First up: (1) Things are not looking up for the “Africa Rising” story and we are only half-way through what was meant to be Africa’s decade. Ghana, just last year, was bailed out by the IMF. Kenya, this past week, announced that the IMF had offered the country a $1.5bn stand-by facility. In Zambia, the IMF concluded a two-week visit painting a very dismal outlook for the country. Zambia will soon need a bailout. In Mozambique, the authorities have had to renegotiate repayment terms on outstanding debts given the country’s lackluster economic performance. It’s also becoming increasingly likely that Nigeria, the continent’s biggest economy, might have to approach the “Fund” for help in plugging its budget shortfall.
(2) Ironically, the Economist, using data from the IMF, declared in 2011 that Ghana, Mozambique, Nigeria and Zambia would be among this decade’s star performers.
We don’t know whether to laugh or cry.
(3) As we said last year, Africa needs to industrialize if it’s going to meaningfully rise. That’s the lesson from history. Countries on the continent need to move away from the colonial legacy of depending on primary commodities (cocoa, copper, oil, et cetera).
(4) For a longtime, economists in the South talked at length about how the benefits of trade liberalization were exaggerated. After all, they had seen first-hand the devastation that the lowering of tariffs had wrought on labour markets in their countries. But these were dismissed as nothing other than the protestations of heretics by the powers that be. The case for ever “freer trade” was ironclad. Trade raised all the boats in the sea!
The free trade religion is now looking shaky even in the West. Recent statistical work by the MIT economist David Autor and his colleagues finds that increased trade between the U.S. and China has been utterly devastating for manufacturing jobs in the U.S. And this partly explains the rise of Trumpism.
American economists rule the world. Perhaps the obsession with free trade will now die.
(5) By the way, if you have an hour to spare you can listen to David Autor talk, in a very accessible way, about his work on trade and the disappearance of U.S. manufacturing jobs here. And one of our favourite economists Dani Rodrik had a set of interesting tweets on this very topic last week.
(6) At the blog Stumbling and Mumbling, which we secretly think is an apt description of the econ profession (shhh, don’t tell anyone), was this interesting post about how U.K politics and policymaking is dominated by private school types. Here’s an excerpt:
The problem is that the dominance of the privately-educated leads to one prism dominating political discourse, leading to a damaging lack of cognitive diversity.
We could rewrite this sentence as:
The problem is that the dominance of Western development economists leads to one prism dominating the development discourse on Africa, leading to a damaging lack of cognitive diversity.
(7) Relatedly, David Pilling of the Financial Times recently declared that “the only thing we know about African economies is that we do not know much at all”.
We wonder who the “WE” is in Mr. Pilling’s statement. Perhaps “WE” stands for Western Economists?
(8) Okay, for some good news. According to the Economist, agriculture production across much of Africa (Ethiopia, Mali, Rwanda, Zambia et cetera) is improving quickly. Which is a good thing.
(9) Curiously though, the Economist seems to think this is a result of market reforms started in the early 80s and 90s. Our reading of the evidence, at least for Zambia and Malawi (countries that we are familiar with), actually suggests the reverse. Agriculture production in the two countries was revived as soon as the state reintroduced subsidies (see the scholarly evidence for Malawi and a chart we put together for Zambia).
(11) “It’s easier for North Americans to travel within Africa than Africans themselves”. This is shameful and Africa needs to fix this. The economic benefits of increasing intra-African mobility are potentially large. Ghana’s recent announcement that it would grant visas on arrival to citizens of the African Union is a giant step in the right direction. Other countries need to emulate this; and
(12) Finally, we came across the following sentence while reading Charles Chukwuma Soludo and Thandika Mkandawire’s edited volume African Perspectives on Structural Adjustment:
It is estimated that about 100,000 expatriate technical-assistance staff work in Africa, meddling in every aspect of policy analysis, advise, policy-making, and implementation and gulping up $4billion per year.
Too many cooks spoil the Egusi Soup.