How Africa Can Work
A new book shows that development is not a matter of chance, but of policy.
How Africa Works: Success and Failure on the World’s Last Developmental Frontier by Joe Studwell. Atlantic Monthly Press, 435 pages.
It seems like every man who has given any thought to Africa, and many who haven’t, has a pet cause for Africa’s perpetual dysfunction, which usually conveniently lines up with his preexisting world view. In How Africa Works: Success and Failure on the World’s Last Developmental Frontier, Joe Studwell provides a refreshingly non-ideological look at what has worked in those African states that have experienced high levels of economic growth in the post-1960 independence era. Identifying Botswana, Mauritius, Ethiopia, and Rwanda as success stories, the text examines the broader issues in Africa and then focuses on those four states. The conclusion he reaches is that, like the great successes of Asia, the African states which have prospered have generally sought broad-based political support and then largely ignored the advice of “orthodox” economists, the World Bank, and the International Monetary Fund, and focused instead on the development of an agricultural economy to create consumer demand, imposed capital controls in their early stages of development, and focused on coherent, government-led development plans. Even for people like me, who know a lot about Africa and think about it all the time, Studwell has done a remarkable job at providing a clear picture of the continent’s problems and giving a realistic but optimistic assessment of what the future may hold in those states where the political leadership manages to maintain focus on successful developmental policies.
The clearest thesis of this text is that, in states that have become affluent, development has followed the same general process. The modern world, however, is “pulling the ladder up” on Africa by applying rules and concerns that our own countries did not have when they were poor. This is a fairly common criticism, and broadly true, but it isn’t always clear what a person means by it. One simple example is countries which got rich off of the energy provided by oil paying African nations not to develop their economy with fossil fuels, due to global carbon concerns. What is freshest about this book is that it avoids moralizing and instead is entirely practical, which is the attitude that needs to be taken towards Africa’s economic problems.
For example, the book rejects the idea that democracy has any specific association with economic development, instead showing specific successful policy prescriptions that may be provided by any type of government (though he adds that democracy has other, non-economic, positive traits.) Similarly, he explains without moralizing why colonialism wasn’t economically positive for either side when practiced in Africa. Most notably, the text extensively discusses the garment trade as a rare form of low-skill factory work that can successfully be brought into undeveloped countries by outside firms and compete in global markets without subjecting readers to lamentations about “sweatshops.” Even slavery is primarily treated as an economic phenomenon, rather than subjecting the reader to constant admonitions about how slavery is morally bad and abusive towards slaves.
One of the most common misconceptions about Africa is that it is facing some sort of Malthusian population bomb. Africa as a whole has historically been extremely underpopulated, principally due to a high “disease burden” from parasites and other causes of early childhood death. It seems alarming that what was French Equatorial Africa has grown in population around 10 times since colonialism ended, but Africa had a population of only 230 million people in 1950, despite being about the size of the United States, India, China, and Europe combined.
It is a huge impediment to economic development simply to lack sizable cities, as Africa did at the start of the 20th century. Furthermore, there was no incentive to improve land, because there has been so much more arable land than people. Africa is only now reaching the level of population density that Asia had in 1960. We should remember that everyone at that time worried about Asia’s growing population; only three generations later, those same states are facing the opposite emergency. The reasons we imagine Africa to be overpopulated, beyond the distortions of the Mercator Projection making it appear smaller than it is, are that Africa’s population has grown faster than its economy, and that it has the least dense cities on Earth—commonly metal shacks stretching out endlessly instead of apartment buildings.
A common narrative of the failure of Africa’s post-colonial development is that they made the mistake of focusing on industrialization instead of improving agriculture. In many cases, the export plantations, often the only source of forex, were either broken up or given over to incompetent cronies of the new regime. There is truth to this, but the reality is that these plantations were always expensively subsidized by colonial governments in various ways, including infrastructure. What Studwell found is that for Africa’s development level it was much better to focus on smallholder agriculture, which is more efficient per acre. Part of the issue is that the greater “efficiency” of modern agriculture is in its low labor costs, and assumes a level of economic development that has consumers and an already occupied public. In reality, Africans spend a tremendous amount of time “milling around” because there are no jobs, and then those are people largely out of the economy, either as producers or as consumers.
In short, without smallholder farmers making money there is also no work in the cities, and no one to buy consumer products. It is very difficult for a domestic industry to grow enough to become an export business unless there are local consumers, and this rural surplus also peoples the cities with workers, which is the process England went through before and during industrialization. Because of this, “extension programs,” such as those the USDA Extension Agents the U.S. supplied in the early 20th century, along with fertilizer and improved seed subsidies for smallholders, are wonderful for economic growth. I am reminded of a quote from William Jennings Bryan’s famous 1896 “Cross of Gold” speech: “The great cities rest upon these broad and fertile prairies. Burn down your cities and leave our farms, and your cities will spring up again as if by magic. But destroy our farms and the grass will grow in the streets of every city in the country.”
Though there are differences between the states featured in Studwell’s book, and nothing went perfectly for them, the most important trait of all four African success stories was competent administration and following a development plan. (Although in the case of Botswana, the country benefited the most from wisdom and integrity in managing its discovered diamond resources.) The main challenge Africa faces that differentiates it from Asia (which Studwell spent much of his career writing about) is that there tends to be a great deal of ethnic diversity and recently created states, whereas the Asian countries usually possessed a strong, preexisting national identity. When policies have the clear goal of public prosperity, it is fairly easy to get “buy-in,” though still important to present your case to the public. In every instance it is also crucial to not embrace politics of grievance, be it against former colonial powers or privileged groups within society.
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Most notably, though, despite the 1980s African debt crisis, it was necessary to ignore the demands of the World Bank and the IMF and not to embrace free trade in goods nor currency to allow for domestic investment. It may seem obvious, both rationally and from the experience of history, that free trade between developed nations and undeveloped nations causes some problems for both, but this is anathema to the modern “orthodox” economist. A final interesting point is that, while I am among those who considered African foreign aid to largely be an unaccountable black hole, all of these successful African states received much more foreign aid than average, and it did help them. But the causality runs the opposite direction one would think: Donors favored those states due to their ability to finish projects on time and on budget, and thus to demonstrate that aid to Africa was accomplishing something.
The book’s weakest point is its curious failure to mention the rapid growth of investment in Africa’s economy by the United Arab Emirates. This bothered me enough that I contacted the author seeking comment, who told me the primary reason for that exclusion was to keep the book focused. He also downplayed the importance of that story, and mentioned that international investments in Africa are commonly routed through Dubai, likening the situation to using Hong Kong to invest in mainland China. I do not find this latter part a convincing argument, both because Hong Kong is part of China and, more importantly, because many of the UAE investments are from conglomerates owned by the royal families, blurring the line between state policy and private interest. Yet applying the lessons of the text, I find that UAE investments in agricultural land and mining are less of a concern than I believed, while their investments in renewable energy and logistics infrastructure are profoundly helpful for Africa’s economic growth. (Their involvement in a myriad of African conflicts is genuinely outside the scope of the text.) This didn’t leave anything noticeably lacking from the narrative to a normal reader, but to someone such as myself who has the role of the UAE in Africa on the brain, it felt like a glaring omission.
Overall, How Africa Works is an incredible work that presents an optimistic picture for the future of a continent that may contain half of the world’s population by 2100. It is of vital importance that Africa’s economic growth manages to surpass its population growth, and there is every reason to believe that with the continent’s young, energetic, and increasingly well-educated population it can do so. In this book, Studwell has shown which developmental policies work in practice. I suppose all that remains is for the world’s economists to decide if these developmental policies can work in theory.
