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Recent Popular Reports about Africa’s Explosive Growth are Highly Exaggerated January 4, 2013

Posted by OromianEconomist in Africa, Corruption, Development, Economics, Uncategorized.
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“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. 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.”,1


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