Mon, Jun 10, 2013 - Page 9 News List

Africa could benefit by reflecting on Asian growth models

By Joseph Stiglitz

Between Saturday last week and Monday, Japan hosted the fifth meeting of the Tokyo International Cooperation on African Development (TICAD). The meeting is a reminder that, while the rest of the world obsesses over Europe’s economic travails, the US’ political paralysis and the growth slowdown in China and other emerging markets, there remains a region — sub-Saharan Africa — where poverty is almost the rule, not the exception.

Between 1990 and 2010, the number of people living in poverty (US$1.25 per day) across sub-Saharan Africa rose from less than 300 million to nearly 425 million, while the number living on less than US$2 a day grew from about 390 million to almost 600 million.

Still, the proportion of those living in poverty declined from 57 percent to 49 percent in this period.

Developed countries have repeatedly broken their promises of aid or trade. Yet Japan, still suffering from two decades of economic malaise, has somehow managed to remain actively engaged — not because of its strategic interests, but in order to meet a genuine moral imperative, namely that those who are better off should help those in need.

Africa today presents a mixed picture. There are some notable successes — between 2007 to 2011, five of the world’s 10 fastest-growing countries with a population of more than 10 million were in Africa. And their progress has not been based solely on natural resources.

Among the best-performing countries have been Ethiopia, where GDP grew by about 10 percent annually in the five years ending in 2011, and Rwanda, Tanzania and Uganda, where annual output has grown by more than 6 percent for a decade or more.

However, while some sources indicate that there are now more middle-class families in Africa (defined as having annual incomes in excess of US$20,000) than in India, the continent also contains countries with the world’s highest levels of inequality.

Agriculture, on which so many of the poor depend, has not been doing well. Yields per hectare have been stagnating. Only 4 percent of arable and permanent cropland is irrigated, compared with 39 percent in South Asia and 29 percent in East Asia. Fertilizer use in Africa amounts to just 13kg per hectare, compared with 90kg in South Asia and 190kg in East Asia.

Most disappointing, even countries that have put their macroeconomic house in order and have made progress in governance have found it difficult to attract investment outside of the natural-resource sector.

EAST ASIAN PATH

Japan’s engagement is particularly important not only in terms of money and moral support, but also because Africa may learn something from East Asia’s development experience. This may be particularly relevant today, with China’s rising wages and appreciating exchange rate underscoring rapid change in global comparative and competitive advantage.

Some manufacturing will move out of China, and Africa has a chance of capturing some fraction of it. This is especially significant, given that, over the past 30 years, sub-Saharan Africa has suffered from de-industrialization. Indeed, by the late 2000s — owing partly to the structural-adjustment policies pushed by the international financial institutions — manufacturing as a share of GDP in developing African economies was lower than it was in 1980.

However, a manufacturing boom will not happen by itself. African governments must undertake industrial policies to help restructure their economies.

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