17 results
Preface
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp xiii-xvi
-
- Chapter
- Export citation
-
Summary
I have always been intrigued by the underlying reasons behind the stark differences between the rich and poor countries as well as that between rich and poor households, communities, towns and cities. I have been curious to understand why developed nations got wealthy and why poor nations lagged. As a young graduate I was very much involved with my country's industrialization efforts, especially the development of Nigeria's iron and steel and other industrial plants. The failure of these initiatives further heightened my curiosity and eventually led me to seek answers when I went off to pursue my doctorate degree at the Science and Technology Policy Studies Unit (SPRU), University of Sussex, in the United Kingdom. I wrote my thesis applying development economics framework on “Technological Capability Acquisition: The Steel Industry in Nigeria.” While my focus in the early days was on the technological dimension of industrial capability acquisition, I was always fascinated by the writings of Simon Kuznets and Arthur Lewis on structural change.
Several years later, working as a consultant for the United Nations Economic Commission for Africa (UNECA), I expressed my thoughts in a report as follows: “The industrial development process in the Twentieth Century is one in which backward countries and regions have employed extant technologies to overcome the wide gaps between them and the industrial forerunners. The key to the successful industrialization of countries that are now referred to ‘late- comers’ had been not only been willingness to imitate but also more importantly the will to learn” (UNECA 1997). In other words, technology transfer demands explicit investment on the part of the learner in order to acquire both formal and tacit knowledge. While the former is fairly easily acquired in the short term, the latter is the product of long- term learning- bydoing, expensive process of heuristics and the establishment of institutions of some sort that is a repository of institutional memory.
For the most part, African countries have neither redeemed their developmental promise nor fulfilled the great potential that natural resources and large deposit of minerals, petroleum and agricultural resources conferred. A number of African countries are endowed with a large population, a potential supply of skilled manpower and ready domestic market. Yet, despite the excitement over their economic potential at independence, most remain stuck in the low- income category.
Index
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 157-168
-
- Chapter
- Export citation
Foreword
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp ix-xii
-
- Chapter
- Export citation
-
Summary
This book makes very important contributions to the discourse of an important theoretical concept: the notion of structural transformation. It uses a rich data set and sound theoretical framing to explain the variety of ways in which structural transformation relates to employment, industrialization, productivity growth, urbanization and poverty reduction. It enriches the debate on how societies are transformed from agrarian economic structures to modern industrial structures, and more significantly the attainment of sustainable social and economic development.
Another important set of analytical findings coming out of this book is the establishment of an explicit relationship between the manufacturing capacities of nations and the eventual transition to high- value services. While the emergent Fourth Industrial Revolution seems to be blurring the boundaries of the three key sectors, namely, agriculture, industry and services, the author demonstrates the inevitable acquisition of manufacturing capacity as a necessary condition for sustainable structural transformation. Clearly, the rate of growth of manufacturing and value added does not just undergird economic growth; it is a strong prerequisite for mastering industrial agriculture and services sectors.
The book shows that while both agriculture and manufacturing value added (MVA) and exports are important drivers of real economic growth, Africa's participation in the global market of manufactures is negligible when compared to other developing countries. Its contribution to continental gross domestic product (GDP), which stands at 11 percent, represents lower ratios than those of other developing regions such as East Asia and Pacific (23 percent of GDP) or South Asia (16 percent of GDP) (African Economic Outlook, 2017).
Not surprisingly, the impact of MVA on real economic growth has been weaker than that of services in Africa. In other words, not only has industrialization not taken a firm root in the region, but sub- Saharan Africa has also been skipping the manufacturing phase of development. The central message of this book is that Africa is unlikely to witness shared and inclusive economic growth and development without industrialization.
Fortunately, over the last decade, industrialization has been back on Africa’s economic policy agenda. The leadership of the region understands the imperative of industrialization, with at least half of African countries having put industrialization policies in place. What these countries seem to understand is that for as long as they lack industrial capabilities, there will be no breaking away from the dependency on commodities.
5 - Pathway to Employment Creation
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 89-104
-
- Chapter
- Export citation
-
Summary
Introduction
The previous chapters articulate in detail the principles of ST and the implications for urbanization, industrialization and quality of life. This chapter sets out to describe the pathways to employment and the relationships between structural economic transformation and employment. Equally, the chapter demonstrates how this crucial relationship impacts development and growth for African economies. Employment is understood technically as a contractual relationship between two parties where one party works while the other pays for this work, resulting in opportunities for people to earn a living. In the grand scheme of things, employment results in economic development as it allocates the work force into sectors with the highest growth potential and productivity. Other than this, employment also creates the environment for social welfare to flourish; it enables a rise in the living standards and minimum wage employments, among others. Studying this relationship between ST and employments enables better understanding of the true long- and short- term causes of rural and urban unemployment.
Global unemployment has continued to rise particularly since the financial crisis, but the situation in Africa is of particular concern given its large percentage of youth. From AfDB (2016) data, one- third of the African youth are unemployed and discouraged, another third are vulnerably employed and only one in six are in wage employment. Africa has the fastest growing and most youthful population— with nearly 420 million people in Africa between 15 and 35 years of age; the youth face roughly double the unemployment rate of adults, with significant variation by country. This proportion of the region's population constitutes a significant asset if properly managed but a ticking socioeconomic time bomb if left undeveloped and unemployed in productive work.
Currently, unemployment constitutes a major socioeconomic challenge to the region. For instance, unemployment rate in South Africa rose to 27.6 percent in the first quarter of 2019 from 27.1 percent in the previous period. Nigeria also experienced an increasing rate of unemployment from 22.70 percent in the second quarter of 2018 to 23.10 percent by the end of the third quarter (Trading Economics, 2019b).
There is a clear connection between employment and economic growth although the growth- employment nexus varies considerably with economic structures and levels of development. For instance, while informal employment is strikingly extensive and widespread in many Asian and African cities, formal employment is more prevalent in advanced industrial economies.
List of Illustrations
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp vii-viii
-
- Chapter
- Export citation
6 - Pathways of Urban Living Standards
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 105-128
-
- Chapter
- Export citation
-
Summary
Introduction
Poverty reduction continues to be the central goal of the international development Agenda because poverty and inequality are not just manifestations of economic and industrial backwardness; they are sources of social tension and powerful sources of societal conflict and widespread mistrust between different groups. According to Adam Smith (2007), “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.” Therefore, poverty elimination was prioritized at the Millennium Summit debate as a key social development goal, it is also the capstone objective of the SDGs. Despite a significant reduction in the general poverty levels worldwide, about one billion of the world population lives under extreme poverty. The international target originally widely adopted in 2000 was to reduce by half the proportion of people living in extreme poverty by 2015. Despite concerted efforts at the highest level, the goal was met in some countries but remained a difficult challenge for many other countries. A new 2030 date has now been set arising from the post- 2015 Agenda debate (United Nations, 2013).
A study for the United Nations University World Institute for Development Economics Research (UNU- WIDER) (2006) concluded that “high levels of inequality (above a Gini coefficient of 0.40) negatively impacts growth, due to “incentive traps, erosion of social cohesion, social conflicts, (and) uncertain property rights.” Poverty has wide- ranging negative effects in all societies especially developing countries because, by their very nature of being less industrialized, African countries are characterized by laterally unintegrated production structures and fragmented markets that are weak relative to advanced industrial nations. Equally, governments in these countries are less effective in compensating through public policy for these weaknesses because the state itself lacks financial capacity. In other words, regardless of the level of development, poverty has a large destructive component associated with unequal opportunities, and this destructive inequality contributes to lower growth (Birdsall, 2006).
Resurgent Africa
- Structural Transformation in Sustainable Development
- Banji Oyelaran-Oyeyinka
-
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020
-
'Resurgent Africa: Structural Transformation in Sustainable Development' is a study of structural change dynamics in Africa and its effect on job creation, living standards and the efficiency of productive cities through manufacturing productivity growth that benefit the majority. Empirical data from selected African countries, including Nigeria, Ghana, South Africa, Kenya, Rwanda and Ethiopia, provides in-depth analysis and knowledge of the continent's diversified economies by establishing relationships between industrialization trends; rates of urbanization; and urban living standards, income growth and employment in Africa. The findings reveal unconventional pathways of structural change, patterns of jobless growth suggesting economic growth that does not necessarily lead to employment, dominance of services at the expense of manufacturing industry explaining the regress in Africa's industrial sector and occurrence of structural transformation without improvement in labour productivity. These are important concerns for Africa's long-term development leading to the conclusion that sustainable urbanization and industrialization are not only closely connected but also key drivers of economic change. The book includes recommendations for policymakers to adopt a new approach to development for a resurgent Africa.
Abbreviations
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp xvii-xviii
-
- Chapter
- Export citation
3 - Losing the Urban Advantage
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 51-70
-
- Chapter
- Export citation
-
Summary
Introduction
Urbanization is closely linked with the process of ST and industrialization. ST refers to the reallocation of economic activities across the three broad sectors (agriculture, manufacturing and services) that are associated with productivity increase and economic growth. As countries urbanize, their economies modernize toward highly productive sectors such as industries and manufacturing. The analysis of ST and productivity changes are key to understanding the mechanisms behind urbanization. Reversely, analyzing urbanization is essential to understand the causes of SC.
In traditional growth patterns, ST and urbanization are deeply interrelated. Both phenomena are characterized by the same movement of labor from the rural and agricultural sectors to the manufacturing and urban sectors. This process normally translates into higher productivity levels and overall economic growth. However, the observed lessons from developed countries does not seem to apply to all developing countries, where urbanization is often not accompanied by industrialization. The example of African countries is particularly striking. Africa's transformation trajectory is very dissimilar to the conventional pattern of growth whereby sustainable urbanization proceeds with transformation from agriculture to productive manufacturing. Contrarily, African cities are crowded with migrants from rural areas with little skill sets and mostly engaged in low- value services rather than high- value manufacturing.
Recent empirical evidence indicates that ST could occur without change in labor productivity, especially in the case of African economies. Most importantly, this situation is common in natural resource exporters (Jedwab et al., 2013). Many African countries tend to specialize in the export of natural resource, which constrain conventional transitions experienced in industrialized settings. Natural resource– exporting countries tend to urbanize without significantly increasing their GDP share of manufacturing output. It is worth noting that the most urbanized countries export natural resources: oil (Angola, Gabon and Nigeria), diamonds and/ or gold (Botswana, Liberia and South Africa). In these countries, urbanization takes place without significant change in the economic structure. A recent analysis looked at ST and productivity growth in eleven sub- Saharan countries during the past 50 years (McMillan et al., 2014). It suggests that the early postindependence period had brought an augmentation of manufacturing activities due to the reallocation of resources, resulting in economic growth. However, in the following period from the mid- 1970s to the 1980s, the process of SC attenuated.
Contents
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp v-vi
-
- Chapter
- Export citation
Frontmatter
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp i-iv
-
- Chapter
- Export citation
References
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 147-156
-
- Chapter
- Export citation
1 - Understanding the Pathways of Africa's Economies
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 11-26
-
- Chapter
- Export citation
-
Summary
Introduction
Africa's economic growth pathways are being shaped by three powerful drivers that are linked together in very complex ways, namely, industrialization, urbanization and ST. However, Africa's industrial evolution, as well as urbanization dynamics, tends to not follow conventional wisdom. While some countries are clearly skipping the industrial phase, with their economic growth being led by the services sector, others have deindustrialized over time. These three drivers in turn significantly influence and shape the speed and quantum of three highly desired outcomes, namely, economic growth, employment and living standards.
According to the African Development Bank (AfDB, 2019), economic growth in SSA was estimated at 2.3 percent for 2018. This was down from 2.5 percent in 2017, keeping economic growth below population growth for the fourth consecutive year. Although it was expected that regional growth would rebound to 2.8 percent in 2019, it remained below 3 percent since 2015 (World Bank, 2019). In 2016, when the continent's economic growth was projected to fall to 1.6 percent, non- oil producers recorded relatively strong GDP growth. The best- performing countries include Ethiopia, Rwanda, Côte d’Ivoire, Senegal and Tanzania. These countries escaped the volatility associated with the commodity crash and continued to grow at annual average growth rates of over 6 percent (World Bank, 2016).
The slowdown in aggregate economic performance has been a result of the weak performance of the region's largest economies, namely, Nigeria and South Africa, as their combined output is half that of the continent’s. This resulted from fall in oil prices from over $100 to less than $50 per barrel since mid- 2014, which affected Nigeria's GDP output combined with poor manufacturing output, due in large part to power outages, and in South Africa, the initial drop (which rebounded later) in mining and manufacturing output.
Clearly, poor diversification, especially in oil and mineral exporters in SSA, was a strong factor determining the evolutionary pathways of their growth. These countries have evolved as enclave economies in which factor endowments pattern the evolution of core institutions leading, for instance, to high- income inequalities, the rise of what one may describe as “consumption cities” where average income lags far behind cost of living. Enclave economies are created by a combination of local political interest and foreign investment in oil and mineral resources with a strong export orientation.
Introduction
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 1-10
-
- Chapter
- Export citation
-
Summary
African economies have recorded significant growth in output; however, growth has not been enough to lift its teeming population out of poverty, stem growing unemployment and bridge the significant income divide within cities and between rural and urban areas. Jobless growth has resulted in poor standard of living even in the face of relatively impressive GDP growth. To understand the dynamics of recent development in Africa, this book draws on Arthur Lewis's (1954) “dual” thesis as well as recent scholarship on structural change (SC) (McMillan and Rodrik , 2011), which posits that where modern and traditional sectors coexist as in the case of African countries, there is the potential for capital and labor to move from low- productivity to highproductivity sectors through the process of SC that fuels economic growth and raises productivity. The rise in productivity and growth through these movements results in resource allocation efficiency gains, even when withinsector productivity is not changing significantly.
Central to discussions on the nature of structural transformation (ST) of economies is the rapid rate of urbanization fueled by a combination of natural birth within cities and migration of rural dwellers to urban centers. Conventional wisdom suggests that industrialization and urbanization proceed in tandem; however, when this takes place in the absence of industrialization and manufacturing production, large swathes of cities are turned into slums while informal economies with little prospects for productivity growth proliferate. Additionally, African economies have been characterized by jobless growth. Urbanization has produced a mixture of wealth conjoining with a conundrum of sprawls, slums and sickness. Africa's current population stands at close to 1.2 billion, and will reach about 1.689 billion (16 percent of world total) by 2030 if we assume a growth rate ranging between 2.0 percent and 2.5 percent. The driver of the rapid changes is high fertility in countries, such as Nigeria, the United Republic of Tanzania, Democratic Republic of the Congo (DRC), Ethiopia and Uganda, whose contribution to total growth is quite significant. In addition is the rapid decline in urban mortality rates and increased life expectancy that complement equally rural– urban migration, thereby fueling urban growth.
4 - Pathways to Productivity Growth in Africa
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 71-88
-
- Chapter
- Export citation
-
Summary
Introduction
Productivity is the measure of production efficiency, such as labor and capital and how it is being used in an economy to produce a given level of output. It is considered a key source of economic growth and competitiveness, and as such serve as the basis for international comparisons and country- performance assessments (Krugman, 1994). At the industry level, productivity growth is very important as it allows an industry to compete with other sectors of the economy for resources (labor, capital and raw materials) and maintain international competitiveness. There are different measures of productivity and the choice between them depends either on the purpose of the productivity measurement and/ or data availability.
Productivity measures include GDP per hour worked and multifactor productivity (MFP), also known as total factor productivity (TFP), which measures the residual growth that cannot be explained by the rate of change in the services of labor, capital and intermediate outputs. MFP is often interpreted as the contribution to economic growth made by factors such as technical and organizational innovation (OECD, 2008). In development economics, labor productivity is one of the major determinants of productivity growth. It measures economic growth and output of a country and has strong implications for economic growth (Heshmati and Rashidghalam, 2016).
Continuous increase in labor productivity is a critical factor for development while ST and skills development are essential for increasing labor productivity. Over time, developed nations have been able to diversify away from low- productivity sectors (agriculture and traditional products) and, as labor and other resources move from agriculture into modern economic activities, overall productivity rises and incomes expand (McMillan et al., 2014).
Empirical evidence in this book confirm that productivity increase could be attributed to ST and varying factors at individual level (health, education, skills and experience), at enterprise level (management, investment in plant and equipment, occupational safety and health) and at national level (national macroeconomic and competition policies, economic growth strategies, policies for business environment, level of investment in public infrastructure and education).
In Africa, despite the unprecedented high, sustained economic growth witnessed in the last two decades, African states have been experiencing productivity- reducing SC (Rodrik and McMillan, 2011). On average, a firm in Africa produces about $3,000 of output per worker compared to China, Indonesia, Malaysia and Thailand where firms produces $6,500 of output per worker.
7 - Conclusions and Recommendations: Mapping Africa’s Growth Pathways
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 129-146
-
- Chapter
- Export citation
-
Summary
Introduction
This concluding chapter serves to summarize the findings of the various chapters. The main conclusion that can be drawn is that when countries engage with policies and practices that deepen ST in ways that foster economic and industrial diversification, the broad outcome is quantitative improvements in TFP. This in turn lead to socioeconomic development and a rise in living standards. In this book, we analyze the relationships between SC, industrialization, urbanization and the resulting socioeconomic outcomes in African countries.
The central theoretical underpinning of the book is ST while the analytical subthemes, making up the book, can be identified as key variables of productivity growth, industrialization, urbanization, poverty and employment. When capital and labor move from low- productivity to high- productivity sectors, SC fuels economic growth and raises productivity. African countries with “dual” economies, this being both modern and traditional sectors, have the potential to significantly increase their productivity and growth through these movements and see resulting gains in resource allocation efficiency, even when within-sector productivity is not changing much. The book employs labor productivity as the measure of productivity, because TFP could not be used due to the lack of data.
The main sources of productivity growth are either in the main the adoption of advanced technologies or upgradation of skill of the workforce. Both inputs are expected to result in higher productivity. In other words, productivity growth could be treated as an outcome of technology transfer or the development of endogenous skills through training and learning.
In the narrative of ST, two dynamics take place: “the rise of new industries (i.e. economic diversification) and the movement of resources from traditional industries to these newer ones. Without the first, there is little that propels the economy forward. Without the second, productivity gains don't diffuse in the rest of the economy.” The study is concerned with understanding SC dynamics and the resulting effects on job creation, living standards and the efficiency of productive cities through manufacturing productivity growth that benefit majority of citizens. We did not treat SC as an endogenous factor as it has bidirectional relationship with many indicators of economic development but also has unidirectional relationship with few. For instance, poverty is expected to influence SC and not the other way around.
2 - Growth Pathway: Skipping the Industrial Phase in Africa
- Banji Oyelaran-Oyeyinka
-
- Book:
- Resurgent Africa
- Published by:
- Anthem Press
- Published online:
- 30 April 2020
- Print publication:
- 31 March 2020, pp 27-50
-
- Chapter
- Export citation
-
Summary
Introduction
Attempts at industrialization by all regions of the world hacks back to the success first of Great Britain, followed by Western Europe and thereafter North America during the nineteenth and early twentieth centuries. The academic literature seems to agree that although the early industrializing countries started out at different stages of growth, they followed more or less a similar format of change that led to their transformation. Marked by the shift from a subsistence/ agrarian economy toward more industrialized/ mechanized modes of production, the hallmarks of industrialization include technological advancement, widespread investments into industrial infrastructure and a dynamic movement of labor from agriculture into the manufacturing sector (Lewis, 1978; Romer, 1986; Todaro, 1989).
Broad consensus exists that a dynamic process of industrialization is fundamental to the overall economic development of countries, because it promotes growth- enhancing structural change, which is the gradual movement of labor and other resources from agriculture to manufacturing, as accompanied by increases in productivity. Manufacturing is central to ST because the degree of industrialization is related to the per capita income of countries. Given that productivity is higher in manufacturing than in agriculture, the transfer of resources into manufacturing should normally provide a basis for higher rates of productivity- induced growth structures. The nexus of industrial growth and urbanization is therefore vital to our understanding of economic growth and living standards in modern cities.
Typically, rural economies make far less demand on infrastructure, but in contradistinction to the agriculture- dominated rural societies, urban industrial settings demand more but yields higher development dividends because manufacturing pathway is a faster road to capital accumulation. This is particularly so in spatially concentrated manufacturing (cluster agglomeration) compared with spatially dispersed agricultural activities. Capital intensity is equally high for sectors linked closely to urban manufacturing such as mining, utilities, construction and transport and much lower in agriculture and services. Capital accumulation is one of the aggregate sources of growth; therefore, as the share of manufacturing rises, aggregate growth contribution increases.
Urbanization in developing countries typically is a mixture of wealth conjoining with a conundrum of sprawls, slums and sickness. Africa's current population stands at close to 1.2 billion, and will reach about 1.689 billion (16 percent of world total) by 2030 if we assume a growth rate of between 2.0 percent and 2.5 percent.