African Economy

The global commodity slump and China’s economic slowdown have pummeled several African economies, making clear that the continent’s “rise” was a myth.

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May 23, 2017 – Online MCAT CARS Practice

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The global commodity slump and China’s economic slowdown have pummeled several African economies, making clear that the continent’s “rise” was a myth. Now is the time to re-examine the basis of Africa’s recent “boom” and move from feel-good rhetoric to action that will drive genuine economic transformation.

Commodity exporters such as Angola, Ghana, Nigeria, South Africa, and Zambia are reeling, with their currencies crashing since the prices of commodities such as oil and copper began falling sharply. Moreover, fiscal and monetary policies are in disarray, with the risk of social unrest rising if the trend is not reversed in the near to medium term.

The heart of the matter is this: African countries mistook a commodity supercycle-fed boom for a sustainable economic transformation. But a boom connotes transient good fortune – enjoy it while it lasts, or save the proceeds for a rainy day. Most African governments opted for the former.

To be sure, Africa benefited from higher GDP growth and expanded opportunity over the last decade. But hundreds of millions of Africans have yet to be lifted out of poverty in the manner China has accomplished – a path that other Asian countries, such as India and Vietnam, are following as well.

Without question, many individual Africans have become stupendously wealthy and are playing more assertive roles in the world of business. Entrepreneurship is on the rise, especially among young Africans, gradually replacing the dead end of foreign aid. But the vast majority of Africans lag far behind.

Despite the spread of formal democracy on the continent, the nature of domestic politics in most African countries has hardly changed. Real leadership involves not just mobilizing citizens to vote for candidates, but also effective management, strategy, and execution of public policy. And yet power often is sought for its own sake or to secure control of state resources on behalf of ethnic kin or co-religionists. Politics is not yet, as it ought to be, a contest of ideas and programs affecting all citizens. Corruption thrives in such an environment.

Moreover, a proper understanding of economics is necessary. The continent and its leaders have so far failed to understand – or, where they have understood, to apply – historical lessons concerning how the wealth of nations is created. Instead, we often see uncritical acceptance of the received but self-interested conventional wisdom of globalization.

Achieving prosperity in the overarching context of globalization requires creating a competitive economy based on value-added production and export. But it also requires selective engagement with international treaties that favor today’s competitive good producers but put at a disadvantage the developing countries that are increasingly the markets for these goods. Some of these treaties take away the very possibility for African countries to join global value chains, impeding their development.

This is precisely why Africa’s biggest folly is to believe that mineral resources and other raw commodities are automatically a source of wealth. This misconception is why Africa is the world’s richest continent in terms of resource endowments, but at the same time the world’s poorest in terms of income per capita.

Africa’s future competitiveness and prosperity lie in the opportunities afforded by science, technology, and innovation. From Nairobi to Lagos and Johannesburg, innovation hubs are springing up. This is not surprising. It is the modern rebirth of Africa’s ancient talents in science, evidenced in the pyramids of Giza, the astronomy of the Dogon tribe in ancient Mali, and the Caesarean sections of nineteenth-century Uganda.

Africa’s leaders in the public and private sectors have an opportunity to clear the policy bottlenecks that have prevented the commercialization of African inventions, especially in large economies such as Nigeria, South Africa (which has a more advanced innovation policy than the rest of the continent), and Kenya. Innovation must be deployed to cost-effective, competitive manufacturing and service industries.

The commodity downturn need not stop Africa’s development. But if lasting prosperity is to be achieved, today’s challenges must be regarded as an opportunity to reset the trajectory of the continent’s economies on a truly transformational path.

Adapted from Project Syndicate.

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This was an article on Economics.

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Jack Westin
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25 Comments


  1. African economy decreasing, Africa doesn’t understand economics, innovation increasing

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  2. Africa must invest in technology and innovation instead of continuing to rely on material resources for development

    Reply

  3. Econonmic Boom= only temporary good (CW)
    Arica /=/ lifted out of poverty (CW)
    Competive market=prosperity + seeking foreign treaty =important (CW)

    Reply

  4. MIP: African economy in downturn; many still in poverty; need STEM + innovation

    Reply

  5. MI: To discuss what needs to be done to prevent the global commodity to plummet African economies in order to create economic transformation

    Reply

  6. Africa has taken a blow to its economy due to global commodities pummiting as well as chinese economic down turns. Therefore, Africa needs to make a genuine change to their economy.

    Reply

  7. Authors main idea is that in recent years Africa’s economy underwent a boom that inevitably led to a slump. In order to sustain a healthy economy a competitive economy must be established by using Africa’s natural resources in innovations such science and technology to create good and commodities to export.

    Reply

  8. African Economy needs transformation. It needs to focus on innovation.

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  9. africa has not yet had economic boom; needs innovation to shift from commodity based to more competitive economy.

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  10. author tone = informative, lays out problems that cause decline + stagnation of Africa’s economy

    reasons: corrupt politic system, misunderstand resources as source of wealth, needs innovation

    if these are fixed -> africa can become more developed (ex. china)

    Reply

  11. Reexamine Africa’s recent boom = necessary; Need to fix political system (Corruptions), understand economics, and promote innovation to boost Africa’s economy

    Reply

  12. Africa a contient rich in resources but still dwells in poverty due to lack of good leadership and a competitive economy

    Reply

  13. Africa-still poor country due to many problems(gov’t corruption; incomplete knowledge of econ). However, it can use its challenge to re-shift and transform the economy.

    Reply

  14. China’s economic “crash” has negatively impacted Africa’s “boom” in economic growth. The “boom” did, however, opened the door for new ideas and economic stability seen in younger generations. Africa must get a hold on its political aspirations, and must put more emphasis behind historically successful economic growth. They cannot simply rely on their land’s resources, but must use globalization and a new innovation perspective to grow as individual nations in today’s society.

    Reply

  15. Resource ‘rich’ Africa reveals economic weakness with commodity price volatility
    Future depends on driving innovation

    Reply

  16. Africa’s economy has thrived, but it is not necessarily good. Africa must continue to compete in the trade market and prosper with science and innovation.

    Reply

  17. MIP: Africa’s economic boom has crashed. Most of country = impoverished. Successful economy depends on innovation and science, not commodity.

    Reply

  18. Author feels that Africa lacks the political will to transform its economy and make significant progress for its people.
    Author alludes that African countries fail to take practical steps in transforming their economies. While their GDP has increases, millions of people are still living in poverty. Public policies are not enacted to bring about real change to improve the people’s lives and corruption is rampant.
    Author suggests that African countries can improve their economies if they clear policy bottlenecks that impede the commercialization of African inventions as they tap on science and technology.
    For an economy to be thriving in this age of globalization, it has to not only rely on its natural resources for the export of commodities but let technology and innovation drive it.

    Reply

  19. MI: Slump in Eco = Africa not growing as thought, need to make changes, Author = Optimistic

    Reply

  20. An examination of Africa’s economic rise as a myth?

    Reply

  21. African economic boom = myth, Africans = behind, politics =/= changed + corruption, no understanding of economy. Solution: development of science, technology, and innovation.

    Reply

  22. MIP: AF eco down+poor = $folly+don’t know eco+no democracy; method to improve.

    Reply

  23. MIP: African economy = slumped + can change w/ focus on science/tech./innovation; tone = neutral

    Reply

  24. economy rise = myth; to remain competitive leaders must take challenge as an opportunity to transform the economy

    Reply

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