Results for “africa”
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Good news from Africa

From Michael Clemens:

If you’re sick of the sad, hopeless stories coming out of Africa, here’s one that made my year. New statistics show that the rate of child death across sub-Saharan Africa is not just in decline—but that decline has massively accelerated, just in the last few years. From the middle to the end of the last decade, declines in child mortality across the continent plummeted much faster than they ever had before.

These shocking new numbers are in a paper released today by Gabriel Demombynes and Karina Trommlerová in the Kenya office of the World Bank.

The figures can be found at the link.

Why is unemployment so high in South Africa?

Ryan Cooper writes to me:

Hey Tyler, possible blog post topic: I’m wondering how you would explain the situation in South Africa (or other similar countries) with stupendous persistent unemployment–SA has been above 20% since 2000:  http://www.tradingeconomics.com/south-africa/unemployment-rate

A few factors I imagine are important:

1) The education system is totally broken in a lot of places. As in, 12th graders can neither read nor write in any language nor figure out 3×3 in their heads.
2) Unions are crazy strong, and have been driving up wages like gangbusters, particularly in the public sector.
3) Minimum wage laws are stringent and have actually led to worker protests: http://www.nytimes.com/2010/09/27/world/africa/27safrica.html?pagewanted=all
4) Inflation hasn’t been TOO bad recently (~6%), but has seen spikes to almost 14 percent not long ago: http://www.tradingeconomics.com/south-africa/inflation-cpi
5) There’s a highly developed sector. On average, whites are far richer than blacks.

6) Crime and inequality are incredibly bad.
7) The ANC has won every election in a landslide and is strongly allied with the unions.

So how does it tie together? Lots of poorly-educated ZMP layabouts? Wages too high to start sweatshop-style development? Razor wire + electric fence + security guard costs deterring investment? The results of generations of systematic oppression and denial of education? All of the above, plus some?

Just trying to iron out a coherent story. I was a Peace Corps volunteer for two years there and I’m slowly building up my economics knowledge; this question has always fascinated me.

Here is one additional account.  Here is an IMF analysis.  Here are some World Bank powerpoints.  I told him I would try to answer the question, but after a bit of research I don’t find myself getting much further than his suggestions.

Is Africa the next big food trend?

Josh Schonwald says yes:

One night, after reading about sugar-cane drinks and fresh lobster skewers, I started cooking. I made a spicy okra salad, grilled shrimp piri piri and steamed vanilla pudding. The next night, Zanzibari pizzas—chapati stuffed with eggs, meat and spices. Later, I had a Mozambican seafood stew with Senegalese-style jollof rice. I started seeing it.

…As fast-growing African nations become more prosperous, they will develop something that is rare right now—a middle class with disposable time and income. Poverty, hunger, war and sickness are why Africans—from Cameroon to Mozambique to Namibia to Congo—have been unable to develop a baobab-infused vinaigrette.

I very much enjoyed Josh’s new food book The Taste of Tomorrow: Dispatches from the Future of Food, and I can recommend it for its pro-science stance, its interesting speculations, and its excellent reporting.  My prediction, by the way, based on demographics, is that the next big food trend will be more from the Latino cuisines, fused with American ideas to appeal to the (North) American palate.  Chipotle is but one step in this direction.  Sadly, in my view most Americans have room for only a few foreign cuisines in their lives.  Thai and Indian are knocking on the door of Mexican and Chinese (all in their American versions), but I do not see new contenders for that throne.

The African Growth Miracle?

I had not previously read this 2009 paper by Alwyn Young (pdf):

Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing in excess of 3 percent per annum, i.e. more than three times the rate indicated in international data sets.

National income statistics, which in this context are untrustworthy, indicate a growth rate of only about one percent.  Contra Young, here is a much less positive perspective, excerpt:

Yet this is nothing like the required economic advancement built around an actual or dominant “middle-class” milieu as commonly and quite wrongly suggested.

Africa’s burgeoning demography will challenge this future. Subsistence economies remain its anchors, and the alleged “demographic dividend”, that some blithely portray as a “driver”, will mostly transform into one of rising unemployment and growing informalisation.

Those who observe the lack of significant gains in African agricultural productivity often prefer the negative interpretation.  Too many of the observed progress seems to come from mining wealth.  In a recent short essay, Michael Lipton sums it up:

1. Stop kidding ourselves. (a) Faster GDP growth in Africa since 2000 is mainly a mining boom, with dubious benefits. Staples yields (and labour productivity) have not reversed the dismal trends that Peter Timmer diagnosed two decades ago: big, credible rises are seen in only a few African countries (e.g. Rwanda, Ghana). The populous ones (Ethiopia, Nigeria, maybe Kenya, above all DR Congo) tell a sad tale.

That we don’t know who is right is perhaps the most interesting fact of all.

Is there a Peltzman effect from AIDS treatment in Africa?

Somewhat, it seems.  Plamen Nikolov, a job candidate from Harvard, reports (pdf):

AIDS treatment provides enormous mortality benets to infected individuals but because it immunologically insulates people from more risk-taking, it could, in theory, stir perverse behavioral responses. Therefore, the response of sexual behavior to AIDS treatment in Africa is an important input to predicting the path of the epidemic. Existing estimates from observational studies suggest limited behavioral response, but they fail to take into account possible differences across individuals seeking treatment. Using an encouragement design field experiment conducted in South Africa, I estimate behavioral responses subsequent to AIDS treatment. I find moderate negative responses to treatment for HIV + individuals and mixed results for HIV

South Africa’s gloomy economic present and future?

During the 2001-08 commodities boom, the world’s top 20 mining countries achieved an average mining growth rate of 5 per cent a year, but South Africa’s sector shrank by 1 per cent a year, according to the country’s Chamber of Mines. Only Venezuela, where leftwing president Hugo Chávez is nationalising large swatches of the mining industry, came close to matching that poor result.

…The reasons for the frustrated mood are numerous and vary according to the country’s rich basket of commodities. The decline is partly the result of the maturing nature of South Africa’s gold mines, which are getting deeper and more expensive to mine. Over the past 10 years annual production has halved to 192 tons. In 2008, the country was eclipsed by China as the world’s biggest gold producer, ending more than a century of South African dominance of the industry. Since then it has slipped to fifth place as Australia, the US and Russia have also overtaken South Africa.

Beyond gold, other factors are stymying the potential of the rest of the commodities sector. These include rising production costs, particularly labour and electricity, and infrastructure bottlenecks such as railway capacity for bulk commodities.

But…The most conspicuous cloud hanging over the industry has been an increasingly feisty debate about the nationalisation of mines, prompted by ever louder calls by Julius Malema, the radical leader of the ruling African National Congress’s Youth League, for the state to take control of the sector.

The story is here.  Here is Dani Rodrik, circa 2006, on the economic problems of South Africa (pdf), which seems to be deindustrializing.

My favorite things South Africa

Torr writes to me:

Please will you consider doing a “favorite things South Africa” on Marginal Revolution. I’m also curious: have you ever visited South Africa?

I have yet to go, but here is what I admire so far:

1. Visual artist (you can’t quite call him a painter): William Kentridge.  He is one of the contemporary artists who is both a realist and has a lot of the emotional power of the classics.  His extraordinary body of work spans film, drawings, prints, and mixed media.  Here are some images.

2. Home design: I am an admirer of the Ndebele, some photos of their colorful homes are here.  They are better represented in picture books than on the web.

3. Movies: I don’t know many.  I enjoyed The Gods Must be Crazy, even though some might find it slightly offensive.  Nonetheless I hand the prize to District 9 for its interesting take on ethnic politics, its deconstruction and mock of Afrikaaner settler myths, and its commentary on how South Africans view Zimbabwean immigrants to their country.

4. Movie, set in: Zulu, 1964 with Michael Caine.

5. Novels: My favorite Coetzee is Disgrace, though I like most of them very much, including the early Life and Times of Michael K and Waiting for the Barbarians and the later semi-autobiographical works.  Nadine Gordimer I find unreadable, call the fault mine.  Same with Alan Paton.  A dark horse pick is TrionfAgaat sits in my pile, waiting for the trip of the right length.

6. Music: Where to start?  Malanthini, for one.  As for mbqanga collections, The Indestructible Beat of Soweto series is consistently excellent.  Singing in an Open Space, Zulu Rhythm and Harmony 1962-1982 is a favorite.  Random gospel and jazz collections often repay the purchase price and in general random CD purchases in these areas bring high expected returns.

7. Economists: Ludwig Lachmann was an early teacher of mine and I owe him my interest in post Keynesianism and also financial fragility hypotheses.  G.F Thirlby remains underrated.  W.H. Hutt was one of the most perceptive critics of Keynes and his insights still are not absorbed into the Keynesian mainstream.  His book on the economics of the colour bar remains a liberal classic.  Who am I forgetting?

The bottom line: There’s a lot here.  Here are previous MR posts about South Africa.

Structural Unemployment in South Africa

Unemployment in South Africa is now running at 24% overall with significantly higher rates for blacks.  A shift away from low-skill labor combined with minimum wages and strong trade unions, however, has meant that it is very difficult to lower wages and reduce unemployment.  From a very good piece in the NYTimes:

The sheriff arrived at the factory here to shut it down, part of a national enforcement drive against clothing manufacturers who violate the minimum wage. But women working on the factory floor – the supposed beneficiaries of the crackdown – clambered atop cutting tables and ironing boards to raise anguished cries against it…

Further complicating matters, just as poorly educated blacks surged into the labor force, the economy was shifting to more skills-intensive sectors like retail and financial services, while agriculture and mining, which had historically offered opportunities for common laborers, were in decline.

The country’s leaders invested heavily in schools, hoping the next generation would overcome the country’s racist legacy, but the failures of the post-apartheid education system have left many poor blacks unable to compete in an economy where accountants, engineers and managers are in high demand….

Last year, as South Africa’s economy contracted amid the global
financial crisis, unions negotiated wage increases that averaged 9.3
percent [inflation is 5.1%, AT]….

Eight months ago, Mr. Zuma proposed a wage subsidy
to encourage the hiring of young, inexperienced workers. But it ran
into vociferous opposition from Cosatu, the two-million-member trade
union federation that is part of the governing alliance [insiders v. outsiders, AT], which
contended that it would displace established workers.

Hat tip: Brandon Fuller.

Markets in everything Africa fact of the day

Desperate heroin users in a few African cities have begun engaging in a practice that is so dangerous it is almost unthinkable: they deliberately inject themselves with another addict’s blood, researchers say, in an effort to share the high or stave off the pangs of withdrawal.

The practice, called flashblood or sometimes flushblood, is not common, but has been reported in Dar es Salaam, Tanzania, on the island of Zanzibar and in Mombasa, Kenya.

It puts users at the highest possible risk of contracting AIDS and hepatitis.

Here is more, but perhaps that is all you need to know.  The pointer comes from Steve Silberman.

What do we know about South African fiscal stimulus?

Stuart Torr writes to me:

I've been reading many economics blogs since the start of the crisis (and well before) and I've listened to all the Econtalk podcasts on the crisis. Some of the skepticism comes from the projects not being "shovel ready" and taking too long to have a real stimulative impact. South Africa didn't have a banking crisis but we had a dramatic housing bubble (by far the most dramatic in the world in % terms from checking the back of "the Economist") and we did enter recession after the crisis hit. We also have massive investment in infrastructure because of the World Cup and those projects were only really getting going when the crisis hit. I'm sure there are technical reasons why this isn't relevant to the stimulus debate, but I've barely even seen it mentioned anywhere. Is it really that irrelevant?

Unemployment in South Africa had been 23.5 percent.  Yet, after the collapse and response, the unemployment rate is still rising and see also here for further information.  It's like trying to catch a falling knife, there is more information here

I don't know much about the South African economy, but I would think it is especially difficult to target many of the unemployed resources there.  There is weak infrastructure, many language groups, large distances, and a lack of political unity.

Here is one critique of what they are doing in South Africa with fiscal stimulus.  Here is a more positive treatment.

What do you all know about this case?

More good news about Africa

This time it is from Alwyn Young:

Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing in excess of 3 percent per annum, i.e. more than three times the rate indicated in international data sets.

I thank an MR commentator for the pointer.  Addendum: Link is now corrected.

African poverty is falling

Xavier Sala-i-Martin and Maxim Pinkovskiy report:

The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala-i-Martin (2009), we estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970-2006. We show that: (1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral-rich as well as mineral-poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below- or above-median slave exports per capita during the African slave trade.
Here is an ungated version.  This part is especially interesting:
Not only has poverty fallen in Africa as a whole, but this decline has been remarkably general across types of countries that the literature suggests should have different growth performances. In particular, poverty fell for both landlocked as well as coastal countries; for mineral rich as well as mineral poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below or above median slave exports per capita during the African slave trade. Hence, the substantial decline in poverty is not driven by any particular country or set of countries.