why africa has found it so difficult to industrialize -- 2/4/19
Today's selection -- from Africa Since 1940 by Frederick Cooper. Why Africa has found it so difficult to industrialize:
"The cure for a colonial economy dependent on sales of a narrow range of agricultural or mineral products and on purchase from outside of manufactured goods seemed -- to economists and political leaders in the 1950s and 1960s -- to be industrialization. It didn't work out so simply.
"Africa has long had great difficulty in attracting capital, given its spreadout population divided by colonial and post-colonial borders, the continent's generally low income levels, and the uncertainties of labor force development among people whose long and bitter experience encouraged them to avoid subordination to an employer by keeping other options open. The mining industry -- in gold, copper, and other minerals -- has been the biggest exception, but only in South Africa and, to an extent, in Southern Rhodesia did it spawn broad regional industrial development. Even in the early 1950s, French and British officials were noticing that private overseas investment was not following in the wake of their public development investments. African political leaders thought that independence would make a decisive difference; they could build their own industries.
"And to an extent they did. States used tariff barriers, taxing imported finished products heavily and inputs lightly, to get investors to manufacture products within their borders. Much investment in the 1960s was import substitution industrialization (ISI), relying on transnational corporations headquartered in the United States, Europe, and Japan. States also founded parastatal corporations in sectors that they hoped would stimulate a wide range of private activity or else built industries that they hoped would constitute the core of a socialist economy. But in either case, the constraints were severe: industry demands technical knowledge as well as finance, and that is highly concentrated in the world economy. Transnational companies often bargained to keep competitors out, and state-owned industries were given protected markets, so that ISI usually meant that producers were sheltered and inefficient, and that citizens were stuck with products more expensive and of lower quality than available on the world market. Continual importation of machinery and supplies was necessary for industry to function. The economics of industrialization in countries with small markets and little infrastructure were bad enough; the politics were worse, for politicians were tempted to use protected industries to enrich themselves and their clients and to distribute relatively well paying jobs.
|Port of Busan|
"Industrialization nonetheless had its moment: between 1965 and 1973, industry expanded twice as fast as GDP. Much of this was in mining, but manufacturing, albeit from a low base, grew at nearly 7 percent per year between 1960 and 1980. This was concentrated in food processing and textiles. Except for South Africa, where industrialization stretched back to the nineteenth century, it was concentrated around a few centers: in Zimbabwe and in Kenya, near Nairobi. But after the oil shocks, growth declined, and by 1980 it was negative: Africa was slowly deindustrializing. Only Mauritius, a tiny country, imitated the South East Asian pattern of the 1980s, producing textiles for export markets. Nigeria, Botswana, Kenya, and for a time Zambia could build industry to service a significant mining or agricultural economy, but they were vulnerable to the loss of demand for their usual exports. By the 1970s, world manufacturing capacity was excessive; Africa was in a bad position to make either ISI or export industrialization competitive. South Africa, even after apartheid, had difficulty exporting manufactured goods and becoming a pole of regional economic activity, and it remains vulnerable to declining prices for gold. Building an industrial center requires more than cheap labor or even natural resources. Good communications, reliable electricity and water, linkages among firms, skilled labor, and management capacity are all factors which tend to encourage industrialization where it is already advanced and where states are capable of delivering consistent services. Even a glance at a railway map of Europe and Africa suggests the enormity of the gap between a densely networked region and a zone (with the single exception of South Africa) of limited connections, mostly directed toward evacuation of products rather than regional interaction.
"So investment outside of agriculture has focused above all on mining. A copper boom brought wealth to Northern Rhodesia and Zaire in the postwar decade and at times thereafter; gold enriched South Africa over many decades, and boomed in the late 1970s. Other minerals have had their moments: iron ore in Liberia; bauxite in Guinea and Ghana; uranium in Niger and Gabon. These moments have only rarely been sustained and even more rarely have they had effects beyond the mining enclaves and the labor reservoirs which supplied them. Multinational mining corporations play off the diverse locations of supplies around the world and sometimes the substitutability of products; mining enclaves in Africa are vulnerable to state incapacity and disorder. Even gold has been an unreliable source of export income, and two of the world's leading copper producers, Zambia and Zaire, experienced, from the 1970s, plunging prices, declining output, and growing unemployment. The hopes of mineworkers, once the vanguard of labor stabilization, for a new sort of life fell along with the copper prices and national policies built on mine revenue.
"Industrial investors have many options worldwide, and Africa is risky.
The degradation of infrastructure since 1980 has made those obstacles higher: deteriorating roads; unreliable electricity; few telephones; workers with inadequate education and health protection; and arbitrary regulatory and judicial systems. Outside of South Africa, investment per capita in Africa dropped from $80 in 1970 to $73 in 1997. Meanwhile, the idea of a more self-reliant industrialization, using 'appropriate technology' and concentrating on product lines based on domestic supplies of raw materials, has been more hope than strategy."