As the rest of the world is still trying to resurrect itself from economic crisis, a new economic player is beginning to emerge. Africa is beginning to prove itself on an international stage, becoming an increasingly important force in the world economy. Its growing economic significance will have a sizable impact on the status quo, but only if this growth can be maintained.
In 2011, six of the ten fastest growing countries in the world were in Africa. Inflation has fallen from an average of 15 percent in 2000 to 8 percent today [1]. The economies of many African countries appear to be expanding, which is more than can be said of many industrialized nations. As Stephen Jennings of Renaissance Capital said, Africa “is the only region in the world where growth is accelerating” [2]. GDP growth has averaged 4.9 percent from 2000 to 2008, a substantial growth, especially for a continent where many countries have been stagnant for years [2]. There is even some speculation that Africa will be the new Asia, as development could lift hundreds of millions of people out of poverty.
The comparison to Asia is particularly poignant. Japan aside, many now dominant Asian economies were barely beginning to emerge thirty years ago. In reducing child mortality, increasing levels of education, and strengthening infrastructure, Asian countries experienced rapid development, becoming important economic players today. For example, Asia features 2-3 of the BRICS nations, the new leading economies of the world (India, China, and depending on your definition of Asia, Russia).
African nations have apparently learned from the example of Asia in targeting resources towards development. Many have, however, also been dependent on Asian nations to finance this growth – China in particular. The Chinese are notorious for investing heavily in African infrastructure development projects, especially in Western Africa. The motives behind these acts of assistance are somewhat questionable, yet they have definitely contributed to facilitating African growth. As China is the number one trading partner with the continent, this seems to be at least superficially beneficial to both sides [3].
Similarly contributing to this newfound growth is the recent reversal in the storied African Brain Drain. Educated Africans are increasingly seeing employment and innovation opportunities in their homelands, and thus the exodus of the educated to Europe and the USA has diminished significantly [4]. This retention of brain power gives Africa nations a better platform from which to develop.
While all these indicators are very promising, I cannot help but be skeptical. Africa as a continent has fared extremely well in recent years in terms of economic development, but the vast majority of that development has occurred in very few countries; Nigeria, for example, has experienced incredible growth. Meanwhile, countries like Ethiopia have had great famines and are struggling more than ever before. It is for this diversity of experiences that I object to the lumping together of the entire continent. Just as the economies of Germany, Italy, Spain, and Sweden are entirely different, so are those of Botswana, Senegal, Somalia, and Tunisia. Instead of examining these nations as a continent, a regional analysis of growth would better represent the struggles and triumphs being experienced in Africa today.
Continued growth will not come easily. Even though some researchers feel that the continent is poised to continue this trajectory, a simple fall in commodity prices could yield disaster for many countries. Similarly, as developed nations continue to pull themselves out of financial disasters, African commodities and exports will face increased competition as the cost of imports will rise. Ultimately, overcoming poverty on the African continent is going to take much more than a few years of growth. It will require governmental and societal change, something that has been slow-coming in Africa.
Sources:
[2] http://www.nytimes.com/2012/10/19/world/africa/19iht-letter19.html?ref=africa&_r=0
[3] http://72.167.255.126/index.php?sid=0&aid=228&dir=2012/August/Monday6
[Image Credit: http://www.prco.com/uk/destinations-pr/southern-africa-a-diamond-mine-for-hotel-investors/]
