Jeffrey Sachs in Fortune says that “the core problem in Africa is not corruption but the lack of basic infrastructure and services.” Sachs goes on to say that the World Bank should spend money on roads, electricity infrastructure, agriculture, malaria medicine, and mosquito nets. He also cites previous infrastructure investments that supposedly unlocked prosperity:
When poor American farmers lacked electricity, the U.S. established the Rural Electrification Administration in 1935 to provide low-cost credits to bring electricity to the countryside.
When India needed a Green Revolution in the 1960s, the Rockefeller Foundation brought high-yield seeds, and the U.S. government shipped massive amounts of fertilizer.
When China’s countryside needed roads and electricity, the Chinese government, not the private market, did the job, and the World Bank helped with financing.
India’s food troubles may have been temporarily alleviated by outside help, but India’s economic output was stunted for all of its post-colonial history until they decided to ditch their brand of socialism in 1991. I doubt that rolling out roads and electricity to rural areas in the U.S. and China before there was enough demand was a good investment, but what I can say for sure is that China’s recent prosperity is not due to country roads but due to the extent that they’ve adopted a free market.
The poorest countries in Africa need two things: rule of law and free markets. Rule of law generally means the following:
- There is a sensible legal code that is known by everyone in advance and reliably enforced.
- Laws apply to everyone equally, including kings and plutocrats.
- Property rights. If you own something the state (or thieves) can’t capriciously take it away.
- There is a reasonably non-corrupt judicial system for conflict resolution, contract enforcement, and interpretation of law.
If you’ve got rule of law and a non-socialist government then free markets emerge on their own because people will feel safe owning, selling, and investing.
Until troubled African countries aren’t at war or run by kleptocrats there’s not much anyone can do but send food, medicine, and hope for the best. If you lay power or telecom cables in one of these places the cable will just be stolen (this is actually a problem that even some developed countries have because copper is so valuable).
Unfortunately it’s hard to create functional countries out of whole cloth. Japan and Europe were easy to rebuild after WW2 because they already had the human capital and institutional knowledge that a modern economy needs. As we’ve seen in Iraq, Africa, and elsewhere you can’t impose a modern free economy. It has to emerge on its own.
One Comment
Is it that all possible answers in Africa can be traced back to Education??
I think it is unfortunate that we attemp to compare the troubles in Africa to other ‘less’ developed countries in the world.
A government crippled by debt is trying to govern over a population that has average literacy levels close to a develped coutries 8 year old whom live in a place where by the most part free markets, socialist markets and any other market a marxest influenced tyront has attempted to construct (despite his initial good intentions.
I agree that constructing a responsible democratic constitution in terms of government and law is esenential. Improving infrastructure and education levels of a country will have little effect if the government has no fututre of responsible governence.