African Economic Development
Attacks the standard development orthodoxies using Ethiopian evidence throughout.
Summary
Cramer, Sender and Oqubay wrote a heterodox assessment of African economic development, arguing against several positions they regard as dominant in policy and in donor practice.
Their critique targets specific orthodoxies. They argue that the emphasis on small-scale enterprise, microfinance and smallholder agriculture is misplaced, because these do not generate the productivity growth or the wage employment that raises living standards. They argue that microfinance in particular has been shown by the evaluation literature to produce very limited effects and has absorbed attention disproportionate to its results. They challenge the assumption that African agriculture should remain smallholder-based, arguing that commercialised larger-scale agriculture generates wage employment that has done more to reduce rural poverty than smallholder support programmes.
Their positive argument is for structural transformation: moving labour from low-productivity activity into higher-productivity manufacturing and commercial agriculture, which requires industrial policy, state capacity and investment on a scale the current policy consensus does not contemplate. They point to Ethiopia's experience, on which Oqubay has written separately, as evidence that state-directed industrial development can work in an African context.
They also challenge the way development is measured and the reliability of the statistics on which cross-country research depends, arguing that African economic data is far weaker than the econometric literature using it acknowledges.
The book argues one position and engages the mainstream literature critically rather than neutrally. The claim that wage employment in commercial agriculture reduces poverty more than smallholder support is contested and depends on evidence the authors read differently from other researchers. The Ethiopian case has since been complicated by conflict and macroeconomic crisis. The critique of African statistical capacity is widely shared.
Key takeaways 7
- Wage employment rather than self-employment is what raises living standards, so policy focused on small enterprise misses the mechanism.
- Microfinance has produced very limited measurable effects and has absorbed policy attention disproportionate to its results.
- Commercialised larger-scale agriculture generates rural wage employment that has reduced poverty more than smallholder support programmes.
- Structural transformation requires moving labour into higher-productivity sectors, which needs industrial policy and state capacity.
- African economic statistics are far weaker than the cross-country econometric literature using them acknowledges.
- Donor programmes are shaped by what is measurable and fundable rather than by what produces structural change.
- State-directed industrial development has produced results in African contexts, which contradicts the assumption that it cannot work there.
Who should read it
Investors and analysts working on African development who want the heterodox case against the small-enterprise and smallholder policy consensus.
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