Economic Transformation in Theory and Practice: What are the Messages for Africa?

Authors
Clemens Breisinger, Xinshen Diao
Publisher
Regional Strategic Analysis and Knowledge Support System (ReSAKSS)

The Regional Strategic Analysis and Knowledge Support System (ReSAKSS) is an Africa-wide network of regional nodes supporting the Common Market of Eastern and Southern Africa (COMESA), the Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADC), in collaboration with the International Food Policy Research Institute (IFPRI) and the Africa-based centers of the Consultative Group on International Agricultural Research (CGIAR), to facilitate the implementation of AU/NEPAD’s Comprehensive Africa Agriculture Development Programme (CAADP). The ReSAKSS nodes offer high-quality analyses to improve policymaking, track progress, document success, and derive lessons for the implementation of the CAADP agenda. The goal of the ReSAKSS Working Paper series is to provide timely access to results of preliminary research and data analysis that relate directly to strengthening ongoing discussions and critical commentaries on the future direction of African agriculture and rural development.

Encouraging signs of growth acceleration in Africa may herald a new development era of rapid transformation. In an effort to promote the future success of African transformation, we herein provide an extensive literature review on development economics and empirical observations from successfully transformed countries, along with analytic narratives on the transformations of Thailand and Mexico. To conclude, we derive six key messages for African transformation. We find that the traditional development economics theory is consistent with the transformation practice of successful countries. However, this theory needs to be broadened in light of rising inequalities during transformation. Success vitally depends on agricultural development; early withdrawal of public support away from agriculture slows down transformation, and the resulting inequalities are recognized as a persistent development challenge. Transformation also depends on industrialization strategies, but we find that winner-picking industrialization negatively affects other aspects of development, whereas home-grown, export-oriented

industrialization led by private entrepreneurs opens up broader opportunities for sustainable growth. Finally, government support will be required to create a business-promoting environment and to offer incentives for African entrepreneurs to lead growth.
Publication date
Source / Citation
Breisinger, C. and X. Diao. Economic Transformation in Theory and Practice: What are the Messages for Africa? ReSAKSS Working Paper No. 10. 2008.
Location
http://www.resakss.org/index.php?pdf=39396