BY RICK ROWDEN | JANUARY 4, 2013
source http://www.foreignpolicy.com/articles/2013/01/04/the_myth_of_africa_s_rise
Recent high growth rates and increased foreign investment in Africa have given rise to the popular idea that the continent may well be on track to become the next global economic powerhouse. This "Africa Rising" narrative has been most prominently presented in recent cover stories by Time Magazine and The Economist. Yet both publications are wrong in their analysis of Africa's developmental prospects -- and the reasons they're wrong speak volumes about the problematic way national economic development has come to be understood in the age of globalization.
Both articles use unhelpful indicators to gauge Africa's development. They looked to Africa's recent high GDP growth rates, rising per capita incomes, and the explosive growth of mobile phones and mobile phone banking as evidence that Africa is "developing." Time referred to the growth in sectors such as tourism, retail, and banking, and also cited countries with new discoveries of oil and gas reserves. The Economist pointed to the growth in the number of African billionaires and the increase in Africa's trade with the rest of the world.
But these indicators only give a partial picture of how well development is going -- at least as the term has been understood over the last few centuries. From late 15th century England all the way up to the East Asian Tigers of recent renown, development has generally been taken as a synonym for "industrialization." Rich countries figured out long ago, if economies are not moving out of dead-end activities that only provide diminishing returns over time (primary agriculture and extractive activities such as mining, logging, and fisheries), and into activities that provide increasing returns over time (manufacturing and services), then you can't really say they are developing.
What's striking about the two articles cited above is that they don't mention manufacturing, or its disturbing absence, in Africa. And that, in turn, confirms once again the extent to which the idea of development as industrialization has been completely abandoned in the last few decades. Free market economics has come to advise poor countries to stick with their current primary agriculture and extractives industries and "integrate" into the global economy as they are. Today, for many champions of free markets, the mere presence of GDP growth and an increase in trade volumes are euphemisms for successful economic development. But increased growth and trade are not development.
For example, even if an African country like Malawi achieves higher GDP growth rates and increased trade volumes, this doesn't mean that manufacturing and services as a percent of GDP have increased over time. Malawi may have earned higher export earnings for tea, tobacco, and coffee on world markets and increased exports, but it is still largely a primary agricultural economy with little movement towards the increased manufacturing or labor-intensive job creation that are needed for Africa to "rise."
The failure to mention industrialization thus renders most comparisons of growth in Africa and East Asia spurious. For example, the Time article, which suggests that, "during the next few decades hundreds of millions of Africans will likely be lifted out of poverty, just as hundreds of millions of Asians were in the past few decades," cites the divide that has opened up between rich and poor in China and India as a warning that inequality could also become a problem as Africa's progress continues. The Economist article cited a World Bank report that claims that "Africa could be on the brink of an economic take-off, much like China was 30 years ago," noting that, in both cases, a mass population of young workers stood at the ready to boost growth. It also touched on the importance of education: "Without better education, Africa cannot hope to emulate the Asian miracle."
There are, of course, several indicators that offer a more precise picture of how well Africa is developing (or not). We can look at whether manufacturing has been increasing as a percentage of GDP, or whether the manufacturing value added (MVA) of exports has been rising. In these cases the comparison between Africa and East Asia is actually quite revealing -- as demonstrated by a recent U.N. report that paints a far less flattering picture of Africa's development prospects.
It finds that, despite some improvements in a few countries, the bulk of African countries are either stagnating or moving backwards when it comes to industrialization. The share of MVA in Africa's GDP fell from 12.8 percent in 2000 to 10.5 percent in 2008, while in developing Asia it rose from 22 percent to 35 percent over the same period. There has also been a decline in the importance of manufacturing in Africa's exports, with the share of manufactures in Africa's total exports having fallen from 43 percent in 2000 to 39 percent in 2008. In terms of manufacturing growth, while most have stagnated, 23 African countries had negative MVA per capita growth during the period 1990 - 2010, and only five countries achieved an MVA per capita growth above 4 percent.
source http://www.foreignpolicy.com/articles/2013/01/04/the_myth_of_africa_s_rise
Recent high growth rates and increased foreign investment in Africa have given rise to the popular idea that the continent may well be on track to become the next global economic powerhouse. This "Africa Rising" narrative has been most prominently presented in recent cover stories by Time Magazine and The Economist. Yet both publications are wrong in their analysis of Africa's developmental prospects -- and the reasons they're wrong speak volumes about the problematic way national economic development has come to be understood in the age of globalization.
Both articles use unhelpful indicators to gauge Africa's development. They looked to Africa's recent high GDP growth rates, rising per capita incomes, and the explosive growth of mobile phones and mobile phone banking as evidence that Africa is "developing." Time referred to the growth in sectors such as tourism, retail, and banking, and also cited countries with new discoveries of oil and gas reserves. The Economist pointed to the growth in the number of African billionaires and the increase in Africa's trade with the rest of the world.
But these indicators only give a partial picture of how well development is going -- at least as the term has been understood over the last few centuries. From late 15th century England all the way up to the East Asian Tigers of recent renown, development has generally been taken as a synonym for "industrialization." Rich countries figured out long ago, if economies are not moving out of dead-end activities that only provide diminishing returns over time (primary agriculture and extractive activities such as mining, logging, and fisheries), and into activities that provide increasing returns over time (manufacturing and services), then you can't really say they are developing.
What's striking about the two articles cited above is that they don't mention manufacturing, or its disturbing absence, in Africa. And that, in turn, confirms once again the extent to which the idea of development as industrialization has been completely abandoned in the last few decades. Free market economics has come to advise poor countries to stick with their current primary agriculture and extractives industries and "integrate" into the global economy as they are. Today, for many champions of free markets, the mere presence of GDP growth and an increase in trade volumes are euphemisms for successful economic development. But increased growth and trade are not development.
For example, even if an African country like Malawi achieves higher GDP growth rates and increased trade volumes, this doesn't mean that manufacturing and services as a percent of GDP have increased over time. Malawi may have earned higher export earnings for tea, tobacco, and coffee on world markets and increased exports, but it is still largely a primary agricultural economy with little movement towards the increased manufacturing or labor-intensive job creation that are needed for Africa to "rise."
The failure to mention industrialization thus renders most comparisons of growth in Africa and East Asia spurious. For example, the Time article, which suggests that, "during the next few decades hundreds of millions of Africans will likely be lifted out of poverty, just as hundreds of millions of Asians were in the past few decades," cites the divide that has opened up between rich and poor in China and India as a warning that inequality could also become a problem as Africa's progress continues. The Economist article cited a World Bank report that claims that "Africa could be on the brink of an economic take-off, much like China was 30 years ago," noting that, in both cases, a mass population of young workers stood at the ready to boost growth. It also touched on the importance of education: "Without better education, Africa cannot hope to emulate the Asian miracle."
There are, of course, several indicators that offer a more precise picture of how well Africa is developing (or not). We can look at whether manufacturing has been increasing as a percentage of GDP, or whether the manufacturing value added (MVA) of exports has been rising. In these cases the comparison between Africa and East Asia is actually quite revealing -- as demonstrated by a recent U.N. report that paints a far less flattering picture of Africa's development prospects.
It finds that, despite some improvements in a few countries, the bulk of African countries are either stagnating or moving backwards when it comes to industrialization. The share of MVA in Africa's GDP fell from 12.8 percent in 2000 to 10.5 percent in 2008, while in developing Asia it rose from 22 percent to 35 percent over the same period. There has also been a decline in the importance of manufacturing in Africa's exports, with the share of manufactures in Africa's total exports having fallen from 43 percent in 2000 to 39 percent in 2008. In terms of manufacturing growth, while most have stagnated, 23 African countries had negative MVA per capita growth during the period 1990 - 2010, and only five countries achieved an MVA per capita growth above 4 percent.
