In 2000, the World Bank published a report containing provocative titles, “Can Africa claim the 21st century?” The tone of the report was a careful, mind-boggling optimism. For example, I said:
The question is whether sub-Saharan Africa (Africa) can argue that the 21st century is complicated and provocative. The report does not pretend to address all the issues facing Africa or provide a definitive solution to all future challenges in the region. Our central message is: Yes, Africa can advocate for the new century. However, this is a qualifying yes to be conditioned on African capabilities supported by African development partners to overcome development traps that have been limited to a vicious cycle of underdevelopment, conflict, and unspeakable human suffering for much of the 20th century.
So how do you overcome development traps? A quarter century later, the World Bank released a follow-up report. 21st Century Africa
Governance and growtha collection of eight chapters on various aspects of development, edited by Chorching Goh. Here are some of the flavors from the “Main Message” section at the start of the report. On the one hand, there are substantial and undeniable advances.
Over the past 25 years, Africa has achieved notable progress… mortality rates have fallen, increasing from 50 in 1998 to 61 in 2022. School attendance has improved. In the early 2000s, economic growth was strong supported by high commodity prices. China emerged as a partner in trade and investment, with the continent flowing significantly from 17.6% of GDP in 1998 to 38.1% in 2018. As a result, African countries were seven of the fastest growing economies in the world from 2000 to 2019. Dependence on aid has decreased, tax revenues have increased, and the median poverty rate has dropped by about 10 percentage points to about 43%.
On the other side, as the report points out, “Africa remains the world’s biggest development challenge.” Here are some bullet points:
- Persistent poverty. By 2030, 90% of the world’s extremely poor population lives in Africa.
- Economic stagnation. Sub-Saharan Africa’s global economy share remains at 2%, with minimal changes in commodity exports in the region.
- Investment level. Private investment remains low, with the informal economy accounting for 59% of total agricultural employment.
- Limited growth. Smallholder farmers’ reliance on agriculture limits economic growth due to reduced investment and productivity.
- Electric access. Only 51% of the African population has access to electricity, compared to the global average of 91%. …
- Political change. Violent conflicts increased eightfold across the continent between 2000 and 2023, leading to conflict-related deaths and an increase in the number of people displaced internally.
- Governance challenges. There have been continuing issues of corruption, political instability, and lack of trust in governments and institutions.
The report also states in advance that “if it grows on the global average since 1990, income levels in Africa will be 40% higher,” “nearly 83% of African jobs are informal,” and “86% of 10-year-olds in Africa cannot read and understand a simple paragraph.”
The volume contains chapters such as all of these topics. My own sense is that if the authors of the 2000 volume were looking forward to the situation in 2025, they would be more disappointed than pleased.
Here we will add some words to Chapter 3 of “Productivity” and “Productivity” by Cesar Calderon and Ayan Qu. Per capita GDP serves as a rough measure of living standards, as well as a rough measure of productivity. On that scale, African countries struggle compared to the rest of the world. West Africa’s territory had been erupting a bit from around 2000-2015, but now it has returned these modest benefits.
To understand why this pattern is so disappointing, remember that low-income countries have the potential to “catch up growth.” They can utilize technology developed elsewhere and sell to markets in high-income countries. There should be many opportunities in low-income countries. It is somewhat easier to achieve a higher growth rate when starting from a low base. However, African countries are instead experiencing only future growth in the fall. This is a person who compares Africa, South Asia, and East Asia/Pacific regions with the US economy of labor productivity. Over the past 20 years, two regions have caught up with the US, at least to some extent. Africa is below the relative levels of the late 1970s.
Calderon and Qu delve into the underlying data, point out that the percentage of productivity differences explained by investments in physical capital is relatively small, and the share explained by differences in human capital is slightly larger. The biggest factor is the economist term “total factor productivity.” This is efficient for the economy to convert these inputs into products. Therefore, investing more in human capital and infrastructure could pay off these economies, but the major challenge is achieving dramatic structural change.
These economies need to move away from focusing on small-scale agriculture. The three channels to productivity discussed by Calderon and QU are: 1) Growth of productivity within companies where well-managed companies improve workers’ skills, technology adoption and intrusion. 2) Success growth outweighs failure as high-productivity firms make up a larger portion of the economy than low-producing firms. 3) Net entry of productive companies. More productive companies are likely to participate, while less productive companies are likely to leave. At the end of the day, the economy only increases productivity when these dynamics are operating, and for about 1 jillion reasons (see World Bank quantity for more information), these dynamics have not been working particularly well across sub-Saharan Africa.
