The Role of State in Economic Development: Infant Industry Promotion in South Sudan

Abstract

It has been eight years since the Republic of South Sudan became an independent state, following the Comprehensive Peace Agreement (CPA) , signed on January 9th, 2005, between the National Congress Party (NCP) and the Sudan People’s Liberation Movement/Army (SPLM/A). To fulfil the mandate of the CPA, a referendum on self-determination was conducted in January 2011, and 98.83 % of South Sudanese effectively voted to secede from North Sudan. South Sudan thus joined the community of nations as the 193rd member of the United Nations on July 14th, 2011. Less than three years later, in December 2013, South Sudan descended into a civil war. The war and accompanying political crisis has exacerbated a delicate balance in the country, delayed the process of reconciliation, and cast a shadow over South Sudan’s viability as a state. Since December 2013, thousands of civilians have been killed and more than 4.2 million people have been displaced both internally and to neighboring countries as refugees. Prior to the outbreak of the ongoing conflict in South Sudan, its leaders applied for admission into the East African Community (EAC), a regional intergovernmental organization whose mission is to promote regional peace, security, governance, socio-economic development, and more effective integration in the global economy and society. However, the application has been deferred on multiple occasions, first in April 2011 and then in November the same year. In early March 2016, the East African Legislative Assembly passed a Resolution approving the ascension of South Sudan, thereby making it the Sixth Partner State, alongside Kenya, Uganda, Tanzania, Rwanda and Burundi.

In this article I focus on economic development based on the theory of infant industry promotion. Infant industry promotion is a term that refers to a state policy that for a period of time shields domestic industries in order to prepare them for competition with more established firms. Infant industry promotion as a state policy is credited to Alexander Hamilton, U.S. first treasury secretary. The concept was picked up by two other nineteenth century economists: Daniel Raymond in the United States and Friedrich List, the 19th century German political economist, who saw the state as the main instrument for economic progress. Recently two other economists, Ha-Joon Chang and Erik S. Reinert, have popularized the term and developed the term further. Infant industry promotion is characterized by a series of policies designed to nurture domestic industry until those industries develop “productive powers” and are able to compete with counterpart, established industries in other countries. As a new country, one of the big questions that the government of South Sudan faces is how to build a functioning developing state that is equipped to spearhead economic development for the benefit of the South Sudanese people. This paper presents the case for infant industry promotion in South Sudan and calls for an active role by the new Republic in economic development. South Sudan needs to prioritize certain industries and selective economic activities and develop the productive powers of those industries while protecting the infant industries from external competition. It further recommends that South Sudan make a distinction between rent that is the product of constant flow in innovation (increasing return) and rent that is extracted by firms that focus on diminishing return activities.

Keywords: State Formation, Regional Integration, Infant Industry Promotion, Economic theory of growth, East African Community, Trade, Nation and State Building, South Sudan, Africa, EAC, Globalization, Development, Africa, Economic Growth, Poverty