Posts Tagged ‘economic development’
“Government is an art, not a science, and an adventure, not a planned itinerary”*…
And sometimes, suggests Brian Potter, that adventure is more adventurous than others…
I spend a lot of time reading about manufacturing and its evolution, which means I end up repeatedly reading about the times and places where radical changes in manufacturing were taking place: Britain in the late 18th century, the US in the late 19th and early 20th centuries, Japan in the second half of the 20th century, and (to a lesser extent) China today. I’ve been struck by how many parallels there are between modern China (roughly the period from the late 1970s till today) and the Gilded Age/Progressive era U.S. (roughly the period from the late 1860s to the 1920s).
During these periods, unprecedented levels of economic growth combined with large populations were making both the U.S. and China wealthy and powerful. Both countries were urbanizing, building enormous amounts of infrastructure, and becoming by far the largest manufacturers in the world, with industrial operations of unprecedented size. Both were undergoing wrenching social and cultural change as old institutions were replaced by new ones, and the countries began to become “modern.” Both were nations of ambitious strivers, where it seemed like anyone with talent could make themselves into a success by catching the tide of rising opportunity. Despite the many differences between the two countries, the forces of development pulled them along very similar paths…
[Potter reviews the histories of development in the U.S. and in China…]
… Yuen Yuen Ang [here] likewise notes the similarities between modern China and the Gilded Age U.S., stating that “both countries underwent a wrenching structural conversion from rural to urban and closed to global markets, producing once-in-a-generation opportunities for the politically connected and enterprising…to acquire fabulous wealth.”
The most interesting thing about these parallels, to me, is that the U.S. and China in many ways were starting from very different places. Prior to its opening up, China’s economy was entirely state-owned and state-planned, and its economic expansion was coupled with unwinding much of the state enterprise machinery, letting small businesses form and markets bloom.
The U.S., on the other hand, was on the other end of the spectrum. Prior to its economic expansion it had an incredibly weak state, and economy driven by very small enterprises. Its development was accompanied by the creation of large, powerful companies and institutions, and moving away from the “invisible hand” of the market and towards the “visible hand” of exchanges of goods and services mediated within very large organizations.
China’s success came from finding ways to mobilize its huge number of people and hasn’t necessarily been focused on operating at the frontier of efficiency. The U.S., on the other hand, despite its comparatively large population, had a chronic shortage of labor, and much of its development was focused on developing less labor-intensive manufacturing technologies like the American System. China built its success on the back of inexpensive labor, and it remains a middle-income country. In the U.S., labor has never been cheap; the U.S. had nearly the GDP per capita of Britain as early as the 1820s, and it had the highest GDP per capita in the world by the 1880s. But despite these differences, the logic of development pulled the U.S. and China along very similar paths. Both countries could exploit very large markets (both at home and abroad) and operated their industries at very large scales in order to do so. In both countries, this required a novel set of institutions that was radically different from what came before, and the transformation that created those institutions spawned cultures with many similarities…
“How China Is Like the 19th Century U.S.,” from @_brianpotter (via @ByrneHobart).
One notes that any solution brings its own crop of new problems… another way in which China’s recent history recalls the Gilded Age– and its aftermath.
See also: “The 2024 Nobel Laureates Are Not Only Wrong About China, But Also About the West” from Yuen Yuen Ang, cited above.
Apposite: “The Surprising Resilience of Globalization: An Examination of Claims of Economic Fragmentation” by Brad Setser.
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As we ponder parallels (lest we wonder if progress accrues during these developmental periods), we might recall that it was on this date in 1904 that Harvey Hubbell received a patent for an invention that changed life in the U.S. and beyond.
In 1888, at the age of 31, Hubbell had quit his job as a manager of a manufacturing company and founded Hubbell Incorporated in Bridgeport, Connecticut, a company which is still in business today, still headquartered near Bridgeport. Hubbell began manufacturing consumer products and, by necessity, inventing manufacturing equipment for his factory. Some of the equipment he designed included automatic tapping machines and progressive dies for blanking and stamping. One of his most important industrial inventions, still in use today, is the thread rolling machine. He quickly began selling his newly devised manufacturing equipment alongside his commercial products.
Hubbell received at least 45 patents, most of which were for electric products. For example, he patented the pull-chain electrical light socket in 1896. But his most famous– and impactful patent was the one he received on this date: the U.S. electrical power plug, which allowed the adoption in the U.S. of convenient, portable electrical devices (which Great Britain had enjoyed since the early 1880s). In 1916, Hubbell was also granted a patent for a three-bladed power plug, including a ground prong.
“The only people who can fix Africa are talented young Africans. By unlocking and nurturing their creative potential, we can create a step change in Africa’s future.”*…
And there are about to be a great many of those young people… As we exit the Holidays looking forward, our global foci tend to be the Middle East, Eastern Europe, and East Asia. In an updated re-post (the original of which was featured here), the estimable Noah Smith reminds us not to neglect Africa…
Africa has been mostly out of the news in the U.S. these days. But if you think about the rest of this century, and what that’s going to look like, it’s impossible not to think about the world’s second-largest continent. The two reasons, simply put, are 1) population, and 2) poverty. Africa’s fertility rate is shrinking, just like everywhere else, but it started doing so much later. So population momentum is going to make Africa VERY populous by the time it peaks (which some forecasters think will happen at around the end of the century). [See the chart above, taken from this IMF report.]
You’ll notice that these estimates are quite a bit lower than the ones in my first graph in the [original post]. This is because Africa’s fertility rates have been falling a lot more than people expected. But even with these lower estimates, Africa is projected to be absolutely huge by the end of the century. And its fraction of the young population will be far higher still. There will come a time, not too long from now, when countries around the world are clamoring for African migrants instead of trying to keep them out.
The other reason Africa is important is poverty; it’s now clear that Africa will be the last major world region to escape a subsistence standard of living. The question of whether and how it can escape this fate is the subject of the post below. But notice that the flip side of poverty is potential; being poor means you have a lot of room to grow, and by the end of this century, most labor-intensive tasks will probably be done in Africa.
And growth is actually doing well. Despite all the talk of decoupling and the big slowdown in China, and despite the occasional hand-wringing in the Western press, growth in Sub-Saharan Africa has been pretty robust in 2022 and 2023. And that’s projected to continue this year…
…
Just how to jump-start productivity growth in African manufacturing is a difficult question. Should countries make their exchange rates cheaper? Improve infrastructure? Spend more on education and health? Are free trade agreements important here? Do industrial policies and/or export promotion have any role to play? Or does the rise of automation simply mean that countries can’t get rich with labor-intensive manufacturing anymore?
I don’t know. But… the fact that Africa has some productive manufacturers and the fact it has managed to shift more people into factory work are both good signs. And though Asia’s growth boom is still going strong, it can’t last forever, and Africa’s day as the workshop of the world may come soon.
But economists, leaders, policymakers, businesspeople, and international organizations need to be focusing on this challenge more than they are. The fate of humanity in the 21st century and beyond hinges on whether African countries can figure out the riddle of industrialization…
Smith may be over-optimistic… in which case, economic, political, and climate migrants will stream out of Africa. Or, it may be that Africa’s development will follow a new and different social, political, and economic logic (see. e.g., here, here, and here).
In any event, Africa matters absolutely: “All futurism is Afrofuturism,” from @Noahpinion.
See also: Reynaldo Anderson‘s contribution, “In a post-American world order, Africa becomes a power player,” to Politico‘s “The Unpredictable But Entirely Possible Events That Could Throw 2024 Into Turmoil” (all of which are provocative).
If I were not African, I wonder whether it would be clear to me that Africa is a place where the people do not need limp gifts of fish but sturdy fishing rods and fair access to the pond. I wonder whether I would realize that while African nations have a failure of leadership, they also have dynamic people with agency and voices.
Chimamanda Ngozi Adichie
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As we devote ourselves to development, we might recall that it was on this date in 1912 (the anniversary of the 1806 Battle of Blaauwberg, as a result of which the British gained sovereignty over the Dutch Cape Colony, which we now know as South Africa) that the African National Congress was founded. Originally known as the South African Native National Congress, it began as a liberation movement, then became a political party. It has governed South Africa since 1994, when the first post-apartheid election resulted in Nelson Mandela‘s election as President of South Africa.
“Poverty is the worst form of violence”*…
Two economic historians, Peter A. Coclanis and Louis M. Kyriakoudes, on why about 20% of counties in the U.S. South are marked by “persistent poverty”…
For a brief moment in the summer of 2023, the surprise No. 1 song “Rich Men North of Richmond” focused the country’s attention on a region that often gets overlooked in discussions of the U.S. economy. Although the U.S. media sometimes pays attention to the rural South — often concentrating on guns, religion and opioid overdoses — it has too often neglected the broad scope and root causes of the region’s current problems.
As economic historians based in North Carolina and Tennessee, we want a fuller version of the story to be told. Various parts of the rural South are struggling, but here we want to focus on the forlorn areas that the U.S. Department of Agriculture refers to as “rural manufacturing counties” — places where manufacturing is, or traditionally was, the main economic activity.
You can find such counties in every Southern state, although they were historically clustered in Alabama, Georgia, North and South Carolina, and Tennessee. And they are suffering terribly.
First, let’s back up. One might be tempted to ask: Are things really that bad? Hasn’t the Sun Belt been booming? But in fact, by a range of economic indicators — personal income per capita and the proportion of the population living in poverty, for starters – large parts of the South, and particularly the rural South, are struggling.
Gross domestic product per capita in the region has been stuck at about 90% of the national average for decades, with average income even lower in rural areas. About 1 in 5 counties in the South is marked by “persistent poverty” — a poverty rate that has stayed above 20% for three decades running. Indeed, fully 80% of all persistently poor counties in the U.S. are in the South.
Persistent poverty is, of course, linked to a host of other problems. The South’s rural counties are marked by low levels of educational attainment, measured both by high school and college graduation rates. Meanwhile, labor-force participation rates in the South are far lower than in the nation as a whole.
Unsurprisingly, these issues stifle economic growth.
Meanwhile, financial institutions have fled the region: The South as a whole lost 62% of its banks between 1980 and 2020, with the decline sharpest in rural areas. At the same time, local hospitals and medical facilities have been shuttering, while funding for everything from emergency services to wellness programs has been cut.
Relatedly, the rural South is ground zero for poor health in the U.S., with life expectancy far lower than the national average. So-called “deaths of despair” such as suicides and accidental overdoses are common, and rates of obesity, diabetes, hypertension, heart disease and stroke are high – much higher than in rural areas in other parts of the U.S. and in the U.S. as a whole…
Although some people think that these areas have forever been in crisis, this isn’t the case. While the South’s agricultural sector had fallen into long-term decline in the decades following the Civil War — essentially collapsing by the Great Depression — the onset of World War II led to an impressive economic growth spurt.
War-related jobs opening up in urban areas pulled labor out of rural areas, leading to a long-delayed push to mechanize agriculture. Workers rendered redundant by such technology came to constitute a large pool of cheap labor that industrialists seized upon to deploy in low-wage processing and assembly operations, generally in rural areas and small towns.
Such operations surged between 1945 and the early 1980s, playing a huge role in the region’s economic rise. However humble they may have been, in the South — as in China since the late 1970s — the shift out of a backward agricultural sector into low-wage, low-skill manufacturing was an opportunity for significant productivity and efficiency gains.
This helped the South steadily catch up to national norms in terms of per-capita income: to 75% by 1950, 80% by the mid-1960s, over 85% by 1970, and to almost 90% by the early 1980s…
By the early 1980s, however, the gains made possible by the shift out of agriculture began to play themselves out. The growth of the rural manufacturing sector slowed, and the South’s convergence upon national per capita income norms stopped, remaining stuck at about 90% from then on.
Two factors were largely responsible: new technologies, which reduced the number of workers needed in manufacturing, and globalization, which greatly increased competition. This latter point became increasingly important, since the South, a low-cost manufacturing region in the U.S., is a high-cost manufacturing region when compared to, say, Mexico.
Like Mike Campbell’s bankruptcy in Hemingway’s “The Sun Also Rises,” the rural South’s collapse came gradually, then suddenly: gradually during the 1980s and 1990s, and suddenly after China’s entry into the World Trade Organization in December 2001…
A sobering read: “Poor men south of Richmond? Why much of the rural South is in economic crisis.”
* Mahatma Gandhi
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As we dive into the dynamics of development, we might recall that it was on this date in 1718 that the famous pirate Edward Teach– better known as Blackbeard– was killed off the coast of North Carolina.
Edward Teach, also known as Blackbeard, is killed off North Carolina’s Outer Banks during a bloody battle with a British navy force sent from Virginia.
Believed to be a native of England, Edward Teach likely began his pirating career in 1713, when he became a crewman aboard a Caribbean sloop commanded by pirate Benjamin Hornigold. In 1717, after Hornigold accepted an offer of general amnesty by the British crown and retired as a pirate, Teach took over a captured 26-gun French merchantman, increased its armament to 40 guns, and renamed it the Queen Anne’s Revenge.
During the next six months, the Queen Anne’s Revenge served as the flagship of a pirate fleet featuring up to four vessels and more than 200 men. Teach became the most infamous pirate of his day, winning the popular name of Blackbeard for his long, dark beard, which he was said to light on fire during battles to intimidate his enemies. Blackbeard’s pirate forces terrorized the Caribbean and the southern coast of North America and were notorious for their cruelty.
In May 1718, the Queen Anne’s Revenge and another vessel were shipwrecked, forcing Blackbeard to desert a third ship and most of his men because of a lack of supplies. With the single remaining ship, Blackbeard sailed to Bath in North Carolina and met with Governor Charles Eden. Eden agreed to pardon Blackbeard in exchange for a share of his sizable booty.
At the request of North Carolina planters, Governor Alexander Spotswood of Virginia dispatched a British naval force under Lieutenant Robert Maynard to North Carolina to deal with Blackbeard. On November 22, Blackbeard’s forces were defeated and he was killed in a bloody battle of Ocracoke Island. Legend has it that Blackbeard, who captured more than 30 ships in his brief pirating career, received five musket-ball wounds and 20 sword lacerations before dying…
Source
“Every time a newspaper dies, even a bad one, the country moves a little closer to authoritarianism”*…
The state of local journalism in the U.S. is an altogether justified topic of concern.
Since 2005, the country has lost more than a fourth of its newspapers (2,500) and is on track to lose a third by 2025. Even though the pandemic was not the catastrophic “extinction-level event” some feared, the country lost more than 360 newspapers between the waning pre-pandemic months of late 2019 and the end of May 2022. All but 24 of those papers were weeklies, serving communities ranging in size from a few hundred people to tens of thousands. Most communities that lose a newspaper do not get a digital or print replacement. The country has 6,380 surviving papers: 1,230 dailies and 5,150 weeklies…
The State of Local News 2022
Research suggests that when newspapers disappear from communities, civic engagement declines (as do voting rates), partisan divides worsen, economic development suffers, and (absent oversight) the costs of local government rise… very sound reasons for concern.
But, as Rachel Matthews suggests, there is another reason to worry. Her focus is on the U.K., but sadly, her point is only too relevant to the U.S….
While we might take issue with the idea that there is less local news, it is undeniable that there is a decline in the legacy local newspaper with which we associate its delivery. This decline is in the numbers of titles and also, significantly, in their visibility. The move to digital has put papers online and also removed the surrounding trappings, such as town centre offices or newspaper sellers, from our streets. Financial pressures mean fewer staff, who are reliant on remote methods of communication rather than being visible in communities.
This loss of the physical newspaper is significant to the historian because the local newspaper’s physical legacy is that most often accessed by both professional and amateur historians…
How will we study the local past when we can’t read all about it? “What do historians lose with the decline of local news?“, from @ProvNewsHistory in @HistoryToday.
[Image above: source]
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As we read all about it, we might send informative birthday greetings to Robert Conley; he was born on this date in 1928. A newspaper, television, and radio reporter, he served a foreign correspondent for The New York Times and NBC News.
But Conley is probably best remembered as the founding host of NPR’s news and cultural program All Things Considered. His (and the show’s) first episode was inducted into the National Recording Registry of the Library of Congress in 2016.
“There is always something new out of Africa”*…
Afrofuturism is a fun and interesting subgenre of science fiction and philosophy:, but I kind of chuckle every time I see the word, because all futurism is actually Afrofuturism. Africa is literally the future of the entire world. Here is one of the two or three most important charts you will ever see:
Notice that this is the projection for total population. It has Africa just about equal to Asia by the end of the century, but if we were to look at only young population, Africa would have a clear majority here.
“Wait,” you may be about to ask. “Are these 80-year-ahead projections really reliable? What if African fertility falls?”
And the answer is: It’s going to fall! It’s already falling fast. As countries get richer their fertility rates drop; as Lyman Stone shows, Africa’s fertility rates are dropping faster, relative to their income level, than any other region except India…
A recent paper in The Lancet attempts to model how African population will change as women’s education and access to contraception (the two biggest things other than GDP that we know affect fertility) increase. They predict a population for Sub-Saharan Africa of about 3.4 billion by century’s end — only 0.8 billion lower than the UN median projection. That’s still an absolutely enormous fraction of humanity, and an even larger chunk of the young population.
Thus, the future of Africa is the future of humanity, despite the fact that Africa will experience a normal fertility transition and its population will eventually stabilize rather than explode. I don’t think people in the U.S. (or, probably, other regions) have come to grips with the full import of this.
But what happens to Africa is even more important, relative to the rest of the world, than these population numbers suggest! This is because Africa is still a mostly poor region. Economics teaches us that marginal utility — i.e. the amount life gets better when you get a little richer — is much higher for poor people. And with China and (to some degree) India industrializing successfully and seeing population growth slow, soon most of the extremely poor people in the world will probably reside in Africa.
So the future welfare of humanity depends crucially on whether Africa can make big strides against poverty — in other words, whether African countries can achieve substantial economic growth…
The fate of humanity in the 21st century and beyond hinges on whether African countries can figure out the riddle of industrialization.
Can Africa industrialize? Noah Smith (@Noahpinion) believes that it can: “All futurism is Afrofuturism.” The full argument (and more supporting charts and data) in the complete post.
* Pliny the Elder
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As we look to the future, we might recall that it was on this date in 1775 that an anonymous writer, now widely thought to be Thomas Paine, published “African Slavery in America,” the first article in the American colonies calling for the emancipation of slaves and the abolition of slavery.
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