Sustainable Economic Growth VS Sustained Economic growth

Africa-manufacturing-hubMaking lives of poor people better is not the same as fighting poverty. Many aid projects in Africa have been built for sustainability but are rarely sustained once the project timeline ends.   Thus the difference between investing in the productive capacity of the poorest and providing the economic benefits of development to the poorest. If the project designed invests directly in the community’s capacity then the project itself becomes apart of the way of life and will therefore be sustained. Giving away goods that the poor need may alleviate some of the hardships of poverty but it does little to build an stronger and sustainable economy.

The gains that this model of aid creates are real, but rarely outlive the project’s timeline. As aid workers leave the village life quickly returns to what is was before.  Water wells dug by well meaning NGO’s run dry for lack of spare parts, and clean burning cook stoves sit in the corners of huts unused.

Dani Rodrik points out that one of the main factors slowing the anti-poverty fight in Africa is the slow growth of the manufacturing sector.  Rapid and sustained growth which leads to the higher incomes and thus anti-poverty policies is achieved on the back of industrialization.  In Africa, manufacturing is still around 10.1% of annual output. For comparison,  Thailand is about 34% South Korea is 31%.  Making matters worse, manufacturing in Africa has actually been on the decline over the last 40 years, so what we are seeing is are not slow gains but declines of the manufacturing sector.

Asking Africa’s poor to be entrepreneurial with high interest micro loans and building their way out of poverty as a national policy will not work.  Development agencies and African politicians may preach about technological leaps that the African countries can make and while that is largely true, sustained growth and reduction of poverty will only come when Africa’s poor have access to higher paying jobs.  This means that the 70% of Africans citizens that depend on subsistence farming need the means to transition to the higher paying manufacturing economy.

Investments in education and human capital are beginning to lay the ground work for an investment friendly environment however.  Hopefully, African politicians will begin focusing on mass job creation and less on “pro-poor” policies.  Just remember making the lives of poor people better is a noble cause…but it’s not the same as fighting poverty.

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