Microsoft’s founder and one of Africa’s greatest philanthropists, Bill Gates, has suggested that the continent should look to Asia’s methods in tackling its economic challenges. Gates, a LinkedIn influencer, wrote on the platform that the development economic models that made huge success stories out of Asian economic giants can also be applied to countries in the continent with a similar result.
The co-founder of Bill and Mellinda Gates foundation, one of the largest private foundations, Bill’s article is built on his review of How Asia Works, a book by business journalist Joe Studwell, which focuses on the factors that drove the rapid economic growth in several Asian countries like Japan, Taiwan, South Korea and China.
“I read Joe Studwell’s How Asia Works because it claimed to answer two of the greatest questions in development economics: How did countries like Japan, Taiwan, South Korea, and China achieve sustained, high growth and turn into development success stories? And why have so few other countries managed to do so? Clear answers could benefit billions of people living in countries that are poor today but have the essential ingredients to develop thriving economies”, Bill Gates wrote.
He described Studwell’s book as compelling, saying it delivers clear answers, “not the hedged ‘on the one hand, on the other hand’ answers that led an exasperated Harry Truman to ask for a ‘one-armed economist.”
Then he highlights Studwell’s answers thus;
- Create conditions for small farmers to thrive.
- Use the proceeds from agricultural surpluses to build a manufacturing base that is tooled from the start to produce exports.
- Nurture both these sectors (small farming and export-oriented manufacturing) with financial institutions closely controlled by the government.
Bill, whose foundation leads several Africa aid initiatives, explains in-depth how these answers can lead the continent to self-dependence and economic growth and development. His explanation is spread across Agriculture, Manufacturing and Finance.
Learning From Asia’s Agriculture
Gates asserts that like the Asian countries which Studwell writes about, the rapid agricultural development of African nations requires redistributing land more equitably among the huge farming population in the continent. Such redistribution, he says, will lead to higher yields which will in turn help countries generate the surpluses and savings they need to power up their manufacturing engine. Gates reveals that the book has drawn his attention to land ownership picture of the countries in which his foundation works, given that the focus has been on the role of better seeds, fertilizers, and farming practices.
Adopting Manufacturing Policies
Gates cites Studwell’s argument that the successful Asian countries did not simply rely on the invisible hand of market forces for the growth of their industries; “they supplement market forces with the heavy hand of state-driven industrial policy,” he wrote. He advocates that like them, African countries should engage in a combination of protectionism (coddling infant industries to give them time to become globally competitive) and then culling losers (cutting off resources to firms that don’t succeed in export markets).
Applying Their Finance Model
In Finance, like in manufacturing, Gates also points to Studwell’s analysis that rapidly developing countries usually give lip service to free-market principles while actually keeping their financial institutions “on a short leash.” Gates explains that this means that they enact policies to protect themselves against “the shocks and whiplash of global-capital flows”, and also make sure their financial institutions serve the country’s long-term development ends rather than the short-term interests of financiers.
So, Can it Work in Africa?
While he can easily see the “many economic and health benefits” of applying the Asian agricultural model in Africa, Gates is not very much convinced about the manufacturing angle. “The big question for me is: Can African countries become successful export-oriented manufacturing hubs?” he writes. “I do see this potential in countries like Ethiopia and Djibouti. They already have a strong connection with China and ambitious, long-term economic plans. Unfortunately, many other countries on the continent don’t have those same success factors, especially landlocked ones with very poor infrastructure.”
But he emphasises that helping farmers in African countries grow more food and earn more money would be a big help on its own. (VENTURES AFRICA)