The Wire China

May 30, 2026

Here is a link the Wire China article, about How Africa Works, and connected Asian issues. Below is the text and textual illustrations but no photos or graphs.

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Q & A

Joe Studwell on Getting Africa’s Economies to Work

The author and journalist discusses whether the ‘Asian tigers’ model is one African countries can emulate, and China’s influence over the region’s development.

By Andrew Peaple — May 24, 2026

Economy

Joe Studwell’s 2013 book How Asia Works was a groundbreaking analysis of the rise of East Asia’s ‘tiger economies’, South Korea, Japan and Taiwan. In it, the British journalist and author showed how those countries had achieved success by pursuing state-led industrial and agricultural policies while limiting capital flows — a policy mix that ran counter to prevailing economic orthodoxy. In his new book, How Africa Works, Studwell takes a similar look at the world’s poorest region, and asks whether a similar policy mix could and should work there.

In a recent interview Studwell discussed the book’s main arguments and the role of China in African economies. The following is an edited transcript of that conversation.

 

Q: Can you start by explaining the similarities between Africa and Asia in terms of the economic development model that they could or should be following? 

A: Broadly the same policies that worked in East Asia have worked in a very small number of countries in Africa that have developed quickly. The first element is the same emphasis on smallholder agriculture and achieving an agricultural surplus, so that there are broadly distributed gains across society, meaning that essentially everyone’s in the capitalist game.

A second factor is the role of manufacturing and manufacturing policy. That has been important in the small number of countries in Africa that have so far undergone rapid development. And a third factor is financial controls, or what is sometimes called financial repression. The objective of that is to trap money in your country so that you can deploy it for domestic development, rather than letting it run off looking for higher returns elsewhere.

These policies are the connection between the small number of successful African countries and East Asia. But the context is massively different.

BIO AT A GLANCE
AGE 58
BIRTHPLACE Bradford, Yorkshire, England, UK
CURRENT POSITION Senior Visiting Fellow, Overseas Development Institute (ODI)

The striking thing about How Asia Works was the way it challenged the so-called Washington consensus — that free markets and free flows of capital are what developing countries should adopt. You pointed to the fact that state involvement and capital controls helped development in the countries that had success in Asia.

Where the state is sufficiently capable, it plays a big big role in developing countries, because you don’t have a developed private sector that can do things on its own. You need the state to act.

If you read the academic literature over the last 50 years, most of it will tell you that it’s been governance failures — corruption, kleptocracy, civil strife, particularly ethnic strife. But the book that I’ve written argues something different — that the fundamental difference and problem in Africa was demographic. 

Of course, this is not just an Asian thing: it’s not just about the Ministry of International Trade and Industry (MITI) in Japan or the National Development and Reform Commission (NDRC) in China, or the planning agencies in Korea or Taiwan that took a very proactive role in framing the development of their economies. This has happened previously, with the catch-up countries in Europe, and it happened in the United States as well, going back to the 19th century. It’s a universal truth that if you do have a sufficiently capable state, it can very usefully do a lot in the early stages of development.

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MOST ADMIRED Harry Truman. The president who finished in D.C. and took the train home.

In general terms, why is it that African countries haven’t been able to adopt the same kind of economic model that has worked in Asia?

If you read the academic literature over the last 50 years, most of it will tell you that it’s been governance failures — corruption, kleptocracy, civil strife, particularly ethnic strife. But the book that I’ve written argues something different — that the fundamental difference and problem in Africa was demographic.

It’s a vast continent: you can put Europe, India, China and the U.S. into Africa, that’s how huge it is. Because of its extraordinary and unique disease burden, thanks in particular to the prevalence of parasites unique to Africa, the population grew incredibly slowly for a long time. In 1960, if we take that as the start of the continent’s independence era, the population density in Africa was less than 10 people per square kilometer. For comparison, that is the same as Europe in 1500: there wasn’t much growth in Europe back then, and there wasn’t any growth in Africa for a long period after independence. This was the single biggest constraint.

From the 1950s onwards, though, you start to get new drugs, and the development of health care services and screening for things like sleeping sickness — which still kills vast numbers of people, but not the numbers that it did. That quite quickly reduces the infant mortality rate in Africa from the 1950s. Even within that decade Africa reached the highest rate of population growth, at about 2.4 percent a year, that East Asia ever had, and it went up to a peak of nearly 3 percent a year.

So suddenly you get a massive change. From 230 million people in Africa in 1945, today there’s 1.5 billion today; by 2050 there’s going to be 2.5 billion people, and by the end of the century it’s forecast there will be four billion. That will make Africa one of two dominant demographic blocks in the world, along with Asia. So things have changed very fundamentally there.

When there were 10 people per square kilometer, there weren’t big enough markets: you didn’t have enough people to buy anything that you could produce. Moreover, the costs of infrastructure at a per person level were totally unaffordable. So you couldn’t exploit the resources of Africa, because you couldn’t afford to build the roads and utilities that you would require. You don’t have enough people to have a good division of labor. And you don’t have what economists call the economies of agglomeration — you don’t have cities, apart from anything else. In 1900, Africa only had two cities with 20,000 people — Lagos and Dar Es Salaam. Given the disease burden in Africa, people didn’t live in close proximity because it increased their chances of dying from communicable diseases.

But at the end of this decade, Africa will finally be at the demographic density that Asia had in 1960 — the point when the Asian takeoff began. We can’t say precisely when it will be, but at some point you hit a tipping point where you’ve got enough people so that you can start to do things that you could not otherwise do.

The other huge problem for Africa at independence was that because there had been so few people in Africa, you couldn’t raise taxes. No colonial government, whether it was anglophone, francophone or lusophone, operated schools. They just didn’t have the money. All there was was a small number of missionary operated schools.

So when you kick off in 1960, you’ve got 16 percent literacy in Africa and 5 percent female literacy. It’s only after that point that countries started to generate literate and numerate populations, a fundamental requirement of any modern economy. Actually it’s very under-remarked that Africa did remarkably well in educating its population after 1960. Take someone like Julius Nyerere, who became the leader of independent Tanzania when literacy was 10 percent: he steps down 25 years later, and literacy is 85 percent. A World Bank study said Sub-Saharan Africa was the most rapid rollout, at the biggest scale, of a public education system that has ever happened.

So those are the huge contextual differences: those problems did not exist in Asia. There were always enough people, and colonial governments there operated schools and a reasonable share of people went to them.

 

Can you explain why developing smallholder agriculture is so key to development?

Smallholder agriculture has been key really for distributional reasons. If you get the situation there was in Africa where the population starts to increase almost 3 percent a year, it means that every 25 years, from the 1950s, the population doubled and demand for food tripled. Once people had a bit more money, poorer people spent half or often more than half of their income on food. It was a similar story in East Asia: demand for food went up, and then smallholder farmers started growing crops at increasing yields, and earning greater disposable income. In turn, that means that the early gains in terms of GDP growth are very broadly spread.

One outcome of this is the development of manufacturing and industry in rural areas, as happened in China. A classic example was that of the now Great Wall Motor, based in Baoding, south of Beijing. That firm was originally an agricultural repairs business, repairing agricultural machinery. It’s now the biggest producer of four-wheel drive vehicles in China.

So as agriculture prospers, parts of manufacturing and industry take off in rural areas, and all of this is very positive for development — particularly because while smallholder farmers make a bit of money, they don’t ever make enough money to be buying, say, an imported car. You get this great consumption picture where demand in the economy is for goods which can be produced locally. Farmers want cement, they want bricks, they want glass; and they want farming implements, and then they want household consumer goods, all things that can be produced within the domestic economy. It has a very positive supportive effect for domestic manufacturing.

Now in East Asia, or at least in Northeast Asia (including Vietnam), there was an almost perfect smallholder picture, because it was orchestrated by central governments with land reform measures that divided up the land equally among the farming population.

In Africa, historically there were large plantations which were operated by colonists: there were a dozen settler colonies, of which South Africa is the oldest, where white settlers came and basically grabbed the best land. The settlers tended to operate relatively large farms and they pushed the local indigenous population onto so-called native reserves, where they farmed on communal land and in small holdings.

Africa is so big and has so much cultivable land — even today, the World Bank reckons that half the unused cultivable land in the world is in Africa. The difficulty for the smallholders was that often they couldn’t get on the best land, because it had been grabbed by settlers. When the settlers were eventually driven out after wars of liberation, that land was taken over by new post-colonial governments.

But rather than giving land to the population at large, governments tended to divide it up among supporters of the regime to farm at scale. Land distribution remains a problem most obviously in South Africa. Apartheid ended in 1994, and since then still only about 10 percent of agricultural land has changed hands. They haven’t fundamentally confronted the problem.

Chinese public banks have put about $150 billion dollars of lending into Africa and that’s made a huge difference. 80 percent of the money has gone into infrastructure. It’s generally been very positive, because [China has] delivered at a cost which is significantly below what African governments would have paid to European or U.S. firms. 

However, the more important picture to grasp around Africa at the moment is that suddenly you’ve got nearly 40 cities with more than a million people, and scores more with over half a million. You can go to the periphery of any of these cities and where the city meets the first fields, look at how food is being grown. You’ll find classic smallholder-type farmers who have dug bore holes, who are irrigating their fields, so they can get a couple of crops of vegetables or of rice or whatever. They’re feeding into urban markets that are reliable sources of demand, of a kind that just was not there 20 years ago, and they are making thousands of dollars per hectare from their cultivation. This higher yield farming is going forward without any real government involvement: it’s down to a response to demand and the entrepreneurialism of the farmers.

Often these smallholders have other jobs in the cities. Just to give you examples of the people I met in northern Tanzania: one guy was a senior manager at the country’s driving license agency, farming on the side because it was profitable. Another guy farming tomatoes was a senior policeman. The money to be made in agriculture is sucking in a lot of urban entrepreneurs.

What has impeded Africa’s manufacturing sector to date and what are its prospects now?

Again, I think demographics are key. You need to have sufficient demand and sufficiently concentrated demand for products, because that helps you get through the learning experience with manufacturing.

It’s still early days, but both for consumer goods and the manufacturing that surrounds agriculture, there’s a lot going on. There’s not yet much going on for exports to the rest of the world, although there are signs of export growth within Africa — a lot of products produced locally are relatively more competitive within Africa because of logistics costs.

The leader in terms of where manufacturing investment is coming from is agribusiness and agricultural processing, because of the growth in consumption of processed foods in Africa. The money in agribusiness is such that conglomerates are developing, which are somewhat similar to the conglomerates that we saw in the development of Southeast Asia coming out of agriculture — like CP Group in Thailand, which was a seed business originally, or Salim Group in Indonesia, which dominated noodles.

The Bakhresa Group in Tanzania, for example, is in about 10 countries now: as well as milling they do everything from petroleum products to real estate and they’ve even got a football club and a TV station. It would not look out of place in Southeast Asia.

Do African countries have an opportunity to take a larger market share of global manufacturing?

It’s possible. When you look at the most labor intensive activities, garmenting is the most obvious sector where labor costs are decisive. Factory labor in China now costs around $6-700 a month per employee; in Ethiopia or in Madagascar, where there’s a garmenting center that employs a couple of hundred thousand people, it’s $60-65 a month. If port-road connections and shipping can be put in place, and the country can remain politically stable, then this can certainly be attractive.

People say at the moment that China is trying to hang on to every last bit of manufacturing. That certainly wasn’t the case a few years ago when legislation was passed in China which reduced the number of products that could get VAT rebates and other incentives. But even if they are trying to hang on to more manufacturing now, at the end of the day, a tenfold difference in labor cost is significant.

The greater challenge probably for Africa is from other lower labor-cost locations in Southeast Asia and in India. That’s quite hard to predict. The Indians talk the talk about manufacturing, but they’ve never really done anything, which is largely why they have an economy less than a fifth the size of China’s, even though it’s now growing faster. In Southeast Asia, there is Cambodia or Indonesia, although I would say neither of those is without a bit of political risk. So the opportunity is there for African countries if they get organized.

 

As you were traveling around and researching this book, how much did you notice Chinese investment across the continent? And what sort of difference do you think it’s making?

You see Chinese people everywhere in Africa. The Chinese public banks have put about $150 billion dollars of lending into Africa and that’s made a huge difference. 80 percent of the money has gone into infrastructure. It’s generally been very positive, because as China has managed to do with almost everything, it’s delivered at a cost which is significantly below what African governments would have paid to European or U.S. firms. China has sliced the cost of many things that other developing countries need in half, for everything from the cost of concrete to the cost of hydro turbines.

Still, the results are inevitably varied because these are transactions between China and different types of African country. If the African countries are like Ethiopia, they say no, you’re not bringing Chinese workers here, you’re going to train our workers; and if governments negotiate as hard on price as the Ethiopians did, I think they can get a pretty good deal.

If, on the other hand, you’ve got politicians who are willing to take a bung and then let the Chinese do what they want to do, they’ll probably turn up with lots of workers because they find it easier to get the job done that way. Even when things are bad, though, I’m not sure that it’s always genuinely negative for the African country. If you look at Angola, which is the biggest borrower from China, they managed to pay $6 billion for an airport. But at the same time they also got a significant buildout of their electricity infrastructure, road networks and so forth. Angola is such a failed state, they were not going to get that done themselves.

The bigger picture is the amount of credit that China made available to Africa was beyond anything they were going to get from the U.S. and Europe; and the cost at which most projects were delivered was at a significant discount to what they would have paid for U.S. and European involvement.

I do think there’s going to be increased tension between the African Union and China just because of the scale of the Chinese trade surplus. But this is the same as the tension that China’s getting with everyone in the world. You can’t run an aggregate trillion dollar goods trade surplus and have people be happy with you.

 

What about the various accusations made against China, such as the idea that it is creating debt traps for African countries to increase its leverage over them? How fair is such criticism?

In some cases the Chinese banks have over lent, there’s no doubt about it; and so countries are saddled with more debt than it would be prudent for the Chinese banks to have given. We also know that for instance in a country like Angola, there are unpublished contracts that we believe require Angola to turn over more oil as the oil price goes down — not the kind of contracts that, say, the World Bank would recommend as a good idea. The Angolans will sign those sorts of contracts; the Ethiopians wouldn’t have done. Part of being a country is to be sufficiently grown up to be able to deal with other countries.

There’s no way that Africa is going to cease to be very involved with China, just as in the 1980s, Southeast Asia played the role of a vent for Japan’s manufacturing surplus, and the Middle East did so for South Korea. Africa today is the primary location playing that role for China. Estimates also say that around 12 percent of manufacturing in Africa is currently Chinese-owned. They’re there for a range of different commercial activities, and not about to leave.

And in general, did you find people at the policy maker level were more comfortable dealing with Chinese than their Western counterparts?

People in what I would say are the more competent governments who I talked to about China were mainly thinking about the cost and what they’re getting. But I’m sure it’s a relief to them not to have to deal with all the stuff that they would have to deal with in getting European investment.

What’s a little unclear now is the availability of credit from China for infrastructure projects… The question is whether China’s ambitions in Africa are going to pick up again once the central government is happy that existing debts have been managed such that what has to be written off is written off, and what can be recovered can be recovered.

I don’t see an alliance between African countries and China. I think the relationship is economic and transactional. People I’ve spoken to do see Chinese politicians as quite well informed about Africa, and they obviously like that. Certainly Africa is taken seriously and Chinese ambassadors in African countries tend to be very active.

What’s a little unclear now is the availability of credit from China for infrastructure projects, and whether that’s going to end or whether we’re in more of a pause. The question is whether China’s ambitions in Africa are going to pick up again once the central government is happy that existing debts have been managed such that what has to be written off is written off, and what can be recovered can be recovered.

What about the political aspect to the Sino-African relationship? Do you think African countries look at a country like China and see it as a desirable model, and that a certain level of autocracy is necessary to implement the economic development that the country needs?

The debate about whether a bit of autocracy is a good thing for development is very particular in Africa, because of the ethnic fragmentation of countries, which again goes back to demographics. When there was such a low population density for such a long time, different ethnic groups could coexist without much conflict. If there was conflict, people could always take off and find a new place to live. That is the opposite of European or Asian history: in a more densely populated Europe or Asia, everybody fought each other for land and then the victors imposed their values on the losers.

In Africa, traditionally, you didn’t have that. What they have ended up with is several thousand ethnic groups in what generally are colonially created states. What has become apparent since independence is that many of these countries actually need to have democracy to take the heat out of the ethnic conflicts that arose. That is very different to the post-independence situation in Asia.

In East Asia, it was easier to effectively say ‘we’re going to do autocracy for 30 years while we get the economy built’ because these were monoethnic societies. The minorities in Japan or Korea or China were never more than 5 percent of the population. African states are having to develop in a very different context. Mauritius, for example, had a lot of ethnic friction around the time of independence. They’ve done remarkably well with genuine democracy, and so has Botswana. I argue in the book that what is different in Africa from East Asia is that you do tend to need a cross-ethnic coalition politically, and that’s a challenge.

Let’s turn to China’s economy for one last question. Are you more in the optimist or pessimist camp at the moment?

There’s a case for both. What China has created in terms of its manufacturing capability, controlling a third of the world’s manufacturing output, gives it a very powerful position and it’s begun to be genuinely innovative in a number of areas.

But at the same time they have got to the point that we always knew that they would get to with the real estate sector. Once the population stopped urbanizing, given the way that construction was handled in China with property built out ahead of the arrival of demand, that was always going to create a big overhang. We’ve had such periods in the property market before. This time, the difference is that there just aren’t the people to come into towns to take the property up.

But the economy is still growing 5 percent a year. When you’re at over $10,000 of GDP per capita, that’s a very significant growth rate. Most of China’s challenges are political ones, particularly in terms of its relationships with the rest of the world. And although it’s now quite a powerful country, I don’t think it’s wise for China to get into a situation of economic conflict with the U.S. and the EU, and potentially other parts of the world as well. Hubris is the biggest risk for successful states.

 

Andrew Peaple is a UK-based editor at The Wire. Previously, Andrew was a reporter and editor at The Wall Street Journal, including stints in Beijing from 2007 to 2010 and in Hong Kong from 2015 to 2019. Among other roles, Andrew was Asia editor for the Heard on the Street column, and the Asia markets editor. @andypeaps

 

 

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Financial Times podcast

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Kevin Coldiron’s Top Traders Unplugged podcast

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Why Africa’s growth prospects may be looking up

March 4, 2026

By Reuters

This transcript [of Reuters Big View podcast] was created using speech recognition software, it may contain errors. Please review the episode audio before quoting from this transcript.
Peter Thal Larsen
What is the future for Africa’s economic development? Over the years, periods of high hopes for the continent’s prospects have swung to disappointment and back to hope again. Right now, it’s fair to say the mood has turned a bit gloomy again. Many African countries have been whacked by Donald Trump’s tariffs, which have upset their export markets. The United States, United Kingdom, and others have slashed aid budgets, and climate change is adding to the challenges facing many fragile African nations on top of the historic burdens of colonialism, slavery and the scourges of debt, disease and armed conflict which have blighted it in the past.
Peter Thal Larsen
The true picture is much more complicated than this. And there is a more positive story to tell, one where a handful of African countries have, with careful planning and thoughtful policies, transformed their economic prospects and where a population boom is creating the potential for future development and growth that have eluded most African nations in the past.
Peter Thal Larsen
So today on The Big View, we’re going to talk about African growth, the past, and more importantly, the future. It’s what we do at Reuters Breakingviews. We tap our best sources around the world for fresh insights into the biggest stories in business, finance, and economics. I’m your host, Peter Thal Larsen.
Peter Thal Larsen
Some people argue that it’s pointless to try and generalize about a continent which is home to 1.5 billion people spread across more than 50 nations spanning different history, geography, culture, and language. Others maintain that the conditions facing African countries are so historically and geographically unique that it is a mistake to try to compare their economic development to the experience of countries in Asia and South America. It’s fair to say my guest today disagrees. Joe Studwell is a journalist and academic who is currently a visiting senior fellow at the Overseas Development Institute. He’s spent much of his career living in and writing about Asia. But for the last five or six years, he’s been involved in an intensive and in-depth study of Africa. He’s written up his findings in a fascinating new book. It’s called “How Africa Works: Success and Failure on the World’s Last Developmental Frontier”.
Peter Thal Larsen
Joe Studwell, welcome to The Big View.
Joe Studwell
Hello Peter.
Peter Thal Larsen
So let’s start with perhaps the obvious question. I mean, you spent a big part of your career living in and writing about Asia. Your last book, admittedly some time ago, was called “How Asia Works”. You say in the introduction to this book, the project began by a mistake. What happened?
Joe Studwell
Well, there were two mistakes, really. One mistake was the Ethiopian and the Rwandan governments asking me to go and see them. And I said, well, I don’t know anything about Africa, so that would be pointless, even if it’s lovely of you to ask me. And they said, no, no, you don’t need to know anything about Africa. We want to talk to you about Asian development policy. And then the other one was a meeting with Bill Gates, who liked the last book. And with Gates I talked for an hour about Asia. But at the end of it, he said, “oh, you know, but what I’d really like to know is what you think about Africa”. And it was these events that got me thinking, you know, that perhaps there was something to be done. I knew it was going to be a huge project because there are 55 countries in Africa and it was going to take a lot of time. But Gates, the Gates Foundation, and Omidyar, which is one of the eBay founders, together said they were willing to fund the research. And that’s how it started and kicked off.
Peter Thal Larsen
And so you, you spent something like seven years, is that right?
Joe Studwell
I don’t think it was as much as seven years. It was five, six years in total. I wasn’t doing it the whole time, but I was doing it a lot of the time. You can imagine with stuff that you’ve covered in your career that you’ve got to get the historical backstory of different countries. You’ve got to recognize that there are different drivers of economic development in different places. It takes a long time, but I found it fabulous. I didn’t have a bad experience in Africa actually, and I met some really interesting, straightforward, get-ahead people. I thoroughly enjoyed doing the work.
Peter Thal Larsen
Because there is, I mean, there’s another potential challenge facing a book like this, which is how can you possibly generalize? As you say, there is more than 50 countries, different sizes, geographies, languages, political structures, colonial histories. So what made you confident that there was something that could be said that would be sort of relevant on a continent-wide scale?
Joe Studwell
I wasn’t confident — but I got into it and I thought, if there are themes, I’m going to find out what those themes are. And yeah, in the middle of the project, I thought I’m never going to find anything, any commonalities here, it’s just 55 different countries. But ultimately, as I pulled together more and more research, I began to see that no, and there is a pattern in Africa. And it’s a pattern that surrounds demographics, which was not something that I’d ever paid — it wasn’t that I hadn’t paid attention to it in Asia, but I hadn’t ever needed to be concerned because East Asia and South Asia always had sufficient demographic density for economic development, at least after the Second World War. You’d have to go back into the 19th century to find parts of East Asia, Southeast Asia, particularly, that were sort of problematic in terms of demographic density. But when I looked at Africa, what I realized was that that was the major constraint on the continent. We think about Africa today, people, I suppose, particularly in Europe and the US, are starting to get frightened by the population numbers that they’re beginning to get familiar with. So at the end of the Second World War, there were only 230 million people in Africa. Today, there’s 1.5 billion. In 2050, there will be 2.5 billion. At the end the century, there’ll be 4 billion people in Africa. So, you know, the standard reaction to this is the, is the Malthusian one that, oh my God, we’re going to sort of breed ourselves to extinction. But the developmental story, the real developmental story in Africa, is a different one. And it is that in 1960, at the time of independence, when some people were quite optimistic about African development, population density per square kilometer was under 10 people, fewer than 10 people per square kilometer. It’s not a lot. It’s about the same as historians reckon there were in Europe in 1500. And in 1500 in Europe, how much growth was there? Well, there wasn’t any growth. And the reason was there were not enough people. Today, we’re just getting in Africa to the population density that we had in Asia in 1960. The end of this decade we’ll be there. So even though it’s a couple of billion people at the end of this decade, in density terms, it’s only getting to where Asia was in 1960. And that is hugely important because without a minimum amount of demographic density, it’s really impossible to develop because you don’t have markets. You can’t afford infrastructure because when you work out the cost of infrastructure on a per capita basis, it’s just too expensive to build a road or a reservoir or whatever, per person. You don’t get the division of labor that you get with more people and you don’t get a bunch of other what economists call economies of agglomeration. So when all that stuff is missing, you’re really stuck. And that has been — and the core argument of the book is that has been — the biggest constraint on Africa to date, you know, the literature has tended to tell us that it’s been problems of governance, problems of corruption, kleptocracy, problems of ethnic conflict, problems of other civil strife. But those to my mind of mainly been proximate problems. The fundamental problem is that Africa hasn’t had enough people.
Peter Thal Larsen
That’s really fascinating. And I think, I mean, you even sort of, you make the point that, that this goes right back to even the sort of the pre-colonial period, and the colonial period, that actually the way in which the, the colonial countries administered their African colonies was with relatively little investment or kind of oversight?
Joe Studwell
Yeah, I mean, we tend to look back at colonialism in Africa and focus on the fact that it was quite brutal, but it’s more useful in understanding what happened in the colonial era to understand the finances of it. And the dearth of population meant that colonial governments couldn’t raise tax or they couldn’t raise sufficient tax to do anything very much apart from put very small numbers of people, of foreigners, of Europeans, in place, and then rule rural areas in Africa through either chiefs who existed already or chiefs who were put in place by the colonial powers. I mean, there’s research that’s looked at the colonial numbers were put in place in terms of expatriates that were put into place in British colonies in Africa. And each person, each colonial officer, which was usually a district officer, was looking after an area the size of Wales, which would be the size New Jersey in the United States. And so you can imagine. With a horse. You’re not going to get a lot done.
Peter Thal Larsen
Right — I suppose that’s probably right. So it’s clear, as you say, the demographic picture is changing very quickly now. Now you sort of present this as clearly as an opportunity in terms of this enables certain things. But it also, people also think about it as a risk. I mean, there’s a sort of Malthusian argument, but there’s also a sort of, I think the World Bank and others make this argument that you have lots of people who are reaching sort of working age in Africa and just, there are insufficient jobs to support them then — then what happens? I just wonder how you think about the balance of opportunities and risks?
Joe Studwell
I think obviously there are huge risks, but the point I make in the book is that you’ve got to have these people in order to be in the developmental game. Because if you don’t have sufficient density of people, at least, as I say, what we had in Asia in 1960, you’re not going to — you’re not going to get your economies moving. I came away from it preferring to feel optimistic, but I think you can look at the situation and be very pessimistic if that’s the kind of person that you are. I feel somewhat optimistic because the bit of the economy of Africa that you would expect to respond first to greater demographic density, which is agriculture, as was the case in Asia, is responding. So since 2000, we’ve had average agricultural growth, value added growth per year in Africa of about four and a half percent, all right. So that’s the fastest rate in the world. You wouldn’t expect most places in Asia to be faster now because they’re relatively mature in terms of their agriculture sectors. But nonetheless, it’s pretty impressive. And, you know, you can look around the continent, look at, you know, look at Nigeria, as one often has to because it’s the most populous country in Africa. Frequently described as chaotic, ungovernable. But since 2000, the data show that agriculture has been growing at nearly 6% a year, right? So that’s pretty impressive for a chaotic ungovernable country.
Peter Thal Larsen
You talked about how Ethiopia and Rwanda were interested in you talking to them about the Asian development, and you write quite a lot — Ethiopia and Rwanda are two of the examples that you explore in terms of where there’s been some lessons to be learned in part. I’m just wondering a bit about that comparison with Asia. Because what strikes me about the Asian development story, and what I took from your last book, “How Asia Works”, was really that they did things that were against the sort of the economic orthodoxy of the time, right? So that the countries that successfully developed in Asia, Japan, South Korea, Taiwan, you know, they had tariffs, they had capital controls, you know, kind of, they didn’t open up their markets in the way that sort of that the consensus, the economic consensus would have suggested. What you’ve got here — but they didn’t really have, there wasn’t a template to follow. They were just sort of, they were just doing things differently. Whereas here it seems like there’s a more conscious effort to try and say, well, it worked in Asia, maybe it can work for us too. Is that fair?
Joe Studwell
I mean, that’s fair for Rwanda and Ethiopia, which have very, very definitely been trying to replicate Asian models. I mean Rwanda, very interesting, very focused on the Singaporean model, which sounds ridiculous, right? Because Singapore’s this little island on the main shipping lanes of Asia, and Rwanda is bang in the center of Africa. But actually, when you, when the Rwandans explain to you their logic, it does make some sense. Because they say, well, we are so remote and the cost of moving things here by truck is a multiple of what shipping from Asia or wherever costs, we can actually use our isolation to produce manufactured goods that wouldn’t be competitive in the world economy, but are competitive in the center of Africa. So them and the Ethiopians where, yeah, there’s just been a phenomenal appetite to absorb the lessons of development elsewhere, and people are fantastically well-read. Every other minister seems to have done a PhD on the side while being a minister, and the PhDs are all kind of looking at developmental problems. So they are like that. And other countries I would say are sort of less aggressively thinking that they’re going to replicate what’s happened in East Asia. But in a country like Nigeria, you’ll meet politicians like the current vice president who are very interested in learning lessons from East Asia, and then other countries, again, you don’t get a lot of direction to the sort of developmental thinking. But that isn’t quite the end of the world because what we see in Africa, and this is quite different to Asia where most development was state-led in some way or state-orchestrated in some way. What we see Africa and other African countries where there isn’t strong political leadership is we see the private sector leading. And most obviously at the moment, because of the growth, 25 years of accelerated growth in agriculture now, so we see private sector really being very active in the manufacturing bit of agriculture, which is basically making processed foods, everything from milling grain to actually producing packaged foods. And already we see a pattern where quite big companies are coming into being, working across eight, nine, ten countries, producing enough cash flow then to go into other businesses. So in Tanzania, one firm I talk about a little bit is Bakhresa. It’s the biggest agribusiness in Tanzania. It started in milling, bought mills in different countries when they were privatized by African governments. And now they’re in everything from petroleum products to real estate to a TV station, and I think they’ve got a football club as well. You know, so, and quite similar, I mean, Peter, I’m sure you’ll see the analogy or the comparison here, quite similar to those kind of Christmas tree businesses that grew up in Southeast Asia. So you think of CP Group in Thailand or the Salim Group in Indonesia or Astra in Indonesia —
Peter Thal Larsen
Big conglomerates doing lots of different things —
Joe Studwell
Yeah, but they all come out of agriculture. They all originally come out of agriculture, and then the cash is there, and they go and pursue a bunch of different opportunities.
Peter Thal Larsen
So this may be a good segue. I mean, you’ve talked about agriculture as being one of the key, the key sort of things to solve or is in the process of being solved perhaps. There’s manufacturing and obviously manufacturing was a huge part of the Asian development, for the successful Asian development. I guess the counterargument would be today that manufacturing has changed. Everybody’s adopting robotics and artificial intelligence. It’s a little bit the way people talk about India as well, is that the opportunity to do in Africa what was done in South Korea and Taiwan and other places that that moment has gone. How do you think about that argument?
Joe Studwell
I don’t think so. I mean, I think that technologically manufacturing is changing, but very slowly. But I think when you get very large, very low-cost labor supplies, that people remain very competitive against robots and AI. Manufacturing wage rates in Africa now are like $65 to $90 a month, compared to $600 or $700 in China. And then if you compare that with robots, if you look at garmenting, the sort of absolute lowest value added area of activity that countries first go into, a garmenting robot usually can’t do a huge amount of stuff because material, of its nature, is flexible. And robots like working with solid things. But I mean, it’s not going to cost you less than $100,000. And the problem with robots and putting robots into factories is you pay upfront the full amount. You know, you compare that with bringing labor in and laying labor off, which, in poor countries, you can always hire and fire labor as you want it. So a lot of manufacturers, that’s a lot more attractive at $65 a month than potentially overcapitalizing a manufacturing line. So I just don’t think that we are at the point where if you’ve got sufficiently affordable and reliable labor and political stability, that manufacturers are going to say, no, no, we’d rather work just with robotics. I think the more serious challenge to Africa’s ambitions in manufacturing is the competition that there will be from Southeast Asian states that still have a lot of low-cost labor, so Indonesia and South Asia. So is India going to bring a very large number of people into manufacturing? And if they do that with really good government support, then that I think can be more problematic for Africa. But still, at the end of the day, one thing that Africa has very much on its side is the logistics relationship with Europe. I mean, North Africa, totally so, right? I mean, Morocco, you’re 14 kilometers from Spain.
Peter Thal Larsen
You mentioned two important words there, political stability. Obviously, it’s very easy to say that there has been a history of particularly civil war in Africa. But also, I think one of the things that’s striking to me from reading your book is that actually, even against that backdrop, some countries have managed to do very well. You talk about Ethiopia, which obviously had the terrible famine that we all remember from the 1980s and then a period of growth, but also a really gruesome civil war in the 2020s. And yet the economy has continued to grow. And Rwanda came out of this terrible genocide and has had a lot of political upheaval and still managed to keep growing. I wonder how you rationalize that. From the outside, you would look at that and say those two things are inconsistent?
Joe Studwell
Yeah. I mean, again, I think one can look at Africa today and be an optimist or a pessimist in terms of conflict that you see going on around the continent. To me, the main concentration of conflict and coups that we’ve seen in recent years has been the Sahel region, where you have a very particular story. It’s a very particular environment. It is very impacted by climate change, and so forth. And I don’t, so I don’t think that that is symptomatic of a political malaise more generally. But, you know, do you see conflict in other places? Yes, you do. I mean, we can’t deny that. And, you know, the ethnic diversity of the continent is at the root of this. And again, it goes back to demographics. I mean, historically, thousands of different ethnicities could survive in Africa because population was so low. And there was actually very little by European standards, very little conflict between different groups. And if you got in a disagreement and an argument, you could move off and find new land to inhabit. So ethnic strife is going to continue to be a problem. Ethnic conflict is going to continue to be a problem. I think though that one positive that I would point to, maybe not normally one that’s pointed to, is that if you look at protest in Africa over the last, say, five years, and you look at protests that we’ve all seen on the TV in Kenya, in DRC, in Mozambique, in Ethiopia. What’s quite striking to me, is that you see more and more evidence of protests being cross-ethnic. You see different ethnic groups. So it’s no longer about I’m this and you’re that. It’s about the issue. And I would actually point to that as potentially the front end of a positive trend in in Africa. But, you know, that said, unrest will continue to be a problem. We’ve just got to keep it in a bit of perspective. I mean, if you look at the number of people who’ve been killed in incidents in wars or domestic unrest with more than a thousand casualties since 1960, it’s reckoned to be around 6 million. Six million is the top end of the estimates of the number of people who died in Europe in the Napoleonic Wars, which were like a dozen years. So you’ve got to have a bit of perspective on this. It’s kind of too easy for us to look at Africa and say, oh, they’re violent people. I mean, anybody who knows the history of Europe would say we are extremely violent people.
Peter Thal Larsen
Yes, no, absolutely. Yeah. Well, and, you know, not that we, not that you want to get into a numbers game, but when you start looking at, you know, people who died in China during various great leaps forward and things like that, famines. One thing I’m just curious about, because I think there’s two things that probably feature less in your book than in most of the discussion about Africa that you hear or read at the moment, which was basically debt and China. There is this issue with a number of countries that are very heavily indebted, and trying to get out of their debt, complicated by the fact that they’ve also borrowed heavily from China. There was this whole argument that China’s sort of somehow trapped these countries into a sort of, into a debt dependency. I just wonder, I mean, obviously, again, it’s quite hard to generalize from country to country, but how do you think about that issue when it comes to Africa?
Joe Studwell
I mean, the first thing I think about is that African lending, to infrastructure projects and power projects in Africa, has brought capacity and resources that just would not be there otherwise. So if you add up what principally the Chinese policy banks have lent, but at other banks as well, it’s about $150 billion, okay. And that money was not going to come from anywhere else. So I would say that that’s been actually very important to African development, and Africa getting some basic infrastructure resources in place to begin to take advantage of its demographic growth. That said, has China overlent to some countries? And has it been opaque, in the extreme, in the agreement surrounding that lending? Yes, I think that’s certainly true. I mean, for instance, Angola, which is the biggest China debtor, we just don’t know. There’s a lot of speculation, but we just really don’t really know what exactly is in those loan agreements —
Peter Thal Larsen
Which is part of the problem —
Joe Studwell
Yeah, which is part of the problem. But I don’t see this as a Chinese conspiracy. I think that they really did, you know how they do everything as a campaign. I think they really did think that they were taking over the world and they were going to lend all this money to Africa and it was all going to get paid back. And they made some very poor decisions along the way. That has to be cleaned up. I mean, what I’d say from an African national perspective on this is that the number of countries in genuine debt distress is a small subset of all those in Africa. And one way or another, as with all debts, it’s going to have to be resolved.
Peter Thal Larsen
But you don’t see that as a — as a sort of a lasting impediment to development?
Joe Studwell
No, I don’t think so because I think most Chinese lending in Africa has paid for infrastructure and utilities that were needed. And in general, China has delivered those construction projects at a big discount in cost terms to what it would have cost to get the work done by European or US firms. And that’s what we tend to to forget, right? I mean, as with everything, China has cut half, or more, off the cost of doing infrastructure projects.
Peter Thal Larsen
We’re running out of time. I just sort of, just wanted to end on a, you know, as you said, you were sort of your — you chose to be an optimist about this. I thought there was, there’s an interesting sort of line at the end of the book where you say, “If you live outside Africa, whether in the Americas, Europe or Asia, Africa is going to be a bigger part of your life in trade, investment, tourism, literature, and music.” You sort of compare it almost to the impact that Asia was beginning to have in the 1960s and has had since then, which is quite an intriguing prospect. I mean, sort of, yeah, how would you sort of — how would you advise people to prepare for that?
Joe Studwell
I mean, there’s lots of interesting places to go and visit in Africa. People of our generation, if you want to see the deserted beaches that you saw in India or Southeast Asia in the 1980s, then you really need to go to Mozambique or Togo or another African country, because those are the only places that you’re going to see that. Yeah, it’s the last — it is the last frontier in that, in that respect. And, you know, it is also kind of a nice place to go if you’re coming from Europe, because there’s no jet lag, right? It’s all pretty much the same time zone.
Peter Thal Larsen
I see. Well, you’re doing — you’ve got a bright future as part of the African Tourist Board or something like that, if all else fails. But I won’t ask you which continent you’re going to write about next, but we can leave that for another time. But this was really fascinating, Joe. Thank you so much for taking the time.
Joe Studwell
Thank you for having me.
Peter Thal Larsen
That’s all we have time for this week. Thanks to Joe for that fascinating discussion. And as always, thanks to you for tuning in. This podcast was produced by Oliver Taslic, with the help of Mike Coupland and Jon Hodge in the studio in London. You can check out a new episode of The Big View every Tuesday. Don’t forget to tune into our sister show, Viewsroom, every Thursday, and all the other great podcasts from the Reuters team. To get in touch with feedback, questions and ideas, please email us on [email protected]. That’s [email protected]. If you like what you heard, please rate the show and leave us a review. And check out our views on the biggest stories in business and finance every day at Breakingviews.com and Reuters.com.

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The Big View podcast and Tyler Cowen’s podcast.

March 3, 2026

Here is a link to a Reuters Big View podcast about How Africa Works. You can also find it on Spotify and Youtube. And here is a link to Tyler Cowen’s podcast about How Africa Works.

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Key themes in How Africa Works

February 16, 2026

Below are links to two articles I wrote for Dragonomics about key themes in How Africa Works. If you want a bit more detail about what is in the book before shelling out your hard-earned, you will find it in these pieces.

How-Africa-Works-1-Africa_Becomes_A_Little_More_Asian.pdf

How Africa Works 2 The_Birth_Of_African_Demand

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How Africa Works, Global Developments review

February 16, 2026

Joe Studwell Turns To Africa

Oliver Kim

Feb 10, 2026

 

How Africa Works: Success and Failure on the World’s Last Developmental Frontier, by Joe Studwell. Atlantic Monthly Press. 2026.

When Joe Studwell’s How Asia Works came out in 2013, it was a book deeply out of consensus. In an age of randomized control trials and micro-interventions, it resurrected macro policies—land redistribution, industrial policy—that had virtually disappeared from mainstream development economics. Moreover, it returned East Asia, the only developing region in the world to successfully make the postwar climb out of poverty, back to the center of debate.

Thirteen years on, Studwell probably deserves some kind of triumphal march. Industrial policy is back in a big way. Through How Asia Works’s influence on Noah Smith and a host of bloggers, a generation of young tech-adjacent males were primed to rant about semiconductor subsidies at parties.

I am no exception. Reading How Asia Works was a formative intellectual experience for me—a jolt out of the mathematical slumber of PhD coursework. I have a complex relationship with the text (more on this in a moment), but I still recommend it effusively to anyone who wants to learn about East Asia.

Now, thirteen years later, Joe Studwell is back. How Africa Works aims to do for Africa what he achieved for Asia—becoming the natural first stop for readers who want to learn about the economics of the continent.

A Dismal Inheritance

The first part of How Africa Works addresses the perennial question: why is Africa poor?

Historically, low population density, induced by pests like the tse-tse fly, discouraged the formation of large urban centers. The slave trade—first Arab, then Western—further depopulated the continent, breaking down social bonds. When Europeans arrived in force in the 19th century, they did colonialism on the cheap, with few policemen and even fewer schools. (I wrote in depth about this a few months ago.) Unlike (say) the Japanese in Korea or Taiwan, the colonial state rarely penetrated much farther than the capital or key ports, leaving governance in the vast hinterland to invented or upjumped chiefs.

Decolonization left a dismal inheritance. In spite of superficial similarities in GDP with East or South Asia, Africa had far more problems on its plate. Levels of education were far too low to sustain an effective civil service, let alone communities of engineers or innovators. Incoherent states encased in inappropriate borders meant Africa’s founding fathers had to stitch nations together from unrelated ethnic groups.

Studwell’s diagnosis of Africa’s problems is steadfastly conventional, leaning heavily on the academic consensus established by Jeffrey Herbst, Robert Bates, Nicolas van de Walle, Leonard Wantchekon, among others. This is no dig; Studwell is an elegant synthesizer. I have some quibbles around the margins—the underrating of precolonial Africa reflects some lingering Western state-centric bias—but as a diagnosis for Africa’s poverty this is a far richer, textured, and more accurate account than the memelike “extractive institutions”.

Four Success Stories

Having set the scene, Studwell turns to four successful case studies: Botswana, Mauritius, Ethiopia, and Rwanda. This itself is a refreshing approach to economic analysis of Africa, which so often wants to dwell on failure. Unlike Taiwan or South Korea, none of these countries is an unqualified developmental miracle, but their relative success provides clues to how an African economic transformation might take place.

Botswana

Botswana is Studwell’s poster child for a successful democratic developmental coalition. (For this reason, it featured heavily in Acemoglu and Robinson’s Why Nations Fail as an example of “inclusive institutions”.)

Under the sound leadership of Seretse Khama, local chiefs were carefully co-opted at independence and the Botswana Democratic Party built up into a genuine national force. Khama also created a capable civil service, initially staffed by remaining Europeans, but gradually Africanized with sterling Batswana talent. This meant that when diamonds were discovered just around independence, the windfall was carefully managed, avoiding the worst effects of Dutch Disease. These mining revenues helped raise Botswana to upper middle-income status, making it the fourth-richest country in continental Africa.

Botswana’s chief failing, in Studwell’s view, was adhering too much to responsible policy orthodoxy—i.e., not enough industrial policy. There was no vision for large-scale industrialization, no coherent plan to create large numbers of factory jobs. Moreover, the political dominance of large cattle owners (Botswana was a society of pastoralists rather than farmers) meant that redistribution was never in the cards. The result is a relatively rich society, but one that is highly unequal.

Mauritius

Mauritius, which is often not thought of as an African country, is perhaps the most unusual choice. An uninhabited island before Dutch colonization in the 17th century, its ethnic makeup of Indians and Creoles resembles the Caribbean more than continental Africa. Moreover, Mauritius became independent in 1968 at an income level that most contemporary Africans would envy (see chart above).

Nonetheless, Mauritius’s developmental record is impressive. Originally a sugar colony, a tax on sugar receipts was used to funnel landowners’ capital from agriculture to manufacturing. In the subsequent manufacturing drive, powered by the exports of apparel and textiles, GDP rose 6% a year. With egalitarian, broad-based growth, poverty was virtually eradicated.

However, Mauritius was unable to make the leap from garments to higher-value manufacturing, and the sector’s share of GDP has since halved from over 20 percent to just 11 percent by 2020. Alongside Seychelles, it is one of only two African countries ranked “very high” on the UN’s Human Development Index.

Rwanda

Ethiopia and Rwanda, as recent developmental darlings and conscious emulators of the East Asian example, are perhaps the least surprising inclusions in Studwell’s list.

Under President Paul Kagame, Rwanda has explicitly modeled itself after Singapore (including Lee Kuan Yew’s authoritarian tendencies). At first blush, this struck me as absurd: Singapore is an island state on the crossroads of the world’s richest sea lanes; Rwanda is a landlocked country in poor central Africa.

Studwell’s account convinced me there is an economic logic to this strategy. The high cost of road transport means that importing goods into Central Africa is prohibitively expensive. Rwanda does not necessarily need to compete with the world; by delivering on infrastructure projects and maintaining rare political stability, it can attract investment as a kind of entrepot to Africa’s Great Lakes. Under this formula (with perhaps some slight fudging of the numbers), Rwanda has maintained impressive 7% growth for the past decade.

The big question surrounding Rwanda is if the growth coalition can hold together. Nowhere else in Africa is the tragic legacy of ethnic division more apparent; the present Kagame regime took power by overthrowing the perpetrators of the infamous 1994 genocide. Rwanda’s military involvement in the Eastern Congo, which represents both a source of raw materials and a lucrative market of 30 million, adds a further dark cast to its developmental success.

Ethiopia

It is Ethiopia that comes the closest to achieving all parts of Studwell’s formula. As a country of 135 million people, it has the scale to set a major example to the world and to take a serious bite out of Africa’s poverty all on its own.

Meles Zenawi, prime minister from 1995 to 2012, was an avid student of East Asia. (His thesis outline is available online; for any economist with a wavering faith in the power of ideas, read the bibliography.) Under his leadership, the Ethiopian state invested heavily in agricultural extension and irrigation, improving the yields of smallholder farmers. It began (with Chinese support) building industrial parks to support an export manufacturing base. Most ambitious of all, it began work on the Grand Ethiopian Renaissance Dam, one of the largest hydropower projects in the world, to find a permanent solution to Ethiopia’s energy woes.

No student of How Asia Works could have done better. Had How Africa Works been published before November 2020, it’s easy to see how a celebration of Ethiopia might have occupied most of the book. But the outbreak of civil war derailed Ethiopia’s progress, demonstrating the continuing risk of ethnic conflict to the prospects of economic growth.

Mashamba Na Viwanda

Unlike East Asia, Africa has no unqualified economic miracles to point to. The result is a book that is more diffuse in its rhetorical impact than How Asia Works, but also one that is perhaps more realistic about the constraints. Some of the swaggering confidence that marked the Asian Triple Growth Formula is gone.

Nonetheless, Studwell insists that universal prescriptions still exist:

… despite the radically different context, I have found that the policies that were most effective in East Asia in producing economic transformation are the same ones that have worked in the handful of cases of early success in Africa. In this respect, there is no African exceptionalism.

As a recap, these policies were smallholder agriculture with state support, industrial policy to support export-led manufacturing, and tight government control of finance to support all these aims. To these three, Studwell adds the extra ingredient of a “developmental political coalition”—taken largely for granted in the relatively homogenous, authoritarian states of East Asia, but far from table stakes in ethnically fractious, democratic Africa.

I’m no expert on any of the four countries Studwell discussed. But let me comment on two of Studwell’s key pillars from an economic lens: agriculture and manufacturing.

Agriculture

Like in How Asia Works, Studwell advocates for smallholder farming in Africa, citing the familiar evidence that small farms grow more crops per acre than big ones. (In jargon, this is the “inverse farm size – yield relationship”.) In theory, then, redistributing land from big landowners to smallholders should improve aggregate productivity.

Smallholder farming may be desirable for political, distributional, or social reasons. In most societies, owning your own plot of land naturally has enormous psychological value. In Kenya, for instance, having a rural shamba is a source of social status and, in urban downturns, acts as a form of social insurance. Regimes that ignore this basic fact invite unrest: the anti-communist regimes of East Asia likely had to do some form of land redistribution or risk being thrown into the sea.

But on the narrow point of efficiency I am more agnostic. I mentioned earlier my complex relationship with How Asia Works; my academic work finds that the major land distributions in Taiwan and Mainland China had smaller yield effects than previously thought. Having pondered this question for years, it now seems to me simplistic to expect there to be a universal Platonic relationship where the smaller the farm, the higher the yields. Far more likely that this relationship depends on the crop, the soil, and the available infrastructure. Wheat yields in Europe, for instance, seem to be the highest on large farms, while rice yields in Asia can grow on tiny plots with the near-endless application of labor.

But on Studwell’s broader theme, of a renewed developmental focus on agriculture, I am in complete agreement. African smallholders, ignored by their states and deprived of support, are struggling. According to the best available data, stretching from 2008 to 2019, both smallholder yields and total factor productivity have been declining by around 3 to 4% a year.1 It’s difficult to envision lifting 460 million Africans out of extreme poverty without improving the meager returns from their primary occupation.

Manufacturing

The other noteworthy component of the Studwellian recipe is a heavy emphasis on growing manufacturing, fostered by state industrial policy.

What’s so special about manufacturing? Studwell leans heavily on an influential 2013 paper by Dani Rodrik, who argues that manufacturing possesses the unique property of “unconditional convergence”. Unlike other sectors, manufacturing in developing countries appears to catch up quickly to the global frontier of productivity. Intuitively, because most manufactured goods are tradable, manufacturing firms are more exposed to the pressure of international competition, forcing them to innovate; moreover, manufacturing processes (compared to, say, crop growing practices) are readily transferrable across borders.

I was long a True Believer in this thesis, but have recently had my faith shaken. New empirical work, forthcoming in the American Economic Review: Insights, suggests that unconditional convergence in manufacturing may partly have been an illusion of the data. (In that paper, somewhat cheekily, it turns out that agriculture and services display convergence, but manufacturing does not.)

Of course, no one’s worldview is really determined by a paper based on a few cross-country regressions. (Even one by Dani Rodrik.) What convinces most is how central manufacturing was to the East Asian miracle, still the only region of the world to ride the escalator up from poverty to riches.

This relates to a deeper problem with the prospects for African industrialization: namely, that industrialization never happens in a vacuum. A successful domestic manufacturing base is a product not only of your own industrial policy, but global market conditions and the strength of your competitors.

One obvious risk is automation, which threatens the manufacturing sector’s absorption of labor, and may help keep Chinese factories globally competitive despite rising wages. Studwell quickly brushes off these concerns (“[the] labour cost in a country like Madagascar is US$65 a month… the cost of an advanced industrial robot in the apparel sector is over US$100,000”). In my view they deserve deeper inspection.

Moreover, even if Studwell’s right, Africa has strong competitors in the race to claim China’s manufacturing share: South and Southeast Asia, with their large urban populations and increasingly capable states. Studwell notes optimistically that Africa has finally caught up to the educational attainment of East Asia in 1960; he fails to note that South and Southeast Asia have long exceeded that level.

A Bias For Hope

Longtime readers of Studwell’s writing—from 2003’s The China Dream to 2013’s How Asia Works to the present volume—will know that he has a strong contrarian streak. The China Dream was notably downbeat about China’s development prospects just as the largest export boom in history was getting started (p. xii: “the economic foundations of contemporary China have been laid on sand and [are] constructed from the kind of hubris that drove the Soviet Union in the 1950s”). How Asia Works was stridently dirigiste, right at the high-water mark of the Neoliberal Age.

By contrast, Studwell sounds unusually optimistic about Africa, where, post-aid cuts, the pendulum of international opinion has swung decisively towards gloom. State-led improvements in health and (to a lesser extent) education, supported in part by international aid, have eroded some of Africa’s historical disadvantages. Most of all, the demographic boon of the world’s youngest population will give growth efforts a brief but powerful tailwind.

As an analysis of what makes countries grow, the Studwellian formula is of course incomplete—but, with 54 countries and 1.6 billion people, how could it not be? What makes Studwell nonetheless compelling to read is his steadfast underlying belief that poverty is a product of policy decisions. Analytically, this is of course not quite right: as the first part discussed, strong historical and geographic factors condition what’s possible. But, for a practitioner, such belief—what Albert Hirschman once called a bias for hope—is surely a necessary condition for action.

Development is ultimately an act of imagination, of envisioning what’s not yet there. Sound policy requires that these visions be supported by durable political coalitions and within states’ capabilities. (A latent motif of the book is eager states overreaching with megaprojects, in a vain attempt to leapfrog their peers.) But even the mixed success of import substitution industrialization or the follies of incomplete irrigation megaworks seem preferable to the status quo of seeking rents while sitting on one’s hands.

On one final point I am in wholehearted agreement.

At various points Studwell discusses “demonstration effects”: the positive influence one country can have on peer states. Demonstration effects are essentially impossible to falsify in the modern language of econometrics, but are unmistakeable in the real world. (If you disagree, take a look again at Meles Zenawi’s library.) The world really only has two industrial clusters: one began in 18th century Britain, and grew to encompass most of Europe and its colonial offshoots; the other started in Meiji Japan and spread to the rest of East Asia. In both cases, culturally similar neighbors saw what was possible and copied the recipe.

In one sense, this is a note for pessimism. If history is any guide, the great global factory complex will first stretch down from China through to mainland Southeast Asia and Indonesia, and westward through Bangladesh and India, long before it ever reaches Africa. But in another, it sounds a note of hope. If even one African country manages to sustain the kind of broad-based growth that Studwell describes, it could do for its neighbors what Meiji Japan accomplished for the rest of Asia. It may only take one resounding success to shatter the illusion—fed by sixty years of disappointment, egged on by lingering prejudice—that Africans are incapable of achieving economic prosperity.

Studwell presents a careful and sensitive discussion about the tradeoffs between formal land rights (which would make possible land reform) and the present communal landholding that dominates the continent. Considering the elite capture of legal systems, which will likely only favor rich landholders, he ultimately decides that communal landholding is likely better than the alternatives. Smallholder agriculture will have to wait.

 

 

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Posted in Africa, Asia, Ethiopia, Mauritius | Comments Off on How Africa Works, Global Developments review

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