Africa's Rise a Myth? Bring on Authoritarian Capitalism Instead

analysis

Photo: Rodger Bosch/MediaClubSA
Container ships in Cape Town harbour.

The 'Africa rising' narrative may be questionable and misguided, but so too is the suggestion Africa should blindly follow the authoritarian developmental states of East Asia.

In his recent Foreign Policy article, Rick Rowden makes the case that Africa's low levels of manufacturing and industrialisation suggest the continent is not the 'growth miracle' that some commentators believe.

His piece, a response to bullish outlooks from McKinsey, The Economist and Time magazine among others, dismisses talk of Africa's rise as a "myth". Since African economies make up a very small share of global manufacturing, he argues, they cannot be spoken of in the same breath as the Asian economies.

Leading by example?

But while Rowden rightly draws attention to the irrational exuberance common in the 'Africa rising' narrative, his argument is deeply flawed in both its analysis and prescriptions.

Firstly, Rowden gives a glossy, airbrushed description of the East Asian 'growth miracle'. Rowden says this group - often referred to as the 'East Asian tigers' of South Korea, Taiwan and Singapore, followed by China - managed to rapidly build manufacturing capacity, creating jobs very quickly. Since East Asia's industrial policies "worked so well", Rowden argues, African economies should, by implication, follow suit.

While East Asia's industrial policies certainly delivered rapid growth, however, they have been largely deployed via authoritarian, repressive frameworks that entailed frequent and sustained infringement of people's rights.

We hear plenty about benevolent technocrats, generous subsidised credit, carefully designed export strategies, and industrial protection for domestic companies from advocates. But we hear much less about military rule, labour repression, opaque lending to industrial bigwigs, or mass protests against undemocratic constitutional changes, all of which were also integral features of this 'developmental state'.

Imagine if an African government today imposed martial law and hold down wages in the name of export-competitiveness, to crush labour rights and arrest union leaders, give an amnesty to corrupt industrialists as long as their companies meet export targets, and to allow large-scale US food aid to sweep farmers off their land and out of their livelihoods.

Sound appealing? This is South Korea during its 'miracle' growth phase. And while South Korea's land reform programme (initiated, it should be said, by the US military) led to greater equity in land distribution, some argue it did not improve the situation for farmers, whose debts had to be repaid in five years and who faced usurious interest rates to pay the government which was also keeping producer prices artificially low.

But even with repression and authoritarianism, the likes of South Korea and Singapore did not achieve transformation in a single decade, the period which 'Afro-optimists' are referring to in their analysis, and which Rowden dismisses on account that it has not delivered a structural revolution yet.

And this is a caution not just borne out by East Asia's experience. Consider England - mentioned (normatively) in Rowden's article as another (in fact, the original) example of the 'development as industrialisation' mantra.

Let us refresh our memory about what England's 'industrialisation' involved: enslavement and colonisation of half the world to deliver raw materials, exploitation of the domestic working class to deliver cheap labour, and the enclosure movement to privatise land for the purposes of lifting agricultural output, pushing all but the landed gentry out of their livelihoods and into the factories and mines where many perished.

Dodgy data

Even if we focus purely on economic data, Rowden's analysis is weak. His view of the continent's manufacturing sector seems to be based on just two reports, one from the UN, the other from the African Development Bank (AfDB). Any AfDB analysis should be taken with a pinch of salt. This, after all, is an institution which recently claimed there were 300 million middle class people in Africa, classifying 'middle class' as those earning between $2 and $20 per day. 60% of this group earned between $2 and $4; barely out of poverty.

Based on such limited data, the critique misses on-the-ground advances in manufacturing. Industrial processing zones are emerging across many African markets, from Ghana to Ethiopia, providing assembled goods to a range of Western and Eastern firms including textiles, footwear, wood and furniture, leather, auto and consumer products. The Africa Growth and Opportunity Act, an item of US legislation, has resulted in the three-fold increase in US non-oil imports from Africa across a range of sectors, including textiles and apparel, processed agricultural products and footwear.

Rowden's analysis is also limited because it seems to take manufactured exports as a simple proxy for manufacturing. This misses value-added in manufacturing to meet domestic needs.

A recent study from Johns Hopkins University shows the rise in Chinese private, as opposed to state-backed, investment in Africa, with a focus on meeting domestic needs in larger markets like Nigeria and on labour-intensive manufacturing activities, followed by service industries. By primarily focusing on manufactured exports, Rowden misses this completely.

The export focus is further problematic because it propagates a simplistic view of manufactured items as 'good' and primary commodities and natural resources as 'bad' types of exports, stating that a heavy dependence on natural resource-based manufactures is an indication of a "low level of economic diversification and low level of technological sophistication in production".

This is a long-standing view, famously articulated by economists Raul Prebisch and Hans Singer. But is it that simple? Some have already pointed out that on this narrow view, a country full of industrial sweatshops would be called 'developed' regardless of the quality of life for citizens.

More fundamentally, the idea that countries move from natural resource-based exports to manufactured ones is too simplistic when we look at how economies actually function. The trade profile of many of the now rich and industrialised economies of the world - including Canada, the US, Norway, Australia, and New Zealand - still includes major export shares of natural resources and commodities.

Emerging market powerhouses are often dominated by natural resource-based exports too, yet few people talk them down. Agricultural, fuel and mining products account for 63% of Brazil's exports, compared to 32.8% manufactured exports - and it imports 72% of its manufactured goods.

While significantly reliant on natural resources, this is a country that - through its policy initiatives, especially in the areas of social protection - has reduced inequality at a steeper rate than almost anyone historically, and has achieved the highest improvement in wellbeing of any country over the last five years, according to the Boston Consulting Group.

Chile, now an OECD member, has an economy dominated by natural resources, notably copper. Manufactured items account for a mere 13% of its exports. And one of Africa's most successful 'developmental' states - and one of the few globally that has a representative democratic model of governance - is diamond-rich Botswana.

Rowden seems to take natural resource-based exports as a proxy for development by noting that they dropped "as low as 13 per cent in 2008' in East Asia and the Pacific, seemingly signifying success. That is simply an error.

These economies have low shares of natural resource exports because they do not have many natural resources beyond what they consume, thus they are not major exporters. One only needs to look at the feverish efforts of even lower tier Asian national oil companies in Africa to know that these economies would be very pleased to have more of such assets under their feet at home if geological fate had so ordained it.

The point to make here is that countries do not necessarily 'do away' with natural resource-based exports once they become industrialised or head in that direction, like children discarding stabilisers on their bicycle. What matters for developmental success is not simply whether a country sells natural resources of manufactures. Success hinges on much more complex issues, surrounding institutions and the incentives they generate.

Measured optimism

Bullish accounts of Africa may have fallen victim to irrational exuberance, with talk of soaring incomes, flat-screen televisions and a 300 million-strong middle class.

But glibly dismissing Africa's rise as mythical will not do, especially on the grounds Rowden gives. If economists are to prescribe the East Asian model and advocate rapid industrialisation, they should not airbrush its social and political realities - the authoritarian power structures integral to rapid capitalist transformation - out of the picture. Moreover, much more fieldwork is needed to establish exactly how much value addition is occurring in Africa. Citing two reports will not do.

African economies will, of course, need to develop labour-intensive sectors, spanning assembly-based production, services and a range of manufactured goods. Indeed, this is already happening. But it may occur in a distinctive manner. 'Rapid' change is not a value-neutral term and if you advocate it, be prepared to accept the policy frameworks that have enabled it.

'Developmental state' advocates may argue that pain is the price of success, and that future generations will benefit. But we ought to keep in mind both the process and the goals, and not ignore the realities of the former. At the least, before pushing such models, we should accept Confucius' charge: "Never impose on others what you would not choose for yourself".

Adam Robert Green is senior reporter for This is Africa, a bimonthly publication from the Financial Times Ltd., and a contributor to beyondbrics, the emerging markets news and blog website from FT.com. He has a masters in development studies from the School of Oriental and African Studies. His writing has also been published in China Post, the Middle East Institute, and Daily News Egypt.

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Comments Post a comment

  • ras sideeq
    Jan 29 2013, 16:06

    I APPLAUD MR. GREENS FREATURE!!! WHAT I WOULD LIKE TO ADD IS THAT THOUGH OVERSTATED, THOUGH IT IS OF OF AFRICA GROWTH UNDERSTATED DEFINITLEY SHOULD NOT BE??." WHAT IS IMPORTANT IS THE RESSILIENCE OF AFRICANS, AFTER SHERE EFFORT THEY ATTARCT TO THEMSLVES TO ACHIEVE". " AFRICA WITHOUT DOUBT IS RISING,' SOMETHING THE AFRICAN HAS BEEN DEPRIVED OF FOR DECADES. WITH IMMORAL EXTORTIONARY IMF BILLS DICTATORS PUT IN PLACE BY A DICTATIVE WEST; AND OF COURSE AS MENTIONED THE FACT THAT AFRICA WAS DECIMATED BY EUROEPANS EVEN GOING AS FAR AS ENSLAVING THE PEOPLE FOR CENTURIES!!!!!!!!!!! THIS HAS BEEN SOMETHING NEVER HEARD OF IN HISTORY. THEY EVEN WENT AS FAR AS REWRITING BOOKS OF HISTORY BOOKS OF THEOLGY PRESCRIBING A FAI;LURE OPPRESSIVE SYSTEM AS ONE TO GLORIFY AND EMULATE??? HISTORY HAS TAUGHT US THAT THESE FALACIES ARE FRAUDS VEREY SHORT TERM AND UNSUCCESSFUL. AS WEE THE DOWN TURN OF EUROEPAN AND WESTNERN STATES THEY ARE ALL IN DEBT THEY OWE WAY OVER THIER GDP THIER DEBT CAN NEVER BE PAID IN FIFTY LIFE TERMS SO WHO DID THIS BENIFIT THEY ALSO DESTRYED THE ECO SYSTEM CONTRIBUTING T0O GLOBAL WARMING AND SO MUCH MORE LESS AFVOURABLE ACOLADES!!!!!. WHAT HE WEST AHS SUCCEEDED AT IS CORRUPTING THE PLANET WITH CRIMINALITY SHORTCUTS WITH FRAUD AS THE MANTLE TO RICHES!!! AFRICA IS LEARNING FROM ALL THESE LESS THSAN DIGNIFIED EFFORTLES DEPLORAABLE LESS THAN ADMIRABLE WAYS TO INSURE THAT THE PEOPLE LIVE IN PEACE SERCURITY OF WELL EARNED LIFE STYLES. HONEST GOVERNMENST THAT DO NOT SUPPORT CRIMINALITY THE WAY THE WEST DOES. BANKS FINANCIAL INSTITUTIONS BEING REWARDED FOR THEFT SWINDLES LYING IN BED WITH DRUG BARONS MURDERERS USING DEATH AS A WAY TO INSURE PROFITS!!!! THE LIST GOES ON AND ON!!!!!

  • Gido kibukosya
    Feb 3 2013, 22:00

    John Karanga Feb 27 2012, 22:06 Report Abuse Nairobi, Kenya – Police in Nairobi have arrested and placed in custody a manwho allegedly had sex with a pregnant sheep. The high-pitched bleat of the sheep in the night attracted the attention of a resident farmer who caught the Noel Sanyanafwa, having sexual intercourse with the sheep tied to a tree. The Police sent the animal to the Veterinary Services Department to ascertain the truth of the matter. The farmer was returning from his farm when he caught the man half naked and in the act with the sheep.

  • Idealist
    Feb 8 2013, 03:36

    I agree with your observation that there are other factors that influence industrial development, like support structures and incentive frameworks. And that natural resource exports are still a part of most industrialised/ emerging market economies. But I'm not entirely convinced by your critique. Rowden's analysis was imperfect -yes -but I still think it is more convincing than your outlook because you have to keep in mind that its impossible to clearly articulate everything that Africa needs to do to develop. No matter how well you try, there will always be a scenario you have not considered - and by which you fall short. Also, are you are saying is its impossible to effect industrialisation (including growth in natural resource exports) without tyranny and cruelty? Reading all these "economic" arguments on Africa, I'm not sure you are considering the fact that Africa's development will benefit from hindsight that was not available to the Koreas and Chinese. In any case, China is too big a country and population and socially and economically fragmented to apply classic market theories to it. In fact visiting China 2 years ago, I was entirely convinced of the quote that "China is a medieval country with broadband" There is contrast everywhere. I think Africa needs to be compared with Eastern Europe or the likes of Vietnam and Cambodia - who in my view have slightly more in commmon with it.

InFocus

Is Africa's Rise a Myth?

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The "Africa rising" narrative may be questionable, but so too is the suggestion Africa should follow the authoritarian developmental states of East Asia, writes Adam Green for ... Read more »