Nov 26, 2011

The Secrets of the African Boom

This a great article by Edward Miguel, where he reviews the book Emerging Africa: How 17 Countries are Leading the Way by Steven Radelet.  
Steven Radelet's accessible and insightful new book, Emerging Africa, joins a growing chorus of voices explaining how and why Africa has turned the corner. 
. . .  
In Radelet's view, five main factors have conspired to turn Africa around. Expanding democratization has opened up governments, bolstering popular accountability. Improved economic policies have curbed the worst tax and regulatory policies that had plagued African households and investors. Debt reduction has freed up resources for education and health care. New technologies (most notably the ubiquitous cell phone) have boosted Africans' access to markets. And the rise of a new generation of energetic leaders, the so-called cheetah generation (in the evocative terminology of the Ghanaian scholar George Ayittey), has brought new ideas and attitudes to the fore. 
. . .   
Radelet also looks beyond government decisions, describing how individual Africans have accelerated these transformations, often at great personal risk. He profiles such visionaries as John Githongo, Kenya's fearless anticorruption crusader, and Patrick Awuah, a Swarthmore College graduate who left a lucrative career at Microsoft to return to his native Ghana, where he founded Ashesi University, a liberal arts college that aspires to educate a new generation of ethical and entrepreneurial African leaders. There is finally enough oxygen in these increasingly free countries for talented Africans to reimagine and rebuild their societies. 
What is the key . . . 
Although all five of the factors Radelet describes have plausibly played a role in Africa's nascent transformation, the essential question, of course, is, which one has contributed the most? Radelet's answer is democratization. The relationship between democracy and economic growth in Africa, he writes, "is crystal clear: democratic governments . . . have been successful, while authoritarian governments have by and large been failures." He goes on to note that 13 of the 17 countries he singles out as emerging success stories have made the transition to more or less full-fledged democracies since the 1990s, whereas the pace of democratic reform has been far slower in both oil-producing countries and economic "laggards." 
Some handicaps of the book:
But in identifying democratization as the leading cause of Africa's recent economic turnaround, especially in the countries he labels as emerging, Radelet simply pushes the question of causality back another step. Left unanswered is why some African countries, such as Ghana, developed successful democracies in the 1990s, whereas others, such as Côte d'Ivoire, Ghana's neighbor, tried and failed. And why did democracy take root only then, whereas earlier democratic experiments in the 1960s (in Ghana, Kenya, and Sierra Leone, to name a few) collapsed within an election cycle or two? Radelet highlights the role that the end of the Cold War played in creating more breathing room for real political competition in the 1990s. No longer did intervening superpowers distort the political process either directly, as the United States did when it backed the assassination of Congo's first prime minister, Patrice Lumumba, or indirectly, through arms sales and diplomatic pressure. But that is only part of the story. After all, democracy was reestablished in much of Latin America in the 1980s, when the Cold War was in full swing.  
Other reasons for current growth:
Radelet convincingly describes another way in which education promotes economic progress, beyond its impact through politics. He notes that there are simply many more skilled economists and policy experts in Africa today than there were in the 1970s and 1980s, as the more educated, younger cheetah generation takes center stage. This sharp improvement in technical capacity is reflected in the academic credentials of many recent African central bankers. Benno Ndulu, the current governor of the Bank of Tanzania, has a Ph.D. in economics from Northwestern University, is an internationally respected researcher, and has held high-level posts at the World Bank. Officials like him are willing to engage in more rigorous, independent, and creative policymaking than their predecessors; Tanzania's macroeconomic management during the recent global economic crisis was particularly sound.
The future of Africa looks bright indeed. Miguel does a pretty good job in this review, and it seems that the book correctly explains the "secrets" of the African boom. The current increases in productivity in Africa definitely respond to the factors mentioned in this review [I saw this paper that claims that the recent productivity comes substantially from the informal sector]. 
There is one thing however that is not mentioned: an ideological or cultural change from the values of a "traditional" society towards a market mind-set. In this regard Polanyi's book The Great Transformation is key to understand these cultural transformations in Africa. Africa is going to its own "great transformation."  
I thank Joseph Cole for the pointer. 

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