The African continent & the state of capitalism

Africa has been termed the dark continent, the term isn’t racial but refers to inhabitable characteristics that threaten economic and social development.  Weak governance and weaker infrastructure have sealed the continent from development since the defeat of European imperialism.  That may be changing, especially given the status of China.  Even still, manufacturing growth and productivity gains remain for African nations that have history with mercantile England; the others have turned inward and never really broke from their socialist mien.  What we’re witnessing throughout the continent is the stagnation of weak nation states while others are coalescing to form strong national identities.

As a whole, African political economies remain the fastest growing in the world.  What confuses economists is exactly where the growth comes from.  It is understood that development and growth originates when labor enhancing productivity shifts from unproductive, labor intensive subsistence farming to modern capital intensive service and knowledge based service sectors.

Their remain two distinct ways to distinguish between competing versions of the African political economy.  The first focuses on growing labor productivity within distinct sectors while the other stresses structural change aggregated as workers moving between competing sectors.  Interestingly, throughout the 1990’s structural change in sub-Saharan Africa went into reverse.  These trends decimated growth in Zambia, Ethiopia, Malawi and Tanzania.

Compared to east Asia, both kinds of growth happened at once.  Workers moved to littoral regions while those already in urban environments changed into service sectors.  Both experienced intense labor productivity during strong structural change.  The puzzle for Africa is to explain why productivity fell during structural change.

The only viable answers are those that address intra-African exchange and socialist domestic policies that inhibit strong exports. Automation isn’t helping, especially given how Africa competes with low wage Bangladesh and a rapidly automating Asia. What’s closing is waiting for nation states to do what China did, move from agriculture to labor intensive manufacturing and then change again toward service based, knowledge intensive industries.

As of this writing, the African continent has one capitalist option left:  find its slot in global supply chains instead of producing finished products that are exported. It means developing and immediately changing into tradable productive sectors that are easy to scale.

Aside from tourism and heavily dependent infrastructure ploys that depend on viable social institutions, Africa can learn from the success of the east Asian tigers.

Its not too late.


About William Holland

Systematic Theologian/International Relations
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