© 2018 by Robert Person.  The views expressed on this website are my own and do not represent the official policy of the U.S. Army, Department of Defense, or U.S. Government.

ronald.fricke
May 9, 2019

Africa's Only Hope Is Industrialization

https://www.bloomberg.com/opinion/articles/2019-04-24/africa-s-only-way-out-of-poverty-is-to-industrialize

 

This article addresses how the citizens in Africa are living in extreme poverty and that the rest of the world needs to increase foreign investment within the continent for international stability. Specifically, the article states that the United States and other rich countries need to encourage imports of African made goods. The reason for this is that by creating access to markets within Africa it ensures stable demand and will give incentives to other entrepreneurs to invest and build for the long term. The second course of action to change this cycle of poverty is to increase industrialization. In the past Africa has not made the boat regarding the industrialization needed to generate mass employment. However, there is hope for Africa due to the initiative of Chinese businesses. Specifically, due to the rise of labor costs in China, firms are looking elsewhere to keep costs down and increase profits. Over the past 8 years, Chinese firms have strongly been investing in Africa and have built over 10,000 factories within the states of Nigeria, Zambia, Tanzania, and Ethiopia. By Chinese businesses moving into Africa, more and more African citizens are becoming apart of the working force.

 

This article connects to the lesson over globalization, poverty and inequality due to Africa falling into the different "traps" and then counters the argument for the future unlikely success of Africa. Specifically, the article discusses the role of weak governments and the natural resource curse. Part of the reason that Africa is failing is due to the legacy of colonialism and the lack of stable governments that provide the institutions necessary to mitigate risk and increase confidence within foreign investors. This directly connects to the bad governance trap because the current policies in many African countries fail to establish the institutions needed such as a rule of law, property rights, and contract enforcement. Second, the article states that Africa is rich of natural resources but instead of using them to their advantage, it has actually been a burden for their economy. This connects to the lesson because leaders in Africa have notoriously fought over the control of these resources which lead to both civil conflict and an increase in risk which deters investment. The lack of diversification within the country has essentially closed many potential markets which hinders the domestic economy.

 

Lastly, the article counters the argument made by Rodrick that is extremely unlikely for Africa to be successful because they have missed the boat regarding industrialization. This article goes to show that Africa had missed the boat in the past when the rest of the world got rich from industrialization and manufacturing but with the help of the United States and China, there is still hope for Africa. Due to the heavy increases of Chinese investment, more jobs are being opened in Africa and more markets are being opened. With the increase in population in Africa and the labor restrictions in China, Africa has the potential to be the new place where businesses turn to for manufacturing. Also with the African Growth and Opportunity Act, there is the possibility of opening up more markets and trade within Africa.

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