Cracking the Code

Unlocking  Africa's Secret to Wealth

In the April edition (no. 505) of the New African there is a fascinating article exploring one dimension of why Africa has ostensibly not been able to generate wealth comparable to other nations and why it has languished in the global economy.

Author Osei Boateng notes, " History shows that no country has ever become rich by exporting foodstuffs and raw materials without also having an industrial sector and in modern terms, an advanced service sector. The more a country specializes in the production of raw materials the poorer it becomes. But this is a lesson Africa has still not learned. In the 19th century, the saying in the USA was: "Don't do as the English tell you to do, do as the English did." Our advice to Africa and other developing countries is : Don't do as the Americans and the British tell you to do, do as the Americans and the British did." For Africa, this is the only way out of poverty and into prosperity..."

The article seriously critiques the notion that 'free trade' is the way to build and open up economies and ensure a equitable distribution of wealth in our global economy. The reality is that the opposite has been the pattern for most economically successful global economies - and that Africa needs to strike out on a new economic path.

South Korean economist Ha-Joon Chang reminds us that, "Today the history of capitalism has been so totally rewritten that many people in the rich world do not perceive the historical double standards involved in recommending free trade and [the] free market to developing countries... Britain and the US are not the homes of free trade; in fact for a long time they were the most protectionist countries in the world... In other words, Britian adopted free trade only when it had acquired a technological lead over its competitors behind high and long-lasting tariff barriers. Not all countries have succeeded through protection and subsidies, but few without them... The best-performing economies [in the world] have been those that opened up their economies selectively and gradually [because] free trade reduces freedom of choice for poor countries."

Norwegian economist historian adds to this story: "Looking at how the USA today leads in the rhetoric of globalization, the similarity to the role played by England in the 19th century is striking. It is particularly interesting to note that the USA then fought long and hard against the economic theories and policies that today they vehemently support."

For further reading on both of these authors and an indepth analysis of this perspective see:

How Rich Countries Got Rich ... and Why Poor Countries Stay Poor - by Erik S. Reinert (Constable, London 2007)

Bad Samaritans - The Guilty Secrets of Rich Nations & the Threat to Global Prosperity - by Ha-Joon Chang (Bloomsbury Press, New York  2008)