Thursday, April 5, 2012

Africa should finally industrialize

Africa is frustrating, as it seems to be regressing in many ways despite substantial development aid. Several have pointed out that the problem is with this aid, for example because it provides perverse incentives. But I think an important aspect is this obsession with improving agriculture on a continent where land is simply not good for agriculture. While the development stage in development in the rest of the world went first through a boost in agricultural productivity followed by industrialization, I see no reason why Africa cannot skip straight to industrialization. It has a lot of labor. There is the problem with poor transportation and low education, but they will improve if demand increases through industrialization, which little growth in agriculture cannot.

I am mentioning this after reading the report of John Page, who shows that, if anything, Africa is deindustrializing. While one can discuss whether the strategies he advocate can work, the fact is that the climate is not the best for investment into industry in almost all of Africa. Maybe charter cities could be the right trigger?

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