The future of Africa?

by on December 2, 2009 at 7:57 am in Economics, Political Science | Permalink

I'm still thinking about this fascinating article from the NYT magazine last week, titled "Is There Such a Thing as Agro-Imperialism?".  Here are two excerpts:

…one of the earth’s last large reserves of underused land is the billion-acre Guinea Savannah zone, a crescent-shaped swath that runs east across Africa all the way to Ethiopia, and southward to Congo and Angola.


…as of earlier this year, the Ethiopian government had approved deals totaling around 1.5 million acres, while the country’s investment agency reports that it has approved 815 foreign-financed agricultural projects since 2007, nearly doubling the number registered in the entire previous decade. But that’s far from a complete picture. While the details of a few arrangements have leaked out, like one Saudi consortium’s plans to spend $100 million to grow wheat, barley and rice, many others remain undisclosed, and Addis Ababa has been awash in rumors of Arab moneymen who supposedly rent planes, pick out fertile tracts and cut deals.

Foreign investment can do wonders but the interaction between such investment and corrupt foreign governments can also be negative if workers and citizens are not granted adequate rights.  This article caused me to revaluate possible paths for some African futures.  The Coase theorem is finally kicking in.  I see corrupt politicians deciding it is more profitable, and also more secure, to "sell off" their countries than to oppress them in the traditional manner.  I see a new kind of tax farming, based on the extraction and exploitation of resources and raw materials, with African labor along for the ride.  It will mean higher living standards and better infrastructure, but probably not along a path that will look very appealing to most Western observers.

1 farmer December 2, 2009 at 8:27 am

i wonder how you say “rhodesia” in arabic?

2 farmer December 2, 2009 at 8:43 am

with all due respect, how in the world do you get “unused” or “underused” from “not planted w/ monoculture foodstuffs designed for human consumption”? surely, by that definition we ought to count the White House lawn or Arlington!

3 Matt December 2, 2009 at 9:15 am

“This article caused me to revaluate my vision for the future of Africa.”

Africa is an extremely heterogeneous place, not a single entity to have a “vision of the future” for.

4 Tyler Cowen December 2, 2009 at 9:32 am

Matt is right, I will reword…

5 improbable December 2, 2009 at 9:45 am

Instead of imperialism perhaps this should be called outsourcing of competence? Instead of signing a deal with the saudis, a well-organised country could run farms like this itself, and simply sell them the food. But this hasn’t happened, until outsiders came to run it for them. Which is, of course, part of what the previous imperialists were doing.

This explanation ignores the saudis’ desire for food security, which translates into them being willing to pay above market price for it in good years, which is going to help too.

6 Ed December 2, 2009 at 10:48 am

Maybe these African leaders can sell the rights to their countries to other countries. For example, governing Zimbabwe is outsourced to China, which is contractually obligated to spend a certain amount of the tax revenue in Zimbabwe, plus payments to the local “big men”, but can take the rest for themselves.

Oh wait…

7 Bill December 2, 2009 at 11:17 am

You might want to ask: what are institutional mechanisms that could be developmed to minimize corruption in these circumstances.

Is transparency one solution? Are public auction mechanisms a solution? Are rules which say that if there is corruption, and it is proved you knew, that you forfeit the property you acquired, which would give an incentive for the acquirer to have in place public competitive and transparent mechanisms that would mitigate against the risk of corruption.

This is a place where idealized market economics needs some discussion about institutional economics and legal mechanisms.

8 Steve Sailer December 2, 2009 at 4:41 pm

In the 19th Century, African explorer Francis Galton pointed out that millions of Chinese farmers could flourish in Africa by being more productive than African farmers. Will that come true in the 21st Century?

If you were an African, would you think this was such a hot idea?

How’d that kind of thing work out for the Cherokeed and Palestinians?

9 Mari December 2, 2009 at 9:55 pm

Do not despair Tyler, there could be silver lining….think about all the foreign investment that make the lands tillable and impart the locals with skills to manage the property, which makes the populace economically better off, then elect a Chavez/Mobutu style govt and kick all the foreign investors out – voila you got investments and now you own those productive lands…

10 North December 3, 2009 at 2:50 am

I’m surprised you think this is new and exciting. Agro-imperialism is old as imperialism: consider the Irish potato famine, which was largely a matter of British land-owners demanding exorbitant rents. Or United Fruit in Guatemala, American sugar plantations in Cuba – we have many historical examples of a similar dynamic. Most of them have been backed by military force on the part of the imperial power, rather than the dubious bonds of local contract law, and I would anticipate something similar when the African countries producing for export experience internal shortages.

11 Sune December 3, 2009 at 9:04 am

China made a deal with the former president of Madagascar to “buy” 3.2 million acres of land to grow palm oil. The plan was to send 1000 chinese workers down there to work the land.

Problem was Madagascar seemingly didn’t receive any payment in return, not even jobs. While the president it turned out received an unaccounted for jet plane.
And people already lived in and used this region, there were small farms and animals.

When the local ruler of this region found out what was going on he informed the public and it caused an uproar that ended with the president getting evicted in a coup.

12 kurt9 December 8, 2009 at 1:17 pm

That was my first thought as well, the Irish Potato famine. However, I think the management will be better and agricultural yields will increase such that everyone will get enough to eat. I also think this will speed up the introduction of genetically modified crops in Africa, particularly nutri-ceuticals. The current inhibition to the introduction of GM in Africa is due to the fact that much of Africa’s current agricultural output is sold to Europe and the E.U. has said they will cut off their market if GM crops are introduced into Africa. The market for this new agri-business will be the Muslim Middle-East, South Asia, and East Asian. These are all regions that have a much more pragmatic attitude towards GM crops than the luddite Europeans, which will become a declining and, therefor, a superfluous market.

This is one example of how Europe’s influence will decline in Africa (and the rest of the world). In any case, better agriculture is needed for Africa. In particular, better GM crops that not only reduce the need for fertilizers, but also containing nutrients that increase health and intelligence is badly needed by the African (and Asian) populations. The Flynn effect, which is likely based on improved nutrition, will help to accelerate African economic development.

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