Autumn 2012

The Key to Africa’s Growth

THE SOURCE: “Can Africa Industrialize?” by John Page, in Journal of African Economies (supplement), Jan. 2012.

Africa isn’t known for its smokestacks. After a spurt of industrial growth following decolonization, industry declined and workers streamed into farming and other less productive sectors. (South Africa and Mauritius are two exceptions.) Today, manufacturing accounts for a smaller share of the average low-income African country’s gross domestic product than it did in 1985. But no other sector can provide the same economic dynamism. Does Africa stand any chance of becoming an industrialized, middle-income continent in the near future?

Yes—though to do so, it will need to double down on exports, argues economist John Page of the Brookings Institution. It has a long way to go: Manufacturing’s share of output and employment is much smaller than it was in China, India, and Indonesia when they reached the lower-middle income status Africa now aspires to. And yet, while the continent faces a more competitive global environment for exports than East Asia and China did when they reinvented themselves as the “world’s factory” in the 1980s and ’90s, climbing wages and growing consumption in these areas offer an opening for Africa.

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