Paper - Initiative for Policy Dialogue

8
reduction of poverty. But the stagnation in agriculture is not a surprise, given the low
levels of investment. The level of irrigation remains far below that of Asia: only 4
percent of arable and permanent cropland, compared with 39 percent in South Asia and
29 percent in East Asia. Relatedly fertilizer use of 13 kg per hectare in Africa contrasts
with 90 kg in South Asia and 190 kg in East Asia. 7 Africa is still to benefit from a “green
revolution.”
Whilst it is difficult to measure learning and the acquisition of technology
directly 8 --what we argue is central to sustained growth-- all these trends suggest there has
been precious little of that. Moreover, the global crisis that broke out in 2008 highlights
the vulnerabilities of commodity-dependent African economies and the importance of
breaking out of the “structural stagnation” of Africa.
There are, of course, a myriad of country-specific factors that affect economic
performance. Learning lessons of success and failure involves not merely documenting
and interpreting policy lessons but adapting them to particular country contexts. This is as
true in Africa as it is in East Asia, where the mix of policies varied considerably across
countries and over time (as emphasized, for example in the contributions of Hanatani and
Watanabe and of Ohno and Ohno). There are controversies in interpreting lessons and on
the extent or perhaps even the need to reform the reforms.
There is, for instance, a broad consensus that some of the policies pursued by
many African states contributed to the problems facing many of the countries by the late
70s or early 80s: highly overvalued exchange rates, macroeconomic instability, irrational
and extreme protection, un-or-counter productive rent seeking, bloated bureaucracies and
public sectors, and dysfunctional financial sectors became all too common. Frequently,
extensive and excessive interventions were undertaken without regard for the governance
capacity to design and implement them effectively.
To the extent that the Africa version of the “Washington Consensus” served to
highlight these deficiencies and tilt the balance towards the market, it served a useful
purpose. But it went too far in the other direction. From a neglect of government failure
the policy pendulum swung too far to the other extreme of neglect of market failure. As
discussed below (especially in section V), neither economic theory nor history provides a
case for unfettered markets. The results of many of the reforms and conditionalities in
Africa were that when government programs were cut back, markets often did not arise to
fill the gaps; when regulations were stripped back market performance often did not
improve in the ways predicted. In many cases, welfare was reduced, growth impeded,
and poverty increased.
7 Refers to 2002, whilst in 2000 the area under cereals using improved varieties was 24 percenr in Africa,
77 percent in South Asia and 85 percent in East Asia. All these data are from World Bank (2007), World
Development Report 2008: Agriculture for Development (Washington DC).
8 Total factor productivity growth (TFPG) is one indicator that could be used in principle, but in practice it
is fraught with serious problems of data, especially in least developed countries and also sensitive to the
specification of the production function. It is highly doubtful that reasonably reliable estimates of TFPG
can be made in most, if any, African countries (with the possible exception of South Africa).