Edward Miguel is an astute observer of Africa. I particularly admire his combination of insights from fieldwork with an analysis of the big picture, but let me try to offer something more useful than praise.
I wrote The Bottom Billion in 2005. Given the lags in economic data, it was only possible to track African economic performance until around 2002, so the millennium was a natural place to draw the line. As Miguel’s chart of income shows, the early cut off misses something important: since the turn of the millennium, there has been a boom at the bottom. Obviously, the key question is whether this marks a real break with past trends or a blip.
I rather doubt that the wave of democratization has driven the economic turnaround. I would dearly like to believe that it has, but Africa’s democracies basically amount to elections without checks and balances. The inevitable happens: incumbents use the opportunity of freedom from checks and balances to manipulate elections. Miguel writes of Kenya, but a far more dramatic episode has rapidly superseded the Kenyan election. As I write, President Robert Mugabe has turned Zimbabwean democracy into farce. Furthermore, there can be little doubt thatthe Zimbabwean economy has suffered because of the election. In order to win, Mugabe has uprooted the rule of law, and this has had severe economic consequences. My forthcoming book, State of War, sets out why I think democracy has gone wrong in the bottom billion and what would be needed to put it on track.
If democracy is not responsible for the economic about-face, what is? Miguel considers commodity booms an important factor. Indeed, in the short term a country exporting commodities in high demand cannot help but grow. The issue is whether the revenues can be harnessed for something sustainable. Most African governments failed to do so during the last commodity booms of the 1970s. The vital task for Africa now is avoiding a repetition of history.
But the growth we are seeing today is not just a result of commodity booms. I don’t think that is the key to Kenya’s pre-election economic success. There is a process at work that does not depend on democracy and is so simple that analysts generally miss it: learning from mistakes. Since 1970 African societies have accumulated a huge stock of experience in how not to manage an economy. For example, from the mid-1970s until the mid-1980s Tanzania adopted regulatory policies that proved to be ruinous. The knowledge they gained through failure is valuable. Tanzania is now one of the best-managed of all Africa’s economies. The European society with the best record of containing inflation over the past sixty years is Germany. It has the best record because it used to have the worst: the experience of hyperinflation immunized Germans from macroeconomic folly.
Learning from failure is an unglamorous and sometimes unpopular explanation for Africa’s improvement. But if it is right it has one hugely important and attractive implication: the improvement is robust. I am hopeful that the present commodity booms will be better handled than those of the 1970s, primarily because many Africans are fully aware of past mistakes and are determined not to repeat them. ©