Will Infrastructure Boost African Growth? Maybe Not, Says Economist

[GemState]

Africa’s Infrastructure-Led Growth Experiment Is Faltering. It Is Time to Focus on Agriculture.

Instead of fixating on infrastructure, African countries should look to the experience of Latin American countries with similar resource endowments: a greater relative abundance of land than low-cost labor.

carnegieendowment.org

Over the past few decades, several low- and middle-income economies in Africa and elsewhere have sought to turbocharge growth by adopting an export-led economic model premised on heavy investments in infrastructure and building up domestic manufacturing capacity. But this strategy has often not produced the economic gains that have been promised for a variety of reasons. The continued emphasis on infrastructure investment fails to account for the fact that even those African countries that have invested a great deal in infrastructure continue to lag other countries in Asia (like Bangladesh) in key manufacturing sectors like textiles regardless of infrastructure quality. In addition, this approach overlooks the fact that African countries do not have the same comparative advantages as the Asian Tigers that perfected and popularized the export-led growth model: while those Asian countries had an abundance of low-wage labor, wages in Africa are typically higher than those of other countries at comparable development levels.

Instead of fixating on infrastructure, African countries should look to the experience of Latin American countries with similar resource endowments: a greater relative abundance of land than low-cost labor. As this experience shows, countries can make far more durable, sustainable economic gains by focusing on improving agricultural productivity with relatively low-cost improvements targeted at smallholder farmers for whom a boost in productivity would have the largest impact.

Policymakers should pay more attention to Africa’s agricultural productivity gap. World cereal yields have increased nearly threefold since 1960, but Africa has only managed to increase its yields by 90 percent. Africa is the only region where population growth has outpaced cereal productivity. Africa ranks lowest globally in virtually every agricultural productivity indicator much more so than the nonfarm economy does. On the one hand, it is not evident that the infrastructure deficit is more binding on agriculture than it is on the rest of the economy. On the other, there is compelling theoretical and empirical evidence that the agricultural productivity gap is a manifestation of the structural economic factors that impede Africa’s industrial competitiveness.

 

[GemState]

THE CASE FOR AGRICULTURE-LED GROWTH​

There are at least three reasons why the case for agriculture-led growth is more compelling for African countries than their prevailing preoccupation with infrastructure and with growth models centered on export-led manufacturing.

First, Africa’s low agricultural productivity means that returns on investment will be highest in agriculture. This low productivity, for the most part, reflects a lack of working capital (for buying intermediate inputs including “fertilizer, improved seeds, . . . and pesticides”) rather than fixed investment (in farm equipment, tree crops, and land improvements). Africa’s fertilizer consumption is estimated to be around 20 kilograms per hectare against a global average of roughly 140 kilograms per hectare.57 The cost of bridging this 120-kilogram-per-hectare gap would be around $16 billion per year (assuming a fertilizer cost of about $600 per metric ton).

The returns on this investment are easy to demonstrate. Estimates suggest that closing the cereal productivity gap with South Asia would increase Africa’s cereal output by 214 million metric tons, worth $46 billion per year at 2019 (pre-pandemic) global cereal prices, equivalent to roughly one-sixth of the region’s agricultural GDP ($315 billion in 2020). Closing the gap with the world average would increase output by 294 million metric tons worth $64 billion per year, equivalent to 30 percent of agricultural GDP.59

Second, because of the predominance of semi-subsistence, small-scale agriculture in Africa, the problems of low agricultural productivity, poverty, and food insecurity are intertwined. If such assistance were properly targeted, governments would get the biggest bang for their buck in terms of productivity growth by helping poor farmers. The productivity difference between neighboring poor and nonpoor farmers with similar land endowments often reflects modest investments highlighted earlier such as shallow wells, a cow or two, or tree crops. Raising agricultural productivity would hit three birds with one stone—spurring growth, reducing poverty, and addressing hunger.

 

[GemState]

African governments alike are much too enamored and preoccupied with Southeast Asia’s model of growth fueled by low-cost manufacturing. But that export-led model is by no means the only viable development model. Latin America has plenty of countries rich in land and resources that have pursued agricultural export-led growth and achieved comparable income levels and standards of living. It would be interesting to know how many of the African policymakers that are so fond of study tours to Thailand (with a 2020 per capita GDP of $7,200) and Malaysia ($10,400) have explored countries like Costa Rica ($12,200), Chile ($13,200), and Uruguay ($15,400).

These relatively higher incomes have been achieved at relatively low levels of industrialization, comparable to sub-Saharan Africa, with a manufacturing share of GDP of 9 percent in Chile, 11 percent in Uruguay, and 14 percent in Costa Rica (whereas the measure for sub-Saharan Africa is 12 percent and is 25 percent for East Asia). These Latin American countries also received higher ratings on human development than the Asian Tigers. The 2020 Human Development Index ranked Chile at 43 and Uruguay at 55, putting them both significantly higher than Malaysia (which tied with Costa Rica at 62); meanwhile Thailand (ranked 79) fell below Chile, Uruguay, and Costa Rica.

Notably, the Asian development model of export-led growth is generally held up as equitable, while Latin America tends to be associated with extreme inequality. This conventional wisdom is not borne out in the facts. The income share of the poorest 20 percent of the population is roughly the same in Chile (5.7), Uruguay (5.6), and Malaysia (5.8), while somewhat lower in Costa Rica at 4.3 percent and higher in Thailand at 7.5 percent. By comparison, the income share of Brazil’s poorest 20 percent is 3.6 percent and South Africa’s figure is 2.4 percent.69 The per capita consumption of the bottom 40 percent of the population measured in terms of purchasing power parity (2011 U.S. dollars) in Chile ($8.85) and Uruguay ($10.66) is comparable to Malaysia’s figure ($10.98), and those of Costa Rica ($7.16) and Thailand ($7.29) are also similar. By comparison, these figures rank well above those of Brazil ($5.71) and China ($4.26).

To conclude, the Asian Tigers’ export-led industrial takeoff is a reflection of the region’s factor endowments, namely an abundance of labor relative to land. Conversely, Africa’s relatively high wages compared to those of other destinations competing in the area of labor-intensive export manufacturing reflect the continent’s factor endowments, namely abundant land relative to labor.

 

[GemState]

The future of Africa will likely be characterized by a rolling frontier of high-labor enterprises, quite possibly including large agricultural and natural resource projects. This is an attractive option for current rich countries.

The process will likely look similar to what occurred in Mexico, where a very poor, almost entirely agrarian nation gradually developed into a hub of industry and commercial agriculture which now supplies much of America’s vegetables. Both U.S. and Mexican companies carried out the process with state backing.

 

[El Nino]

Policymakers should pay more attention to Africa’s agricultural productivity gap. World cereal yields have increased nearly threefold since 1960, but Africa has only managed to increase its yields by 90 percent. Africa is the only region where population growth has outpaced cereal productivity. Africa ranks lowest globally in virtually every agricultural productivity indicator much more so than the nonfarm economy does. On the one hand, it is not evident that the infrastructure deficit is more binding on agriculture than it is on the rest of the economy. On the other, there is compelling theoretical and empirical evidence that the agricultural productivity gap is a manifestation of the structural economic factors that impede Africa’s industrial competitiveness.
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Absolutely abysmal increase of agricultural output and you can see why. African countries agriculture is still done by small farmers who use traditional methods. Just by modernising the equipment and using new methods, the increase will be amazing.

 

[ZBR]

a lot of these African countries are actually cohericed by western control apparatus like the IMF and World Bank , they must follow the advice of selected expert NGOs opinions, the NGO will tell them they must produce Coffee and Tea, two plants with no caloric value and have value only on the international markets, which aren’t controlled by Africans. The West makes following these clauses contingent on their loan approval and thereby making them dependent on the West for their essential foods and calories. A country ‘em who can’t control its food can’t control its policy

Keeping Africa and Latin America hungry is central to American and Western European foreign policy.

 

[repo]

The price of fertilizer in Africa is at least 4 times that than Europe. This is simply because there are no roads, making it more difficult to transport. Focusing on agriculture before infrastructure is putting the cart before the horse.

 

[repo]

2 min video.

 

[GemState]

The price of fertilizer in Africa is at least 4 times that than Europe. This is simply because there are no roads, making it more difficult to transport. Focusing on agriculture before infrastructure is putting the cart before the horse.

From the article addressing your point

"The case for agriculture-led growth does not imply that Africa does not need infrastructure investment. Agriculture-led growth itself requires considerable investment in infrastructure.
Consider irrigation. A study by the International Food Policy Research Institute estimated a decade ago that only around 3.5 percent of sub-Saharan Africa’s cultivated land was irrigated, compared to the global average of nearly 18 percent. The study reported that irrigation contributed 24.5 percent of the value of agricultural production in sub-Saharan African on average, which means that an irrigated hectare generates seven times the value of a rain-fed one on average. Many African farmers would be perplexed to hear that international experts & governments have concluded that electricity is a bigger priority than water for irrigation.

But more so than infrastructure, agriculture-led growth requires public goods and services traditionally provided by governments, including (notably) research and extension services as well as policies and institutional development to address pervasive market failures."

 

[Basra]

"Instead of fixating on infrastructure, African countries should look to the experience of Latin American countries with similar resource endowments: a greater relative abundance of land than low-cost labor. As this experience shows, countries can make far more durable, sustainable economic gains by focusing on improving agricultural productivity with relatively low-cost improvements targeted at smallholder farmers for whom a boost in productivity would have the largest impact."




In other words Africans are lazy like African Americans. Requiring high wages for low productivity. (not like asians and chinese who are work bees)

Instead- Africa should sale their natural resources which is mass- and do agriculture- which their brains can handle.

 

[Nikka]

We sub Saharan Africans aren't use to civilization. For many millennia we were basically naked nomads that lived in tribes that killed each other. We rest from noon to mid afternoon in between our burst of barbarity. We might be equal to the first world of today in about a thousand years but by then they would be too far ahead for it too even mater anymore.

 

[Basra]

We sub Saharan Africans aren't use to civilization. For many millennia we were basically naked nomads that lived in tribes that killed each other. We rest from noon to mid afternoon in between our burst of barbarity. We might be equal to the first world of today in about a thousand years but by then they would be too far ahead for it too even mater anymore.

Look at u Miss pretend to be dumb spewing