So what’s the solution to improving institutions? Outsourcing governance through charter cities ala Romer? Is there even any evidence that that is working? Is there really strong evidence that institutions matter all that much for growth? I don’t see it. The direction of causality seems to run more strongly in The direction of growth to better institutions by creating the demand for better governance over increasing resources….
are energy costs and energy unreliability important obstacles? If India and Pakistan could import more gas from Iran, could they export more coal to African countries?
I recently noticed that an athletic shirt I bought at Costco in the US is labeled as having been made in Egypt. it seems like countries that built large manufacturing workforces largely started with textiles and electronics assembly. could raising literacy rates among women be helpful?
A large factor in driving labour productivity is competition. This is the main theme of William W. Lewis’ underrated book “The power of productivity”. The basic idea is that policies that benefit the consumer are the keys to growth, such as lower prices and better-quality products. Given that the consumer represents everyone, policies that benefit the consumer will benefit all (Except for producers who have to struggle with more competition).
How he got to this idea is bit more complicated. Basically, the primary driver of services sector productivity is the organization of labour. Improving this can be hard, and competition is the only way to incentivise better ways to organise this.
For South Africa, I would say that the best way to improve competition would be to deregulate more and to make it easier for new producers to enter the market. This has already happened somewhat in the energy market. For Nigeria, which I am less familiar with, I would say that reducing import taxes and quotas would benefit consumers the most. The service sector accounts for the majority of both economies even though both are commodity exporters.
For other poorer countries, where food makes up a large portion of the consumer basket, improving agricultural productivity would benefit consumers the most. In Southern Africa, the long dry season limits agricultural productivity. Thus water projects, like Eswatini’s MNWAP, are a key driver of growth. This obviously assumes many of the institutional factors you’ve mentioned are sorted.
But if you address GBP growth in the region, wouldn’t that make it more expensive for capital markets to exploit? Wasn’t unfettered access to resources the rationale for the policies that construct those economies once they access IMF & World Bank funds?
Another excellent post. Have you looked at the agri-food system data from IFPRI? They have decomposed ag-related GDP to measure the % of on- and off-farm income. It’s adds another layer to the gdp/worker analysis you have here.
So what’s the solution to improving institutions? Outsourcing governance through charter cities ala Romer? Is there even any evidence that that is working? Is there really strong evidence that institutions matter all that much for growth? I don’t see it. The direction of causality seems to run more strongly in The direction of growth to better institutions by creating the demand for better governance over increasing resources….
> Ethiopia, Kenya, and Ethiopia
What country was the other Ethiopia supposed to be?
are energy costs and energy unreliability important obstacles? If India and Pakistan could import more gas from Iran, could they export more coal to African countries?
I recently noticed that an athletic shirt I bought at Costco in the US is labeled as having been made in Egypt. it seems like countries that built large manufacturing workforces largely started with textiles and electronics assembly. could raising literacy rates among women be helpful?
A large factor in driving labour productivity is competition. This is the main theme of William W. Lewis’ underrated book “The power of productivity”. The basic idea is that policies that benefit the consumer are the keys to growth, such as lower prices and better-quality products. Given that the consumer represents everyone, policies that benefit the consumer will benefit all (Except for producers who have to struggle with more competition).
How he got to this idea is bit more complicated. Basically, the primary driver of services sector productivity is the organization of labour. Improving this can be hard, and competition is the only way to incentivise better ways to organise this.
For South Africa, I would say that the best way to improve competition would be to deregulate more and to make it easier for new producers to enter the market. This has already happened somewhat in the energy market. For Nigeria, which I am less familiar with, I would say that reducing import taxes and quotas would benefit consumers the most. The service sector accounts for the majority of both economies even though both are commodity exporters.
For other poorer countries, where food makes up a large portion of the consumer basket, improving agricultural productivity would benefit consumers the most. In Southern Africa, the long dry season limits agricultural productivity. Thus water projects, like Eswatini’s MNWAP, are a key driver of growth. This obviously assumes many of the institutional factors you’ve mentioned are sorted.
But if you address GBP growth in the region, wouldn’t that make it more expensive for capital markets to exploit? Wasn’t unfettered access to resources the rationale for the policies that construct those economies once they access IMF & World Bank funds?
Another excellent post. Have you looked at the agri-food system data from IFPRI? They have decomposed ag-related GDP to measure the % of on- and off-farm income. It’s adds another layer to the gdp/worker analysis you have here.