The first surprising idea in Joe Studwell’s How Africa Works was an unfamiliar-to-me explanation for low economic growth in the post-independence decades. Whereas usually high African population growth rates are framed as challenges, Studwell convinced me over the course of the book that low population density is an important reason why most countries failed to develop large manufacturing sectors. Only now, with Africa reaching the population density of Asia in 1960, are there enough people to form large consumer markets and share the fixed costs of infrastructure.
Why were there so few Africans for so long? The disease burden and slavery are well-known reasons. I did not know that the continent’s soil conditions for agriculture are often poor. And I was astonished to read that “The crops that were grown were raided by an army of elephants that in 1800 was 25 million strong (as opposed to just over 400,000 today) and knew no fear of humans” (p. 4). The decline of megafauna as a precondition for economic development was an uncomfortable framing for me.
Studwell’s perspective on the ups and downs of African politics since independence is equally fresh. European state formation occurred over centuries, with wars interstate and civil playing important roles. Nation building in modern African states—many of which feature extreme ethnic fragmentation and 75 years or fewer of existence—will take a long time, just like in other regions.
The developmental playbook
This is not to say significant changes are unnecessary. Studwell’s three-step development program for African countries is interesting for being identical to the successful strategies of East Asian countries that he highlighted in his 2013 book How Asia Works. The main argument of How Africa Works is to apply the same recipe that made countries like China, Taiwan, and South Korea grow.
The first step in Studwell’s framework is establishing a “developmental coalition”. This has two key ingredients. First, countries should form inter-ethnic governments to give all a stake in development and avoid conflict. Botswana and Mauritius are two countries who did this well. Second, governments should make and implement multi-year plans. Ethiopia under Meles Zenawi stands out in the book for the way government officials studied the experiences of East Asian countries and crafted economic plans adapted to local circumstances.
The Zenawi administration obsessed over increasing the agricultural productivity of smallholders, the second step in Studwell’s framework. Studwell argues that smallholder productivity exceeds the productivity of large-scale farms in Africa. This surprised me, and I think it is contested in the literature. But I do believe that smallholder agriculture provides more jobs than large-scale, and in doing so creates demand for manufactured products, the third step.
I had the most trouble with the industrial policy section of the book because manufacturing does not supply as many jobs or as much economic growth as it used to. The Economist called this the “manufacturing delusion”. Dani Rodrik is cited extensively in the book, but Rodrik has become a “manufacturing skeptic”, now emphasizing the “development of productive capabilities in labour-absorbing, mostly non-tradable services”. Since Rodrik has changed his mind, I’m puzzled why Studwell hasn’t.
Capital controls should generally be used to support both agriculture and manufacturing, Studwell argues. If the wealthy cannot move funds offshore, they will be more likely to invest domestically, helping to create large firms that can reach the technological frontier and compete internationally.
Should you read this book?
I enjoyed the book most as history. The first third explains why the conditions for economic growth were so bad at independence, supporting Studwell’s long view on nation building. For example, former Tanzanian president Julius Nyerere observed, “The British Empire left us a country with 85 per cent illiterates, two engineers, and twelve doctors. When I left office [in 1985], we had 9 per cent illiterates” (p. 310). Rapid growth in educational attainment has been a main area of progress in many African countries.
The middle of the book studies Botswana, Mauritius, Ethiopia, and Rwanda because these countries achieved some of the key steps for economic growth: a developmental coalition, increases in smallholder agricultural productivity, and/or expanded manufacturing. The successes of these four countries are somewhat familiar, so I appreciated how Studwell spent about half of each chapter also explaining the mistakes these countries have made.
The final third becomes somewhat repetitive, but it is effective pedagogically: I only needed to consult the book twice (to find the two quotes) to write this post. Studwell predicts a mixed economic future for Africa, with coastal East and West Africa becoming more prosperous and interior countries continuing to struggle. Agricultural productivity should continue to grow, agricultural processing (a kind of manufacturing) has become widespread, and venture capital to the continent is increasing (though it remains small, and the difficulty of exiting investments seems like a major constraint).
Though I’m mostly persuaded now that more people is good economic news, I keep thinking about those 25 million elephants. The 400,000 that remain today depend on protected areas like national parks that face pressure from human settlement and agricultural expansion. These areas also generate economic benefits for the people who live near them, such as jobs in the tourism industry. I hope that a more populous Africa achieves the economic growth Studwell thinks it will. And I hope countries choose to conserve wild areas and animals along the way.
read more: https://blogs.worldbank.org/en/impactevaluations/making-africa-work-like-asia
