AFRICA at a Fork in the Road TAKING OFF OR DISAPPOINTMENT ONCE AGAIN? Edited by Ernesto Zedillo Olivier Cattaneo Haynie Wheeler Yale Center for the Study of Globalization Africa at a Fork in the Road: Taking Off or Disappointment Once Again? A Yale Center for the Study of Globalization eBook Edited by Ernesto Zedillo Olivier Cattaneo Haynie Wheeler Betts House 393 Prospect Street New Haven, CT 06511 USA Tel: (203) 432-1900 Email: [email protected] Web: www.ycsg.yale.edu ISBN 978-0-9779922-1-8 © Yale Center for the Study of Globalization, 2015 The papers contained in this book are based on presentations from the conference Africa at a Fork in the Road: Taking Off or Disappointment Once Again?, organized by the Yale Center for the Study of Globalization at Yale University in New Haven, Connecticut on April 14 and 15, 2014. The book was made possible by generous support from the Rockefeller Foundation. Yale Center for the Study of Globalization The Yale Center for the Study of Globalization (YCSG) was established in 2001 to enhance understanding of this fundamental process and to promote exchanges of information and ideas about globalization between Yale and the policy world. The Center is devoted to examining the impact of our increasingly integrated world on individuals, communities, and nations. Globalization presents challenges and opportunities. The Center’s purpose is to support the creation and dissemination of ideas for seizing the opportunities and overcoming the challenges. It is particularly focused on practical policies to enable the world’s poorest and weakest citizens to share in the benefits brought by globalization. It also explores solutions to problems that, even if they do not result directly from integration, are global in nature, and can therefore be effectively addressed only through international cooperation. In addition to drawing on the intellectual resources within the Yale community, the Center actively collaborates with institutions and individuals across the globe. Contents Acknowledgements 9 Preamble: Africa in Global Context: Change and Challenges 13 James Wolfensohn 1. Overview 19 Ernesto Zedillo Part I: Interpreting Africa’s Recent Record 37 2. Africa’s Policy Choices in an Era of Rapid Growth 39 Donald Kaberuka 3. Industrialization: The Good Road Ahead 45 Carlos Lopes 4. Reconciling Two Views of Africa’s Economic Boom 53 Shantayanan Devarajan Part II: Why Performance Matters: The Challenge of Inclusive Growth 61 5. How Inclusive is the Present Growth Pattern in Sub-Saharan Africa? 63 Erik Thorbecke 6. Inclusive Growth in Africa: Current Performance and Prospects 87 Mthuli Ncube 7. Productivity, Jobs, and Growth in Africa: Six Pieces of the Puzzle 121 Vijaya Ramachandran 8. Avoiding an African Spring: Confronting Africa’s “Employment Problem” 133 John Page 5 Yale Center for the Study of Globalization 9. Africa’s Jobs Challenge 145 Haroon Bhorat and Karmen Naidoo 10. The Informal Sector, Employment, and Economic Growth: Recommendations for Effective Policies 163 Nancy Benjamin, Stephen Golub, and Ahmadou Aly Mbaye Part III: The Governance Factor 179 11. Democratic Governance in Africa: Misconceptions and Opportunities 181 Leonard Wantchekon 12. The Political Origins of Africa’s Economic Revival 189 Robert H. Bates and Steven Block 13. Evidence-based Reflections on Natural Resource Governance and Corruption in Africa 239 Daniel Kaufmann 14. Reflections on Corruption in Africa: Shifting Standards and Challenges 261 Ian Shapiro and Adira Levine 15. To Maintain its Forward Momentum, Africa Needs Bold Leadership 271 Ernest Aryeetey Part IV: New Norms, New Opportunities: Africa in a Changing World 277 16. Global Value Chains and “Servicification” in Africa 279 Olivier Cattaneo 17. Better Global Governance for a Stronger Africa: A New Era, A New Strategy 315 Léonce Ndikumana 18. China-Africa Economic Cooperation: Dimensions, Changes, Expectations 331 Deborah Brautigam 19. The Role of Aid in a Changing Africa 341 Stefan Dercon and Nick Lea 6 Africa at a Fork in the Road: Taking Off or disappointment Once Again? Part V: Shaping Africa’s Future 353 20. Actors of Change in Africa: Human Capital and Markets 355 Yaw Nyarko 21. Past the Resource Curse: The “New Normal” of African Economics and Politics 365 Paul Acquah 22. Can Africa Move from Resource Dependence to Structural Transformation? 373 Adam El Hiraika and John Robert Sloan 23. Foreign Direct Investment, Natural Resources, and Employment in Sub-Saharan Africa 395 Elizabeth Asiedu, Komla Dzigbede, and Akwasi Nti-Addae 24. Tanzania: Turning Natural Gas into Sustained Growth Christopher Adam 415 25. Feeding Africa’s Growing Population 435 John M. Omiti and Nancy M. Laibuni 26. Taking Stock of Africa’s Green (Shoot) Revolution 449 John W. McArthur 27. Smallholders Hold the Keys to Africa’s Food and Nutrition Security 473 Sam Dryden 28. Financial Markets, Investment, and Productivity in African Agriculture 485 Christopher Udry 29. Towards Sustainability: Predictors of Growth Reversals in Africa 495 Jacob Oduor and Hodkinson Brennan Conference-Participant Contributors’ Biographical Information 519 7 Acknowledgements This volume is the product of a conference hosted by the Yale Center for the Study of Globalization in April of 2014 to assess the key development opportunities and challenges of Africa. The conference brought together an extremely talented and knowledgeable group of academics, practitioners, and policymakers from Africa, the U.S. and Europe, with the objective of analyzing the sustainability of Africa’s current trajectory, exploring which policies and practices have proven most effective throughout the region, and discussing what needs to be done to keep Africa growing and address more effectively the acute poverty and human development problems that persist in some countries on that continent. Hence the importance of convening a group as distinguished as the one we were able to bring together to debate the challenges, opportunities and predicaments of Africa’s development over the course of two days at Yale. Our forum to focus on Africa’s development was not our first such gathering. It was the third in a series of international forums, or colloquia, to discuss in depth key aspects of the economic evolution of some of the emerging players in the global economy. Having held two colloquia on Latin America’s future growth and develop- ment, the most recent in the spring of 2013, we turned our attention to Africa and plans proceeded apace to undertake a serious discussion of that continent’s eco- nomic growth and development for, among other topics, its prospective contribution to the size of the global economy, and more importantly for its consequences in addressing what is a significant part of the global poverty problem. In the meantime, a serendipitous occurrence took place at Yale when our univer- sity’s new president, Peter Salovey, was inaugurated in the fall of 2013. One of 9 Yale Center for the Study of Globalization the key points of the inaugural address was when President Salovey announced that “With the growing influence of the African continent on the world economy, as well as increased migration to, from, and within Africa, this is the moment to bring scholarship and teaching about Africa at Yale into sharper focus.” With these well- received comments, we knew that our conference was coming at a propitious time in the life of our University. This volume contains 30 papers submitted by the participants in follow-up to their presentations at the conference. The papers, for the purposes of this e-volume, have not been peer reviewed, nor did the editors require that the papers be of similar length, as is sometimes done in such volumes. The papers are the product of our conference proceedings. The scholars and practitioners who produced the chapters that follow are some of the most thoughtful, skillful, and effective voices commenting today on African development in all its many aspects. We wish to express extensive gratitude to all of them for the time and effort they have given to prepare their papers for this publication. They have kindly and patiently put up with our many communications and have produced what we are certain will be an extremely useful volume. All of us at the Yale Center for the Study of Globalization are indebted to Olivier Cattaneo, also a participant and paper contributor, for helping us to develop the structure, organizing the content of the conference, and doing the initial editing of the submitted papers. We would also like to thank Rachel Weaving whose editing skills and talent for turning a set of papers into a book are remarkable. It is always a pleasure to work with such a professional. Our Center’s Deputy Director, Haynie Wheeler, who began working on this project at the initial idea stage, was in charge of organizing the conference and galvanizing authors to produce their submissions in a timely fashion, and she helped throughout the editing process. She performed all these tasks with her usual grace and efficiency. The Rockefeller Foundation provided the primary financial support for the confer- ence, and for that we extend our most sincere appreciation to President Judith Rodin and her colleagues. We also warmly and sincerely thank Mr. Mamadou Biteye, the 10 Africa at a Fork in the Road: Taking Off or Disappointment Once Again? foundation’s Managing Director for Africa, who was enthusiastic, extremely encour- aging, and helpful to the overall enterprise every step of the way. The Center’s other generous supporters of this conference, to whom we owe very special thanks, are the William and Flora Hewlett Foundation, Banco Santander, and the Edward J. and Dorothy Clarke Kempf Fund. Ernesto Zedillo Director, Yale Center for the Study of Globalization 11 Preamble The first thing to understand about Africa is that Africa is not monolithic. Africa is many Africas—in terms of language, of country size and stage of development.