Services, not manufacturing, will be the growth sector for Africa, says Stiglitz

Services, not manufacturing, will be the growth sector for Africa, says Stiglitz

Who Said What is a new interactive tool designed by ACET to generate discussion on major economic transformation topics and statements of our times.

In the first Who Said What statement posted here, renowned economist and Nobel laureate, Professor Joseph E. Stiglitz, challenges the notion that Africa’s development can follow Asia’s growth model of manufacturing export-led growth.

Instead, Stiglitz says, “services will be the growth sector in the future”. Stiglitz, a professor at Colombia University and World Bank chief economist from 1997 to 2000, made these remarks during a presentation in Cape Town, South Africa, on 15 November. The event was organized jointly by three research institutions, the Bureau for Economic Research, Economic Research Southern Africa and REDI 3×3.

So what about agriculture?

Whether agriculture can play a major role in transformation is controversial, Stiglitz said in his presentation. Nevertheless, he quoted favourably ACET’s African Transformation Report, Agriculture Powering Africa’s Economic Transformation, as saying that agriculture presents the easiest path to industrialization and economic transformation for African countries. Stiglitz quoted the report thus:

For many African countries: “agriculture presents the easiest path to industrialization and economic transformation. Increasing productivity and output in a modern agricultural sector would, beyond improving food security and the balance of payments (through reduced food imports and increased exports) Sustain agro-processing, the manufacturing of agricultural inputs, and a host of services upstream and downstream from farms, creating employment and boosting incomes across the economy.”

By improving all the upstream and downstream linkages, agriculture can be a particularly successful part of the strategy for Africa, Stiglitz, in a video recording of his Cape Town presentation, quoted the African Transformation Report as saying.

In the light of Stiglitz’s comments:

Can Africa move from agriculture to services without pursuing a manufacturing export-led growth model?

Can African agriculture create a path to industrialization?

 


 

What do you think?

Watch an extract from the Stiglitz Cape Town presentation here:

View Extracts from Stiglitz’s Powerpoint Presentation here.

View Stiglitz’s full Powerpoint Presentation here.

Read how the South African press reported Stiglitz here.

Read the ACET report quoted by Stiglitz here.

 

Have your say in the comments box below.

 

6 Comments

  1. Demba ☕️ ♻️ (@diasporaonline) says:

    Indeed services provision in a digital age… With ever increasing demand in food and nutritional facts in consumers lifestyles, information generation, processing, storing and selective dissemination remain of utmost importance… In the case of Africa, growing food import bill of over $37 billion a year (excluding fish) must be phased out gradually with adaptive strategies or we’ll be caught up in the lost decades of development self-fulfilled prophecy…




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  2. Daniela Silva says:

    Thanks for sharing!!




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  3. Alexander Darku says:

    If any African nation has the chance to manage its path to development, following the discussion of Joe Stiglitz will not be a good advise. No development efforts in Africa can bypass complete transformation of agriculture and the people who do agriculture. The analysis base on past and current sectorial contribution to GDP as a gauge to what should be done going forward is similar to making a derailed train continue on its path of derailment.




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  4. Fortune Nwaiwu says:

    Yes, service and not manufacturing may be the future growth sector for African economies, but if these African economies aspire to have sustainable and inclusive economic growth, then they need to pursue economic growth policies that is anchored more on manufacturing than services. Africa cannot afford to continue have a ‘flash in the pan’ economic growth while continuing to serve as the world’s source of natural resources.




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  5. Kirk Leigh says:

    Yes the services sector is growing, at least in Nigeria where it is the largest on the continent But when looked at from the prism of factor endowment/labour cost, and propensity for job creation,
    agriculture looks more like it. But what is to say we cannot pursue a multi pronged approach that would include agriculture and services among others, depending on what is practical for each country on the continent




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  6. Adams Asamoah says:

    Prof Stiglitz is not completely right with a service oriented recommendation. Yes Africa will benefit from a well defined service economy but without manufacturing and industrial base the fundamentals of the economies will continue to be weakened. The ideal way forward will be import substitution of some products and increasing export of manufactured products to other markets. We don’t have to copy the Asian miracle but we can do a comparative model better suited to the African context. Of course it cannot be simple sweat-shops like we saw in Asia but it could be by leapfrogging into a highly automated and efficient manufacturing base. It’s about time Africa moves away from the raw material basket of the world to a contribution of value added products which are highly needed in the global economy. We all assume agriculture could the be the game changer for Africa. Yes that’s true but we cannot create large farms only to export and re-import back at a higher cost to our economy and devaluation of our currency. It’s not about agriculture, it’s more about sensible agri-value. More so, there is enough talk. The African problem is leadership leadership and political will. Service orientation has become the easy route because that’s where there is minimal need for government leadership. But until we get serious about what we mean by transformation, it will continue to be talk and conferences. Change the mind, change the situation.




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The video and other materials used in this post were supplied by Economics Research Southern Africa. The opinions expressed here are meant to stimulate debate on Economic Transformation and do not necessarily reflect ACET’s view.