Nothing presented so far is unique to Africa. Colonialism and it aftermaths is a global phenomena that affects every continient. Politial and Military Intervention by western powers has been seen throughout the world. Parasitic governments afflict every nation, yet africa has lagged behing everyother region of the world for centuries. There has to be more to the story.
You are confusing the consequence for the cause.
Poverty causes them to have poor nutrition, sanitary conditions, health care, and therefor have a lower life expectancy, not the other way around (although parent’s dying early has a detrimental effect for sure).
In London, England in the year 1800, life expectancy was around 25 years old (and around 30 years old in france). That didn’t prevent them from having the industrial revolution and rapidly raising their life expectancy.
Because of all the technology produced by the West, it should be even easier for Africans to raise themselves out of poverty than it was for Europeans, but what’s missing is the institution of private property, and freedom from the state, which are essential to entrepreneurial investment.
That was mostly caused by infant mortality. People didn’t drop dead at 25 years old.
Dare I mention that Ghana, Botswanaland, Somalia,.etc are still fairly well progressing nations?
There are parts which are relatively well off and parts which are not. So some good initiatives by people have allowed those respective nations to prosper in their own way, although not as much as the rest of the world. The rest are aggravated even further by oppressive governments.
So if nations with good people like Ghana,.etc are still prospering in their own way, but are still behind the rest of the world, I can only come back to the original answer that geographical and demographic hindrances are still at play. But they only hold back these nations so much.
We are homo sapiens and it is in our nature to DO SOMETHING. When we decide to shoot ourselves in the foot, we disappear completely, but otherwise we are always inclined to do something at the very least. Even Africans can and will prosper, and I am sure that within even the next ten years, better portions of Africa will show large towns with monorails and earthquake proof glass fronted buildings all over them, and some of them are already more or less coming there.
In mises words: “The Anti-capitalistic mentality”. There is not much more to it.
Capital accumulation per capita and valuable natural resources of land, although the latter is practically useless without the former. With today’s capital intensive methods of production, the former is always the primary factor.
The rest of the story is just to devise a theory with respect to why there is more capital accumulation in some places relative to other places. The causes will always be political mischief (current and historic) and all those who ignorantly support it.
for example:
You’re crazy if you think that the increase in production in America over the last 200 years is attributable to capital accumulation. No doubt, that plays a part in the increase in per capita income, but analogous to the case of the developing country we would see a huge decrease in the return on capital, we haven’t seen such huge decreases in interest rates.
Going back to the return on capital in developing countries, the risk premium you mentioned would increase, not decrease, the potential return on capital. Even with this risk premium we’re not seeing interest rates anywhere close to what you would expect if capital were the cause of the differences in incomes (and if we were, you can be sure that capital would flow to these developing countries because no government has ever been so predatory as to wipe out the potential profits to be made).
No, clearly there must be something else that accounts for the increase in living standards and per capita income. My vote goes towards technology, Solow agrees.
But they have these machines in Africa, read the Easterly book I cited. I left my copy on the plane so I can’t actually reproduce his examples here. But there are plenty of poor nations that have plenty of physical capital, natural resources and labour. Yet, somehow these nations aren’t developing at the rate that the capital fundamentalists (his term, not mine) would expect.
To repeat the central message of The Elusive Quest for Growth “incentives matter”.
To the OP, you mention natural resources. In fact, outside of the context of private property and the rule of law we might expect a negative correlation between natural resources and development, know as the natural resource curse.
You are correct, there are most definitely parts of Africa that doing well when compared to other parts of Africa. But when put on the global scale they lag behind the rest of the world and in some cases falling futher behind. The geographical and demographic hindrances are definitely a factor, however they are a factor no matter where you go. I have always found these arguements lacking, especially considering Africa lagging behind is not a recent or modern phenomenon.
I hope this is the case.
In the grand scheme of things, it really is a recent phenomena. In fact, the growth of the western world in the last few hundred years has really been a one off in terms of human history.
Btw, by return on capital, you mean the interest rate?
Your argument sounds very Ricardian, where the ‘return on capita’ would fall to 0 eventually with an ever large capital stock.
Mises, Rothbard, Hoppe, etc.. have all shown that this is plainly false, the interest rate depends on the time preference rate, not on the capital stock.
What is true, though, is that some capital good would be more productive (yield a higher price) in some places where capital is low compared to labor than the opposite.
Anyhow, I’d be very interested to know what you attribute the increase in the standard of living in america over the last 200 years, since you qualify attributing it to capital and division of labor as “crazy”.
Technology? That’s the typical economically illiterate answer, and is of course wrong, since technology is available to every poor countries (i.e. the know-how to do things, they don’t need to re-invent the weel), but what prevent them from benefiting from technology, is the capital that they lack.
If all you know is Solow, then no wonder you can’t figure out what’s wrong with Africa.
One can’t understand what makes poor countries stay poor without a sound capital theory.
Capital accumulation + increased population with skills sets that adapt to the economy is what lead to all the economic advancement over the last 200 years in the US.
I’m having trouble making sense of this sentence (a little ambiguity in there), but I’ll chime in about what crosses my mind when I think about how a lack of capital formation is keeping Africa poor:
The lack of skill in impoverished areas, and lack of ability to use and maintain sufficiently advanced capital will actually make the advanced capital get a better return on investment in a developed nation.
Giving Texans a microprocessor development and manufacturing center will yield greater returns than one placed in the Congo, for obvious reasons. That’s why people don’t send such capital to impoverished parts of the world.
Now if you can guarantee that a sweatshop won’t get destroyed in the Congo.. the returns on investment for that might be greater than setting one up in New York.
But if some people in some parts of the world are consistently hostile to capital, how will they realize a better standard of living?
I only have a basic knowledge of African history and what I do know may be outdated. But Africa had brief periods of advanced civilization on par with Roman, Persian, or Chinese civilizaton centuries ago. However, there was little continuity and these civilizations short lived. Certainly societies in around the rest of the world went through these cycles, but in the rest of the world the collapses didnt return those societies to square one, where as in Africa it seems each cycle was almost a start from scratch.
Please correct me if I am mistaken.
Do they have the same number of such machines per head as in the US for example?
You don’t expect me to read an entire book now in order to validate your claim. What you are suggesting (or perhaps the book is) seems to be economically impossible. Machines need to be financed. Nobody would maintain and invest in these machines if they were just sitting idle or even operated at below optimal levels so that they could not justify their costs. If you or the book cannot offer any logical explanations, then most likely the book makes economically unsound claims.
- Yes, there was very high infant mortality, but so is in Africa today. African countries today varies from 100 to 200 infant deaths per 1000 (with Zimbabwe at 260).
I found some statistics that quote infant mortality in the US (for whites) was at 216.8 per 1000 in 1850 (when life expectancy was 39.5 years old for whites).
So it was something comparable to today’s Africa.
- Life expectancy in Europe in 1800 was much lower than today in Africa, from 10 to 15 years lower than the poorest African countries.
Unless you come up with some statistics proving your case, life expectancy has to be completely excluded as a reason for Africa’s lasting poverty.
I’m following this captivating thread with great interest.
At some point, a link was posted to Ron Paul’s explanation of why Africa is messed up.
I sort of lost the jungle for the trees, so could someone tell me please:
Do you think his explanation is flawed? If so, why, and what is the real or fuller explanation?
He carries a lot of credibilty to me, so my default is to accept his version.
Oh, something else, check out this source:
That quotes infant mortality rates in England at around 160 per 1000 in the year 1800, which is actually very close to the average for sub-saharan african countries today.
I’m sure.
Well since 1955 the population of Africa has quadrupled. So the image of starvation at least is totally misplaced. Starvation is a problem for only a tiny fraction of the populace and it only happens when it is brought on by some other disaster like war, locust or a record breaking drought.
Regarding this, are you basically trying to say that under some conditions being too rich in natural resources is a bad thing? I can’t imagine how it could be, unless we were assuming said area was surrounded by more advanced neighbors who weren’t averse to colonizing it. Does the “natural resource curse” have any relation to colonialism and possibly even the mercantilism that accompanied it in Europe’s own history?
Regarding arguments for the geographic factor: no offense to those who offered, but I find these arguments more or less untenable. There are plenty of areas in the world that are completely inhospitable to travel and communication which, although daunting to surmount at first, were eventually taken care of. Greece for one was more fractured and fragmented than Africa. Also, if you look at the entire world, you could say that the Atlantic and Pacific Oceans are ridiculously inhospitable barriers to transportation and communication, yet they are still routinely traversed with relative ease in global markets. I still get to drive my Japanese cars! [:D] Plus, the difficulty in overcoming the oceans themselves don’t appear to be responsible for the relative poverty of any nation in the world (that I can think of).
Regarding the Dr. Paul link which basically asserts that foreign aid is the cause of continued African poverty: what would be the repercussions of withdrawing all foreign aid to these dictators? Would institutions we’re familiar with like private property and the rule of law find more fertile soil to take root in? (Yes, I know many of us might find the “rule of law” a bit ironic here [;)])
If its only a problem for a fraction of the population, and most of Africa can feed itself, then how come neighboring countries can’t supply the increased demand for food through the normal market means? It seems to me that if you have people campaigning for donations halfway across the world, you have some sort of distribution or production problem. I guess this would make sense if all of Africa was at the subsistence level, but I doubt that is the case. As long as some of the food producers had surpluses earmarked for foreign export, they could easily make a tidier profit selling to a high demand area. But I guess that would only work if the potential buyers had money, which … maybe they don’t? And if they don’t, and only foreign donations would solve the problem, then aren’t we basically saying that no one is charitable enough in Africa to help out other Africans?
I mean, are the mechanisms preventing all of this really so intrusive and backwards that markets are barely able to function normally in most African countries?