Category Archives: Crescimento Africano

Antena 1 – Entrevista a Alexandre Abreu

No dia em que o Banco Mundial divulgou um relatório que apresenta perspetivas de forte crescimento na África subsariana, o investigador do Instituto Superior de Economia e Gestão (ISEG) e especialista em assuntos africanos Alexandre Abreu afirma que se tem verificado desde o início deste século uma inversão da tendência que apontava para um continente perdido.

Entre 2000 e 2010, seis dos dez países com crescimento mais elevado foram países da África subsariana, liderados por Angola. Este foi mesmo o país do mundo que registou a mais elevada taxa de crescimento média anual durante esses dez anos, à frente da China.

Nesta entrevista conduzida pelo jornalista Nuno Rodrigues, Alexandre Abreu aponta como causas para este ritmo de crescimento da África subsariana o facto de se partir de uma base muito reduzida, o que faz com que o afluxo de investimento tenha um peso muito elevado no PIB destes países. O economista aponta ainda outras causas, como o aumento do preço das matérias-primas – petróleo, carvão, gás natural e produtos alimentares –, o aumento das remessas dos emigrantes, a exploração do turismo, e a aposta em novos parceiros de construção de infraestruturas, nomeadamente China, Brasil e Índia.

Foto: Alice Vilaça/Antena1

2013-01-16

via Antena 1 – Entrevista a Alexandre Abreu.

via Antena 1 – Entrevista a Alexandre Abreu.

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‘Africa rising’: TIME magazine agrees with The Economist

BUSINESS FOCUS, FEATURE ARTICLES | BY JACO MARITZ | NOVEMBER 24, 2012 AT 19:34

At the end of 2011, The Economist magazine caused quite a stir when it came out with a cover titled ‘Africa Rising’ together with an illustration of a boy flying a rainbow-coloured kite the shape of the continent.

The reason for all the fuss was that 11 years earlier the publication called Africa “the hopeless continent” on one of its covers. The accompanying article painted a picture of a continent ravaged by war, famine and disease.

“Since The Economist regrettably labelled Africa ‘the hopeless continent’ a decade ago, a profound change has taken hold,” said last year’s article, headlined Africa’s hopeful economies: The sun shines bright. It went on to mention that Nigerian cement tycoon Aliko Dangote has overtaken Oprah Winfrey as the richest black person and that countries such as Ghana, Ethiopia and Mozambique are now among the world’s fastest growing economies.

Over the past year, many commentators have used The Economist’s U-turn on Africa as confirmation of the continent’s changing economic fortunes.

This week TIME, the world largest weekly printed news magazine, also highlights Africa as the “world’s next economic powerhouse” on its cover.�Surprisingly, TIME’s cover and the article inside have the exact same title as last year’s The Economist cover: ‘Africa rising’.

The latest issue of TIME magazine has the same title as a cover by The Economist a year ago.

In the competitive world of media it is somewhat strange that a magazine of TIME’s stature�would go to print with a title the same as a magazine that could be seen as one of its competitors.

TIME also doesn’t seem to think that Africa will sell enough magazines in markets such as the US and Asia. Every week the magazine publishes four editions: for the US; Europe, Middle East and Africa; Asia; and South Pacific. The ‘Africa rising’ cover, however, features only on the Europe, Middle East and Africa edition, while the other three editions lead with an article about the nutritional value of frozen food, written by celebrity surgeon Dr Oz.

In a colourful article, TIME journalist Alex Perry points out that despite Africa’s rapid economic growth over the past decade, the continent still faces numerous challenges, especially converting growth into jobs. “If Afro-pessimism is outdated, undiluted Afro-optimism is premature,” notes the article.

Perry also says Irish musician Bob Geldof’s evolution from the organiser of Live Aid to the founder of a $200 million Africa-focused private equity fund, is evidence of the region’s improving business environment.

While media industry commentators might poke fun at TIME for its unoriginal cover, business people with an interest in Africa’s improving image have most likely already made mental notes to include the cover in their next conference slide-show presentations.

***

Editor’s note: After this article had been published, a How we made it in Africa reader pointed out that TIME magazine had in fact in March 1998 also published a cover with the title ‘Africa rising’ (see right).

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via ‘Africa rising’: TIME magazine agrees with The Economist.

via ‘Africa rising’: TIME magazine agrees with The Economist.

BBC News – Viewpoint: Binyavanga on why Africa’s international image is unfair

BBC News – Viewpoint: Binyavanga on why Africa’s international image is unfair.

Viewpoint: Binyavanga on why Africa’s international image is unfair

Madonna in MalawiShould Madonna be Africa’s president?

Binyavanga Wainaina, Kenyan author and a past winner of the Caine Prize for African Writing, argues that the world has got its image of Africa very badly wrong.

Start Quote

Africa’s image in the West, and Africa’s image to itself, are often crude, childish drawings of reality”

Let us imagine that Africa was really like it is shown in the international media.

Africa would be a country. Its largest province would be Somalia.

Bono, Angelina Jolie and Madonna would be joint presidents, appointed by the United Nations.

European aid workers would run the Foreign Affairs Office, gap year students from the UK the Ministry of Health and the Ministry of Culture would be run by the makers of the Kony2012 videos.

‘Wholesome and ethnic’

Actual Africans would live inside villages designed by economist Jeffrey Sachs.

A view from Venezuela: “Africa has been oppressed and abused”

Those villagers would wear wholesome hand-made ethnic clothing, dance to wholesome ethnic music and during the day they would grow food communally and engage in things called income-generating activities.

For our own protection, American peacekeepers and Nato planes would surround the villages – making hearts and minds happy and safe.

We would give birth to only one baby per couple – this way we would not overwhelm poor, suffering Europeans with our desire to travel outside our villages and participate fully in a dynamic world.

We would not be allowed to do business with the Chinese and we would not be allowed to do business with the country formerly known as Gaddafi’s Libya.

Africa would discover the child in itself, and stop trying to mess around and be a part of the rest of the world.

Getting back to here, and now.

Any sensible person would say that to cede power to others to decide what you are has never been a good idea.

That is one of the reasons why Al-Jazeera exists.

Kenyan artist Cyrus Kabiru posing with artwork resembling sunglasses on February 1, 2012 in NairobiAfrica has numerous different images of itself to offer the world

Already, after 20 years of economic growth, as our countries – which are all very young – start to evolve and grow rapidly what starts to happen is that we start to look less cartoonish to ourselves and to others – as we export our entrepreneurs, our writers, our skilled people within the continent and to the rest of the world; as we continue to invest aggressively in digital technology; as we begin a new agricultural revolution; as our countries start to make larger political and economic unions.

Africa’s image in the West, and Africa’s image to itself, are often crude, childish drawings of reality.

These pictures and words are crude because crude things come out of little investment: Of money, of time, of attention, of imagination.

The picture becomes clearer, the more progress arrives. The more politics becomes lucid and accountable, the more roads, cables and railways are built.

Africa ‘not Switzerland’

That process has been accelerating for a while now.

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Everywhere I go, I see young people: confident, forward looking”

The human ability to learn, grow, and innovate is our most valuable tool.

Africa will never look like Switzerland.

One of the problems with the way it is written about is that it is measured in the present tense by how different it looks from the places that have developed a sophisticated and deeply documented sense of themselves.

Those nations and regions that got in earlier found themselves better able to project their own image to the rest.

There are parts of Africa that are not yet even committed to being in a nation-state as drawn in 1885 at the Berlin Conference, and in the 1960s by the great powers.

A view from Islamabad: “I think Africa is doing very well. Africa rocks!”

There are nation states that will survive those – and new nation states will emerge, new arrangements of people, new ways to manage resources, to use what is there.

There is work to be done. That is no question. Work for the brave, those full of imagination and desire.

There are a billion of us – of every human persuasion you can imagine.

Eight years ago, in my country Kenya, we had stopped imagining we could make anything work. Now Kenya is overwhelmed by new ideas, businesses, frictions, paint work, books, movies, magazines, and industries.

Everywhere I go, I see young people: Confident, forward looking. I have seen them in Lagos, in Rwanda, in the suburbs of London.

There is fresh concrete all over the continent. There are great challenges, but there is aggressive movement – and movement causes conflict.

The Africa Debate

Tune in to the BBC World Service at 1900 GMT on Friday to listen to The Africa Debate broadcast from Kampala: Is Africa’s image unfair?

Or take part in Twitter – using #bbcafricadebate – Facebook or Google+

What is much, much worse is stagnation. Places where people just sit and wait for fate. The post-IMF 1990s were like that – but that was more a moment than a permanent reality.

Things are changing fast.

The truth is, we have only started to see what we will look like.

The truth is, with the rise of China, we do not have to take any deal Europe throws at us that comes packaged with permanent poverty, incompetent volunteers and the occasional Nato bomb.

As the West flounders, there is a real sense that we have some leverage.

The truth is, we will never look like what CNN wants us to look like.

But that’s fine – we can get online now and completely bypass their nonsense.

Binyavanga Wainaina is the author of One Day I Will Write About This Place: A Memoir and founding editor of the literary magazine Kwani?

via BBC News – Viewpoint: Binyavanga on why Africa’s international image is unfair.

BBC News – Does Africa really benefit from foreign investment?

BBC News – Does Africa really benefit from foreign investment?.

 

via BBC News – Does Africa really benefit from foreign investment?.

Does Africa really benefit from foreign investment?
By James Melik
Reporter, Business Daily, BBC World Service

Unemployment is a major concern among the young which can sometimes lead to public disorder
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Africa foreign investment surges
Viewpoint: Why Africa’s international image is unfair
African economies have grown robustly over the past decade, but that has not solved the continent’s economic problems.

According to Mthuli Ncube, chief economist of the African Development Bank (ADB), this is because Africa has weak manufacturing and agro-processing sectors.

He further maintains that at least 70% of growth over the past decade has been driven by natural resources.

“Exploiting natural resources is capital intensive and does not create many jobs directly,” he says.

He says that for more people to benefit and to create more jobs, there has to be value-added processing of those resources.

“But more importantly, the answer lies in creating what is known as sovereign wealth funds,” he says.

“These are resources that can be used for creating venture funds, to support new entrepreneurs, new business ideas, which could then create jobs,” he says.

He points to Botswana, which has done a good job in creating sovereign wealth funds out of its diamond revenues, as an ideal example of how such a concept can work.

Inherent concerns
One of the key functions of the ADB is to advise African governments on their economic policies.

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Corruption is there, it will come in the way”

Mthuli Ncube
African Development Bank
Much of the continent remains poor and in some areas, youth unemployment stands at 50-60%.

“We were in Zambia recently, discussing the issue of youth employment with the whole cabinet and they were very receptive,” he says.

“We are working with them to see if we could set up clusters across Zambia – points where we could stimulate small to medium scale enterprises, support their ideas, build infrastructure, ensure electricity is available,” he says.

However, there are well-documented difficulties when it comes to getting governments involved in Africa – corruption and governance.

“We have to make it a mission and show the benefits of managing these resources transparently and efficiently through a sovereign wealth fund type structure,” he notes.

Adding value to mined resources will help to create more permanent jobs for Africans
“Corruption is there, it will come in the way,” he concedes.

“One of the reasons why some of the governments are corrupt or difficult to work with is because of the presence of natural resources, where the elite capture all the benefits and the rest of the people are poor,” he adds.

Foreign investment has played a huge role in Africa’s transformation over the past decade.

It certainly brings resources to the continent, but is that a problem if that is not under African control?

Cautious approach
Kenyan author Binyavanga Wainaina says: “We are in a season where there is an enormous amount of opportunity as many things are getting realigned.”

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That there are now more players in the marketplace with capital means we can negotiate things to a better strategic advantage”

Binyavanga Wainaina
Author
He says that the primary focus should be to change the continent politically and economically for its own benefit and, whenever necessary, to partner with whoever is able to do so for its own strategic advantage.

But does it worry him that there has been a significant amount of land bought in Africa by foreign investors who want to grow biofuels or food for themselves?

“We saw the direction that our cash crops such as coffee and tea went,” he says.

“It presumably brought in the foreign exchanges that sent us through development, but the indigenous economy of agriculture itself had to flounder and we live in a country, 50 years on, after having a pretty sophisticated agricultural system, where we still have people who don’t have enough to eat.”

He explains how due diligence and scrutiny has become more important, and that there are countries which are booming and which do not possess resources.

Partnership
A senior executive with financial services firm Ernst and Young, who specialises in Ethiopia and East Africa, welcomes foreign investment.

“If you want to create a riot in a conference room of big investors in Africa, bring up this issue called land grab,” says Zemedeneh Negatu.

“It has a certain connotation about it, but we need to be careful so that Africa does not squander these investment opportunities.”

From his perspective, foreign direct investment in Africa is a big plus, especially when other emerging countries have increased their economies by attracting investment.

“China is actively courting investment,” he says, “And Africa also needs to be able to attract it because it is a job creator.”

Mr Wainaina would also like to see more investment in the continent.

“I am very much for it in the present climate, where the Mafia-like grip that western establishments had over certain territories and business on the continent is up for grabs again,” he says.

“The fact that there are now more players in the marketplace with capital means we can negotiate things to a better strategic advantage,” he says.

Infrastructure across the whole continent has to be improved to help the economy grow
However, he does have a proviso.

“Just cash becomes corruption.” he says. “What we want to do is also have some degree of protectionism that allows our own industries to grow.”

Mr Negatu says that the current investment coming into Africa is a once-in-a-lifetime opportunity, but Africa needs to be smart about it in terms of policies, and building the capacity in both the public sector and the private sector.

“We need to engage the investors that are coming into the continent, so that both sides benefit,” he says.

“It is a partnership between the investors coming into these African countries and the African countries wanting the benefit for themselves as well,” he adds.

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Africa, oil and the West: Show us the money | The Economist

BARELY a month goes by without a new oil discovery in Africa. Only five of the continent’s 55 countries are neither producing nor exploring for oil. Most places are also extracting lots of lucrative minerals. A resource bonanza is in train across the continent, generating big government revenues and real benefits for Africans. Road networks are expanding, public services are improving. But most of this happens behind a veil of secrecy. Money sloshes out of public scrutiny at the insistence of officials and politicians who prefer it that way.

Even if squeaky-clean Western multinationals are involved, transparency over payments for resources is minimal. Ordinary people can rarely find out how much goes into government kitties. That makes it easier for insiders to line their pockets. Monitoring groups say corruption has been rising. Ministerial car parks are filled with the fanciest limousines. A lot of money still reaches public budgets, but without oversight it is often badly spent. Many new roads go nowhere or are barely used; shiny new hospitals are often understaffed.

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The resulting frustration can trigger violence. In Angola, Africa’s second-biggest oil producer, activists have been demanding a fairer distribution of revenues; the government has responded with a bloody crackdown (see article). South Africa has just seen the worst disturbances since the apartheid era, with 34 platinum miners shot dead during a wildcat strike. Resources can also fuel international conflicts. The two Sudans went to the brink of war earlier this year over oil.

African governments have become more democratic and better at delivering services. Yet the combination of rising mineral wealth and continuing poverty is explosive. After decades of misrule, even the most competent officials are often suspected of pinching funds. More transparency is what is needed to ensure that resource wealth is used better and distributed more fairly. Much of Angola’s income is managed by a national oil company that is shielded from oversight by commercial secrecy. The oil revenues of Equatorial Guinea, where three-quarters of the population live below the poverty line, are a state secret. This is both wrong and dangerous.

The challenge for Western firms and governments is how to help African citizens wheedle data out of their governments so as to hold them more to account. A decade ago Britain’s Tony Blair had a go, promoting the Extractive Industries Transparency Initiative. As many as three dozen countries, in Africa and elsewhere, agreed to publish details of payments from oil and mining companies. But the scheme was voluntary; the worst offenders either refused to join or dragged their feet.

Follow America’s lead

America’s Securities and Exchange Commission has now come up with a set of rules. The 1,100 resource companies listed on American stock exchanges, which make up half the global industry by value, will be required to publish all payments to foreign governments above $100,000. The European Union is talking of introducing similar requirements. It should do so.

Some Western investors say such rules involve costly red tape. Without some hidden payments to officials, business will be lost, they add. Divulging the details of every deal will give secrets away to competitors. Moreover, non-Western companies, especially Chinese ones, will gain an advantage because they will escape such scrutiny.

The bureaucratic cost will not be large, since companies will merely have to make public figures that are currently held privately. And some Chinese firms will find themselves subject to similar requirements, because many are, or plan to be, listed in America. Moreover, if the West changes its behaviour, China may too. After years of claiming that, unlike Western imperialists, it supports Africa’s people, not its dictators, it may feel it has to back the publication of data about payments.

But there is no guarantee that China will see the light; and, in the meantime, Western companies are likely to find themselves at a disadvantage. So be it. Western countries already spend money and political capital on trying to promote democracy, encourage development and discourage corruption in Africa. Helping Africa use its mineral wealth to achieve those ends is worth paying a price for.

via Africa, oil and the West: Show us the money | The Economist.

via Africa, oil and the West: Show us the money | The Economist.

África positiva está realmente na moda!

Rui Neumann

A edição de Setembro da revista Geo é dedicada inteiramente ao Continente Negro. O maior destaque vai para Angola, mas também para o “boom” tecnológico africano e o ensino universitário no continente.

No entanto, o que mais chamou a minha atenção são os cinco megaprojectos na área do ambiente que já estão em curso: Uma muralha «verde» de 7.000 km que atravessa a totalidade do Sahel (onze Estados) que pretende travar a progressão do deserto; Um canal de 1.300 km na República Centro Africana que terá como missão manter vivo o Lago Chade (este lago que ocupava um superfície de 25.000 km2 em 1964 está hoje reduzido a 2.500 km2); Construção de uma mega central fotovoltaica no Saara que se estenderá de Marrocos à Líbia e que permitirá em 2050 fornecer 15% da energia que a Europa necessita; Construção ao longo de 165 km de um parque eólico (com 365 turbinas eólicas) que abastecerá 20% da energia consumida no Quénia; Criação da maior reserva do planeta, localizada na junção de Angola, Namíbia, Botsuana, Zimbabué e Zâmbia numa área de 300.000 km2 que irá fundir 14 parques nacionais.

Quando se fala na balcanização de África estes megaprojectos contrariam esse “cliché” dado que todos são transnacionais. Sim! A África está em movimento.

via Wall Photos.

via Wall Photos.

Opinion: Could Africa be world’s next manufacturing hub? – CNN.com

Opinion: Could Africa be world’s next manufacturing hub? – CNN.com.

via Opinion: Could Africa be world’s next manufacturing hub? – CNN.com.

Opinion: Could Africa be world’s next manufacturing hub?
By Hinh T. Dinh, Special to CNN
June 20, 2012 — Updated 1033 GMT (1833 HKT)
Chinese shoe maker Huajian has built a factory outside Adis Ababa, Ethiopia, employing some 550 local and Chinese workers.
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Ethiopia
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STORY HIGHLIGHTS
Low labor costs and abundant resources are some of Africa’s manufacturing advantages
Rising costs of land and labor in China have begun to erode Beijing’s cost advantage
African countries can benefit from taking timely measures to develop manufacturing goods
Manufacturing can help Africa industrialize and create jobs for millions
Editor’s note: Hinh T. Dinh currently serves as a Lead Economist in the Office of the Senior Vice President and Chief Economist of the World Bank in Washington DC. He is the lead author of the “Light Manufacturing in Africa – Targeted Policies to Enhance Private Investment and Create Jobs” World Bank report.
Washington D.C. (CNN) — With domestic labor costs rising, many Asian manufacturing producers are now looking to relocate their factories in other regions of the world. Could Africa replace Asia and/or China as the world’s next manufacturing hub?
To be sure, Africa has a number of manufacturing advantages that it has yet to realize. Besides low labor costs and abundant resources, these include duty-free and quota-free access to U.S. and EU markets for light manufactures under the Africa Growth and Opportunity Act and the Cotonou Agreement.
Is this enough to offset Sub-Saharan Africa’s generally low labor productivity relative to that of its Asian competitors?

Hinh T. Dinh is a World Bank economist
Yes, if Africa can implement appropriate supportive policies to leverage its opportunities soon. This is the finding from a recent book by a team of World Bank economists. China dominates the global export market in light manufacturing, and its competitive edge far exceeds that of low income exporters that recently entered the global market.
But steeply rising costs of land, regulatory compliance, and especially labor in China’s coastal export manufacturing centers have begun to erode the latter’s cost advantage, a trend likely to accelerate in the coming years.
The ongoing redistribution of cost advantages in labor-intensive manufacturing presents an opportunity for Sub-Saharan Africa to start producing many light manufactures, enhance private investment and create millions of jobs.
Read more: Brazil competes with China, India to invest in Africa
According to new evidence, feasible, low-cost, sharply focused policy initiatives aimed at enhancing private investment could launch the region on a path to becoming competitive in light manufacturing.
These initiatives would complement progress on broader investment reforms and could foster industrialization and raise the market share of domestically produced goods in rapidly growing local markets for light manufacturers.
And as local producers scale up, product will improve, and experience with technology, management and marketing will accumulate, allowing them to seize emerging export opportunities.
In Sub-Saharan Africa, as in China and Vietnam, policies that encourage foreign direct investment can speed up industrial development and export expansion. Isolated successes can be multiplied, as with Ethiopia’s recent foray into selling cut flowers in EU markets: a single pioneering firm opened the door to an industry that now employs 50,000 workers.
Africa’s business potential
Previous studies identified long lists of constraints, including corruption, red tape, inadequate utilities, poor transport and skills, inadequate access to finance, and so on. In contrast, the book proposes smaller, more specific, and sometimes newly identified constraints.
Narrowing the analysis can make the reform agenda more manageable within the financial and human resource constraints of most African countries.
Take the leather industry in Ethiopia. This sector employs about 8,000 workers and exported about $8 million in 2010, a fraction of similar countries in Asia such as Vietnam. Ethiopia’s labor costs are lower than Asia’s and the country has Africa’s second largest cattle population, next to Sudan.
Read more: Why Asian giants scent opportunity in Africa
Furthermore, climatic conditions mean Ethiopian animal skin is among the best in the world. Yet the most binding constraint is the shortage of quality processed leather due to poor disease control, lack of quality processing of raw hides and restrictive trade policies on processed leather.
Once the problems are identified, the proposed solutions are straightforward. Treat ectoparasites (the skin disease that causes blemishes) at modest cost; allow imports and exports of raw hides and processed leather to help alleviate this constraint; and provide technical assistance.
Some of these measures require changing existing policies. Others require provision of public goods such as industrial parks that could be inexpensive.
Manufacturing relationships with China
Ethiopia’s comparative advantage in wages, productivity, and natural resources has led the Huajian Group, a Chinese shoe maker, to build a factory in Ethiopia in three months, with two production lines starting in January 2012, exporting 20,000 pairs of shoes a month and creating some 550 jobs.
So the opportunities and the preconditions are certainly there, provided African policy makers speedily seize them, as the book notes. But will Africa be the world’s next manufacturing hub?
Not likely. Manufacturing can be an unprecedented opportunity for Africa to industrialize and provide productive jobs to millions of Africans, especially young people who make up as much as 36% of the total working-age population; three in five of Africa’s unemployed are under the age of 25.
Read more: Is the West losing out to China in Africa?
But the emergence of China as a powerhouse producing a variety of manufacturing goods at very cheap prices thanks to the large scale and skilful exploitation of the supply chain means that not all manufacturing jobs will be transferred from China to Africa.
Due to widely varying country conditions, some African economies can take advantage of favorable wages and natural resources and benefit from taking timely measures to develop and export manufacturing goods.
But large-scale production requirements also mean that some jobs will be transferred to countries such as India, Bangladesh, Cambodia and Vietnam while others will move to China’s interior.
In short, the invisible hand of globalization will work to ensure a redistribution of cost advantages to the benefit of the ultimate consumers around the world.

What Is Development? | Owen Barder | Global Development: Views from the Center

What Is Development? | Owen Barder | Global Development: Views from the Center.

 

via What Is Development? | Owen Barder | Global Development: Views from the Center.

What Is Development?
August 16, 2012

By Owen Barder in Complexity, Economic Development, Global Development, Governance/Democracy Tags: Europe
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This is the first of three blog posts looking at the implications of complexity theory for development. These posts draw on a new online lecture by Owen Barder, based on his Kapuscinski Lecture in May 2012 which was sponsored by UNDP and the EU. In this post, Barder explains how complexity science, which is belatedly getting more attention from mainstream economists, gives a new perspective to the meaning of ‘development’.

The Nobel-prize winning economist Amartya Sen has twice changed our thinking about what we mean by development. Traditional welfare economics had focused on incomes as the main measure of well-being until his ground-breaking work in the 1980′s which showed that that poverty involved a wider range of deprivations in health, education and living standards which were not captured by income alone. His ‘capabilities approach’ led to introduction of the UN Human Development Index, and subsequently the Multidimensional Poverty Index, both of which aim to measure development in this broader sense. Then in 1999 Sen moved the goalposts again with his argument that freedoms constitute not only the means but the ends in development.

Sen’s view is now widely accepted: development must be judged by its impact on people, not only by changes in their income but more generally in terms of their choices, capabilities and freedoms; and we should be concerned about the distribution of these improvements, not just the simple average for a society.

But to define development as an improvement in people’s well-being does not do justice to what the term means to most of us. Development also carries a connotation of lasting change. Providing a person with a bednet or a water pump can often be an excellent, cost-effective way to improve her well-being, but if the improvement goes away when we stop providing the bednet or pump, we would not normally describe that as development. This suggests that development consists of more than improvements in the well-being of citizens, even broadly defined: it also conveys something about the capacity of economic, political and social systems to provide the circumstances for that well-being on a sustainable, long-term basis.

Mainstream economics has had a difficult time explaining how economic and social systems evolve to create this capacity; and, in particular, our economic models have struggled to explain why some countries have experienced rapid economic growth while others have not. In part this is because economists have generally stuck to models which can easily be solved mathematically. In the meantime, there has been a growing movement in physics, biology and some other social sciences, often called complexity science. Some economists – notably Eric Beinhocker and Tim Harford – have started to make a compelling case for bringing these ideas more centrally into our analysis of economic and social systems; and a new volume of essays from IPPR later this month will call for complexity to be taken more seriously by policymakers. But with the honourable exception of Ben Ramalingam, who has a book coming out in 2013 and has published on this topic for ODI, there has so far been very little work specifically on how complexity theory might be useful in development economics and policy. My Kapuscinski Lecture in May 2012, was an effort to make that connection.

An updated version of the full lecture is now available as a narrated presentation which you can watch by clicking the image below. The whole thing lasts 45 minutes, but you jump from one section to another to skip the boring parts.

Complex does not mean complicated

It is not news to anybody working in development that the problems are complicated in the sense that making progress involves tackling lots of different problems. But saying that the economy is a complex adaptive system implies something rather specific about its dynamic properties. We are using ‘complex adaptive system’ here as a term of art to describe a particular kind of non-linear system which turns up everywhere in nature – from waterfalls to ant colonies.

The presentation begins with the charming story of a British design student, Thomas Thwaites, who tried to build a toaster from scratch. It turns out that this is very difficult to do: to build something even as simple as a toaster requires a lot else to be already in place in your economy and society. An economy consists of a series of people, firms, products and institutions which interact with each other, each adapting to their changing circumstances as they do so. In the presentation I explain how this network of adaptive agents interact with each other to create a complex adaptive system of the kind studied in biology and physics.

The mainstream economics profession has been slow to take up these ideas, but fortunately scientists have been studying complex adaptive systems for at least thirty years and they have made considerable progress in describing their properties. Despite the huge diversity of these systems in nature, they have some important characteristics in common, by virtue of their underlying mathematics. There are good theoretical and empirical reasons for thinking that economic and social systems might share these characteristics, and the real-world trajectories of economic and social systems appear to fit the properties of complex adaptive systems better than they fit the simple, linear models of mainstream economics.

Development as an emergent property of an economic, social and political system

One of the key lessons from complexity theory is that complex adaptive systems can have system-wide properties which do not correspond to the properties of individual components. (This is only possible in non-linear systems, since linear systems are by definition a weighted sum of their parts.) For example, we think of consciousness as a characteristic of a human brain; but it makes no sense to say that a particular brain cell or synapse is conscious. A thunderstorm is a characteristic of the weather, but we cannot say that a particular molecule in the air is, or is not, stormy. These phenomena – which are called ‘emergent properties’ – are not the sum of characteristics of individual parts of the system: they are consequences of the way that the different parts of the system interact with each other.

In the talk, I argue that development is an emergent property of the economic and social system, in much the same way that consciousness is an emergent property of the brain. This seems obvious, and yet it is a surprising departure from the way most economists have normally described development as the sum of economic output of all the firms in the economy, or the sum of human well-being of the citizens of a nation.

Development is not the sum of well-being of people in the economy and we cannot bring it about simply by making enough people in the economy better off. Development is instead a system-wide manifestation of the way that people, firms, technologies and institutions interact with each other within the economic, social and political system. Specifically, development is the capacity of those systems to provide self-organising complexity. Self-organising complexity in an adaptive system is never designed or deliberately built: it comes about from a process of adaptation and evolution. It follows that if we want to accelerate and shape development, we should focus especially on how the environment can be made most conducive for self-organising complexity to evolve.

This view of development as an emergent property of a system fits with the common-sense definition of development described earlier. Development is more than improvements in people’s well-being: it also describes the capacity of the system to provide the circumstances for that continued well-being. Development is a characteristic of the system; sustained improvements in individual well-being are a yardstick by which it is judged.

This has important implications for development policy, both for developing countries themselves wishing to put their economy and society onto a path of faster development, and for outsiders who want to help that process. We are at an early stage of exploring those implications. In my next blog post I will look at one particular implication of the application of complexity theory to development: it has both positive and negative implications for the UK Government’s emphasis on a ‘golden thread’ of institutions which they claim runs through all successful economies.

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Africa’s Resource Curse or Blessing | IndexMundi Blog

Africa’s Resource Curse or Blessing | IndexMundi Blog. via Africa’s Resource Curse or Blessing | IndexMundi Blog. Africa’s Resource Curse or Blessing Posted on August 9, 2012 by Claudia Soria Energy Production for Select African Countries  (1960-2010) The discovery of resources in developing … Continue reading

The African Executive | Why China Will Not Solve Africa’s Problems

Why China Will Not Solve Africa’s Problems

A ZANU PF poster captures the African spirit

China will double its loans to Africa to 20 billion US dollars in the next three years, an apparent gesture to strengthen ties with Africa, an ally that serves as a supplier of natural resources to China and market for cheap Chinese products. China has been pouring money into Africa to win the fierce competition for the continent’s vast natural resources. Already China is Africa’s biggest trading partner, after surpassing the United States in 2009.

While it’s up to individual African countries to choose economic partners from the current large pool, it is wrong to assume that a particular partner will somehow solve Africa’s economic and political problems.

South Africa’s president Jacob Zuma, expressing optimism in the China-Africa ties says, ‘’We are particularly pleased that in our relationship with China, we are equals and that agreements entered into are for mutual gain.’’ China thus serves as relief from Western paternalistic and uneven relationship with Africa since independence.

Africa ought to know that it really doesn’t matter who your partners are or what plans they have for you in economic development; rather it matters what plans and strategies you have for them. What China wants from Africa is quite clear: raw materials to feed its economic boom. And its strategy? More loans and aid for Africa to lure more countries to look eastwards.

What is not clear is Africa’s strategy. Africa’s 54 countries, with a combined economy over four times smaller than China’s, are probably too small to succeed in the modern economic competition and globalization. They need to further integrate and present themselves as one economic entity. With continuing strong economic growth, an integrated Africa will make a more attractive investment destination for foreign capital and technology than a collection of tiny individual economies. Also, integration comes with increased clout and bargaining power.

Economic development is a result of wealth creation and value addition to natural resources – not who your partners are! As long as plans and strategies of individual African economies do not reflect this realization, stronger nations will continue to acquire Africa’s natural resources at bargain rates. As Africa’s economic prospects brighten, she should not allow herself to become a proxy battleground for a shifting balance of power in the world’s larger economies.

The only difference between China and the West as partners for Africa’s economic development is the absence in the Chinese mind of an Africa associated with poverty, wars and disease – ghosts still present in Western imagination – despite Africa harboring six of the world’s ten fastest growing economies and a young population which can turn things around, if properly harnessed.�

While Chinese President Hu Jintao’s observation that “China sincerely supports African countries as they pursue their own development paths, and will sincerely assist African countries in strengthening their ability to develop independently’’ should not be doubted, actions speak much louder than words. Africa is no stranger to eloquent commitments that are not followed by appropriate action.�

It is not China’s business to pledge assisting Africa to develop independently. A commitment to develop independently should be the goal of individual African country governments. The irony is that China still faces the same governance issues that loom over Africa’s long term success.� Also, let’s face it; no country’s motives are so pure that it only wishes others to ‘sincerely’ develop independently without consideration of self-interest.

China is not in Africa to make free lunches for anyone – it’s none of its business anyway. On the contrary, Africa has been giving free lunches to many, through the provision of unprocessed crude raw materials for quite some time. It is folly to assume that Africa can negotiate mutually beneficial deals with the China when she has not resolved the issues that led to the exploitation of her resources by other partners.

Africa must not be too Westwards or Eastwards minded- but rather Inwards minded. It is within Africa that all the answers lie. Creating transparent institutions, investing in human capital, fostering a conducive environment that allows for wealth creation and value addition to resources should be Africa’s main focus. In these areas too, no help is needed, especially from China. As an East African saying goes “outside help always comes after the rain.’’

By Obadias Ndaba.

The author is the Regional Director of the World Youth Alliance Africa. These views are his own.

via The African Executive | Why China Will Not Solve Africa’s Problems.

via The African Executive | Why China Will Not Solve Africa’s Problems.