Why has China grown faster than India? And what (if anything) does this mean for Africa?

Chris Blattman and Bill Easterly address the issue. See here, here and here for a great discussion.

While I find myself nodding in agreement with much of what both experts have to say, I hesitate slightly when discussion turns to a near-comparison between growth in China and Africa. While neither scholar seems to be suggesting that China's path to growth can inform a similar phenomenon in Africa - or otherwise delving into very nuanced discussion of the similarities and differences between the process in both regions - I nevertheless feel inclined to caution against any such analogies. There are, of course, lessons which various African countries can learn from China - particularly as regards agricultural policies - but there are many constraints which hinder a direct, general analysis.

Martin Ravallion of the World Bank's Development Research Group has compiled a brilliant presentation highlighting precisely these constraints. Foremost among them:

• Africa's higher levels of income inequality. At the time of China's economic reform, inequality was lower in China (a Gini index well under 30%) than found in all but a couple countries in sub-Saharan Africa today
• The continent's high dependency rates
• Africa's low population density, which impacts on matters such as technological innovation and the cost of supplying certain forms of basic infrastructure
• Africa's weaker state institutions (Blattman's point about differing political climes, etc.)

Of course drawing any comparisons between China and Africa is also somewhat ridiculous, as we're dealing with one country and an entire continent. While this is quite an obvious point to make, you would be surprised at how many people conflate the two.

In short, there are many factors which preclude one from deducing too much about growth in Africa based on how it was played out in China. From my reading, both Easterly and Blattman appear on the brink of such an analysis, but quite wisely never take the plunge. It is precisely for this reason that theirs proves a truly worthwhile debate. Do read it.

Over-exaggerated Asian scrambles and praise-worthy Angolan management on a Monday morning

Chatham House released a new report today which provides a comparative study of the impact of Asian oil companies on Nigeria and Angola - the two leading oil-producing companies in sub-Saharan Africa. While the report considers Indian, South Korean and Japanese national oil companies, the primary focus is on Chinese oil strategy. Specifically, the report considers why Chinese oil strategy has been - and remains - so successful; how it is that Angola emerged as the second largest supplier of oil to China in 2008; how Chinese companies negotiate deals; and how such deals benefit Angola and Nigeria, respectively.

Among the more interesting findings emanating from the report is that which suggests that Angola does not fit the stereotype of a weak African state being exploited by the resource-hungry Chinese. Indeed, the Angolan government has been quite successful in managing its relationships with China and its oil companies, as well as handling its own version of the oil-for infrastructure scheme. The case of Angola is contrasted with Nigeria, where the Obasanjo government largely failed to manage the scheme:

While Nigeria was playing politics with its Asian partners, Angola was driven by economic necessity to quickly access funds to finance its reconstruction [...]

[...] The scale of corruption, mismanagement and non-execution of projects in the Obasanjo years has sent shockwaves through Nigeria. [...] His intentions were good but officials failed to spell out the full implications of the scheme. And many used the scheme for private profit.

The report further suggests that Western fears about an Asian takeover in the Nigerian and Angolan oil sectors are highly exaggerated:

Except for Japan, [Asian oil companies] only acquired equity participation in both countries in the last five years. More important, the [western] oil majors remain the leading players in both countries. They dominate production and hold the majority of reserves.

While Western oil companies do, indeed, still own much of Africa's oil reserves, the Chinese scramble for African soil should not be downplayed. As the report itself notes, Angola is now the second largest supplier of oil to China, with Nigeria, the Congo, Kenya, and other oil-producing states not too far behind. In 2005, China imported nearly 701,000 bpd of oil from Africa - approximately 30% of its total oil imports. This figure has been rising in recent years, and is estimated to reach some 40-50% in the next decade.

The full report - Thirst for African Oil: National Oil Companies in Nigeria and Angola - may be found here.

Fake drugs in Africa? Don't blame the Indians - at least not entirely

Chinese-made drugs which are dangerous or otherwise fake are evidently being sold in parts of Africa with "made in India" labels, much to the detriment of the Indian pharmaceutical industry's inroads into West Africa. This problem appears to be especially pronounced in Nigeria, where Indian generic drugs are the preferred choice of importers:

Chinese, and now Indian, companies have been accused of selling fake drugs in Nigeria's $298-million pharmaceutical market, nearly 60 per cent of which comprises imports.

Although, the $298 figure looks small, it is attractive to fake drug manufacturers. According to a survey conducted in Nigeria in 2007, fake drugs make up for over 50 per cent of all drug sales in th country. The Pharmaceutical Society of Nigeria, puts the figure of fake drugs circulating in the country at nearly 70 per cent.

[HT: Appfrica]

Noteworthy….

Bansky, the British street artist, has left his mark on the African continent. This Flickr page has a wonderful collection of his images which highlight Western perceptions of Africa

China is now an empire in denial, according to the FT's Gideon Rachman

Kindles, iPods and the end of cultural snobbery? Oh dear, this can't possibly be good.

Starbucks has opened an office in Kigali, Rwanda, and is set to partner with local coffee farmers. I wonder if this means that I can get my sugar-free vanilla soy latté fix next time I'm in Rwanda?

According to this projection, China will be the second most populous country in the world by 2050 (it is currently first), followed by the U.S. and Nigeria. India will be the foremost populous, while the Congo will be ninth-most.

IMF finds Asia's growth projections better than anywhere else

The IMF has recently revised April's World Economic Outlook growth projections for 2009 and 2010. The revised summaries for emerging and developing economies are as follows:

• Growth projections in emerging Asia have been revised upward to 5.5 percent in 2009 and 7.0 percent in 2010. The upgrade owes to improved prospects in China and India, in part reflecting substantial macroeconomic stimulus; and a faster-than-expected turnaround in capital flows. However, the recent acceleration in growth is likely to peter out unless there is a recovery in advanced economies.

• Growth projections for Latin America have been lowered by 1.1 percentage points in 2009, primarily because production has been hit much harder by the global trade slowdown than initially expected. However, the region is benefiting from rising commodity prices, and growth projections have been revised up by 0.7 percentage points in 2010.

• The growth projections for central and eastern Europe and the Commonwealth of Independent States (CIS) have been revised downward by 1.3 and 0.7 percentage points in 2009 and upward by 0.2 and 0.8 percentage points in 2010, respectively. Developments differ appreciably across countries but many have been badly affected by the global financial crisis, with capital flows reversed and commodity exports sharply contracted, although the recent recovery of commodity prices is forecast to raise demand in key CIS economies.

• Growth projections for emerging Africa and the Middle East have been revised downward by 0.3 and 0.5 percentage points in 2009, respectively, while those for 2010 are broadly unchanged. Both regions have been more negatively affected by the drop in global trade than previously expected, with Middle Eastern oil exporters using their financial reserves to prop up domestic demand.

China's growth projection has been revised upwards by 1%, with the country expected to register 8.5% growth in 2010.

[HT: Duncan Green]

A new take on the bottom (three) billion

Three billion individuals. That's the approximate number of people that would be scrapped if we were to eliminate the bottom 5% global GDP contributors, the vast majority of which are found in either Africa or Southeast Asia. 81 countries comprise this bottom 5%. Together they represent half of the 192 UN member states and nearly 43% of the world population.

What would the world look like without them? Via Strange Maps we are offered a glimpse:

In reverse order of magnitude the 81 countries are:

Zimbabwe, Burundi, DR Congo, Liberia, Guinea-Bissau, Eritrea, Malawi, Ethiopia, Sierra Leone, Niger, Afghanistan, Togo, Guinea, Uganda, Madagascar, the Central African Republic, Nepal, Myanmar (Burma), Rwanda, Mozambique, East Timor, the Gambia, Bangladesh, Tanzania, Burkina Faso, Mali, Lesotho, Ghana, Haiti, Tajikistan, the Comoros, Cambodia, Laos, Benin, Kenya, Chad, the Solomon Islands, Kyrgyzstan, India, Nicaragua, Uzbekistan, Vietnam, Mauritania, Pakistan, Senegal, Sao Tome and Principe, Ivory Coast, Zambia, the Yemen, Cameroon, Djibouti, Papua New Guinea, Kiribati, Nigeria, Guyana, the Sudan, Bolivia, Moldova, Honduras, the Philippines, Sri Lanka, Mongolia, Bhutan, Egypt, Vanuatu, Tonga, Paraguay, Morocco, Syria, Swaziland, Samoa, Guatemala, Georgia, the Congo, Iraq, Armenia, Jordan, Cape Verde, the Maldives, Fiji and Namibia.

It is equally curious to note which countries are not included among the bottom 5%. Any surprises?

'No worries mate' no more?

Australia's defense white paper, "Defending Australia in the Asia-Pacific Century: Force 2030," has been stirring up controversy since its release earlier this week. At the heart of the controversy is a proposed $72 billion expansion of the military over the next 20 years, prompted in part by the potential threats posed by a rising India - and especially a rising China. Included in the upgrades is the purchase of 100 F-35 fighter jets, hunter-killer submarines, Tiger helicopters, armored vehicles, and significant investments in cyber and electronic warfare technologies. With China and India likewise seeking to expand their capabilities, one can't help but wonder whether we may be witnessing a new arms race underway in the Pacific.

Australia is seemingly also jumping on the Africa bandwagon, and has been actively seeking to improve relations with African countries and expand its influence across the continent. Historically, Africa has not been a major foreign policy issue on Australia's agenda, but the tide appears to be turning:

Since early 2008, the Rudd government has signaled its intention to change direction on Africa and pursue a much stronger engagement strategy. The elevation of African issues in foreign and defence policies appears to be based partly on a judgment about shifting strategic priorities among the major powers. 

The Australian government believes that Africa is drawing closer to the centre of international security politics. For this reason, a policy of benign neglect towards a quarter of the world’s countries is no longer sufficient to meet Australia’s long-term national interests.  

This judgment is reinforced by the actions of several major players in African affairs, including China, the USA and the European Union.

I'd venture to guess that the Australian concern is less with the U.S. or Europe, otherwise the government would have pushed for such a policy of engagement quite a while ago - well back in the 1960s and 70s if we really want to exaggerate the point. Rather, the Australians appear to be highly cognizant of the reality of a quickly rising China - both in their own backyard and indeed globally - and rightfully want to protect their national interests and perhaps thwart China's rapidly expanding geopolitical influence in any way they can (enter Africa). [Sidenote: for an interesting read on China's international intentions, see yesterday's piece in the China Post written in response to Australia's defense paper].

Because Australia has little history of bilateral cooperation with African states, my guess is that any sort of diplomatic ties will evolve only gradually. Nevertheless, this shift in policy presents a curious opportunity for African policymakers to harness viable strategies and reap the benefits of what appears to be a multifaceted scramble for their continent. The huff and puff surrounding Australia's defense paper, too, is a curious example of just how rapidly China is assuming a prominent role on the international stage, and how worrying this is to those in Beijing's own backyard, and beyond.

Noteworthy….

A new alliance between Rwanda and Congo is drawing many former Hutu guerrillas home to live at peace among their former enemies. 

Freedom is not always good and the Chinese need to be controlled, says actor Jackie Chan. Is he being racist/cynical/horrible [insert accusatory adjective here], or did he merely articulate what many (wealthy) Chinese feel?

New research released by the London Councils suggests there are not enough places in London's schools for new pupils. Third world (education) problems are evidently not confined to the third world alone.

The biggest electoral show on earth is now under way in India. Despite the country's growing role on the international stage, foreign policy appears to play only a marginal role in the decisions of nearly 714 million voters.