Posts Tagged ‘How Asia Works’

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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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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How Africa Works is out in the UK, FT review

February 10, 2026
My new book, How Africa Works, is out in the UK and will be out in the US on February 17 (and dates around this in other parts of the world). The first review that I have seen was published in the Financial Times. Here it is: ‘A dazzling reassessment of the continent’s historic handicaps, and its potential for economic development. … One of the most original and important books on Africa in years.’ How Africa Works by Joe Studwell — how to change the economic trajectory A dazzling reassessment of the continent’s historic handicaps, and its potential for economic development In 2013, writer and academic Joe Studwell produced a brilliant, intellectually daring account of the factors underlying Asia’s economic miracle. Called How Asia Works, the book flew in the face of the pro-market prescriptions of the Washington consensus, concluding that Asia’s most successful economies had thrived through unorthodox policies: a combination of agricultural reform based on intensively farmed small plots, financial repression and industrial policy turbocharged by a ruthless drive to export. Impressed, government officials in Ethiopia and Rwanda, both serious about development, suggested that Studwell write about their continent. “In Ethiopia, in particular, I was struck by my hosts’ depth of knowledge and their appetite for more,” Studwell writes, before concluding in typically terse style: “The invitations were flattering but pointless.” He knew nothing about Africa. Studwell subsequently set about putting that right. He devoted seven years to intense reading and field research, collecting empirical evidence rather than received wisdom. The result is one of the most original and important books on Africa in years. Especially in the dazzling first section, almost every page bristles with ideas and challenges to lazy (often prejudiced) thinking. How Africa Works is arranged in three parts. The first, contrary to the title, is an analysis of why Africa doesn’t work. More accurately, it catalogues the factors, sometimes surprising, that help explain why most of the 54 states into which Africa was corralled by colonialism have failed to emulate Asia’s economic take-off. The second section is a study of four states — Botswana, Mauritius, Ethiopia and Rwanda — that have managed to generate long periods of sustained growth. The third is an assessment of what it would take for other African economies to emulate that record, with particular emphasis on the agricultural and manufacturing revolutions that were essential to Asian growth. Throughout, Studwell steers carefully between the Scylla of fatalism and the Charybdis of frothy optimism. Africa’s two big development handicaps, he argues, are a sparse population and what he calls “low budget” colonialism. The first factor, in particular, challenges conventional thinking, but Studwell makes his case powerfully. At the start of the 20th century, Africa’s population density — at under five people per square kilometre — was similar to England’s in 1066 Before the 20th century, because of factors including a high disease burden, slavery and the preponderance of crop-destroying elephants, Africa was thinly populated. Between 1700 and 1850, the population barely budged and, even by 1950, there were fewer Africans than there had been Asians in 1500. At the start of the 20th century, Africa’s population density — at under five people per square kilometre — was similar to England’s in 1066. Studwell argues that this retarded development. In pre-colonial times, it slowed state formation. Unlike in crowded Europe, where nations were formed through war, in Africa, when one set of people didn’t like their leaders, they simply picked up and started someplace else. At the onset of colonialism, there were 10,000 African polities, some of them proto-states but many “loose groupings” of between 5,000 and 10,000 people “constituted as micro-monarchies”. Since independence, a sparse population has made it harder to deliver services, such as electricity and education, to rural populations. From Studwell’s perspective, the explosive population growth of recent decades, viewed with alarm by many Africa-watchers, is nothing more than “an extremely belated process of demographic normalisation”. Since 1960, around the time many African nations gained independence, the continent’s population has more than quintupled to 1.5bn and is forecast to add a further billion people in the next 25 years. The previously sparse population, overlaid by “low budget colonialism” — shallow, brief and extractive — made Africa less ready for take-off than many Asian states. Tanzania, by no means an outlier, gained independence with two engineers, 12 doctors, 120 ethnic groups and 85 per cent illiteracy. African leaders made a collective decision not to contest colonial borders. Since 1960, Studwell counts five interstate wars and 38 civil wars. “Most of Africa was frozen as an atomised, pre-modern ‘ethnic’ jigsaw,” he writes. “The violent process by which state formation took place in Europe was interrupted.” Studwell is too astute to blame everything on colonialism, or even on pre-colonial factors. The book’s second section examines how four countries set about overcoming their inheritance, albeit imperfectly. The chapters on Mauritius and Ethiopia are particularly enlightening. Mauritius, dismissed as “an overcrowded barracoon” (slave enclosure) by the writer VS Naipaul, is now on the cusp of becoming a high-income country. The key, argues Studwell, was to forge a political coalition across ethnic lines, one whose overriding goal was development. In lieu of the radical land reform that took place in Asia’s most successful economies, Franco-Mauritian sugar barons were forced to finance development through taxes. These were recycled into special economic zones and a textile industry that became the basis for a push into higher-end manufacturing, finance and luxury tourism. Mauritius has not done everything right. Studwell blames it for not pushing manufacturing beyond jewellery, watches and small-scale electronics. But the key to its significant success, he writes, has been a lack of ideology. Whether former Marxists or rampant capitalists, leaders emulated China’s cautious attitude described as “crossing the river by feeling the stones”. They experimented and then did more of what worked. Ethiopia has been even more important as a potential development template. With 137mn people, it is the continent’s most populous nation after Nigeria. Once a byword for famine and misrule, under Meles Zenawi, who came to power after the overthrow in 1991 of a disastrous Soviet-backed regime, Ethiopia modelled itself on South Korea and Taiwan. For Meles, everything was about instilling a sense of national mission. He liked the story of Taiwanese customs officers who extracted bribes on imported consumer items but never on the capital equipment needed for national improvement. Ethiopia prioritised agriculture — a Studwell essential — building rural roads and providing farmers with advice and fertiliser. Agricultural output quadrupled. Farmers’ savings were trapped by capital controls (Studwell’s financial repression), lifting investment to 41 per cent of GDP, on a par with Asia. Meles, who died in 2012, thought growth would trump ethnic conflict. After 1991, the economy expanded by 6-10 per cent annually, but conflict came anyway amid resentment over the political control exerted by officials from the northern Tigray region from where Meles came. Studwell calls the resulting 2020-22 war in Tigray, in which 600,000 people died, “the biggest development tragedy in a generation”. Still, growth continued and Studwell too hopes that economic gains can eventually smother ethnic divisions. The final section strikes a note of measured optimism. Some countries will fail, Studwell writes. But others have hit a stage at which development becomes possible. In 2030, Africa will finally reach the population density of Asia in 1960, its point of take-off. African urbanisation rates are the fastest in history. Ninety African cities have populations above 1mn against two in 1960. Scarcer land and more urban demand has forced an improvement in yields and created a landless peasantry fit for the factory. Relative wages have fallen, while education levels have soared. With the right policies, Studwell argues, the conditions are in place for Asian-style manufacturing-led development. He dismisses those who say technology means Africa has missed the boat. A textile machine costs $100,000 upfront, he says. A Madagascan worker costs $65, paid monthly. Studwell’s conclusion is that, while most African countries are not going to become development states, many can move the policy needle. If by 2060 they reach the African Development Bank’s target of $4,500 GDP per capita — a stretch for some admittedly — the continent would have an economy not much smaller than today’s China. Africa he concludes is not “a miracle waiting to happen”, nor is it “a monolithic failure”. The truth lies somewhere in between. How Africa Works: Success and Failure on the World’s Last Developmental Frontier by Joe Studwell Profile £25/Grove $32, 448 pages David Pilling is the FT’s Africa editor

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Latest thoughts on the Chinese economy / the ‘new normal’

December 16, 2014

China held its Central Economic Work Conference last week, chaired by president Xi Jinping, so here are a few thoughts on the current state of the Chinese economy and a few links to an article I have written, and talks I have given, recently about the Chinese economy.

First up, the slogan du jour is definitely ‘new normal’ (???). Xi Jinping has been using this for about six months, but now he is really using it. Xinhua’s short, official report on the conference has ‘new normal’ in the headline and ‘new normal’ six times in the text. See here for the English version.

What does it mean? It means that local politicians, state firms, and everybody else should dial back their expectations about credit and growth. The increase in both is slowing and that is the way it is going to be as China undertakes a deleveraging process in the banking and corporate sectors. There is not going to be the kind of collapse in growth that many have predicted. The government has plenty of room to fine tune the slow-down, Chinese exports remain competitive, and the global economic environment, while not great, is not a disaster from the perspective of China’s needs. Look out for reported GDP growth in 2015 between 6-7 percent.

Against this background reforms will continue to increase the extent to which the market prices credit in China’s economy. There has already been a big shift in favour of lending to the private sector since the global financial crisis (see my review of Nicholas Lardy’s new book, below), and this is one aspect of an ongoing financial liberalisation process. To my mind, this explains the recent strong performance of the Chinese stock market much better than claims it is down to an interest rate cut (which wasn’t really a cut at all given falling inflation). Previous run-ups in the Chinese market have coincided with periods of financial sector deregulation. The difference this time I suspect is that the bull market will last longer.

All in all the outlook is a not unattractive one: slower growth, better credit rationing hence higher quality growth, and a rising share for consumption in the economy at the expense of slowing investment. The main risk — as was the case during Zhu Rongji’s long period of ‘structural adjustment’ in the 1990s — is that the central government listens to local politicians who say they cannot maintain ‘social stability’ without more credit and growth. Zhu didn’t listen to such imprecations, and we have to hope Xi won’t either. As the slogan says, China needs and is getting a new normal. Otherwise the books really cannot be balanced and financial system risk will become unmanageable.

Later re. the new normal: Damian Ma has written an excellent piece for the new issue of Foreign Policy around the theme of the ‘new normal’. Well worth a read, with a lot more detail than I can offer here.

 

Links:

Below is a link to download the review of Nick Lardy’s latest book, Markets Over Mao, that I wrote for the latest China Economic Quarterly. The book makes an important contribution to the optimists’ case that China will overcome its current slough of non-performing loans in the banking system.

2014 CEQ Q4 final Markets Over Mao review

 

This next link is to a download of a synopsis of a talk I gave at the Madariaga College of Europe in Brussels (an EU think-tank) a couple of weeks ago. It is about how China’s development model is similar and dissimilar to those of Japan, Korea and Taiwan. The theme will be familiar to anyone who has read How Asia Works, but there are some additional, up-to-date thoughts about China as well as responses to questions raised by the Brussels nomenklatura. The precise topic I was asked to speak on is ‘What can east Asian countries learn from China’s economic policies?’

2014-Dec-01 – Madariaga – CN lessons to East Asia_final

 

The Youtube video below is a speech I gave at the National University of Singapore in October (blog entry about that trip here) on the subject of ‘When will governance matter to China’s growth?’ (governance here meaning institutions like a free and fair and prompt judiciary). Roger Cohen of the New York Times speaks first about the role of the US in east Asia. Then I speak at roughly the 25-minute mark. Then there is a joint Q&A.

 

 

And here is another Youtube video where I spoke separately about How Asia Works at the National University of Singapore. There is quite a long Q&A in which lots of questions about development from a more Singaporean perspective are addressed.

http://https://www.youtube.com/watch?v=k8RBt3B3E9I

 

 

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All is forgiven

December 10, 2014

I spent the 1990s fuming about Microsoft Office and its regular-as-clockwork crashes. But I now realise that I was wrong.

Why? Because of this.

Or in video format if you prefer:

In fact I see that Gates has written a full review of How Asia Works, here.

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How Asia Works

April 5, 2013

I was just sent a link to a first review of my new book, carried in the FT. If you want to see other reviews (assuming there are any), check www.howasiaworks.com. This one I will paste in here since it gives a pretty good synopsis of what the books is about (and, let’s be honest, isn’t entirely negative either).

 

Reap what you sow

David PillingReview by David Pilling

How Asia Works: Success and Failure in the World’s Most Dynamic Region, by Joe Studwell, Profile, RRP£14.99, 288 pages
A woman plants rice seedlings in a flooded paddy field, Taiwan©GettyA woman plants rice seedlings in a flooded paddy field, Taiwan

Why are the northeast Asian states of Japan, South Korea and Taiwan rich, while the southeast Asian ones of Thailand, the Philippines and Indonesia are relatively poor? Is the failure of the latter because of their geography or climate, or is it because their leaders chose wrong-headed policies?

One of the many virtues of the pithy, well-written and intellectually vigorous How Asia Works is that Joe Studwell does not equivocate. South-east Asian nations have ended up on what he calls the “rubbish heap of industrialisation” because they failed to learn the lessons of history. Instead of taking what he presents as relatively simple steps to technological advancement, leaders were captured by their ruling elites or took bad advice from international institutions such as the World Bank. The latter pushed neo-liberal policies – including no protection for fledgling industries – that Studwell considers wholly inappropriate for countries trying to get on the first rung of the developmental ladder. His recommendation to poor nations is to emulate Park Chung-hee, the South Korean strongman who oversaw what became known as the miracle on the Han river: “make public pronouncements about the importance of free markets, and then go quietly about your dirigiste business.”

The measures taken by Japan, then South Korea, Taiwan and, after 30 years of Maoist missteps, communist China were, argues Studwell, threefold. They involved land redistribution, the development of an export-oriented manufacturing policy, and the formation of a closely controlled finance system. The three important development insights, he argues, are that “a country’s agricultural potential is most quickly released when its farming is transformed into large-scale gardening supported by agricultural extension services; that the technological upgrading of manufacturing is the natural vehicle for swift economic transformation … and that finance must be harnessed to both these ends”. Only the small city-states of Hong Kong and Singapore have successfully taken a different path.

The most original part of the book deals with farming. Studwell, whose Asian Godfathers (2007) dissected the failures of crony capitalism, argues convincingly that successful Asian nations were built on radical land reform. Japan began parcelling out land after the Meiji Restoration of 1868, a policy continued after the war when the US occupation oversaw a seemingly un-American exercise in land confiscation and redistribution. South Korea and Taiwan followed suit. Large farms are often considered more efficient because they can be highly mechanised to produce higher yields per farmer or per unit of investment. In other words, they are more profitable. But in poor, labour-abundant countries, Studwell contends, that is not the point. The goal should be to use available labour to maximise yield per hectare, something achieved on smaller, intensively farmed plots.

Maximising yields serves several broader development goals: farmers earn money to spend on local manufactures; higher food production means the state doesn’t have to waste precious foreign exchange on imports; and farmers’ savings can be recycled through the banking system into industry. Both the indulgent leaders of the Philippines, who left vast haciendas in the hands of absentee landlords, and Maoist ideologues, who collectivised land into unproductive large-scale co-operatives, ignored the basic insight on what he calls “the triumph of gardening”.

The sections on industrial policy and finance are more familiar, though the ideas remain controversial among free-market economists who argue that governments can’t “pick winners”. Such economists, says Studwell, misunderstand what Japan, and later South Korea, actually did. The key was to force manufacturers, whether of steel or cars, to export and thus compete on international markets. Those that couldn’t hack it were killed off. Korea, for example, had three putative car champions in 1973 at a time when local auto sales were only 30,000 cars a year. In the early years, the market leader was the now-forgotten Shinjin. Only later did Hyundai emerge as the last car company standing. “The economics of development requires nurture, protection and competition,” he writes. The alternative to such hard-headed, nationally driven policies, he says contemptuously of the Philippines, is “an authentic, technology-less Third World state with poverty rates to match”.

Studwell’s thesis is bold, his arguments persuasive, and his style pugnacious. It adds up to a highly readable and important book that should make people rethink the glib equation of free-market policies with economic success. He also writes with disdain for those who would peddle the “fairy tale” that poor countries can become rich by skipping industrialisation. Of India’s attempt to build wealth through IT services, which employ only a few million people, he says: “Punditry that likens India’s economic development to that of the more northerly countries is fatuous.”

The implication of Studwell’s analysis is that talk of globally converging living standards is overdone. Those countries that do not begin with comprehensive land reform or bully their entrepreneurs into nation-building – as opposed to rent-seeking – are bound to fail. Even the relatively successful ones won’t get further than Malaysia, he says, a country whose botched efforts at industrialisation he likens to attending school but not paying much attention.

That leaves China, which in many ways has emulated the successful northeastern model, through post-1978 land reform and the creation of state champions financed through policy banks. China’s biggest companies, he argues, are closing in on international standards in heavy industry. But consumer businesses are not. As demographics worsen and as vested interests worry more about personal gain than national development goals, he wonders whether China will get stuck.

Studwell’s book is a warning to those who believe that developing countries in Asia, Latin America and now Africa have cracked the secret of growth and will inevitably catch up with rich ones. Only those nations with good policies will make it, he argues. And good policies are out of fashion.

David Pilling is the FT’s Asia editor

 

 

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