Africa and Asia in Comparative Economic Perspective

The World Bank website devoted to economic growth research has a graph showing the path of East Asian and sub-Saharan African GDP per capita since 1960. Beginning from a relatively small gap, the picture is one of continued divergence thereafter. The obvious question to ask is why is there this increasing gap? What is it about sub-Saharan Africa (SSA) which makes its performance so different from Asia since 1960? The papers collected in this volume address these questions from three different standpoints. The majority of them compare particular aspects of economic behaviour in the two continents. Another group of papers examine potential lessons for Africa that might be learned from Asian, mainly East Asian, development. Finally, two of the papers address the issue of convergence and divergence between the two country groups.

The last decade has seen an explosion of work on the fast growing economies of East and South-East Asia, by individual scholars and by the international development institutions. Influential books by Amsden (1989) and Wade (1990), as well as the work of Johnson (1982, 1995) have explored the nature of the East Asian developmental state, and especially the role of government in determining the allocation of resources to particular industries, in building infrastructure and in the development of the educational system. The widely discussed report published by the World Bank (1993) on the East Asian ‘Miracle’ endeavoured to draw lessons not just from the experience of Japan, Taiwan and Korea but also from four fast-growing economies in South-East Asia, Singapore, Indonesia, Malaysia and Thailand. The recent growth experience of China was also discussed. This report and the large literature which it generated have tended to convey the impression that the huge area of the world which the term ‘East Asia’ embraces have all experienced rapid economic growth over the last three decades, and that from their experience a coherent set of ‘lessons’ can be drawn for less successful economies in other parts of the world.¹

The aim of this essay is in principle a simple one: to identify the reasons underlying the success (from the 1960s to 1997 at least) of the East Asian economies and derive any lessons for economic policy in sub-Saharan African (SSA) economies. The 1997–98 crisis notwithstanding, for some thirty years many East Asian economies enjoyed unprecedented economic growth rates. An understanding of the reasons for this can help inform economic policy recommendations for other developing countries. Furthermore, the reasons underlying the crisis also offer lessons, in particular regarding exchange rate and financial sector policies. Economic policy in developing countries can benefit from greater understanding of the successes and failures of the East Asian countries. We do not argue that African countries should emulate or copy the Asian economies. Rather, we ask what can African economies learn (or what can we learn, from the Asian experience, about prospects for African economies)?

Post-colonial sub-Saharan Africa has languished. For many countries in the region, living standards are lower in the 1990s than they had been thirty years earlier. There is no shortage of possible scapegoats: drought, famine, civil war and unrest or the legacy of colonial oppression. However, it is too facile to argue that these factors alone led to stagnation on such an enormous scale.

The outstanding pre-1997 economic performance of East Asia has attracted its fair share of attention. A number of factors have been offered as determinants of this performance, which has involved not only rapid and sustained economic growth but reduced income inequality and poverty. These factors include the achievement of macroeconomic stability, a strong export orientation, increased human and physical capital, high rates of saving, strategic interventions and flexible labour markets.¹ In these respects East Asia is, or at least was, held up as an example for other countries to follow, especially those in sub-Saharan Africa. Comparison of the underlying economic structures and conditions and economic policies between these two regions is not uncommon. While such pursuits have merit, the real benefit of looking at the experience of a particularly successful group of economies, and identifying factors which have caused their success, is that it conditions or informs questions about the performance of other countries, including the poor- performing countries of sub-Saharan Africa. This is especially so if relatively good empirical information is available for the former group of economies, as is generally the case in East Asia, as more questions about them can be answered with some confidence.

The population age structures of Sub-Saharan African (SSA) countries are among the youngest in the world. It is estimated that by the year 2000, 45 per cent of the SSA population would be below the age of 15, as compared with 33 per cent in South-East Asia, which has started its demographic transition much earlier. But fertility has started to decline in several SSA countries. Kenya, Rwanda, Zimbabwe, Botswana, South Africa and Côte d’Ivoire have experienced moderate to large declines in fertility with smaller declines occurring in Malawi, Tanzania, Zambia, Cameroon, Central African Republic, Burkina Faso, Gambia, Ghana, Mauritania, Senegal and Sierra Leone (Cohen, 1998). This trend is going to continue and will be repeated in other SSA countries, whose population by the middle of the twenty-first century will stabilise at replacement level. Other developing countries in Asia and Latin America have started their demographic transition earlier, and their population, particularly in South and South-East Asia, will reach replacement level by the first quarter of the twenty-first century (see Table 6.1).

This chapter is concerned with the remarkable revival of interest in academic and policy circles in regional trade and economic cooperation arrangements between developing countries. Having long been discounted by economists on the grounds that the costs of trade diversion were likely to far outweigh the efficiency gains from trade creation and dismissed by policy-makers for its failure in practice to accelerate the pace of economic development, regional integration in the developing world has now ‘come in from the cold’ and is being actively promoted as a vehicle for promoting economic growth and development.

The comparative economic performance of countries in Africa and Asia has attracted considerable attention from economists and policy-makers in recent years. In particular, significant contrasts have been made between the growth performances of the states in sub-Saharan African and the East and South-East Asian ‘tiger’ economies. From a different perspective, comparisons have also been drawn between sub-Saharan African states, South-Asia and China. Much less attention however, has been directed at the comparative economic performance of very small states or ‘micro-states’ in these two regions.

While South Asia has the largest number of working children, sub-Saharan Africa has the highest incidence of child labour. Child work participation rates are 41 per cent in Africa as compared with 21 per cent in Asia and 17 per cent in Latin America (Ashagrie, 1998). Comparative work is a first step in gaining an insight into the universality of the problem of child work. South Asia and sub-Saharan Africa are clearly very different environments, their common ground being that the average household, at least in rural areas, is poor. We compare the determinants of child labour in the two countries, including household living standards, household human capital and demographics, and community-level data on schools and infrastructure. The data describe prominent differences in the environment that children grow up in. We then present a summary of the determinants of the variation in child work across households within each country. Interesting contrasts across country and gender are highlighted.

The dominant perception about African agriculture is that of a declining output performance (World Bank, 1994). This is also reflected in falling growth rates of agricultural exports and declining market shares. In contrast, agricultural output and exports performed well in Latin America and the Caribbean (Twomey and Helwege, 1991), and there was a significant diversification in agricultural exports. Such a diversification did not materialise in Sub Saharan Africa (Akiyama and Larson, 1993), where the composition of agricultural exports became increasingly dependent on a few products.

How systematically do central banks operate in developing countries? What is the relation between central bank credit creation to government financial demand and economic growth? Answers to these two questions form the subject matter of this chapter.

Convergence or divergence in and between developing regions in Africa, Asia and Latin America is an important issue in the present convergence debate.¹ This paper analyses the intra- and inter-regional similarities and differences among developing countries in the main integration arenas AFTA, SADC and MERCOSUR, to evaluate the question whether regional integration will lead to strong inequality in and between these regions and to prove the relevance of comparing aggregated geographical units like ‘Africa’ or ‘Asia’. Convergence is understood as a faster per capita growth of poor economies than of richer ones according to the neoclassical assumption of diminishing returns to capital (cf. Barro and Sala-i-Martin, 1992: 226). The divergence assumption rejects the inverse relationship of per capita growth and the starting level of output due to the availability of technological progress.