# Future of Emerging Economies - Africa



## Edward Campbell (31 May 2009)

I decided against resurrecting a necro-thread – the topically closest being from 2003 and not exactly full of ideas or information – but Mods may wish to merge this with something I missed.)

It looks as though it’s the annual “let’s all wring our hands about Africa” weekend for Canada’s _opinion leaders_, amongst whom we must count the publishers and editors of the  _Globe and Mail_ and the _National Post_ and the organizers of the forthcoming Munk Debates.

The _agent provocateur_ for this little burst of attention is Dambisa Moyo, an African economist with a few controversial ideas.

The validity, or otherwise, of Moyo’s ideas is not at issue; she’s not a pioneer in suggesting that most Western _*aid*_ to Africa has done as much harm as good.

There are, broadly, two views on _aid to Africa_: one school, we can safely call it the Stephen Lewis school believes that all that needs to be done is, guiltily, to throw more and more and more money at Africa. Some of it, he agues, must, eventually, stick, and that which doesn’t is “owed,” anyway, as “payment” for the evils of colonialism. The other school, the one we might call the Calderesi-Moyo school says that the traditional pattern of aid for Africa has failed and we need to take another hard, cold eyed look at what we want to do and why we want to do it.

But the problem isn’t aid, _per se_. It is security and I posit that Africa will, over the next few decades, equal and then dwarf the security threat posed by radical _Islamist_ movements today.

The Arab/Persian _Islamist_ threat is based on some _comprehensible_ “grievances.” Even if we reject those grievances and even if we, correctly, refuse to offer redress, we can understand what infuriates bin Laden _et al_. The same is not true for Africa. The “threat” from Black Africa is inchoate but it is very real. In fact chaos, itself, is at the root of the African security threat. The 50± “nations” of Africa are, in the main, a bit of a joke. There are only about two dozen functioning “national” governments – the rest are facing separatist movement, break-away states and provinces and outright civil wars. The African “economy” – never strong – is a shambles. Systems, like education and public health, are collapsing. AIDS is destroying the very fabric of society. The “casualty rate” from AIDS will exceed anything that made the First World War so frightening in its social implications. Soon children will be raising children.

Africa will explode into a series of increasingly violent and dangerous crises – an explosion is, after all, just a very rapid series of little fires. Each “fire” may be unique and unrelated to the next. They may relate to money or trade, race or ethnicity, religion, and so on. But the individual problems will not matter when they come at us with increasing frequency, as an explosion. We will have to “do something.”

Of course the time to “do something” is now, when the “something” can be done without great cost or violence. But we have decided, without discussion, on a “hands off” policy so we will not do anything now; we will wait, and wait, and wait for the inevitable explosion. Then the ‘something” will involve more than just one Canadian Army battle group and one Canadian air wing serving in larger, poorly organized _"coalitions of the willing"_.

But we – the collective Western we, led in our opinions by folks like those who publish and edit our major media outlets – have decided to ignore Africa. I think we’ve done so mainly because it’s just too complex. We can wrap our collective mind around Osama bin Laden and al Qaeda, as I said, their “grievances” are comprehensible, even as they are false. Many of Africa’s grievances appear, to most of us, to be more like _self inflicted wounds_ – somehow more worthy of censure than of relief. There is also, I think, more than just a whiff of racism in our attitudes towards Africa and Africans. We appear to suspect that Africans are, somehow or other, not quite ready for self-government in the 21st century. Discussions – in books and the media and amongst the _talking heads_ on TV (the source of most “information” for most people) – drift, more often than not, towards the “idea” that the solution to Africa’s problems will, somehow or other, require re-colonization. The idea is that only Westerners (or Chinese or Indians) can “manage” a complex socio-economic makeover of the sort that many experts suggest Africa requires. And _empire_ and _imperialism_ are bad words in America (and Europe), despite Niall Ferguson’s attempts to paint a fresh face on a mouldy old corpse.

Almost every year superannuated rock stars, earnest, grey G-8 “leaders” and _opinion makers_ in the media and academe trot out a new “plan for Africa.” About a week later all is forgotten - and maybe a few ill conceived loans are forgiven. It is *possible* – I do not know about the *probability* – that we might “fix” many of Africa’s problems over the next decade with about the same amount of money (and a whole lot fewer lost lives) than one or two years of military operations will, inevitably, cost. Since we will not do that we can count on spending a lot more money, over many, many years, in a long, dirty “war” (or series of wars) that will make us look fondly back at the Afghan adventure.


----------



## FoverF (6 Jun 2009)

"Sorry, Africa, but we JUST gave out our last $700 BILLION. Maybe you can try asking our bankers if they want to lend you some of that scratch?"


----------



## 54/102 CEF (6 Jun 2009)

Africa would be a great training area 

See - http://www.africom.mil/ - lots of stuff going on


----------



## Edward Campbell (18 Dec 2012)

I'm reviving a very old thread and asking:

1. Members to take a look at this video about which I will have more to say; and

2. Moderators to rename this thread "Future of Emerging Economies."

At first glance this video appears to be, mainly, about China - and, indeed, that is Bill Easlerly's current preoccupation - but it is not the main point.

Let me begin by saying that we have three levels of economies:

1. Established;

2. Emerging; and

3. Underachieving.

There are, of course, subsets: within the established economies some, like America and Italy are in trouble, others, other, like Greece, are failing; some, like Canada and Germany are sound but bedeviled by slow growth, thanks to e.g. Italy and Japan; while still others, like Australia and Norway are both growing nicely and don't have any (apparent) fiscal cliffs, etc. Within the emerging economies we have both high growth regions - China and India, for example; and low growth or stagnant economies, like Brazil; and failing economies like Ukraine and Croatia. I am classing pretty much every country (there are a couple of exceptions, like Iceland and Vietnam, of course) with a GDP of less than $200 Billion as "underachieving." Some underachievers, like Mongolia, Ethiopia and Panama have very, very high growth rates, while others, like Yemen, have equally remarkable reates of contraction. The problem is that Yemen (-10.5% growth) could change places with Mongolia (+13.2% growth) in a year.

The issue is that we can, by reading history, assume that:

1. Established economies are unlikely to cause _strategic_ or _security_ problems - not even when, as in the Greek case, they fail;

2. Emerging economies are at risk but still unlikely to cause serious strategic problems; but

3. Underachievers are very likely to be sources of serious strategic/security threats.

While I agree, broadly but not in detail, with Easterly that _freedom_ leads to economic growth, it is not clear, to me, anyway, that _freedom_ has to equate to the Anglo-American liberal democratic model. I think Dambisa Moyo is closer to the mark: some _freedoms_ - especially property rights - are essential to economic growth (see, especially, Hernando de Soto), but political _freedom_ is a "should have" not a "must have."

I also agree with Moyo that the long established aid model has failed, *but* we, the US led West, still have some rather altruistic interests in the "Underachieving" nations plus it is in our strategic/security interests to help them become more prosperous and, concomitantly, more peaceful.

Many years decades ago there was a _McDonalds Rule_ which said that no two countries that had McDonald's franchises would go to war with one another. (I think the Falklands War broke the rule.) The principle was simple: the McDonald's corporation would not sell a franchise to anyone in a country with a _per capita_ GDP of less than $_nn,nnn_. People in countries with moderate to high GDPs are unlikely to want wars, even if their leaders are so inclined, and since most moderate to high GDPs are democracies the "will of the people" counts for a lot. It's still a good rule of thumb: higher income ≈ greater inclination to peace.

Our, Canada's, foreign aid programme should be recast to *invest* ~ which means expecting a return on investment ~ in poor countries, on a sound, business-like basis, without much regard for the politics or policies of the governments there and, especially, without providing government-to-government aid. We should, also, perhaps first, drop all trade distorting tariffs on the things the "underachievers" make, like textiles.


----------



## a_majoor (18 Dec 2012)

I broadly agree with you on every point except that economic freedom is not equal to political freedom.

Historical examples abound going back as far as Ancient Athens, where polities with relatively greater political freedoms were able to use their resources more effectively than polities with lower levels of political freedom. Sometimes the mismatches were quite immense; Athens continued fighting the Peloponnesian war for a decade after they had lost most of their Delian League allies and the flower of their army and fleet, despite being challenged by Sparta and her Allies, and having the enemy funded by the vastly larger and resource rich Persian Empire.

We see similar examples in the 1500's; Elizabethan England vs Hapsberg Spain; the United Provinces (the Netherlands) vs Hapsberg Spain and the _Serenìsima Repùblica Vèneta_ vs the Ottoman Empire.

In every case, the smaller polities were (for their era) more politically liberal and free compared to their opponents, and the mismatch in resources and manpower was quite considerable. England, for example, started out bankrupt while the Spanish could count on a river of silver coming from the New World to finance their activities. The _Serenìsima Repùblica Vèneta_ had only a small fraction of the territory and manpower of the Ottomans, yet remained quite competitive until the early 1600's (when they turned their attention away from the sea and towards Terra Firma. This is a good example of why maritime powers should avoid land wars).

The same effect can be seen today; compare the "Tiger" economies to China, or for that matter compare the before and after pictures of China and India in the 1970's (pre reform era) and the 1990's (post reform in China; the end of the "Permit Raj" in India). Liberalization has had a great deal to do with this; individuals can harness and use their own resources rather than have them sucked away by a vast and impersonal bureaucracy.

Liberalization in other parts of the world may not look like our liberal democratic model (fully agree there), but political liberalization _must_ exist in order to release the energy and creativity of the people.


----------



## Edward Campbell (18 Dec 2012)

Thucydides: you are confusing the "state" with the "nation" in at least two of your three 16th century examples: while the British and Dutch governments were, indeed, bankrupt, the countries, themselves, were rich ~ in both cases richer than Spain even with the huge influxes of silver (which did little more than create runaway inflation, anyway).

I will agree that a poor, weak government is advantageous to enterprise and industry (albeit not to the military) but it is not essential ~ America continued to grow at a good rate even after the US government became bloated and corrupt and China grows despite a corrupt, fat bureaucracy. Even further I will agree with you and Bill Easterly in saying that, broadly, greater _liberty_ ≈ greater economic growth *but* high rates of growth are hard (impossible?) to sustain in established economies. Even if we _liberated_ America and China (and Canada) from their bureaucratic bloat, mindlessly restrictive regulation and stilted, often corrupt politics we would be unlikely to see Mongolia's level of growth: the "floor" is already too high. 

Where I continue to stand my ground is to say that full, _liberal_ political _freedom_ (including, say, freedom of assembly, for example) is not a condition of democracy, at least not the sort of democracy that is required to establish and maintain a sound, stable, prosperous nation-state. In my view the preconditions for the sound, stable, prosperous nation-state are:

1. Respect, by ALL - governors and governed alike, for the fundamental freedoms: life, liberty (of the person) and property;

2. Respect, by ALL - governors and governed alike, for the rule of law - especially for equality for all at and under the law; and

3. Government with the (informed) consent of the governed.

Number 3 is tricky; almost everyone, including me, says that regular free and fair elections, where "opinion:" is informed by a free press, is the only or, at least, the best way to gain the "consent" of the people. But I am not so conceited as to say that some other way - don't ask me what it is, perhaps some sort of regular polling on issues - *might* not be possible. The questions are: how "free" does "free speech" have to be? how broadly must "freedom of assembly" be interpreted? similarly, how broadly must our "right to privacy" be interpreted? It may be interesting to note that Japan's economic "miracle" happened when it was, still, a very _conservative_ society with an equally conservative form of democracy; as Japan and its democratic system became more _liberal_ (after the 1960s and 70s) its economy began to stagnate, then decline and, now, contract. (See Doh Chull Shin, _Confucianism and Democracy in East Asia_)


----------



## a_majoor (18 Dec 2012)

I suspect we are in violent agreement here. Defining liberalization and liberty is difficult (anyone from this era would probably not find being thrust back into Periclean Athens, Elizabethan England or even today's China to be a very "liberal" society).

The first points you bring up in your list (liberty, property rights and the Rule of Law) are essentially the three founding principles of classical liberalism. While point three is probably essential to ensure that a society can function on classical liberal principles I'm not entirely sure how something like that can be instituted over the long term. Looking at the present state of education and the media is a pretty depressing experience when you believe that "high information" people are needed to engage and provide informed consent.

I think there might also be disagreement on how deeply embedded these principles need to be in a society. Niall Ferguson claims that all you need to do is adopt the "killer apps" of Western Society, and on the surface it appears to be true, but my own belief is there needs to be a much deeper cultural linkage or we end up with fractured societies like we are seeing in the Middle East (where the overlay of Western technology and consumerism has not meshed well with the underlying cultures). How this works with your formulation of Liberal/Illiberal and Conservative cultures is something that will need a lot of thought.


----------



## Edward Campbell (18 Dec 2012)

It needs to be borne in mind that while Fareed Zakaria's _liberal_ <> _illiberal_ construct is fairly widely accepted, my _liberal_ and _conservative_ are two side of the same coin and _illiberal_ is the opposite of both formulation has not been tested academically, it's just one idea out there. Of course I go even farther by suggesting, in my model, that _conservative_ ≈ Confucian, because the only successful _conservative democracies_ I can find (Korea, Singapore and Taiwan) are all, more or less, Confucian. I may be guilty of situating the appreciation.


----------



## Edward Campbell (11 Apr 2014)

Every so often even political scientists and public intellectuals must get it right, and Thomas Homer Dixon does in this opinion piece which is reproduced under the Fair Dealing provisions of the Copyright Act from the _Globe and Mail_:

http://www.theglobeandmail.com/globe-debate/whats-behind-these-fractures-stalled-economies/article17925027/#dashboard/follows/


> What’s behind these fracturing countries? Stalled economies
> 
> THOMAS HOMER-DIXON
> Special to The Globe and Mail
> ...




One needs to dig into Hernando de Soto's theory of _dead capital_* to get closer to the real problem. Basically we argue that the _driver_ of economies is the individual and family (small business) and the most (most often only) source of capital for the individual is his home. If (s)he has clear title to his/her home and land in a fair and stable political regime then (s)he has access to real capital and a 'better,' secure future. But clear title is uncommon, even rare, in many, many countries in the third world and thus there is no capital available for exploitation, it is "dead," and so is hope.


_____
* See _The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else_ (2000)


----------

