A Fresh Outlook on Evidence, Analysis, and Policy for Economic Development in Africa
Abstract and Keywords
The keys to sustained economic growth and development lie in policy and investment strategy decisions taken within African countries. Our argument is ‘possibilist’: neither pessimistic nor naively optimistic. We draw on a wide range of economic and political economy research but also on research in history, anthropology, environmental science, agronomy, and more. The book pays attention to gender relations, offering thick descriptions of the ways in which the majority of African women struggle to survive. It pays closer attention than many to how data are produced and to the quality of evidence underpinning conventional wisdoms. It draws on an unusually wide range of types of evidence, qualitative as well as quantitative, historical and contemporary, providing a rich resource of references and a guide to additional reading. Our arguments through this book are often different from both those typically associated with mainstream neoclassical economics and those more common on ‘the left’.
1.1 The Air that Policy Officials Breathe
Every day policy officials are tasked with coming up with solutions to complex puzzles. They must do this in a context of (often) inadequate staffing levels and unreliable data; multiple claims on the resources at their disposal; and having to think strategically while under intense pressure to address short-term issues. At the same time, they must field the attentions of an array of domestic political forces and international agencies (international financial organizations, bilateral partners, international non-governmental organizations (NGOs), and a stream of beltway consultants).
All the while, they are breathing in an atmosphere thick with ideas. Some they may have absorbed while ploughing through a standard textbook on economics; some are part of the popular discourse of African nationalism; and some are supposed ‘universal truths’ about global political economy. Often, these ideas contradict each other. In short, being a policy official in an African—or any—country is difficult.
In this book, we will attempt to introduce some fresh ways of thinking about the complex economic policy problems facing many African countries. However, this does not mean we claim to know the policy answers. Policies have to be designed in detailed ways, addressing the specific needs of individual countries (and parts of countries) at particular times. Furthermore, as we argue in this book, often the most interesting policy design issues emerge during the process of policy implementation, where they either fail or at least do not turn out as was intended—policies can then be adjusted, improvised, and improved in response to these unpredicted problems.
Policy is made within a global and a structural context. In other words, countries are shaped by their histories, and their current options may be constrained by the often hostile characteristics of the international environment. Even so, we strongly argue that the keys to generating sustained economic growth and development lie within African countries, in the form of policy and investment strategy decisions. In this sense, following the economist Albert Hirschman, (p.4) we argue that policy officials can achieve better results by widening their horizons and adopting an attitude of ‘possibilism’ (see Chapter 5).
Sceptics, while perhaps acknowledging that the arguments and evidence presented in this book may be well founded, will doubtless assert that there is little chance that any policies arising from them can or will be implemented in Africa. Some might argue that there are too many ‘failed states’; too many economies dominated by rent-seeking, patrimonialism, and the ‘politics of the belly’. Others might argue that the weight of the continent’s colonial past is too heavy; that the noose of global economic governance rules is too tight. Contrary to this, we argue that while the policymaking process is complex, and its trajectory uncertain, there is often unexpected scope for adroit policy reasoning. Policies are designed and implemented through shifting coalitions among political leaders and policy officials, often blending conflicting interests and logics. The evidence—gathered both from our own long experience of working with African governments and from the work of others—is that there are in fact cadres of thoughtful, public-spirited policy officials and even politicians; and furthermore that there is ample demand from wage workers and the intelligentsia for industrial policies rooted in evidence rather than abstruse economic theory. This positive assessment is confirmed by discussions with thousands of policy officials attending more than ten years of residential schools through the African Programme on Rethinking Development Economics (APORDE), as well as those taking part in APORDE’s predecessor at Cambridge and in residential schools in African countries funded by the Mo Ibrahim Foundation/SOAS Governance for Development in Africa (GDiA) programme, not to mention by our more direct experiences of policymaking.
1.2 How This Book Differs from Others on the Economics of Africa
The spirit of possibilism is one of the things differentiating this book from other economics texts on Africa. Many of these are afflicted either by a profound pessimism—that, due to the legacy wrought by the continent’s colonial past and the current strictures of global economic governance imposed by the World Trade Organization (WTO) and the Bretton Woods Institutions, there is little that can be done—or by the overly optimistic idea that if only this or that barrier could be removed then a smooth, sustained, and inclusive path to economic development would naturally unfold. Possibilism, by contrast, is a form of realism: it reflects a ‘bias for hope’ but is rooted in a pragmatic, often somewhat depressing, awareness of the cruel historical record in Africa and globally. A record that is, in fact, the history of capitalist development.
It is important to state that this book it is not merely an ‘economics’ text, confining itself to narrow economic theory or research. Instead, we draw on the (p.5) work of historians, anthropologists, and political scientists; agronomists, soil scientists, and engineers; and here and there—for illustrative purposes—on works of art and literature. Economies and economic policies do not exist in a vacuum, sealed off from the social relationships, historical patterns of behaviour, power relations, and physical environments of which they are a part. Women’s participation in wage labour markets, for example, cannot simply be ‘read’ from abstract models of labour supply and demand, or from game theoretic models of household bargaining. Rather, this is often a product of skewed power relations and violent coercion within households and wider social institutions. Throughout the book, our approach to discussing gender relations is to offer thicker descriptions of the ways in which the majority of African women are struggling to survive.
There are two consequences of taking ‘interdisciplinarity’ seriously. First, there is an unusually wide range of references in this book. Despite citing an array of experiences and perspectives, we have, inevitably, failed to be comprehensive. Many gaps have been left, with the rationale for our specific choices the subject of some further discussion in Section 1.3. We do not expect most readers to follow up every thread and scholarly reference, but we hope at least that the references pique the curiosity of some, allowing them to delve further into their own areas of special interest and discover a variety of publications that economists often overlook. Unpublished doctoral dissertations (readily available on the web) are also rarely cited in textbooks, but can be an important resource and one of which we have made use.
There are other reasons to include a wide range of references. The most important of these is that we cite arguments with which we disagree. Too often, economics publications feature scant citation, with what little they do cite produced by a familiar stable of data-crunching workhorses. That prevents readers seeing where contrary arguments come from, or even sometimes realizing that contrary points of view exist at all. We are happy to cite arguments made by the economists of the World Bank and Department for International Development (DFID); as well as official reports produced by organizations such as the International Monetary Fund (IMF) but also the United Nations Conference on Trade and Development (UNCTAD), the International Food Policy Research Institute (IFPRI), the International Labour Organization (ILO), and so on. Many African intellectuals distrust the Washington institutions especially, and in this book we provide a number of reasons for querying much of the economic analysis promoted by the World Bank and the IMF. At the same time, we recognize that these institutions are not monolithic, that they are subject to internal conflicts and ideological shifts over time, and that they have been able to marshal unparalleled resources to undertake economic research in Africa. However, we also cite many other economists, from Adam Smith to Karl Marx, Joan Robinson through to Alice Amsden and Prabhat (p.6) Patnaik. This is done not to make a display of our erudition, but to expose readers to a range of different arguments, to support explanations given in the book, and to encourage policymakers, students, and scholars to be more confident in formulating their own nuanced responses to the pronouncements of mainstream economists traipsing through Africa.
The second consequence of taking interdisciplinarity seriously is that we understand the relationship between economics and other ‘disciplines’ differently from the way most mainstream economics scholars appear to. There is a strong current within neoclassical economics that claims to be able to explain not only market transactions but virtually every other kind of social phenomenon as well—a tendency amounting to ‘economics imperialism’. Some economists, for example, believe they can ‘explain’ the incidence and causes of civil (and other) wars in Africa though the application of neoclassical economic theory. Our approach, by contrast, comes closer to the ‘trespassing’ idea espoused by Albert Hirschman (see Chapter 6). We are open to learning from non-economists and advocate humility regarding the relative strength (and many weaknesses) of the methods employed by economists.
We also draw on historical experiences of capitalist development. This is not, we stress, due to some notion that everything will ultimately work out the same way it has in, say, the UK or South Korea; or that the path of African economies is determined by colonialism or its legacy. The outcomes and trajectories of capitalist expansion vary hugely and unfold through conflict and contingency. The implication of this is that past ‘lessons’ should not be relied upon, and that development trajectories are unlikely to repeat past experiences. Ethiopia will not follow the same pattern of development as Taiwan, nor Ghana that of Malaysia. Nonetheless, we remain convinced that a close study of the historical record of industrialization and uneven technological change is important. One reason is that it at least offers some evidence regarding the complexity of how economic change comes about, and what the implications of this are for employment and welfare. The historical evidence, though, should not be used lightly in order to highlight failure—for example, the alleged ‘failure’ of the Green Revolution in Africa—or as a cast-iron guide to appropriate policy in contemporary economies. There is, however, a hierarchy of plausibility, and evidence from a wide range of countries trumps anachronistic claims based primarily on ideological assumptions.
1.3 Types of Evidence in This Book
Throughout the book, we make use of the kinds of statistical evidence commonly employed by economists, both for individual countries and in cross-country comparisons. In doing so, we present a number of charts illustrating trends in (p.7) variables, drawing on both national and international statistical agencies. All this said, we take far more seriously than the majority of economics texts the charge that much of this statistical evidence is unreliable.
Huge numbers of academic papers and many well-known economics books are published without much thought being given as to whether the underlying data are accurate and comparable over time or between countries (or even parts of countries). This is not mere nit-picking. We argue, again and again, that policy officials cannot be expected to design, implement, monitor, and refine effective policies without the quality of evidence being taken more seriously. This applies to everything: do we really know how much coffee is produced in Ethiopia, or how much maize is produced in Malawi? Just how sure can we be about pronouncements on the level and rate of food availability growth in a given economy? How accurate are current estimates of the total population or the level and rate of urbanization in a specified country? There are a number of technically advanced econometric models laying claim to explaining patterns of growth across African economies, the majority of which have very little to say about the evidence being fed into their equations. Even if the underlying theories, concepts, and models appear sophisticated, such exercises cannot be taken at face value because of the lack of attention paid to the quality of evidence—in effect, it is ‘garbage in, garbage out’. Sometimes, the situation is even worse than a misguided faith in such econometric models. On several occasions, we have listened to senior economists make evidence claims in order to serve an ideological purpose, in the full knowledge that such assertions are misleading.
This points to one of the main purposes of this book: providing readers with the tools and confidence to question ‘expert’ evidence, claims, and arguments. It is also why we devote considerable space to the difficulties of economic analysis where evidence is poor. One of the key priorities for any effective policy official should be to constantly question the evidence, which is why in this book we cite authors with whose arguments we disagree. Readers—whether policy officials, graduate students, or researchers—need the tools to critically interrogate a wide range of positions before coming to their own conclusions.
Similarly, difficulties in trusting the evidence mean we do not restrict our analysis to ‘large-N’ statistical evidence, but also draw on other kinds of evidence where available and appropriate. It is worth noting here that our examples are ‘biased’ towards particular places in Eastern and Southern Africa, specifically Ethiopia, Mozambique, and South Africa. This is not because these countries are in any way statistically ‘representative’, but rather because of our general scepticism about evidence. We have more direct experience of policy debates in these countries and have carried out considerable primary research in them. Additionally, we have greater knowledge of what other sources of evidence are available, and why some published evidence may be unreliable. This is not to say (p.8) we know everything there is to know about these countries either. For Ethiopia, for example, we draw on research evidence from the Upper Awash Valley, but not, say, from the Raya Valley. Some of our evidence is unashamedly anecdotal, deployed with the aim of helping readers digest large doses of theoretical political economy. In short, we are happy to acknowledge that our coverage of Africa is far from comprehensive.
1.4 How the Book is Organized and the Main Arguments It Develops
Inevitably, policy officials will have limited time to devote to reading books from cover to cover. Thus, we have organized the book into four clearly defined sections.
Part I, opening with this chapter, sets the stage for later analysis and arguments. Chapter 2, on the contradictions of development in Africa, provides contextual evidence from a range of countries, as well as a wide array of socio-economic indicators, ranging from gross domestic product (GDP) growth rates to the incidence of teenage pregnancy. Going beyond this, however, the chapter makes two closely related arguments. First, capitalist development is everywhere, and always has been, a messy, non-linear, and often brutal process. It is, therefore, not possible to know at any particular moment where it is ‘headed’. This is an important point. Many commentators indulge in ‘African exceptionalism’, marking the continent out as different from the rest of the world. In reality, many of the things people point to as being peculiar problems of African economic development closely resemble historical experiences that have occurred in many places across the globe. Urban slums or abusive exploitation of mine and child workers are not pathologies of African development but have been at the heart of capitalist development everywhere. To be clear, while this does not mean we think African economies will evolve in exactly the same way as other parts of the world, there are important features worth abstracting and highlighting from global experiences of economic change. The second argument put forward in Chapter 2 emphasizes the extraordinary variety and contradictory characteristics of recent economic experiences both across and within African countries. If ‘Africa is not a country’—and it is remarkable how easily many people still resort to sweeping continent-wide generalizations—it is just as true that ‘Nigeria is not a country’. And beyond mere diversity, we argue that capitalist development in African countries, as elsewhere, has been contradictory: all good things do not go together.
In Chapter 3, we return to the atmosphere of ideas that policy officials inhale: the common-sense notions that are rarely questioned and that condense and then rain down in a repertoire of phrases and assumptions we refer to as ‘rhetorical (p.9) commonplaces’.1 We suggest that many of these influential ideas can be categorized as either naively optimistic or overly pessimistic, and in doing so aim to liberate policy officials from the institutionalized ideas they inherit and are under pressure to accept. What is distinctive about our argument is that we show how people who regard themselves as sharply opposed to each other often in reality share attitudes and even assumptions that are excessively optimistic or pessimistic. Nor are the ideas swirling around the policymaker consistent. For example, in some African cities it is possible to identify a poisonous atmosphere that combines elements of ‘neoliberalism’ with a Third World nationalism that in theory ought not to sit easily with neoliberal instincts. The ideas surveyed in Chapter 3 echo many of the ideas and analyses examined throughout the book. For example, a critique of naive hopes for ‘capitalism with a human face’ picks up the argument developed in Chapter 2 about the way capitalist economic development is and has always been messy, non-linear, and brutal, even as it produces historically unprecedented advances in welfare and human potential. Meanwhile, a critique of the pervasive ‘small is beautiful’ notion rehearses arguments developed in, for example, Chapter 6’s discussion of mega-projects and Chapter 9’s analysis of the productivity of small farms.
Part II addresses policy questions at the core of strategies for sustained economic growth, productivity improvements, employment creation, and foreign exchange generation. Chapter 4, the principal focus of which is investment, is noticeably longer than other chapters, the reason being that it makes a point of avoiding false distinctions between ‘macro’ and ‘micro’, or between macroeconomic policies and industrial policy. In it, we argue that African governments should as a matter of urgency raise their share of investment in GDP. Furthermore, they should proactively direct such investment towards activities that have the highest potential for increasing returns of scale and scope, for raising demand for labour, and for earning foreign exchange.
Access to foreign exchange is critical. If developing countries grow quickly, this inevitably results in a huge thirst for and therefore growth in imports, which can be very difficult to keep up with. Borrowing abroad or making requests for foreign aid can certainly help, but both potentially introduce new forms of uncertainty and can threaten the coherence of development strategies. Chapter 5 deals with these and other international dimensions of economic strategy. In doing so, it discusses trends in Africa’s net barter terms of trade and how these may affect policy choices, exchange rate policy, and the place of regional African (as opposed to broader international) trade within overall strategies of growth and development. In brief, we argue that sustained, broadly welfare-improving growth depends on maintaining a high growth rate of imports, which, in turn, requires (p.10) rapid export growth. A modestly competitive—that is, undervalued—exchange rate is one (necessary but not sufficient) way of supporting such growth. Regional integration among African economies may also have some positive consequences (though probably mostly in helping the largest firms in the most advanced economies across the continent). However, we argue that regional trade should not be promoted above exporting to large and growing high-value markets further afield. African intra-trade may be a complement to, but is certainly not a substitute for, an ambitious global trade strategy.
Our arguments about trade exemplify the possibilism we advocate throughout Part II and the book as a whole. This possibilism also extends to ‘big projects’ (e.g. large-scale irrigation) as well as to an overall strategy of rejecting all recommendations for balanced growth. Hirschman’s approach, discussed in Chapter 6, is not reducible to making the case for unbalanced growth versus balanced growth, but rather represents a profound difference in undertaking economic analysis and thinking about projects and policies in low-income economies. Above all, we take to heart Hirschman’s observation on how a country’s prospects for economic development should be considered. The great majority of economists—whether ‘left’ or ‘right’, mainstream or heterodox—seem to think that a country’s prospects are determined by what that country has and is: its previous history, its factor endowments, its linguistic fragmentation and geography. Hirschman argued that, instead, a country’s prospects are determined by what a country does, and by what it becomes as a result of this.2
Part III extends some of the arguments made in Part II and draws out their implications. Above all, it is concerned with the broad welfare of people in African countries, especially those on lower incomes, and women in particular. Chapter 8 argues that many myths and problems abound in how economists and international organizations define and measure poverty and how they design policies for poverty reduction, and that these myths help account for the record of such programmes. We contrast these with very different ‘stylized facts’ about who exactly the poorest people are. The poorest people live in small, not large, households. Also, while they live in households with a relatively high number of women, this is not the same as saying they live in ‘female-headed’ households. Additionally, the poorest people depend for their survival on access to wage labour opportunities—much of the problem results from the fact that such opportunities are often few and far between, and even when they are available the pay and conditions for the work involved are pitiful.
Wage employment—generating more and better jobs—is at the heart of this book. This, too, is surprisingly unusual, with many influential texts on Africa barely even mentioning employment. Even when they do, the focus tends to be on (p.11) small farmers, the self-employed, and entrepreneurial start-ups rather than on those working for wages. In fact, many people still classify as self-employment economic activities that are really wage employment. An example of this is the young men paid a wage for carrying passengers on motor cycles or for touting and ticketing car and mini-bus passengers.
The macroeconomic policies discussed in Part II have wage employment expansion as one of their main objectives. Chapter 8 argues that an overwhelming majority of the very poorest people have to work for wages—casually, seasonally—in order to survive, but that their poverty is exacerbated if the demand for wage labour in rural Africa is not sustained. Chapter 7 brings together a range of arguments about wage labour markets and relations, and again emphasizes the lack of good-quality data on labour markets and employment status as a serious failing of national and international organizations, as well as a major impediment to progressive policy design.
Chapter 7 is also where we argue that the prospects for rising productivity and poverty reduction are likely to improve in circumstances where strong trade union organizations can develop. Throughout the long history of capitalist development, trade unions and other workers’ organizations have played extremely important roles in protecting and bringing about improvements in working conditions. Many of these improvements were achieved after periods of protracted social conflict, rather than being the inevitable result of a smooth working out of shifting supply and demand, rising skills, and increases in productivity. For example, during the 1920s and 1930s Norway and Sweden were relatively poor economies, having some of the highest levels of industrial strife in the world.3
Unions have also played an important role in economies such as China, where, despite there being clear repression of unions, worker organizations have been able to generate changes in the law that have dramatically improved working conditions.4 And unions have been very important in African development, having been central to bringing about the end of apartheid and, more recently, at the forefront of the movement calling for regime change in Sudan.5
Raising agricultural productivity acts as a foundation for broader sustained economic development and should therefore be a priority for policy officials. This is so for a number of reasons. First, most of the poorest people in Africa will, despite rapid rates of urbanization, continue to live in rural areas for some time to come. Both small- and medium-sized farms, as well as functionally landless people reliant on wage incomes, depend for their welfare on rising agricultural productivity. Second, higher productivity in the output of food crops bought and consumed by African wage workers is a key part of a non-inflationary strategy to sustain profitability, investment, and growth (as well as political stability). Third, (p.12) agriculture is central to securing foreign exchange earnings that can allow for the expansion of imports, thereby fuelling investment and growth. Fourth, there is increasingly scope for agricultural production and processing to reap productivity and other gains previously associated exclusively with manufacturing, and that have wider spill-over effects throughout the economy. Chapter 9 is devoted to understanding the constraints on raising agricultural productivity in African economies, querying conventional arguments concerning the role of extension advice and micro-credit in raising yields, and to presenting arguments for what needs to and could be done.
Finally, in Chapter 10 (Part IV) we draw together the policy priorities that flow from earlier chapters. In doing so, we emphasize strategic policy priorities—and their rationale—rather than setting out a lengthy ‘must do’ blueprint. We have little faith that such a blueprint would stand any chance of becoming operational across such a diverse range of contexts and uncertainties, given that policy choices are in reality products of technocrats and politicians having to respond to the pressures of prevailing economic conditions as well as to powerful and often conflicting class interests. Additionally, all policies, once introduced, will probably have unintended and unpredicted consequences that can fundamentally change their dynamic.
We hope that this book provides officials with the confidence to raise questions, as well as the means to design, implement, monitor, and refine specific policies. We also aim to present students of economics with material that is both more challenging and exciting, and features fewer bland platitudes about Africa, than many other textbooks.
Our own arguments are explicit and many of them are deliberatively provocative. We do not hold back when criticizing work on African policy issues by other social scientists. We justify our many and robustly expressed criticisms because we make a consistent effort to outline alternative theoretical and practical proposals. For example, we not only show the limitations of the most popular approaches to rural labour markets and poverty, but constructively argue the case for a very different approach. In attempting to encourage debate and further reading, we try to emphasize how and why we differ from many widely accepted and fashionable views. Some of these differences are highlighted in Figure 1.1. (p.13)