Fifty years ago, parts of West Africa exported food and cash crops to Asia. Today, the economic gap is stark. In an interview with Nad Sivaramen, development economist Joe Studwell argues that policy – not destiny – explains the divergence, and lays out what African countries, including Mauritius, must do to turn demographics into growth.

■ Fifty years ago, countries such as Benin and Ghana exported food and cash crops to South Korea and Malaysia. Today the gap is stark. In your view, what policy choices – rather than historical fate – most clearly explain how Asia pulled ahead while much of Africa fell behind?

Your question asks me to ignore issues of historical fate, but in Africa I don’t think you can ignore the low demographic density that until recently made accelerated development impossible for most countries. That said, Asia got policy right. Asia focused heavily on agriculture at the outset, which led to very broadly spread economic gains. Then, Asia moved on to export-oriented manufacturing, using a degree of financial manipulation to support manufacturing. Almost all African countries, by contrast, did little – if anything – for agriculture after independence and tried to develop a few large, capital-intensive industrial projects focused on domestic markets. In consequence, Asia entered a virtuous circle of rising savings, investment and GDP, with a positive balance of payments. Outside of Mauritius and a couple of other states, Africa so far saw nothing like that.

■ You argue that successful Asian economies rejected free-market orthodoxy in favor of land reform, financial repression and export-led industrial policy. Why have so few African governments adopted this playbook consistently – and what political obstacles matter most?

It is correct that Asian states rejected free-market orthodoxy, although it is important to remember they retained very high levels of competition in their economies, just like China today. Within Asia, the playbook came originally from Japan, which played a powerful ideological role in the region. In Africa – given the reversal of Nasser’s 1950s developmental state project in Egypt and the tiny size of Mauritius –, there has been no real, powerful demonstration effect at the policy level.

Today, we are waiting to see which populous states will set examples. Despite the recent civil war, it could still be Ethiopia. But equally it could be a better-governed Nigeria or another state. So, in short, Africa needs positive demonstration effects in large, mainland states.

■ In How Africa Works, you challenge the idea that Africa’s population boom is a crisis, calling it delayed “demographic normalization.” How should governments turn this youth surge into a manufacturing workforce rather than a generation of unemployed urban poor?

The normalization of African demographic density – it is now roughly where Asia was in 1960 – is a huge opportunity because we finally have meaningful markets, big urban centres, more affordable infrastructure per capita and lots more of what economists call ‘economies of agglomeration’. The way to take advantage is to support the development of agriculture (including for export), remembering that Africa has half the world’s unused cultivable land. Then, Africa has to get serious about manufacturing. There is no way to upgrade national skills quickly without it. African wage rates in 1960 were two times the Asian average.

Today, African wage rates are from one half to one tenth those in China. The continent is competitive if the infrastructure, utilities, and stability are in place. If Africa does not take advantage of normalized demographics, it becomes a big risk – as was the case with civil unrest in 18th- and 19th-century Europe and late 19th- and early 20th-century Asia.

■ Your book highlights Mauritius as an African outlier, built on cross-ethnic political coalitions, redistributive taxation of sugar elites and export manufacturing. But you also say the country underinvested in advanced industry. What must Mauritius do now to avoid, as some warn, becoming a rent-based economy rather than a productive one?

I think that Mauritius will survive without a second-stage industrial policy, but I think it can be a more equal and much happier society with one. As to what to focus on, that is a question for research. Mauritius needs to find something more technologically complex where it can be globally competitive – like the Danes did when they decided to be the world’s leading manufacturer of wind turbines and all the control systems that optimise them. Maybe Mauritius will find something ocean-related or some other niche technology. The biggest problem I detected when I was in Mauritius was there seemed to be zero interest among politicians.

■ You stress that no country gets rich without an active, disciplined state. Yet many African leaders still favor “hub” strategies, tax incentives and storytelling over industrial policy. Why does this approach persist, despite decades of mixed results?

There is path-dependency in almost everything in life and African politics is no different. However, I have also seen in Ethiopia and Rwanda that bureaucracies can be reframed and made much more effective in relatively short periods – one or two decades. We need a handful of states to break out in terms of political practice, and that will have a gradual secondary impact on the whole continent.

■ You cite Botswana, Ethiopia , Rwandaan d Mauritius as cases where agriculture-first strategies and state coordination produced growth. What single reform would you prioritize today for countries still stuck in commodity dependence?

I don’t think you can name a single reform because there are always local conditions that favour one or other policy as the best way to proceed. The Mauritian use of heavy export taxation on the sugar barons, and a single export agency to prevent money being hidden offshore, was extremely effective, but I have not seen it used elsewhere. Overall, you start with a focus on smallholder agriculture because it employs three quarters of the population in a poor country, and success spreads money very widely. The precise way to focus on agriculture, however, has to be determined locally.

■ The Ethiopian experience shows both rapid growth and devastating ethnic conflict. Does economic development reliably reduce identity politics – or is strong nation-building a prerequisite for sustained growth?

I think it is difficult to argue that economic development does reliably reduce ethnic conflict. Rather, I think it is usually political work – including the building of cross-ethnic coalitions – that reduces ethnic tensions. Perhaps the best performance in Africa on bringing a very high number of different ethnicities together is Tanzania, and that was the project of Julius Nyerere. In a country of more than 120 ethnicities, Swahili was encouraged as the national language, identification on the basis of ethnicity was discouraged, and banned for political mobilisation, leadership appointments were balanced across different groups, and ethnic boundaries or federalism were not allowed. All of this reflected political choices in a country that has not, since independence, been an economic success. But it has been a big political success when it comes to convincing scores of ethnic groups to live and work together.

■ Climate change is now reshaping agriculture, migration and investment across Africa. How does it alter your prescription of farm productivity first, factories second? Can late industrializers still follow Asia’s path under climate constraints?

If climate change can be kept to 2 °C, I don’t think that most parts of Africa or most agriculture will be heavily impacted. There is so much potential to improve the agronomic management of African farming, increase irrigation, use water more efficiently, and so on, that those gains will be bigger than losses to climate change. That said, limited areas of Africa – such as the Sahel – do face disruptive change from climate developments. In terms of manufacturing, governments can make adjustments to things like water pricing depending on local circumstances. Climate change does not mean that manufacturing cannot work in Africa.

■ The Polish reporter Ryszard Kapuściński once wrote that Africa is often misunderstood through myth rather than evidence. How does his human-centered reporting resonate with your data-driven research – and what do both approaches reveal about the danger of fatalism when discussing Africa’s future?

I would agree with Kapuściński’s observation, though I am not sure that my work is data-driven to the exclusion of human reporting. Like How Asia Works, How Africa Works contains numerous exploratory journeys to meet smallholder farmers and manufacturers and decide whether what they say squares with the data.

My own criticism of academic coverage of Africa in the past 60 years is that there has been a lot of herd behaviour – everyone banging the same drums of failed governance, corruption and ethnic conflict. Much of the work is high quality, but scholars have been unable to step back and see the demographic context, or indeed to contextualise violence in Africa against the violence seen, for instance, during European development. The data say that six million people died in conflict in Africa over 65 years since 1960, but no one points out that this is the same as the upper estimates for deaths over 12 years in Europe’s Napoleonic wars.

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Credentials

Joe Studwell (BA, MPhil, PhD)

[email protected]

Joe worked as a journalist and author in East Asia for 25 years. He was the founding editor of the China Economic Quarterly and co-founder of the Asian research firm Dragonomics, now GaveKal Dragonomics.

Joe is the author of three books about East Asia: The China Dream: the Quest for the Greatest Untapped Market on Earth (2002); Asian Godfathers: Money and Power in Hong Kong and South-East Asia (2007); and How Asia Works: Success and Failure in the World’s Most Dynamic Region (2013). The latter two books were long-listed for the Financial Times Business Book of the Year. How Asia Works was an Economist book of the year, and Bill Gates described it as one of his favourite works on economic development.

Joe’s latest book is How Africa Works: Success and Failure on the World’s Last Developmental Frontier. It has been described as ‘compelling’ by Bill Gates, ‘an essential read’ by Justin Yifu Lin, a ‘hopeful narrative’ by Dani Rodrik, a ‘remarkable book’ by Antoinette Handley (U Toronto), ‘a powerful analysis’ by Clare Short, ‘an amazing book’ by Jakkie Cilliers and ‘a dazzling reassessment’ by the Financial Times. Joe is Senior Visiting Fellow at the UK’s Overseas Development Institute.