Book reviews on global economy and geopolitical readings. ESADEgeo, under the supervision of Professor Javier Solana and Professor Javier Santiso.

Transcription

1 Book reviews on global economy and geopolitical readings ESADEgeo, under the supervision of Professor Javier Solana and Professor Javier Santiso. 1

2 Emerging Africa: How 17 Countries are Leading the Way Radelet, Steven (2010), Washington DC. Center for Global Development. This book is about a group of 17 emerging African countries comprising more than 300 million people, that since the mid 1990s has begun to undergo dramatic changes in economic growth, poverty reduction and political accountability. For two decades between 1975 and 1996, their recorded economic growth per capita was essentially zero. But between 1996 and 2008, per capita growth averaged 3,2% per year, powering a full 50% increase in average incomes in just 13 years. The share of people living below the poverty line dropped from 59% in 1993 to 48% in 2005 a huge drop for a 12-year period. Basic Idea and Opinion The general by and large, negative and pessimistic view of the African continent, its politics, economy and development, is erroneous, unfair and simplistic. Treating all the countries in this continent in the same way is not constructive and does not present a true picture of the reality of Africa. To demonstrate this, one only has to look at the 17 emerging African nations which, since the mid-1990s, have set themselves apart from the others and are emerging as the genuine hope of the region. These are 17 countries whose reality has changed over the last 25 years, thanks to rapid and steady economic growth that suggests a highly promising future. With a total population of some 300 million people, these nations showed an average increase in annual per capita income of 3.2% between 1996 and Five basic factors have been instrumental in this change: more democratic governments, more sensible and clearer economic policies, the end of the debt crisis and a change in the relationships with donors, the technological revolution, and the arrival of a generation of political, economic and social leaders the so-called cheetahs. The Author Steven Radelet holds a PhD in Public Policy from Harvard University and a degree in Mathematics from the University of Michigan. He is currently the chief economist for USAID, and previously, in 2010, he was senior adviser for development for the US Secretary of State. His links with Africa go back to the year 2000, when for a period of two years he was deputy assistant secretary of the US Treasury for Africa, the Middle 2

3 East and Asia. From 2005 to 2009, he served as an economic adviser to the President of Liberia. Since 2002, he has been a senior fellow at the Center for Global Development, where his work and research focuses on economic growth, poverty reduction, and foreign aid, debt and trade. An updated view of Africa With this book, Steven Radelet offers an updated and extremely necessary view of Africa. As the President of Liberia, Ellen Johnson Sirleaf (to whom the author was an adviser), writes in the introduction, this book recognises that African countries have distinctive histories and political systems and that they are on different trajectories. The African continent cannot be observed and analysed from a single general perspective: Africa is not a whole, and distinctions must be drawn between the different realities of each of the nations and also between the different stages at which these nations find themselves. Thus, Radelet s principal aim in this book is to highlight the 17 nations which, from the mid-1990s, have begun to move towards greater political stability, leading to a stronger economy and continuous growth. This group is formed by Botswana, Burkina Faso, Cape Verde, Ethiopia, Ghana, Lesotho, Mali, Mauritius, Mozambique, Namibia, Rwanda, São Tomé and Príncipe, Seychelles, South Africa, Tanzania, Uganda and Zambia. Between 1996 and 2008, the annual economic growth rates of this group were at least 2% per capita, averaging 3.2%. Countries such as Mozambique and São Tomé and Príncipe even reached 5.3 and 5%, respectively. Indeed, the author bemoans the scant attention paid to these positive figures when Africa is discussed, the focus being only on the most pessimistic information. "For more than 30 years, it has seemed that just about all of the news out of Africa has been bad, says Radelet, pleading for a revamped image of the continent. The image of an entire continent mired in failure and hopelessness is increasingly out of date. Whereas the world has understood for some time now that Asian countries are spectacularly diverse, it would seem this has gone unnoticed in the case of Africa. Together, these 17 countries have some 300 million inhabitants. The author wishes to stress that none of these countries belong to the group of oil-producing nations. Their growth is not due to this source of revenue, nor do they share the economic parameters of this type of nation, whose growth is meteoric, but in many cases is not accompanied by an improvement in social indicators. The experience in these 17 countries is one of an improvement in almost all parameters thanks to the adoption of stable and long-lasting measures. The indicators that show this are: Economic growth of at least 2% in all 17 countries; Decrease in the number of people living below the poverty threshold, which fell from 59% in 1993 to 48% in 2005; 3

4 Increase of more than 100% in investment and trade; Rise in school attendance and literacy levels, especially among women; Improvement in health indicators with the exception of those countries that perpetually suffer the blight of HIV; Fall in the birth rate. Over the course of two decades, from 1975 to 1995, the per capita income of these emerging countries showed zero growth, but in the following 20 years it shot up to 3.2% a year, registering an increase of 50% in 13 years. This is an indication of the substantial change that took place in the mid-1990s, which allowed this group of countries to veer off in a radically different, positive direction. Radelet devotes the main part of his analysis to defining these five fundamental changes which put the aforementioned nations on the path towards growth and transformed their fortunes: 1. Democratisation According to Radelet, the tragedy of Africa in terms of development has largely been due to its abysmal colonial inheritance, as well as its difficult geographical conditions and the plagues suffered by many of the countries, but also, and to a large extent, to serious problems of leadership. After decades of tyrannical government with authoritarian leaders, the economic crisis of the 1980s, which followed the oil crisis, acted as a wake-up call to a people tired of corruption, violence and poverty, sending them out on to the streets. Two key events gave the final impetus to this tide of change: the end of apartheid and of the Cold War. The winds of change also reached Africa and led to the demise of many authoritarian governments. The number of democracies rose from 3 in 1989 to 23 in The echoes of freedom from Eastern Europe were heard by this new civil society, which shared the same dream of the people being granted a higher degree of representation in the running of countries ravaged by debt and deficit, with GDP at a very low ebb. The author recalls that the fuse was lit by the elections in Namibia on November 8 th 1989, one day before thousands of Germans were to dance on the Berlin Wall. The wave of protests calling for change spread across sub-saharan Africa, and demonstrations in support of the continent rose from 20 a year in 1989 to more than 50 in 1990 and more than 80 in Many governments responded by introducing reforms to guarantee civil rights, and by calling elections, the number of which grew from 2 in 1980 to 14 in Between 1990 and 1994, elections were held in 38 African countries, quadrupling the figure for the previous five years. In 20 years, Africa went from not having a single democracy to half the continent adopting this system. An interesting conclusion could be drawn from this, dispelling a fallacy which had held sway until then: democracy is possible in poor countries; of the 23 democracies, 12 4

5 had a per capita income of less than 600 dollars. Never in the course of history had so many poor countries converted to democracy so quickly. But the author points out that elections alone do not signify democracy and that this was just the starting point in the construction of some states where changes were already underway: there was a shift away from the politics of the individual to the institutionalisation of power, there were improvements in the protection of civil and political rights, and there was an increase in the number of civil society groups and NGOs that could monitor government actions. This progress was even more significant in the 17 emerging countries. All of them meet the Freedom House and Polity IV standards to be considered democracies. The Freedom House scores on civil liberties on a scale of 1 to 7 improved from 4.9 to 2.8 in 20 years and the political rights scores were even better. However, Radelet poses a pertinent question: has democracy meant better governance? It would appear so. With respect to levels of violence, for example, 26 violent incidents a year were recorded in these countries between 1980 and In 1996 this figure dropped to 5. As for corruption, the average country ranking was 89 th in 2008, compared with 104 th in Improved economic management 20 years ago, almost all the African economies were bankrupt, due above all to disastrous management by totalitarian governments with heavy-handed economic policies. In sub-saharan Africa the minimum salary fell 15% between 1977 and 1995 and the poverty rate was 59% or even worse in many cases. But in the mid-1980s the situation changed. When the political changes took root and democracy spread across the region (swept forward by events such as the release of Nelson Mandela), there was a resurgence in confidence and the economies reacted. In Radelet s opinion, this demonstrates that the relationship between democracy and economic development is clearer in Africa than in any other region. This was particularly true in the 17 countries, where the state control of markets exercised in the past disappeared. Tough measures were necessary in the quest for macroeconomic stabilisation, including price controls and the removal of trade barriers, which, of course, did not immediately lead to growth. However, they proved effective in laying the foundations of a longer-lasting development that began to be felt once the political situation had stabilized. Some of the key economic policies were: Exchange rate, trade and budget policies, such as cutting tariffs by half and increasing foreign exchange reserves. An increase in agricultural initiatives with the removal of price and production controls. Thus, agricultural production in the 17 countries has increased by an 5

6 average of more than 3.5% a year over the course of 20 years, and total production has doubled since An improvement in conditions for business with the introduction of measures that encourage the creation of new companies. There were considerable reductions in property registration costs, as well as in requirements, permits and bureaucratic procedures. 3. The end of the debt crisis and the change in the relationships with donors When the debt crisis worsened, the IMF and the World Bank emerged as the principal players and judges. Their tools were the Structural Adjustment Programmes, which went on to define economic policies and the relationships between debtor countries and donor states. 20 years on, the debt crisis would appear to be over, leading, in Radelet s view, to three key changes: 1) Debt burdens have fallen, relieving pressure. 2) Politicians can focus more on policy issues at home, rather than spend time renegotiating debts and conditions. And 3) the end of the crisis has created a healthier relationship between developing countries and donors. 4. Technological revolution The arrival of mobile phones and the internet had a revolutionary impact on Africa at all levels, expanding economic opportunities, creating jobs and reducing business costs. The opportunities for technology to lift people out of poverty and change the economic fortune of the continent have never been greater. Technology, which arrived relatively late in Africa, is reaching more and more areas. Growth in the number of mobile phones (40% a year) is faster in Africa than anywhere else in the world. In contrast, access to the Internet remains below 85% of the population due to infrastructure problems, but also due to prices (with tariffs 40 times more expensive than in the US). However, this situation will change, as Radelet points out, with the appearance of many new operators over the next few years. The 17 emerging African countries are at the forefront of this expansion with seven times more Internet subscribers than the rest of the continent. 5. The coming of the cheetahs A new generation of young political, economic and social leaders, with the capacity to combine their African identity and what they have learnt of the globalised world, is emerging in Africa. They are the true vehicles of change, whose task is to ensure that the changes mentioned earlier are implemented effectively to reshape the future of the continent. The cheetahs, a term coined by Professor George Ayittey of Ghana, are, according to this analyst, a new generation of young Africans who look at African issues from a totally new perspective. They do not relate to the old colonialist model. 6

7 According to Radelet, the objective they pursue is also to eradicate the erroneous perception of Africa, so that it may be seen as a set of stable, secure and dynamic communities that are productive and responsible members of the international community. This group is present in all professional fields, while it is strongest in the 17 emerging countries, since this is where the conditions are most favourable for the development of its members. Some even occupy government positions, such as Ngozi Okonjo- Iweala, Nigeria s first female finance minister. Radelet, who has close-hand experience of this generation, observes that the cheetahs represent many things, but he highlights five: ideas, technology, entrepreneurship, market power, and a pressure group for good governance and political responsibility. It is their strength that sustains the change. Challenges for the future The five factors mentioned earlier may signify the promise of a better future for a continent that still has a lot of ground to cover and which still suffers from some very serious problems (HIV, corruption, a lack of security). What does appear clear is that this group of 17 emerging countries is moving away from the pack and leading a change which, 25 years after the big revolution of the 1990s, is bearing fruit thanks to a generation that is prepared to channel its knowledge towards a better future. Among the challenges for the future indicated by Steven Radelet are: 1. Deepening democracy and strengthening governance; 2. Creating new economic opportunities for a growing workforce; 3. Managing the rise of China. China's trade in sub-saharan Africa represents 100 billion dollars a year, and this Asian country is set to become the biggest partner in the region. This generates opportunities and potential benefits, but also negative aspects which the leaders of the emerging countries must manage appropriately. Being able to say no from time to time may benefit them, in addition to promoting transparency in transactions and associations with China; 4. Adapting to climate change. Rising temperatures must be anticipated so that agricultural productivity is not affected; 5. Building strong educational and health systems with a focus on HIV as the principal challenge; 6. Promoting and safeguarding the value of women in society. For its part, the international community must be an active player in this process, ensuring that: 1. It is the emerging countries that lead the establishment of priorities and design the programmes, not the donors; 7

8 2. The agreements that the donors sign with the 17 emerging countries are on a longer term basis than with other countries. Only in this way will Africa be able to escape the so-called poverty trap, in which low incomes trap individuals in perpetual poverty. 8