Policy makers and academics alike puzzle over why some countries achieve economic ‘growth miracles’ while others lag behind. Of the 100 middle-income economies in 1960, fewer than a dozen transitioned into high-income economies. Economic history and empirical observations show that progress is linked to how nations learn and more specifically to the processes of technological learning, industrial policy, and catch-up. By looking at the cases of Japan, the United States, China and Ethiopia, I argue that commitment to learning by governments and dynamic technological learning by firms are key to economic catch-up. How these and other nations learn can provide valuable insight for African countries.
How did Japan overtake Europe in the mid-20th century?
The key driver of catch-up in Japan was technological learning and an active industrial policy. Japan’s learning experience involved the transfer of skills and knowledge, the importation of equipment and the acquisition of turnkey projects to develop technological capability. Japan also developed industrial infrastructure, including railways and the telegraph, by deploying state-owned enterprises. Continue reading “How do Nations Learn? Why Development is First and Foremost About Learning”
By Dominic Rohner, Faculty of Business and Economics (HEC Lausanne), University of Lausanne and Center for Economic Policy Research (CEPR), and Alessandro Saia, Faculty of Business and Economics (HEC Lausanne), University of Lausanne
Armed conflict is a major obstacle to human happiness and prosperity. The most visible consequence of warfare is, of course, the human death toll, leaving millions of families shattered. But below this surface, the grim consequences of fighting go further. The economic cost is very considerable, with the average war leading to a total loss of about 15% of GDP, human capital accumulation is slowed down, inter-group trust is threatened, and psychological suffering and trauma become widespread.1
While academic research on conflict has boomed in recent years, the lion’s share of contributions has focused on factors that are well-suited for statistical analysis but that are difficult to modify by policymakers. In particular, while we know that ethnic diversity, adverse weather shocks and natural resource discoveries play a role in the occurrence of conflict, there are not many obvious policies that can modulate these parameters.
Barely no one can answer this question, even with some thought. And yet, Africa is the cradle of humanity, and therefore logically, the cradle of science and innovation. So why can’t we name any famous African scientists? The simple answer is that we don’t know much about the history of innovation in Africa. The world’s technologically driven human progress can be divided into two parts: the “Africa” time with major discoveries, including tools, fire, mathematics and steel, and the more recent “industrial” read “western Europe and North America” time with major discoveries such as the steam engine, vaccines, antibiotics, computers and much more. In between the two, the world transitioned from more “informal” homegrown knowledge-based innovation to more “formal” scientific knowledge-based innovation. Within that context, Africa’s research and innovation, which often occurs outside the so-called “formal” innovation framework, completely disappeared from the global map of Science, Technology and Innovation (STI). Since then, “playing catch-up” has been the cornerstone of the strategy of every single African nation intending to adopt a knowledge-led economy. But do we really need to catch-up? What does catching up even mean?
When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. However, I know that the reality is still so much different from what I have in mind.
When I was 12 years old, my friend in school was pregnant. As soon as everyone in her family and school knew, she dropped out of school and I have never heard about her again. Three years later, I attended the wedding of another friend, who was pregnant at the age of 16. I was really confused at her wedding and feeling sad for her because she looked unhappy and very quiet. I imagine that it was a hard time for my friend to accept. After the wedding, she dropped out of school and moved in with her husband’s family. Continue reading “Girls’ Leadership Matters!”
Over the last decade, Africa has witnessed the emergence of a dynamic start-up scene in some of its countries. The district of Yaba, in Lagos, Nigeria is one example. In Yaba, young educated people are supported by a network of incubators, accelerators and other support facilities. This entrepreneurship cluster has taken advantage of the nearby presence of many Nigerian higher education institutions, such as the Yaba College of Technology, the University of Lagos, or the Federal Science and Technical College for students and facilities.
Another well-known case is the so-called Silicon Savannah in Kenya, a highly entrepreneurial eco-system that has given birth to innovative tech companies like M-Pesa, the worldwide money transfer and financing service operating via mobile phones, and Ushahidi, the well-known crowdsourcing platform. As in Nigeria, some of the universities based in Nairobi, notably the University of Nairobi and Strathmore University, are important actors in this eco-system. Continue reading “Building Africa’s entrepreneurial culture”
ByWim Naudé, Professor in Business and Entrepreneurship in Emerging Markets, Maastricht University, Dean of the Maastricht School of Management, The Netherlands, and Research Fellow at the IZA Institute for Labor Economics, Bonn, Germany
Africa has failed to industrialise. At the same time, millions of young people are seeking jobs. Put one-and-one together and the answer seems to be that if these labour market entrants become entrepreneurs in industry then they can in one stroke create jobs and help Africa industrialise. Yet, optimising the nexus between entrepreneurship and industrialisation requires overcoming some vexing policy biases. These can be categorised as biases of over-estimation and biases of under-estimation.
First, industrialisation’s job-creation potential is often over-estimated. The world is in a Fourth Industrial Revolution (4IR) driven by technologies such as the Internet of Things, automation, additive manufacturing and big data analytics (see Naudé, 2017). These technologies are causing the loss of low-skilled routine jobs, of which Africa has a disproportionate share. It’s estimated that up to 66% of all jobs in developing countries are at risk. Relatively poor African countries such as Ethiopia are at a particular risk of having around 44% of current jobs susceptible to automation. The 4IR is furthermore leading to a ‘re-shoring’ of manufacturing back to advanced economies. This is to the detriment of low-wage labor in African and other developing countries. As Culey (2012) points out: How important is low-cost labor when you don’t actually need labor? Continue reading “Biases in entrepreneurship and industrial policy in Africa”
By Michael Bratton, University Distinguished Professor of Political Science and African Studies at Michigan State University and senior adviser to Afrobarometer, and E. Gyimah-Boadi, Executive Director of Afrobarometer and the Ghana Center for Democratic Development
Beyond the limelight and the headlines, the recent Group of 20 (G20) summit accomplished an important piece of business by launching the Compact with Africa. The next step is crucial: negotiating the priorities that the compact will address.
One key concept is that the compact is with – rather than for – Africa, implying that it will rely on true partnerships to pursue mutually agreed-upon goals.
Receiving quality higher education in Latin America is still a privilege, with two-thirds of youth in the region lacking advanced technical, professional and management skills. Despite their limited access, acquiring these valuable skills is still the main vehicle to a career. The consequences are not minor. According to OECD data, 21% of youth are not working or studying, and another 19% are working in the informal economy. All of them face limited opportunities to fulfil or even discover their potential. A better way must be found to give the region’s young talent a path to professional growth.
A few years ago, I started a web development company in Lima, Peru. In the process of building our team of software developers, my partners and I discovered what appeared to be a loophole in the system. Most of these coding professionals, making competitive salaries and facing endless opportunities for career growth, did not have a fancy degree from a renowned university. They were self-taught developers, university dropouts or computer engineering graduates from obscure technical institutes. Despite the lack of a degree, they were doing great. And they were not the only ones. According to Stack Overflow’s 2016 survey, 56% of developers do not have a college degree in computer science or related fields. In tech, the key to a high paying job often has more to do with what you can build than where you studied.
Some countries in the South Asia and Pacific region are experiencing a rapid increase in the number of working-age people. This will create some opportunities as it will contribute to reducing the dependency ratio and increasing the possibilities for social cohesion policies. But if these people fail to find decent jobs, then per capita income may slow down. With less income, people face lower living standards and difficulties accumulating capital and assets. For young people, these changes potentially bring significant challenges. Take, for example, youth in Cambodia.
By Mike Herrington, Executive Director, GEM Global
Explore this topic further with the upcoming launch of the 2017 African Economic Outlook: Entrepreneurship and Industrialisation in Africa.
Stay tuned for details.
In the last decade, most countries in Africa underwent radical transformation, increased their GDP per capita and moved towards globalisation. Just look at Botswana where GDP per capita increased from USD 7 136 in 2013 to USD 7 505 in 2014, or Cameroon that saw an increase from USD 1 271 to USD 1 405, or Nigeria that experienced a jump from USD 1 692 to USD 3298 during the same period.1