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06/06/2010

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Al

It is refreshing to see academia blogging about Africa and I think many people will agree that a lot of research isn't available on Africa's latest socioeconomic progress.
Three reports just released last week by McKinsey, Boston Consulting Group, and Chatham House offer a different perspective on Africa most people including those in academia aren't aware of.
I will leave it to you all to draw your own conclusions.

- McKinsey Quaterly - What's Driving Africa's Growth:
https://www.mckinseyquarterly.com/Whats_driving_Africas_growth_2601#AboutTheAuthors

- Chatham House Report - Our Common Strategic Interests: Africa's role in the post G8 world
http://dev.chatham.sov.m-w.co.uk/publications/papers/download/-/id/888/file/16704_r0610_africag8.pdf

- Boston Consulting Group - African Challengers: www.bcg.com/documents/file44610.pdf

- Africa Progress Panel:
http://www.africaprogresspanel.org/report/

Luke

You make a number of good points and yes i agree that something must be done to tackle corruption and inefficiency, but is the answer really a smaller government sector in an unstable, insecure region?

If we want Africa to take off surely encouraging investment must be salient in order to accommodate the creation of more and better job opportunities by providing African countries with comparative advantage in profitable areas.

The disincentive to invest provided by instability (To which Africa is especially prone not only due to poor security but also as a result of abundant commodity wealth)is much greater than that provided by poor governance.

Crony capitalism may be worse than competitive capitalism, but its a dam sight better than civil war and anarchy.Smaller government means a smaller police force and a smaller army and thus a higher chance of civil war and instability. yes these institutions may be corrupt but in most instances it is better that they exist than not.

Perhaps the solution is not a smaller government but enforcing a better use of aid flows by stipulating conditions on the receival aid such as increased investment in infrastructure or education.

The problem is not that these country's receive too much aid, but too few conditions on where and how that aid is spent.

Liu

I'd rather give my standpoint by recommending a greater government in sourth Africa that is more important to avoid anarchy or chaos.Corruption is chronic and needs a long time to cure,in which a peaceful environment for economic growth is needed.The first step those countries should get through is a faster development but not the west style capitalism.And more to say,when considering socilism or capitalism,economic issues are far more sophisticated,I give my appreciation to the points about the birthrate ,the recources ,etc. except the discussion about superstructure.

Orion Jones

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sam vinson

Surely Becker and Posner are right as far as they go. But to travel through rural Africa is eye-opening. Farms--the overwhelming majority are very small--many less than two acres, few larger than four. It is subsistence agriculture, not market agriculture. The farms are getting smaller because of customs preferencing equal division among heirs at death. Seventy percent of the population is in farming, contrasted with 7-8% in as backward a rural economy as France and 2% in the US.

The Western European tradition of primogeniture in retrospect created accumulations of wealth that could flow into emerging technologies and lift the West. It also led to younger sons of more educated families moving into more knowledge intensive professions. Africa needs a method of concentrating land control to raise productivity, to create an available industrial workforce, and to orient the culture toward markets. Land concentration should not be done through nationalization as in the Soviet Union, but through private mechanisms that are price oriented so that wealth can be accumulated. And modern agriculture technology needs to be introduced. The tradition of sending promising kids to Fabian professors in Europe needs to be stopped. A few DeVrys need to be located in SubSaharan Africa, and some of the Chicago kids who reversed economic decline in Chile under General Pinochet need to be dispatched. Finally, inviting back in the Indians dispossessed in post-independence days with appropriate reparations as inducement would do a lot to demonstrate seriousness about real economic development.

NEH

Africa? Still the target of colonialism and imperialism (this time by their own tribes)Some may call it corruption. The Chinese, a business opportunity. They don't require the local power structures to clean up their acts and function like humanitarian Liberal-Democracies. Like those of us in the west require in order to gain access to the funds for development (not that they would do the Continent any good it only enriches the power elite). South Africa is gone, Rhodesia is gone, German East Africa is gone, Belgian Congo is gone, and the various other Colonial States have also gone. Looks like China is stepping into the vacuum and setting itself up as the New African Colonial Power and gaining access to all those valuable natural resources for themselves (ahh... the joys of Global Mercantilism). And I won't even mention the economic impacts of depopultion due to HIV, Ebola, and other tropical diseases.

Africa? More like a dying Continent and the vultures are simply waiting.

Jim

NEH says it well. Look in the front section of any issue of the Economist and you will note that the jobs are all for assistance to the power elite, I suppose hoping that trickle down economics will work in tribal Africa. In many villages, the elders won't even sanction extra-tribal marriage much less corruption of the local dialect. We might get a pleasant portrayal of Africa's progress but the substance will be less so.

Gambling88

It is refreshing to see academia blogging about Africa and I think many people will agree that a lot of research isn't available on Africa's latest socioeconomic progress.

gimmick

"Africa has rebounded from the worldwide recession faster than many other nations."

Might be a good idea to clarify this as to not suggest that Africa is a "nation."

Danny

It's hard to imagine that any international sporting event can bring long-term economic prosperity to a third world country. Even the olympics often leave their hosting countries worst off than they were before because of the amount of debt incurred to get the city up to snuff. Kind of makes you wish there was some way to monitor those committees like we do here to cops: http://lawblog.legalmatch.com/2010/06/07/monitoring-big-brother-is-it-okay-to-record-the-police/

NEH

Large scale international sports venues as an economic quick fix? Only in the imagination and fantasies of short term mentality economists. The real issue is "long term" real economic development and growth (agricultural, industrial, commercial & financial) that benefits the populous, not only the power elite. Good luck!

Miguel

This is a great take off, I believe it will have a profound effect.

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PGZ

Dr. Posner,

It is always a pleasure to read your blog. I am wondering if you could write an article about your stance on the case in which Supreme Court rebuffs homeowners' in Beach Case. I think it is one of the most controversial issue in the realm of law and economics because it is about how economic analysis is related to property rights. What should the economic analysis and normative analysis be here in this case? Are there any conflicts between these two analyses in this case?

Your analyses are greatly appreciated

http://www.nytimes.com/aponline/2010/06/17/us/politics/AP-US-Supreme-Court-Beach-Erosion.html?emc=eta1

Thank you very much!

Nicolas

You raise some good points, but your assumption that democracy helps an economy take off is flawed IMO. Many African countries have supposedly been democratic for decades. You'd be right to counter with the fact that such democracies were very often questionable 'crony' democracies, but then that would bring us to the point that democracy in itself doesn't do much for a country. I also strongly disagree with the assertion that a crony democracy is better than socialism for an economy that's almost totally undeveloped.

I'm only speaking in very general terms here - dangerously close to pure rhetoric actually - but when most people hardly have access to food, water, health services or employment, exercising democratic rights is probably not a great concern.
To jump to a different and equally unsubstantiated point, 'benevolent' dictatorships - socialist or otherwise - can actually be helpful in giving a kick-start to economic progress. Democracies work when a country already has the semblance of an infrastructure. Otherwise they can very easily fail, just as you cite the socialist approach as having failed.

As for riches in primary resources, those aren't always a boon. Corruption is in fact often associated with the presence of valuable resources (Congo, Angola, etc).

Ken Ndirangu

Nicolas, Africa countries cannot be considered democratic when they suffer such low levels of literacy and civil education.
The larger part of Africa's 'Democratic' past has been riddled with conmen (both foreign and local) colluding to loot their countries' coffers while misleading their citizens with rubbish incentives, bribes, tribalistic tirades and political hogwash.

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good luck for Africa.

Nwabu Nnebe

Africa as a term is deceptive. Several African countries have better fundamentals and benefit from higher growth rates. Those countries happen to be a mixed bag of commodity exporters (Nigeria, Angola, Mozambique) and private sector engines (South Africa, Kenya, Ghana, Rwanda). It tells you that investment is a big part of the story whether crony (commodity-related state companies) or private.

To satisfy the Chicago school which Prof Becker is obviously a loyal member of I suggest he take a look at MTN founded by the South Africans, Celtel founded by a Sudanese, Orascom founded by an Egyptian, Dangote founded by a Nigerian, and Equity Bank founded by a Kenyan - all of which are private sector stars.

If he is looking for western cowboys doing their thing in Africa there is also plenty of that too. Consider Standard Bank which has roots in Britain, is based in South Africa and is investing in the African growth story. Or he may look at Lonrho or Gateway Communications, smaller players both run by british expatriates.

Either way, Africa is growing and globalizing and joining the rest of the world in the transition towards urbanization and developing a high consumer culture.

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I'd rather give my standpoint by recommending a greater government in sourth Africa that is more important to avoid anarchy or chaos.Corruption is chronic and needs a long time to cure,in which a peaceful environment for economic growth is needed.The first step those countries should get through is a faster development but not the west style capitalism.And more to say,when considering socilism or capitalism,economic issues are far more sophisticated,I give my appreciation to the points about the birthrate ,the recources ,etc. except the discussion about superstructure.

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Chamberlain Peterside

There's a lot of resource-base to believe that Africa should take off, but in the same token - a host of empirical evidence on ground why the time might be slipping away for Africa. I wish things were brighter and more comforting than we see today amongst the decision-makers and that lessons learnt are helping them make better and wiser policy choices - am yet to see that.

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