Has Africa always been the world’s poorest continent?

by on June 15, 2012 at 11:30 am in Economics, History | Permalink

Jeff Sachs claims that Africa was always the poorest continent in the world, that many parts of Africa have never experienced economic growth, and that comparisons between African countries and Asian countries are highly misleading (see in this video for example).

Until recently it has been hard to establish basic stylized facts about African development because GDP data only goes back to 1960, but Ewout Frankema and Marlous van Waijenburg have been able to compile internationally comparable real wage estimates back to the 1880s (pdf). They follow Bob Allen’s influential methodology, constructing representative consumption bundles, and then seeing how many bundles an unskilled worker could obtain. The welfare ratios that result show that it simply makes no sense to talk about African economic performance in general in the colonial period.

There were at least two distinct economies in British colonial Africa, a comparatively high-wage, labor scarce, economy in West Africa, and a low-wage economy in East Africa.   Real wages in many West African cities grew more or less continuously, from the 1880s until the 1930s, as these economies enjoyed a boom in commodity exports, and West African wages exceeded wages in many Asian cities through the colonial period. The story of poverty and stagnation in modern West Africa is not a story of permanent stagnation, but of growth collapses and growth reversals (especially in the 1970s and 1980s).

In contrast, real wages were extremely low in British East Africa.  Many East African economies like Kenya never experienced rapid growth in the colonial period. It was the crisis of the 1970s that created the current view we have of all of sub-Saharan Africa as sharing a common set of problems. Modern Ghana, or the Gold Coast was roughly twice as rich as Kenya in the colonial period,  but by the 1980s per capita GDP in the two countries was the same.  Were the high real wages of the colonial period solely the rest of labor scarcity? (like the high wages recorded in medieval Europe after the Black Death) or did they represent a genuine moment of opportunity that could have led to sustained economic growth?

Consider this evidence in light of recent optimism about growth rates in Africa in the 2000s (see this MR post).  Like the increase in real wages that occurred in the colonial period, recent growth has been driven by an export boom and rising commodity prices.  These findings suggest that episodes of economic growth are less rare in African history than we might previously have supposed.  Instead, perhaps the real difficulty lies in sustaining economic growth, and not in getting growth going for a few years.

buddyglass June 15, 2012 at 11:52 am

The Pharoahs had some bank.

Willitts June 15, 2012 at 9:36 pm

Egypt has never considered itself “African.” Geographically, they considered themselves Mediterranean just as Rome and Greece didn’t consider themselves European.

Egyptians get quite testy when Americans attempt to lump them in with Africa.

Nyongesa June 16, 2012 at 2:22 am

This very true, and soon to be an very big issue, as most of their water comes from East Africa, in an British designed arrangement that will soon blow up into a possible conflagration. So they do not consider themselves African, but rely on sub-Saharan Africa for their livelihood.

john personna June 15, 2012 at 12:20 pm

Equatorial jungles are the hardest places on earth to live. Parasites …

The Anti-Gnostic June 15, 2012 at 12:58 pm

Any forest is tough going. That’s why certain groups decided to chop down trees, drain swamps and breed protein sources that wouldn’t bolt for the horizon or try to kill them when they approached. Or, you can be a hunter-gatherer and carry on just fine.

Anyway, the jungles have been eliminated from Haiti and they’ll be gone from Africa as well.

david June 15, 2012 at 1:30 pm

The thing with jungle terrain is that, quite often, even if you burn it all down, it’s still pretty infertile for growing stuff. The jungle drained all the phosphorous and such millenia ago. Forest is better in that regard. Still, it took literally millenia to clear most of northwestern Europe.

And in the “chopping down” part there’s still the mosquitoes and the tigers to deal with. The mosquitoes are probably more deadly. And if you grow rice rather than wheat, you’re stuck with the swamp mosquitoes in the end anyway.

dirk June 15, 2012 at 3:29 pm

This is an interesting comment. If the jungle drained all the phosphorous, how does the jungle continue to grow? Or does the jungle not need phosphorous? If the jungle doesn’t need phosphorous, why did it drain it?

seesee June 15, 2012 at 5:27 pm

Perhaps, the jungle can subsist on a lower level of phosphorous, and the consumption and production of phosphorous are equal. However, when the jungle was first developing in a phosphorous-rich environment, it consumed more phosphorous which was not being replenished quickly enough. Over time, the mix of plant species in the jungle changes or the phosphorous use of the plants in the jungle changes until the jungle reaches the low-phosphorous equilibrium.

Nyongesa June 16, 2012 at 2:30 am

One of Africa greatest natural assets is it’s biomass, and along with it, the highest ratio by a long shot of potent human diseases. A marvel of mother natures work, and a disaster for Human development. It’s no coincidence that the most virile of human pathogens come from Africa. Pick up any Biology book on human diseases, and more than 50% of the book will be based on Africa, despite it’s small proportion of land global mass. This “disease load”, was a potent retardant of development in Africa, A great example was the “sleeping sickness” carried by the Tsetse fly, a disease so potent that a highly fertile and habitable crescent sweeping from southern Tanzania through Malawi in southern Africa, was depopulated by the disease, with many villages simply abandonment due to high mortality rates.

WM June 16, 2012 at 5:17 pm

Africa is the second largest land mass (20.4%) behind only Asia (29.5%). The point on disease, though, is well taken ofcourse.

JonF June 15, 2012 at 5:18 pm

By the beginning of the modern era the only hunter-gatherer populations of any size left in Africa were the San of the Kalhari. everyone else was either farming or herding animals. The Africans had managed to invent iron metallurgy all on their own with no help from the outside world, something that happened in only two other places, Asia Minor and China. There were even powerful kingdoms and empires in some parts of Africa. The Kingdom of the Kongo (which lay mainly in Angola) so impressed the Portuguese they signed treaties and educated some of its royal family in Lisbon as equals to their own royalty.

So no, Africa was not “the poorest continent”. That honor goes to Australia whose people never did get beyond the hunter gatherer stage.

Nodnarb the Nasty June 21, 2012 at 2:01 am

And the San were barely hunter-gatherers, too! A few anthropologists created a firestorm a few years back when they argued that the San were hunters and gatherers because they lost their land to the Tswana, the Europeans, and a couple of other ethnic groups over a period of a couple hundred years. Check out Land Filled with Flies for more detail.

Matt July 1, 2012 at 8:50 am

Bah! What of Antarctica?

Anthony June 15, 2012 at 12:26 pm

West Africa was exporting surplus labor until the early 1800s.

Urso June 15, 2012 at 12:48 pm

for a very broad definition of “export”

The Anti-Gnostic June 15, 2012 at 1:05 pm

Actually, it’s an uncomfortably precise definition of “export.”

Nyongesa June 16, 2012 at 2:34 am

The labor was not surplus, many communities collapsed during the slave trade, the removal of the strong and fertile young people from them was overwhelming. Also not really exports, more like forced imports.

Cindy June 15, 2012 at 12:33 pm

I am not an expert on this topic, but doesn’t Angus Maddison provide GDP data for African countries back to 1820?

josh June 15, 2012 at 12:59 pm

Holy crap! Cheap Chalupas admits that labor scarcity leads to higher wages. Does he just really love Chalupas or really hate Americans?

maguro June 15, 2012 at 1:29 pm

Look at the byline, not a Cowen post.

josh June 15, 2012 at 5:03 pm

Ah. Order is restored to the world. Somebody let this Koyama guy know the rules before word gets out.

david June 15, 2012 at 1:31 pm

Labor scarcity is most useful when the supply of land, rather than capital, is the determining factor in labor productivity.

Rahul June 15, 2012 at 3:19 pm

Sailor-ite?

Johan June 15, 2012 at 1:10 pm

Ewout and Marlous excellent work builds on a larger literature. See http://www.sfu.ca/~mjerven/PDFs/african%20growth%20recurring.pdf for example.

FXKLM June 15, 2012 at 1:13 pm

I don’t know. Antarctica seems like pretty stiff competition.

Brandon Berg June 15, 2012 at 4:49 pm

Penguins are surprisingly resourceful.

Dan Weber June 15, 2012 at 6:59 pm

And spiffy dressers.

Willitts June 15, 2012 at 9:39 pm

Antarctica probably has the highest per capita income.

Wonks Anonymous June 15, 2012 at 2:07 pm

Pre-colonial Australia was exclusively hunter-gatherer, making it poorer than Africa (if we stick with Robin Hanson’s view that in the pre-modern era “wealth” took the form of larger populations).
Koyama is implicitly restricting the discussion to “sub-Saharan Africa”, which isn’t even an entire continent.

dirk June 15, 2012 at 3:44 pm

Hanson’s view on this, if you are describing it fairly, is obviously wrong. Hunter-gatherers were much taller (almost as tall as contemporary 1st worlders) and thus better fed than their malnutritioned farmer descendants. Any view that ascribes greater wealth to those who don’t have enough to eat is far far-fetched.

Doug June 15, 2012 at 4:43 pm

A better way to look at it is economic development. The simplest measurement of economic development if total factor productivity. For sake of simplicity let’s restrict ourselves to pre-industrial economies where almost all production and consumption is food. If you can support a thousand farmers at subsidence wages on three thousand acres of land (Western Europe) then I’d say you clearly have higher TFP than another civilization that can support 25 hunter-gatherers on the same area. Even if they do have higher wages (represented by better nutrition), you’re talking about supporting 40 times as many people.

JonF June 15, 2012 at 5:19 pm

So the Europeans and Asians were also “poorer” than the Australian aborigines, given that they suffered terrible famines and plagues?

dirk June 15, 2012 at 6:17 pm

Absolutely. Although I do understand Doug’s point above and would say that the Europeans and Asians had more “economic development”. But what good is economic development if median income happens to decrease along with it? I’d much rather live in a backward, undeveloped world where I got enough to eat than a developed one where I got so little nutrition as a child that my growth was stunted. A lot of poorer people living on less land still makes them a lot of poor people.

TGGP June 15, 2012 at 10:05 pm

“But what good is economic development if median income happens to decrease along with it?”
Think more Darwinian: what good is median income if you have fewer descendants?

dirk June 15, 2012 at 6:50 pm

But never mind the famines and plagues they were also poorer on a good day.

jc June 15, 2012 at 9:42 pm

I strongly disagree on the assertion that heigh is a good measure of economic wealth:

In the US heights declined from 1790 to 1890, while actual income increased several times.

That’s possible simply because: increased incomes increase the rate of urbanization, urban people eat less meat and milk and more grain than people in the countryside, thus they grow less.

And Europeans in the 18th century, specially the Dutch, were vastly wealthier than Australian aborigines, even if they had poorer nutrition. I think wealth should be measured by consumption of also durable goods, such as housing, clothing and furniture. And in this aspect, 18th century Europeans had houses of 500 square feet, on average, 10 times larger than the tribal huts of aborigines, and also much better build. They had much more clothing and furniture as well. In terms of physical material goods, Europeans in the 18th century were vastly wealthier than tribal populations.

Adam Smith already remarked that a European peasant had a better standard of living than an African king:

“Wealth of Nations, page 16-17, Penn State Eletronics Classics Series Publications
Observe the accommodation of the most common artificer or day labourer in a civilized and thriving country, and you will perceive that the number of people, of whose industry a part, though but a small part, has been employed in procuring him this accommodation, exceeds all computation….I say, all these things, and consider what a variety of labour is employed about each of them, we shall be sensible that, without the assistance and cooperation of many thousands, the very meanest person in a civilized country could not be provided, even according to, what we very falsely imagine, the easy and simple manner in which he is commonly accommodated.

Compared, indeed, with the more extravagant luxury of the great, his accommodation must no doubt appear extremely simple and easy; and yet it may be true, perhaps, that the accommodation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute masters of the lives and liberties of ten thousand naked savages.”

So, there were indeed vastly differences of living standards between countries already in the 18th century. The Netherlands, specially, had incomes several times greater than the world’s average.

gwern June 15, 2012 at 4:24 pm

Interesting quotes:

Table 1, columns 1-3, shows that slave export intensity is highly and significantly (at the 1% level) correlated to GDP per capita in 2000, but not to income levels in 1950 or 1960. In 1970 the effect is significant at the 10% level, but the coefficient is much smaller than in 2000. Column 4 to 6 shows the regression on growth rates including initial GDP per capita (ln). A regression of slave exports on per capita GDP growth is only statistically significant for the period 1973-1995, which explains why the regression on GDP per capita in 2000 is so robust. However, for the periods 1950- 1973 or 1995-2008 the correlation is insignificant and after 1995 the coefficient turns positive. Hence, the claim that Africa’s slave trades affect current economic performance is multi- interpretable.11 The results of this regression analysis do not necessarily refute the argument that the slave trades are important to understand current African poverty, but they do point out that we are missing an important layer of complexity. If ‘history matters’ for current outcomes, this should presumably be discernable at various points in time before the present.

Has Africa really been the slowest growing region in the world since the Industrial Revolution, as Bloom and Sachs argue? If we turn back again to the Maddison data – which Bloom and Sachs also use –, we see that until 1964, regional GDP per capita estimates for Africa are higher than those for Asia.13 Bourguignon and Morrisson observe that, “In 1950, only 12 percent of world inhabitants with incomes of less than half the world median income lived in Africa. By 1992, 30% did. Poverty, largely an Asian problem until just after World War II, is fast becoming an African problem.”14 African income levels started to fall behind since the 1960s, and particularly after 1973. But how African income levels compared to the rest of the world before 1950 is something we know preciously little about. This leaves room for different interpretations of long-term African growth, such as the ‘lost decades’ perspective recently put forward by Bates, Coatsworth and Williamson.

We retrieved wage and price data from the colonial blue books, the sessional papers and a wide range of administration reports that are available in the archives of the Colonial Office in London. The use of different sources allowed us to cross-check our wage and price series. The questionnaires that were dispatched by the Colonial Office in London explicitly asked colonial governments to report daily, monthly and/or annual wages including payments in kind, such as food rations, housing or clothing. In some cases monetary value and material contents are reported separately. Annual reports from the various colonial labor departments, which become available from the 1920s onwards, offer annual surveys of wage movements and, occasionally, surveys of wage-earners’ cost of living. The reported wages refer to adult males.

Second, these intra-regional wage gaps were already present at the start of the colonial era and remained in place until independence. Only during the second half of the 1950s did nominal wage levels in Nairobi and Dar es Salaam show convergence to those in the West African capitals. Third, wages in West Africa and Mauritius were considerably higher than those in British India. In East Africa wages remained slightly lower than the Indian wages throughout the interwar era, with the exception of Zomba, where wages remained lower until the end of the period under consideration. When we place West African nominal wage levels in a broader comparative perspective, including the British West Indies and the British Asian territories, it appears that West African wages were higher than in any of the British Asian colonies we explored.20

Table 3 also indicates that the First and Second World War had a devastating impact on the living standard of urban unskilled wage earners in all British African colonies. Price hikes as a consequence of war rationing schemes and a collapse of international trade placed purchasing power of initially unchanged nominal wages under severe strains. These wage-to price responses were common. Inflation, for instance in the early 1920s, caused a decline in real wages in the short run, while deflation during the Great Depression of the early 1930s lead to a temporary rise in purchasing power of wage workers, as prices fell sharply before wages were readjusted. In the long period of price stability up to the First World War wages hardly changed as prices remained fairly stable. This mechanism has not been taken for granted in mainstream African historiography.

The rapid growth of the Ghanaian export economy has been extensively documented in the literature.32 Our real wages series corroborate these trends. Cocoa exports started to drive economic growth from the 1910s onwards, were booming in the 1920s and sustained real wage growth rates until the early 1960s. In 1964 Ghana’s economy entered into a decade of stagnation and in the decade following 1974 it experienced a dramatic collapse. From the mid-1980s growth has resumed, but the trend line added to the graph suggests that this episode has set Ghana’s economy back in time for ca. forty years! What the long-term evidence suggests is that Ghana is among the poorer countries of the world today because of a major interruption in its long-run growth trajectory in the 1970s. Kenya’s long-term growth trajectory appears very different. A dramatic collapse of the economy did not occur in Kenya. Average long-term growth rates were considerably lower than in Ghana, however. For the sixty-years between 1904 and 1964 the annual average real wage growth rate of 1.44% was respectable (partly due to very low starting levels), but since the late 1970s the economy entered into a long phase of stagnation in which per capita income growth was close to zero.

Steve Sailer June 15, 2012 at 5:39 pm

Off the top of my head, I’d look to a Malthusian explanation for the difference between East Africa and West Africa in colonial times. Much of East Africa is at higher altitude, and thus cooler and healthier. Populations would more tend to approach the limits set by the food supply in East Africa than in lower altitude West Africa, where disease kept the population well below what the potential food resources could supply.

Rahul June 16, 2012 at 1:18 am

That sounds very counter-intuitive: Cooler, healthier climes lead to low growth and low real wages?

Do other cooler, healthier regions of the world replicate this thesis?

Steve Sailer June 16, 2012 at 1:51 am

Demand and supply of labor. Until medical breakthroughs against disease in the 20th Century, much of West and Central Africa was lightly populated per square mile because the disease burden was so high. A few places in East Africa, however, were more like Asia in that population was pressing up against limits imposed by lack of land.

John Reader’s “Africa: Biography of a Continent” is the place to start.

Nyongesa June 16, 2012 at 2:44 am

Add to that Southern East Africa, as far as disease burdens. The dynamics of bumping up against natural boundaries is still prevalent to this day, And in East Africa it plays out in support of arguments to the effect that resource competition promotes development. Kenya, which has a very habitable temperate zone of 30%, and then an inhospitable 70%, has a well deserved regional reputation for aggressive entrepreneurial and hard working population, to chagrin of it’s neighbors. Land conflicts are quickly escalating, and have become a political flash point. Consequently, Kenyans are known to be relatively more focused on education than other East Africans.

Steve Sailer June 16, 2012 at 6:07 pm

So, the model of East Africa is small amounts of well-watered, healthy highlands and lots of low-land deserts. So, you see quasi-Malthusian conflicts in densely populated Rwanda and Burundi.

West Africa and Central Africa, in contrast, have enormous amounts of well-watered lowland, but the population per square mile was kept low by disease and other problems until recently.

Thomas Sewell June 15, 2012 at 6:02 pm

Next someone will be claiming getting rid of colonialism in Africa hurt the local economy there and made the people who lived there worse off!

Nyongesa June 16, 2012 at 2:48 am

This is actually correct, in it’s rawest form. few here will touch the subject though for obvious reasons. Long term economic growth was unattainable under colonial rule.

Morrissey June 15, 2012 at 8:19 pm

Sachs left out one very important metric, Abysmal IQ rates one only needs to read Prof Garett Jones work on low IQ and being poor.

http://mason.gmu.edu/~gjonesb/

joe June 19, 2012 at 9:39 pm

“Were the high real wages of the colonial period solely the rest of labor scarcity? (like the high wages recorded in medieval Europe after the Black Death) or did they represent a genuine moment of opportunity that could have led to sustained economic growth?”

There’s a large amount of data that the high wages in medieval Europe after the Black Death resulted in a virtuous cycle that allowed for the employment of scientists and entrepreneurs, that spiraled into the sustained economic growth of the industrial revolution, almost continously over the next several hundred years.

Why see the two as opposing things?

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