Are African economies doing better or worse than we thought?

I did not find myself with a clear answer to that question after reading Morten Jerven’s new book Africa: Why Economists Get It Wrong, which I picked up in hopes of adding to my very scanty knowledge about the region. About three-quarters of the book seems to be arguing that Africa is doing better than than many people thought, as it criticizes a whole swathe of economic research about a supposed “chronic failure of growth” in Africa. Here’s a sample:

The simple point I am making is that, in contrast to what the growth literature tells us, the African growth experience has not been one of persistent stagnation. According to GDP data in international prices from the Angus Maddison dataset, the African GDP per capita in 1960 was about one-sixth of world GDP per capita. This remained true until 1977, after which the gap widened, and by 2000 the African GDP per capita was less than one-tenth of world GDP per capita. The African growth shortfall is thus a more recent phenomenon: before 1977, African economies were not lagging behind significantly in terms of growth rates.

A lot of his effort goes into attacking growth regressions that ignore both the historical trajectory of the growth data and take a simplistic view of the social and institutional factors supposedly related to growth. I am very sympathetic to these criticisms, but even after accepting his arguments it’s not clear that we are left with a very positive growth picture for Africa. So it’s not true that African economies have never experienced economic growth; on the other hand, it still looks like the growth data are pretty poor for a good three decades or so.

In the last quarter of the book Jerven then switches to arguing that Africa is in fact doing worse than some people think. He reviews some of his previous work on African GDP statistics to tackle the opposite side of the growth stagnation argument, and argues that the optimistic “Africa Rising” story of recent years is also overwrought and undersupported:

It is likely that very recent growth data are overestimating economic growth. First, for some economies – and Ghana is the best example – the growth figures are higher because there was a recent large upward revision in GDP levels. When the time series is smoothed out across the 2000s in light of these new data, it shows an exaggerated acceleration in growth. Second, for those economies that have very outdated base years, the GDP level is most probably underestimated. This has two effects. One is obvious: when the base is too low, growth estimates are too high. … A second effect results from statisticians and consultants adding to the GDP measure to make it more exhaustive by revising current and previous GDP estimates upward as they go along.

Jerven does not spend much time building up a new narrative about Africa to replace the two that he demolishes. But when he is describing Africa itself rather than people’s arguments about it, the description is not terribly positive: African governments for instance are “relatively fragile and particularly vulnerable to economic downturns and temporary fluctuations.” Such weak governments are unlikely to be able to replicate the kind of “developmental state” policies that have been successful in Asia (the best recent summary of this strategy is Joe Studwell’s How Asia Works). And nothing in this book challenged my naive understanding of most African economies as being heavily reliant on agriculture and exports of raw commodities, and therefore unlikely to generate the kind of sustained growth seen in the more successful examples of economic development in Asia and the European periphery.

I tend to agree with the Financial Times review that the book tends to skate over some rather obvious facts in its mission to show that Africa’s situation is more complicated than many theories allow. On the whole I felt that too much of the book is devoted to internecine academic warfare, and not enough to developing a coherent narrative about African economic development for the general reader. I am still in the market for one of these, so suggestions would be very welcome.

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