific and fundamental principles that are important, which if you do not observe, you will not take off. And I think, even with this, you would agree; if your prices are not right within the economy, it is still not going to work.
“And when I mean prices, I think like; if you have a distorted exchange rate regime, if you have very severe distortions within the economy, that are fundamental to macroeconomic stability, it is not going to work.
“So, we can outline those principles, and say you need to observe certain principles; these are not conditionalities or 450 prescriptions we are talking about. They are just certain basic principles that underpin development.”
She said the state also has a major role to play in achieving economic growth and development, emphasising that not all can be left to the market to do.
“We forget that even in those countries where the economic theories that we are expounding were born and are being practised that there is an acknowledged role for the state,” she said.
“That there are market imperfections and failures, where we have to call in other instruments other than the market. These are things we need to bear in mind.”
Okonjo-Iweala said many people do not know the president of Switzerland, but investors and individuals from all over the world trust the Swiss with their monies because the nation had built institutions bigger than the president.
She called on African nations to build institutions rather than building personalities.