Africa’s Geography and History

1. Africa’s Geography and History

2. Background • Since the industrial revolution, sub-Saharan Africa has been the lowest income and the slowest growing part of the world economy • 1820—per capita GDP was about 1/3 of that of western Europe • But since this period, the Industrial Revolution has continued and came to the US—the industrialized nations have mass education, evolved economies from ag to manu to services and now to information and Africa has gone almost nowhere • By the start of the 21st century, per capita GDP was 1/20 that of the high-income countries of the world

3. Africa’s Economy • It is difficult to compare per capita GDP across time and countries, but much of Africa is essentially at the same place as Europe in 1820 • This divergence did not happen all at once it just became steadily worse, but the worse time was the 25 years after WWII • When Africa threw off colonial rule in the 50s and 60s many thought the economies would surge; it did not

4. Africa’s Economy • I know that there are problems with per capita GDP, but when the average person in the poorest region is not doing any better • And maybe even getting poorer • Hungry people are even more hungry • It is a big group, but we will look at the 48 countries of Sub-Saharan Africa • 9 countries have one million people or less • Cape Verde, Comoros, Equatorial Guinea, Gabon, Mauritius, Mayotte, San Tome and Principe, Seychelles, Swaziland

5. 4 countries have more than 40 million • South Africa, Democratic Republic of Congo (used to be Zaire), Ethiopia, Nigeria (largest with 145 individuals) • 9 of sub-Saharan Africa countries are larger than the large-population country of Nigeria • Mali is 10% larger than Nigeria but has a population only about 1/10 are large • Ranking by population • Nigeria, Ethiopia, Democratic Republic of Congo, South Africa, Tanzania, Kenya, Sudan, Uganda (about 60% of all people in sub-Saharan Africa) • South Africa is the special one • Almost one-third of the GDP of sub-Saharan Africa is from South Africa (47 million produce 1/3 and 740 million produce the other 2/3) • The 47 others are about the same size as a middle class economy like South Korea

6. GDP and Per Capita GDP for Populous Countries in Africa in 2006

7. More Econ Facts

8. They Are The Poorest and Have Been Stuck There For a Long Time • The standard measure of poverty used by the World Bank is $1 per day (for a family of four $1,400 a year) • In 1990, 47% of Africa’s population was living below $1/day • By 2004, it was still about 41% below $1/day

9. Poverty • In 1980, Africa had 10% of the world’s population living in poverty • By 1990, Africa had about 20% of the world’s population living in poverty • By 2004, Africa had about 33% of the world’s population living in poverty

10. Standard of Living is not just Economics • It includes income, but also health, education and other factors • Amartya Sen • He has argued for the capabilities approach to thinking about poverty • To give an example life expectancy in the US rose from about 45 years in 1900 to about 75 years in 2000, per capita GDP went up by a factor of about 5X—here is the question—what is more important to your standard of living income 5X or living 30 more years—Economist have tried to estimate this and we find them to be nearly equal—of course, we got them both. No need to make a choice

11. Amartya Sen • In Africa, they had large gains in certain areas of health and education, but they have not experienced any economic payoff • Life expectancy and infant mortality are two stats that provide a rough comparison of overall health • There was an improvement in the 1970 and 1980s • But in 2005, life expectancy is only about 50 years • AIDS and Wars did not help this number in the 90s

12. Infant Mortality Rates in Africa, 1960 and 2005

13. Education Levels in Some African Countries

14. Transition to the Fundamental Question • Why has Africa’s Economy lagged? • The standard story for a long time was the poverty trap

15. Escape the Poverty Trap • How can you escape? You need foreign aid and help from abroad. • The poverty trap does sound plausible, but a few countries have broken out

16. Investment and Its Return • Sometimes it is not the level of investment, many have managed to invest and foreign capital is possible • But in Africa, it seems that all investment disappears • The savings and skilled people are often fleeing those economies • Alexander Gerschenkron (1904-1978) • The advantages of economic backwardness • You can draw on techno and skills from elsewhere

17. They Have Not SoWhat is Different? • Geography, Climate, and Economic Growth • Patterns of investment have worked for others, but it may not work for Africa and geography may play a part • Economies are about specialization and trade • In many early economies, transportation has often played an important part of growth • Trade often started around ports or cities on rivers

18. Europe vs. Africa • Western Europe has 1/8 the area of Africa, but still has a coast line that is 50% longer than Africa—because it wiggles around with all of those bays • All the major rivers in Africa, the Nile, the Congo, the Zambezi, all have beautiful and large waterfalls as they approach the coastline • Africa has the lowest share of people living near water

19. Percentage of Population that Lives Near a Navigable River or Coast • Africa—19% • US—67% • Western Europe—89% • When you do not have rivers or ports, you do not have cheap water transportation, you do not have groupings of great trading cities • Temperate areas less that 10 km from a waterway is 8% of the world’s land area and where 23% of the population live and where 53% of the world’s GDP is produced

20. Lack Of Water Trade • Lack of water sources can produce fragmentation • Groups are not trading with each other • Small countries and different ethnic and language groups do not bump into each other in the same way—people are separate • Unfortunately, these separations often produced conflict and civil war

21. Climate and Techno Progress • A tropical climate tends to have certain economic consequences • Look around the world, poverty is often close to the equator

22. Equatorial Problems

23. Equatorial Problems • Technology often does not spill over • Technology is temperate climates does not often work well on the equator • For example, vitamin enriched rice in Asia cannot grow that far south • Improvements in cassava, taro root, brown nuts, and yams are limited because much of the world does not eat them, but Africa needs the improvements • It is sad to say, but you can predict a countries GDP very well if you know its latitude

24. More Thoughts

25. Colonialism • Colonialism can not be defended • Denied people a voice in their government • Often coupled with racism, right in the home country • It did not help countries build what was needed for long term growth (Ironically, this is not true in Japan and Taiwan) • One sad stat is that Africa had slow growth before colonialism and after—they have been given this now they must overcome

26. What can they do? • Colonialism has been gone for sometimes as long as 50 years • They need to provide for their future • Many governments were not ones that provided enlightened support for civil liberties and economic liberties • Foreign aid has not solved the problem • The current difficulty is that they need to: • Bring up education levels • Bring up health levels • Connect to each other and to the rest of the world • Find an economic environment where firms can exist—where they can hire and innovate • Find technology that works • Communications that work • Shift away from relying on a few minerals and cash crops