Technical Change and Agricultural Productivity

The evidence does not support gloomy generalizations about an irreversible African environmental crisis or pessimistic arguments that barriers to adopting Green Revolution technologies are insuperable. Although evidence on agricultural technology in Africa is often unreliable, food output and grain yields do appear to have risen strongly in some African economies.. Huge variations in crop yields, including within similar agro-ecological zones, suggest massive potential for policies to promote a rapid increase in yields. Agricultural research and development (R&D) within African countries—and production on many large-scale farms—has shown that dramatically higher yields are possible. Crop yield improvements—with the aid of suitable high-yield varieties (HYVs), public agricultural research spending, and especially investment in irrigation—are possible without draconian resettlement schemes, without wasteful extension service spending, and without recourse to micro-finance schemes. The methods underpinning commonly produced estimates of yields are unreliable, calling into question conventional wisdom that small farms are more efficient than larger farms.

Introduction

The keys to sustained economic growth and development lie in policy and investment strategy decisions taken within African countries. Our argument is ‘possibilist’: neither pessimistic nor naively optimistic. We draw on a wide range of economic and political economy research but also on research in history, anthropology, environmental science, agronomy, and more. The book pays attention to gender relations, offering thick descriptions of the ways in which the majority of African women struggle to survive. It pays closer attention than many to how data are produced and to the quality of evidence underpinning conventional wisdoms. It draws on an unusually wide range of types of evidence, qualitative as well as quantitative, historical and contemporary, providing a rich resource of references and a guide to additional reading. Our arguments through this book are often different from both those typically associated with mainstream neoclassical economics and those more common on ‘the left’.

The Trade Imperative

Economists from very different backgrounds often counsel against a fast growth of imports—and it is certainly true that the balance of payments constraint all too easily derails growth episodes. But the level of output is more important than an obsession with the obsessive pursuit of macroeconomic balance; macroeconomic policy has to serve productive goals rather than vice versa; and policy needs to enable rapid import growth to raise the overall level of output. African countries urgently need to push for rapid export expansion. This chapter argues against International Monetary Fund (IMF) balance of payments approaches. It also argues that the evidence undermines the export pessimism common among many structuralist economists. There is compelling evidence suggesting the need for competitive (undervalued) exchange rates; these are more effective when combined with targeted policies encouraging investment in specific activities that satisfy the criteria we set out here and in other chapters.

Wage Employment in Africa

Most economists think there is little wage employment in Africa and doubt the potential for faster growth of paid employment. They favour supply-side measures encouraging self-employment. The statistical base of conventional views is extremely unreliable. Even the poor statistics that are available do not support pessimism about wage employment in African countries, which has been expanding (and as a share of total employment). Huge numbers of wage workers, including women in domestic service, agricultural child workers, and, often, factory workers, are also invisible in the data. There is no reason for pessimistic predictions about slow fertility rate decline in Africa. There are realistic policies to encourage a faster rate of growth of wage opportunities, for example, to increase demand for young and female rural workers. Also, employment protection legislation (EPL) is not a brake on investment, productivity increases, and growth; excessive labour market ‘flexibility’ subsidizes inefficient enterprises.

Investment, Wage Goods, and Industrial Policy

Raising and sustaining long-run growth rates is made more difficult by the complexity of economic growth and by the complexity of growth theory debates. Nonetheless, the investment rate is central to long-run growth and development. Growth sustained by high investment rates will also involve structural change: a shift of resources into high-productivity economic activities. This chapter combines discussion of investment—why it matters, what economic policies help to raise investment rates and keep them high—with discussion of ‘industrial policy’. But the terrain of industrial policy has expanded to take account of new high-productivity activities, of servicification, and of agribusiness; policy officials thus need to refine the criteria used to make resource allocation and incentive decisions accordingly. A particularly important political economy constraint on investment rates is the non-inflationary supply of wage goods.

Working Out the Solution to Rural Poverty

Ideas about poverty and poverty reduction policy are clouded by misleading measures and unreliable evidence. National statistical organizations (NSOs) are under-resourced and the collection and dissemination of data are compromised by political pressures. Allegedly pro-poor policies have had an inegalitarian impact in rural Africa. Conventional views expecting that support spread across smallholder farmers will reduce poverty are based on skewed evidence and ideology. Large farms have a bigger effect on poverty reduction through labour markets. ‘Gold standard’ poverty measures based on consumption surveys are unreliable and misleading. Composite indices are even less useful. There are better ways to assess deprivation. The poorest typically live in small households with few men in them. Women and children in these households suffer the risks of teenage pregnancy; they risk undernutrition because of a monotonous and undiversified diet; they can acquire hardly any basic consumer wage goods; they depend on access to wage employment opportunities.

Varieties of Common Sense

Policy officials are often influenced by two broad varieties of conventional wisdom: the set of ideas broadly associated with neoclassical economics; and those ideas flowing from third worldist, anti-imperialist, and structuralist development economics. We show how these apparently opposing perspectives often have a surprising amount in common. Reflexes of ‘impossibilism’ and ‘naive optimism’ are often shared across an ideological divide. Thus, pessimism in orthodox trade theory suggests no African economy can hope to accelerate structural change by defying the signals of comparative advantage; and pessimism in structuralist trade arguments claims limited gains from exporting, especially from exporting primary commodities while the terms of trade are declining. Both forms of pessimism can easily switch to naive optimism when they imagine the ease of rapid and ‘inclusive’ development. But the switch requires that unrealistic conditions are put in place: perfectly competitive markets or idealized South–South cooperation.

Unbalanced Development

Balance is a powerful idea in economics—in equilibrium economics, in strategies of balanced growth, and many other strategies. This chapter argues for a different understanding of the history of capitalism and, therefore, of policy and strategy. The idea of imbalance is a springboard to explore the ideas of Albert Hirschman. These include the concept of linkages and the dynamics of unbalanced growth (pressures, tensions, and disequilibrium as the motor of change), the principle of the hiding hand, and a focus on unintended consequences and poorly measured side effects of development projects and policies. In line with Hirschman’s ‘possibilism’, we argue that the critiques of large ‘mega-projects’ are misleading. Hirschman also highlighted the difference between economists who think a country’s prospects are determined by its ‘endowments’ (what it is and has) and those more interested in what a country does and becomes through what it does.

High-Yielding Variety Policies in Africa

Chapter 10 highlights policy priorities capable of generating large productivity improvements, balance of payments improvements, and big increases in employment, especially for rural women. Growth, structural transformation, and welfare improvements in African economies require a sustained high investment rate, led by public sector spending to maximize crowding in of private investment; they require state support for the development of ‘national champion’ firms (and farms); they cannot be sustained without a massive export drive; investment needs to be encouraged in specific kinds of labour-intensive economic activities. This ‘possibilist’ strategy depends developing capabilities for monitoring performance and disciplining recipients of state resources; among the relevant targets for firms are measures to encourage the effective organization and voice of the workers they employ. The strategy also has to include policies to expand the non-inflationary supply of basic wage goods, including intervention to manage grain prices.

Uneven, Contradictory, and Brutal Economic Development in Africa

Even where capitalist expansion brings about dramatic and progressive changes, it is always and everywhere contradictory, uneven, and brutal. All good things do not go together. African economic experiences have—similarly—been contradictory. That is one reason why efforts to fit African economic experiences into linear narratives of ‘tragic growth’ or ‘Africa Rising’ are doomed. African economic development is also extremely diverse. This variation is not just between countries. There is also huge variation, perhaps more significantly, within countries. That is why we argue against relying heavily on averages or on continent-wide pronouncements based on just a handful of countries. This variation, as we argue in this chapter and in others, is also often a useful analytical starting point to consider the possible and to identify potential for economic policy to bring about change.