What Africa can learn from Asia

The stakes : show how Africa could draw inspiration from Asian economic policies to reduce its dependence on its traditional dependence on raw materials.  

Published in mid-October and soberly entitled « Towards a difficult recovery », the latest economic forecasts of the International Monetary Fund (IMF) have confirmed what all African states have already known for several months: in the wake of the shock resulting from the Covid-19 pandemic, 2020 will be a very bad vintage. « The region’s economy will contract by 3% in 2020 according to projections, the worst outlook ever, » said Abebe Aemro Selassie, Director of the Fund’s Africa Department. At the forefront of the countries affected by this major crisis, the countries exporting raw materials. Once again, the continent’s primary commodity-producing nations are being hit hard by the (downward) volatility of world prices. Like an eternal revengeful return of the pendulum.

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However, there is no fatality, as the example of the East Asian nations (Japan, South Korea, Taiwan, China, Singapore) proves. Faced with a cyclical world economy, which has never ceased to alternate phases of growth and recession, the strength of the Asian model is that it has succeeded in building a sustainable development strategy, less subject to erratic economic fluctuations. It is not that the economic downturn was not felt on the Pacific Rim, far from it. But unlike many of their African peers – dependent on primary resources with volatile value – East Asian countries favored early on an export strategy of manufactured goods, which are less sensitive to price variations than commodities. Necessity, it is true, often prevailed: these nations had few resources other than their human capital. Moreover, the emphasis was soon placed on a rapid rise in value chains (from product assembly to product design) in order to capture the largest possible portion of the value added produced. And, who says more value retained means more financial independence. Similarly, by closing their financial networks to the outside world for a long time, these countries have most often given themselves favorable exchange rates, which are indispensable levers for strategies to conquer foreign markets. This economic management is far removed from the commonly accepted liberal doxa and has enabled them to generously finance sectors considered strategic – education, health, infrastructure, industry. But never to the detriment of efficiency, private investment, balanced public finances and monetary stability. These are all favorable factors that have enabled these countries to become world champions of growth in the long run.

Conversely, since the same causes produce the same effects, prolonged economic difficulties in African latitudes could once again set off a negative spiral similar to that of the 1980s (sustained fall in commodity prices and explosion in debt-servicing interest rates). Caught by the throat, Africa was then imposed a drastic and uncompromising regime by the IMF and the World Bank. This will be the era of structural adjustment and state failure, which will last until the end of the 1990s and which will weigh so heavily on the continent’s populations. A possibility that is now seen as a repulsive possibility. At the end of the day, we always pay a high price for risky economic choices in the event of an economic downturn. A deterioration in economic conditions that, sooner or later, will inevitably occur. On the other hand, judicious public policy decisions will spare many foreseeable difficulties in difficult times and allow us to fully capitalize on the opportunities offered by a more favorable economic climate. Each person has his or her own choices and growth trajectories. Trajectories that are nevertheless always subject to change, in the light of the lessons of history.