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Africa: Why Economists Get It Wrong (African Arguments) Paperback – June 15, 2015
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Jerven is an economic historian with a PhD from the LSE and wrote the highly acclaimed book Wrong Numbers that seems to cover much of the ground that this book does.
Jerven describes how economic growth is misunderstood because good African statistics often start in 1960 and are not very strong and because low commodity prices and other factors, possibly HIV and some very poor governments led Africa to have low growth in the 1980s and the 1990s which was then declared as normal despite it effectively being two poor decades.
The book also makes the point that if growth from 1960 to 1990 is divided into two 15 year sections Africa does fairly well in each, only huge growth in the 1975 to 1990 era by South and East Asia making Africa not look particularly good. It's curious here that for a book written in 2015 that the statistics stop in 1990.
Jerven then looks at how poor statistics are compressed and combined to present a picture of poor growth in Africa in the pre-colonial era. This also includes some asides into how The Economist and other news magazines have declared Africa lost and then doing well in the space of two or three years. He also points out how a number of the explanations for growth successes may be post fact rationalizations. The idea that growth and wealth might bring in good institutions rather than the other way around is very interesting.
The book also describes the big problems with modern African statistics in more detail. Due to low populations, low wealth and statistical tools designed to measure wealthy countries economies the accuracy of African statistics is very questionable. A number of African states have errors that are huge, in the order of 1/3 or more of the GDP per capita when comparing across different statistical agencies. This indicates huge inconsistencies and problems. Also rebasing is not done frequently enough and when it is done tends to have such a big effect that it overshadows actual economic changes.
The book concludes that poor numbers and dubious explanations have combined to create poor economic studies of Africa. The differences within Africa and the relative lack of wealth may have caused economists to make considerable errors. Jerven asserts that there is no Bottom Billion and that development stories have been driven by narrative fallacies based on quicksand. It's a really interesting idea and even if wrong the book is definitely worth reading.
1. begin with the assumption that country characteristics on the one hand and indicators of development levels on the other are causally related. This is a gigantic mistake.
2. fail to question the quality of data, and instead focus on the details of statistical process.
3. fail to question the quality and relevance of proxies used in economic analysis.
4. fail to address the problem of missing data, things that are uncounted or unrecorded.
5. in the case of many analyses, begin in 1960. While sometimes allowance is made for this, the arbitrary starting point inevitably shapes what questions are asked, and influences or determines what questions are not.
6. have in many cases been distorted either by the "African dummy variable", or by the search for it, which was ultimately futile.
7. begin with the assumption that there has been no growth, instead of finding evidence for this belief.
8. make unwarranted use of subjective and fabricated variables such as the "black market premium variable".
9. fail to make proper use of the discipline of economic history.
Jerven comments that “It is quite obvious that not all that can be counted counts and not all that counts is counted. But the impact of missing data on scholarly analysis is not usually appreciate it fully.”
Jerven demolishes the statistical credibility of the various attempts to show that slavery or some other historical factor explains the African problem — quite apart from the fact, as he sees it, that there is no such thing as an African problem. For example, one study that tried to prove that past slavery is the main cause of current problems in Africa took as an assumption the set of the ten the poorest countries in Africa. However there is little consensus across the leading major sets of statistical data as to which African countries are poor and which are rich. This is an example of a broader problem in African data of the high variability of income. One cause of the high variability is the high proportion of wealth that is agricultural, and therefore depends on the vagaries of the weather and the harvest and the market.
“The solution is to refocus the study of economics on the study of economics. The increasing distance between the observers and the observed has created a growing knowledge problem …. The toolbox of economists is conceptually Eurocentric.... The bottom line is that there is no ‘bottom billion’”.
Unfortunately, Jerven does not spend much time building up a new narrative about Africa to replace the two that he demolishes. So non-specialist readers like myself are left unsure as to what the real picture is. On the whole I felt that too much of the book is devoted to internecine academic warfare, with the author attacking the theories of his opponents, and not enough to developing a coherent narrative about African economic development for the general reader.