Rethinking socio-economic development through Parish Development Model
By Moris Chris Ongom
Lira—21, August 2021: As we roll on the Parish Development Model (PDM) which greatly I believe if well managed, Uganda will surely leap forward in the near future.
There are key questions that must be reflected on. I will handle briefly two questions for today:
On which economic law is the Parish Development Model (PDM) built? What is the theory of change of the PDM?
In classical economics, Say’s Law, or the Law of Markets, claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product.
So, production is the source of demand. In his principal work, A Treatise on Political Economy (Traité d’économie politique, 1803), Jean-Baptiste Say wrote: “A product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value.”
And also, “As each of us can only purchase the productions of others with his own productions—as the value we can buy is equal to the value we can produce, the more men can produce, the more they will purchase.”
As you now know, neoclassical economists emphasize Say’s Law, which holds that supply creates its own demand. Conversely, Keynesian economists emphasize Keynes’ Law, which holds that “demand creates its own supply”.
It’s very clear: our country’s economic development policies are largely based on Say’s Law. We can see the country is struggling with Operation Wealth Creation (OWC), now PDM, etc., to build the economic muscle of Uganda. What’s true is that we are mobilizing the citizens to produce for who?
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In the result chain theory, the small question is: if we do this, so what? This is a small question that if not addressed, the nation will produce so much and all the blessings will go to the industries, not the farmers who toil throughout to make the raw materials for our value addition installations.
Keynes’ Law holds that demand creates its own supply. John Maynard Keynes (5 June 1883–21 April 1946) was an English economist whose ideas changed the theory and practice of macroeconomics and the economic policies of governments. One of the most influential economists of the 20th century.
During the Great Depression of the 1930s, Keynes spearheaded a revolution in economic thinking, challenging the ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands.
Arguably, Keynes’ theory of employment is a demand-oriented theory. It means that Keynes visualized employment/unemployment from the demand side of the model. According to Keynes, the volume of employment in a country depends on the level of effective demand of people for goods and services.
Among other principles, the theory holds that:
• Demand drives supply and that healthy economies spend or invest more than they save.
• Governments should increase spending and lower taxes when faced with a recession, in order to create jobs and boost consumer buying power. With Covid-19, check our government policy!
1 Balance production and industrial growth and set in motion policies and strengthen institutions to protect the producers (farmers).
2 Work on the issues of corruption which have continued to stagnate all well thought development programs.
3 Strengthen the cooperatives to work more effectively to drive this agenda. Yes, money is coming, but we have built which institutions to be trusted to drive this model?
Finally, is the PDM basically hinged on assumption that the only constraint of development at parish level is lack of financing? If so, then we shall replay Emyooga, Youth Livelihood Programme (YLP), Youth Venture Capital Fund, etc., rhythms with very limited economic outcomes.
Let the debate start and we refine this model.
The author is the CEO, GLOFORD Uganda; an economist and development expert.